Assembly Bill (AB) 85

The Affordable Care Act and RealignmentArticle 13 Counties

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BackgroundCalifornia elected to implement a state-run Medicaid Expansion starting in 2014. With the state taking on the obligation for the county indigent population currently served by counties, it is assumed that counties’ costs associated with the indigent population will decrease.  Assembly Bill (AB) 85 lays out a process by which a portion of the 1991 County Health Realignment Funds would be redirected to support Social Services programs.

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Background (cont.)The formula, should these counties not choose to redirect 60%, is addressed in Section 17613.

Redirection to begin effective January 2014

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Article 13 CountiesFresnoMerced OrangePlacerSacramentoSan Diego

San Luis ObispoSanta BarbaraSanta CruzStanislausTulareYolo

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OverviewCounties have 2

optionsfor determining the redirected amount.

Each county must inform DHCS of tentative decision by

11/1/13Must adopt a resolution by

1/22/1460% of 1991 Health Realignment Funds

+60% of Maintenance of

Effort Maintenance of Effort is capped at 14.6% of the total value of each county’s 10-11

allocation.

County Savings Determination Process

(Formula)Lesser of:

(Revenues-Costs) x .80 (.70 in 13/14)

Or County Indigent Care Health Realignment

Amount(=Health Realignment

Amount x Health Realignment Indigent Care

Percentage)

If the counties do not adopt a resolution or fail to inform DHCS of their chosen option, then the calculation is 62.5% of County Realignment funds and 62.5% of the MOE.

Counties that select the 60%/40% option may later petition the Health Care Funding Resolution Committee to elect the formula option.

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Overview Continued - County Savings Determination Process (Formula)The purpose of the formula is to calculate the health care savings the county is experiencing as a result of health care reform. This is achieved by determining if the overall available revenues exceed the costs the county is incurring (subject to a cost containment limit)

Revenue1. Indigent Program Revenues2. Special Local Health Funds3. County Indigent Care Health Realignment Amount4. Imputed County Low-Income Health Amount

Costs5. Indigent Program Costs incurred by the county for the fiscal year, not to exceed the cost containment limit.

County Indigent Care Health Realignment Amount Health Realignment Amount x Health Realignment Indigent Care Percentage

=MIN((SUM(1+2+3+4)-5) x .80*, [or] County Indigent Care Health Realignment Amount)

*In 2013/14, the savings percentage will be .70

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Revenues

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Definitions – Indigent Program RevenuesSelf-pay payments made by or on behalf of

indigent program individuals to the county for services rendered in the fiscal year.

Excludes revenues received for mental health and substance use disorder services.

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Definitions – Special Local Health Funds Tobacco Settlement Funds

The amount of tobacco settlement funds used in the revenue calculation will be the greater of:

A. The actual amount of tobacco settlement funds expended by the county during the fiscal year

ORB. The tobacco settlement funds that the counties

receive x the average of the historical percentages (FY08/09-FY11/12).

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Definitions – County Indigent Care Health Realignment Amount= Health Realignment amount for the fiscal year

x Historical health realignment indigent care

percentage

OR

= 85% 85% will be used if the county does not provide the information

needed to calculate the health realignment indigent care percentage

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Health Realignment Indigent Care PercentageCounty-specific percentage determined as

follows:The average of the percentages for each

historical fiscal year of the percentage of county health realignment that was used to provide health services to the indigent.

If the county does not provide the required information or insufficient data, the percentage shall be set at 85%.

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Definitions – Imputed County Low-Income Health AmountPredetermined, county general fund subsidy used

for county indigent care

Calculated as follows:1. Take the historical amount for each historical

fiscal year (FY08/09-FY11/12)2. Find the average percentage increase 3. Average the historical amounts in (1.) and

multiply it by the lessor of the average percentage increase (2.) or the applicable blended CPI

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Costs

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Definitions – Indigent Program CostsCosts incurred by the county for purchasing,

providing or ensuring the availability of services to the indigent program individuals during the fiscal year.

Mental health and substance use disorder costs are not included

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Blended Consumer Price Index (CPI)Bureau of Labor Statistics dataNon-seasonally adjusted CPI for All Urban

Consumers – US city averageCategory 1 – Hospital and Related Services –

weighted at 75%Category 2 – Medical Care Services – weighted

at 25%

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Cost Containment Limit (formula)

= Base Year Cost Per personX

Blended CPI X

Indigent program individuals in the relevant fiscal year

*base year = FY ending 3 years prior to subject FY.

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Cost Containment LimitIF – the subject years actual indigent

program costs exceed the calculated cost containment limit for the year THEN the cost containment limit is used for the calculation OR adjustments to the cost containment limit can be sought.

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Adjustments to the Cost Containment Limit The following costs, if applicable, can be

added to the cost containment limit prior to the application of the limit in the formula:Costs related to state or federally mandated

activities, requirements, or benefit changes.Costs resulting from a court order or

settlement.Costs incurred as a result of a natural disaster

or act of terrorism.Other costs as requested and approved by

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Cost Containment Limit ExampleTrue-Up Calculation Scenario 1 Scenario 2 Scenario 3

Calculated Cost Cap

FY14-15 Cost Per Person

CPI Trend (Per Year)

Cost per person cap

Calculated Costs for True-Up

Actual Costs 4,999,500 7,875,000 11,000,000

Cost per person cap * Enrollment 6,652,307 7,761,025 8,869,743

Does actual cost exceed the cap? N Y Y

Cost Containment Adjustments

Mandates n/a - -

Court orders/settelements n/a 1,000,000 1,000,000

Natural disaster/terrorism n/a - -

Total Adjustments - 1,000,000 1,000,000

Revised Cost Cap n/a 8,761,025 9,869,743 Does actual cost exceed the revised cap?

n/a N Y

Lessor of actual costs or cost cap for True-Up

4,999,500 7,875,000 9,869,743

4,000

3.50%

4,435

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TimelineFY 2013/14

10/31/13 – Counties using formula give data needed for formula to state for 1) Health Realignment Amount 2) Imputed County Low-Income Health Amount 3) Indigent Program Costs

o 12/15/13 – State notifies counties if we disagree with data listed aboveo 1/13/14 – If no agreement has been reached regarding data, DHCS

shall use county’s data until a decision is made.o The County Health Care Funding Resolution Committee shall decide

whether the data is accurate/sufficient within 45 days.By 6/30/15 – Counties submit final data to stateBy 12/31/15 – State provides final FY 2013/14 calculations to

counties

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Timeline ContinuedFY 2014/15 and future yearsNovember - 5 months after the end of each fiscal year, counties

using the formula submit reports on all revenue and cost data to DHCS.

January - DHCS completes the interim calculation the January prior to the starting fiscal year, using the most current/accurate data available.

May – DHCS updates the interim calculation in May before the start of the fiscal year.

June - 12 months/by June 30th of the year after subject fiscal year, counties submit final data to DHCS.

July - December – DHCS completes the final calculation and submits to counties by December 31st of the fiscal year following the receipt of the final data – one and a half years after the subject fiscal year.

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