During the final hours of this year’s legislative session, at 10:50 p.m. on Sept. 12 to be exact, a final vote was taken on a critical piece of legislation for hospitals in California. SB 239, a measure sponsored by the California Hospital Association (CHA) and co-authored by Senators Ed Hernandez (D – Los Angeles) and Darrell Steinberg, (D-Sacramento), was unanimously passed by both houses of the legislature and is now sailing to Governor Brown’s desk.SB 239 will implement an initial three-year hospital fee program effective Jan.1, 2014 – bringing in more than $10 billion in new federal Medicaid funds to California hospitals and an estimated $2 billion in annual contributions to the state’s economy – a mutually beneficial win for the state, patients and hospitals.

These additional dollars will go a long a way to strengthen the ability of hospitals to meet the increased demands resulting from pressures related to implementing the Affordable Care Act. The funds will be paid to hospitals in the form of supplemental Medi-Cal payments and financial incentives guarantee the state’s financial share.

In addition – and vitally important – the bill restores the Medi-Cal rates to non-rural distinct-part skilled nursing facilities (DP/SNFs) of hospitals by lifting the current rate freeze and reversing the cuts that resulted in significant underpayments to DP/ SNFs dating back to 2008 (see my related post on AB 900). Why is this so important? More than 80 percent of patients at these facilities — fragile and disabled seniors, adults and children — receive Medi-Cal assistance. Chances are someone you know will benefit from these changes.  Eliminating future Medi-Cal payment cuts to these facilities will help sustain 36,000 healthcare jobs.

The last minute agreement on the Medi-Cal cuts was hammered out by Brown administration officials, legislative leaders from both parties and CHA following a number of lengthy daylong meetings between the parties. Typically, legislation that results from these kind of last second dealings results in something akin to policy sausage. However, here we have a classic example of how, when parties and groups can put their minds together, good policy can be produced as a result. 

Despite all of the work that has been done, one task remains - getting the federal government to agree to not collect retroactive payments made to SNFs dating back to June 1, 2011. That effort will continue in hopes of obtaining an agreement from CMS to not move forward with collecting those back payments. If this is successfully accomplished then we will have achieved full relief for those skilled nursing facilities.

Until next session…