(a) The Legislature finds and declares all of the following: (1) Designated public hospital systems play an essential role in the Medi-Cal program, providing high-quality care to a disproportionate number of low-income Medi-Cal and uninsured populations in the state. Because Medi-Cal covers approximately one-third of the stateâs population, the strength of these essential public health care systems is of critical importance to the health and welfare of the people of California. (2) Designated public hospital systems provide comprehensive health care services to low-income patients and lifesaving trauma, burn, and disaster-response services for entire communities, and train the next generation of doctors and other health care professionals, such as nurses and paramedical professionals, who are critical to new team-based care models that achieve more efficient and patient-centered care. (3) The Legislature intends to continue to provide levels of support for designated public hospital systems in light of their reliance on Medi-Cal funding to provide quality care to everyone, regardless of insurance status, ability to pay, or other circumstance, the significant proportion of Medi-Cal services provided under managed care by these public hospital systems, and federal requirements related to Medicaid managed care. (4) It is the intent of the Legislature that Medi-Cal managed care plans and designated public hospital systems that may enter into contracts to provide services for Medi-Cal beneficiaries shall in good faith negotiate for, and implement, contract rates, the provision and arrangement of services and member assignment that are sufficient to ensure continued participation by Medi-Cal managed care plans and designated public hospital systems and to maintain access to services for Medi-Cal managed care beneficiaries and other low-income patients. (5) It is the intent of the Legislature that, in order to ensure both the financial viability of Medi-Cal managed care plans and support the participation of designated public hospital systems in Medi-Cal managed care, the department shall provide Medi-Cal managed care plans actuarially sound rates reflecting the directed contract services payments implemented to comply with federal requirements relating to Medicaid managed care. (b) Commencing with the 2017â18 state fiscal year for designated public hospital systems, and commencing with the 2023 calendar year for district and municipal public hospitals, and for each state fiscal year or rate year, as applicable, thereafter, and notwithstanding any other law, the department shall require each Medi-Cal managed care plan to increase contract services payments to the designated public hospital systems and to district and municipal public hospitals by amounts determined under a directed payment methodology that meets federal requirements and as described in this subdivision. The directed payments may be determined and applied as distributions from directed payment pools, as uniform dollar or percentage increases, or on other bases, and may incorporate acuity adjustments or other factors. (1) The directed payments may separately account for inpatient hospital services and noninpatient hospital services. The directed payments shall be developed and applied separately for classes of designated public hospital systems and district and municipal public hospitals. The department, in consultation with the designated public hospital systems and district and municipal public hospitals, as applicable, shall establish the classes of designated public hospital systems and district and municipal public hospitals, as applicable, consistent with the objectives set forth in subdivisions (a) and (d) and that take into account differences in services provided, service delivery systems, and the level of risk assumed from Medi-Cal managed care plans. For designated public hospital systems, the factors to be considered shall include, but are not limited t
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