SECTION 1. STATEMENT OF FINDINGS

A. The federal government established the Medicaid program to help pay for health care services provided to low-income patients, including the elderly, persons with disabilities, and children. In California this program is called Medi-Cal. In order for any state to receive federal Medicaid funds, the State has to contribute a matching amount of its own money.

B. In 2009, a new program was created whereby California hospitals began paying a fee to help the State obtain available federal Medicaid funds, at no cost to California taxpayers: This program has helped pay for health care for low-income children and resulted in California hospitals receiving approximately $2 billion per year in additional federal money to help hospitals to meet the needs of Medi-Cal patients.

SECTION 2. STATEMENT OF PURPOSE

To ensure that the fee paid by hospitals to the State for the purpose of maximizing the available federal matching funds is used for the intended purpose, the People hereby amend the Constitution to:

A. Require voter approval of changes to the hospital fee program to ensure that the State uses these funds for the intended purpose of supporting hospital care to Medi-Cal patients and to help pay for health care for low-income children.

SECTION 3. AMENDMENT TO THE CONSTITUTION

Section 3.5 of Article XVI of the California Constitution is added to read:

Sec. 3.5(a) No statute amending or adding to the provisions of the Medi-Cal Hospital Reimbursement Improvement Act of 2013 shall become effective unless approved by the electors in the same manner as statutes amending initiative statutes pursuant to section 10(c) of Article II, except that the Legislature may, by statute passed in each house by roll call vote entered into the journal, two-thirds of the membership concurring, amend or add provisions that further the purposes of the Act.

(b) For purposes of this section:

(1) "Act" means the Medi-Cal Hospital Reimbursement Improvement Act of2013 (enacted by ·Senate Bill 239 of the 2013-14 Regular Session of the Legislature, and any non-substantive amendments to the Act enacted by a later bill in the same Session of the Legislature).

(2) "Non-substantive amendments" shall only mean minor, technical, grammatical, or clarifying amendments.

(3) "Provisions that further the purposes of the Act" shall only mean:

(i) amendments or additions necessary to obtain or maintain federal approval of the implementation of the Act, including the fee imposed and related quality assurance payments to hospitals made pursuant to the Act;

(ii) amendments or additions to the methodology used for the development of the fee and quality assurance payments to hospitals made pursuant to the Act.
Final 9/30/13

(c) Nothing in this section shall prohibit the Legislature from repealing the Act in its entirety by statute passed in each house by roll call vote entered into the journal, two-thirds of the membership concurring, except that the Legislature shall not be permitted to repeal the Act and replace it with a similar statute imposing a tax, fee, or assessment unless that similar statute is either: (i) a provision that furthers the purposes of the Act as defined herein; or (ii) is approved by the electors in the same manner as statutes amending initiative statutes pursuant to section 1 0( c) of Article II.

(d) The proceeds of the fee imposed by the Act and all interest earned on such proceeds shall not be considered revenues, General Fund revenues, General Fund proceeds of taxes, or allocated local proceeds of taxes, for purposes of Sections 8 and 8.5 of this Article or for the purposes of article XIIIB. The appropriation of the proceeds in the Trust Fund referred to in the Act for hospital services to Medi-Cal beneficiaries or other beneficiaries in any other similar federal program shall not be subject to the prohibitions or restrictions in Sections 3 or 5 of this Article.

SECTION 4. Amendments to Medi-Cal Hospital Reimbursement Improvement Act of 2013

Section 14169.72 of Article 5.230 of the Welfare and Institutions Code is amended to read:

§14169.72. This article shall become inoperative if any of the following occurs:

(a) The effective date of a final judicial determination made by any court of appellate jurisdiction or a final determination by the United States Department of Health and Human Services or the federal Centers for Medicare and Medicaid Services that the quality assurance fee established pursuant to this article, or Section 14169.54 or 14169.55, cannot be implemented. This subdivision shall not apply to any final judicial determination made by any court of appellate jurisdiction in a case brought by hospitals located outside the state.

(b) The federal Centers for Medicare and Medicaid Services denies approval for, of does not approve on or before the last day of a program period, the implementation of Section 14169.52, 14169.53, 14169.54, and 14169.55, and the department fails to modify Section 14169.52, 14169.53, 14169.54, and 14169.55 pursuant to subdivision (d) of Section 14169.53 in order to meet the requirements of federal law or to obtain federal approval.

(c) The Legislature fails to appropriate moneys in the Hospital Quality Assurance Revenue Fund in the annual Budget Act, or fails to appropriate such moneys in a separate bill enacted within thirty (30) days following enactment of the annual Budget Act.

(d) The department has sought but has not received federal financial participation for the supplemental payments and other costs required by this article for which federal financial participation has been sought.

(e) A lawsuit related to this article is filed against the state and a preliminary injunction or other order has been issued that results in a financial disadvantage to the state. For purposes of this subdivision, "financial disadvantage to the state" means either of the following:

(1) A loss of federal financial participation.

(2) A net General Fund cost incurred due to the Act

(f) The proceeds of the fee and any interest and dividends earned on deposits are not deposited into the Hospital Quality Assurance Revenue Fund or are not used as provided in section 14169.53

(g) The proceeds of the fee, the matching amount provided by the federal government, and interest and dividends earned on deposits in the Hospital Quality Assurance Revenue Fund are not used as provided in section 14169.68.

Section 14169.75 of Article 5.23 0 of the Welfare and Institutions Code is amended to read:

§14169.75. Notwithstanding subdivision (k) of section 14167.35, subdivisions (a), (i), and (j) of section 14167.35, creating the Hospital Quality Assurance Revenue Fund, are not repealed and shall remain operative as long as this article remains operative.

SECTION 5. GENERAL PROVISIONS

(a) If any provision of this measure, or any part thereof, is for any reason held to be invalid or unconstitutional, the remaining provisions shall not be affected, but shall remain in full force and effect, and to this end the provisions of this measure are severable.

(b) This measure is intended to be comprehensive. It is the intent of the People that in the event this measure or measures relating to the same subject shall appear on the same statewide election ballot, the provisions of the other measure or measures shall be deemed to be in conflict with this

measure. In the event that this measure receives a greater number of affirmative votes, the provisions of this measure shall prevail in their entirety, and all provisions of the other measure or measures shall be null and void.

*Text stricken from the original bill is not included in this version.