14165.51. (Added by Stats. 2024, Ch. 999, Sec. 8.)

(a) (1) For dates of service commencing no later than January 1, 2026, the department shall establish a Medi-Cal managed care directed payment reimbursement methodology in accordance with Section 438.6(c) of Title 42 of the Code of Federal Regulations applicable to the hospital.

(2) The directed payment reimbursement methodology shall, at minimum:

(A) Provide reimbursement for contracted hospital inpatient services such that aggregate managed care reimbursement to the hospital for hospital inpatient services, exclusive of any payments pursuant to Article 5.230 (commencing with Section 14169.50), is projected by the department to be at least equal to 72 percent of the hospital’s projected Medi-Cal costs for hospital inpatient services associated with the implementation of Section 14182, and other mandatory managed care enrollment provisions implemented subsequent to January 1, 2011.

(B) Provide additional reimbursements to the hospital for contracted hospital inpatient and hospital outpatient services in a form and manner that is projected by the department to total twenty-five million dollars ($25,000,000) annually in addition to the amount described in subparagraph (A).

(C) Align with the goals and objectives of the department’s comprehensive quality strategy.

(D) To the extent appropriate, link payments to value and outcomes, consistent with measures selected by the department consistent with subparagraph (C), in addition to access to and utilization of services.

(E) Be developed with consideration of the stability of the hospital’s cash flow.

(F) Be developed in consultation with the hospital.

(3) (A) The department shall, annually on a prospective basis, make the projections pursuant to subparagraphs (A) and (B) of paragraph (2), and may develop the projections on either an aggregate or individual service level, or both.

(B) The department may require Medi-Cal managed care plans and the hospital to submit information regarding contract rates and expected or actual utilization of services, at the times and in the form and manner specified by the department.

(C) In the event payments to the hospital at the level set forth in paragraph (2), in combination with any other reimbursement, exceed any federal statutory or regulatory limits on Medicaid reimbursement, the amount of payments that the Medi-Cal managed care plans make shall be reduced to comply with the applicable federal limitation.

(D) In establishing the reimbursement methodology pursuant to paragraph (1) and the parameters for Medi-Cal managed care plans in the County of Los Angeles to make increased payments to the hospital pursuant to subdivision (b), the department shall consider strategies that are designed to result in the hospital receiving the payments pursuant to this section as quickly as practicable and on an ongoing or periodic basis that supports the stability of the hospital’s cash flow.

(4) To the extent necessary to meet the objectives identified in paragraph (2) or to comply with federal requirements, the department may, in consultation with the hospital, adjust or modify the directed payment reimbursement methodology to meet applicable federal requirements and be consistent with actuarial rate development principles and standards.