17612.5. (Amended by Stats. 2014, Ch. 71, Sec. 205.)

(i) June 30, 2023.

(ii) The beginning of the fiscal year following a period of two consecutive fiscal years that both of the following occur:

(I) The total interim amount determined under subdivision (b) of Section 17612.3 in May of the previous fiscal year is within 10 percent of the final, reconciled amount in subdivision (d) of that section.

(II) The final, reconciled amounts under subdivision (d) of Section 17612.3 are within 5 percent of each other.

(B) After the redirected amount ceases as provided in subparagraph (A), a permanent redirected amount shall be established to be an amount determined by calculating the percentage that the redirected amount was in the last fiscal year of the operation of this article of the county’s health realignment amount of that same fiscal year, multiplied by the county’s health realignment amount of all subsequent years.

(b) Except as otherwise provided in this section, the definitions in Section 17612.2 apply. For purposes of this section, and for purposes of the calculations in Section 17612.3 that apply to the County of Los Angeles, the following definitions apply:

(1) “Adjusted patient day” means LA County DHS’s total number of patient days multiplied by the following fraction: the numerator that is the sum of the county public hospital health system’s total gross revenue for all services provided to all patients, including nonhospital services, and the denominator that is the sum of the county public hospital health system’s gross inpatient revenue. The adjusted patient days shall pertain to those services that are provided by the LA County DHS, and shall exclude services that are provided by contract or out-of-network clinics or hospitals. For purposes of this paragraph, gross revenue shall be adjusted as necessary to reflect the relationship between inpatient costs and charges and outpatient costs and charges.

(2) “Blended CPI trend factor” means the blended percent change applicable for the state fiscal year that is derived from the nonseasonally adjusted Consumer Price Index for All Urban Consumers (CPI-U), United States City Average, for Hospital and Related Services, weighted at 90 percent, and for Medical Care Services, weighted at 10 percent, all as published by the United States Bureau of Labor Statistics, computed as follows:

(A) For each prior fiscal year, within the period to be trended through the fiscal year, the annual average of the monthly index amounts shall be determined separately for the Hospital and Related Services Index and the Medical Care Services Index.

(B) The year-to-year percentage changes in the annual averages determined in subparagraph (A) for each of the Hospital and Related Services Index and the Medical Care Services Index shall be determined.

(C) A weighted average annual percentage change for each year-to-year period shall be calculated from the determinations made in subparagraph (B), with the percentage changes in the Hospital and Related Services Index weighted at 90 percent, and the percentage changes in the Medical Care Services Index weighted at 10 percent. The resulting average annual percentage changes shall be expressed as a fraction, and increased by 1.00.

(D) The product of the successive year-to-year amounts determined in subparagraph (C) shall be the blended CPI trend factor.

(3) “Cost containment limit” means the LA County DHS’s total costs determined for the 2014–15 fiscal year and each subsequent fiscal year adjusted as follows:

(A) The County of Los Angeles will be deemed to comply with the cost containment limit if the county demonstrates that its total costs for the fiscal year did not exceed its total costs in the base year, multiplied by the blended CPI trend factor for the fiscal year as reflected in the annual report of financial transactions required to be submitted to the Controller pursuant to Section 53891 of the Government Code. If the total costs for the fiscal year exceeded the total cost in the base year, multiplied by the blended CPI trend factor for the fiscal year, the calculation in subparagraph (B) shall be performed.

(B) (i) If the number of adjusted patient days of service provided by LA County DHS for the fiscal year exceeds its number of adjusted patient days of service rendered in the base year by at least 10 percent, the excess adjusted patient days above the base year for the fiscal year shall be multiplied by the cost per adjusted patient day of the public hospital health system for the base year. The result shall be added to the trended base year amount determined in subparagraph (A), yielding the applicable cost containment limit, subject to subparagraph (C). Costs per adjusted patient day shall be based upon only those LA County DHS costs incurred for patient care services.

(ii) If the number of adjusted patient days of service provided by LA County DHS for the fiscal year does not exceed its number of adjusted patient days of service rendered in the base year by at least 10 percent, the applicable limit is the trended base year amount determined in subparagraph (A) subject to subparagraph (C).

(C) If LA County DHS’s total costs for the fiscal year, as determined in subparagraph (A), exceeds the trended cost as determined in subparagraph (A) as adjusted by subparagraph (B), the following cost increases shall be added to and reflected in any cost containment limit:

(i) Electronic health records and related implementation and infrastructure costs.

(ii) Costs related to state or federally mandated activities, requirements, or benefit changes.

(iii) Costs resulting from a court order or settlement.

(iv) Costs incurred in response to seismic concerns, including costs necessary to meet facility seismic standards.

(v) Costs incurred as a result of a natural disaster or act of terrorism.

(vi) The total amount of any intergovernmental transfer for the nonfederal share of Medi-Cal payments to the hospital facility described in subdivision (f) of Section 14165.50.

(D) If LA County DHS’s total costs for the fiscal year exceed the trended costs as adjusted by subparagraphs (B) and (C), the county may request that the department consider other costs as adjustments to the cost containment limit, including, but not limited to, transfer amounts in excess of the imputed other entity intergovernmental transfer amount trended by the blended CPI trend factor, costs related to case mix index increases, pension costs, expanded medical education programs, increased costs in response to delivery system changes in the local community, and system expansions, including capital expenditures necessary to ensure access to and the quality of health care. Costs approved by the department shall be added to and reflected in the cost containment limit.

(4) “Health realignment indigent care percentage” means 83 percent.

(5) “Special local health funds” means both of the following:

(A) The total amount of assessments and fees restricted for health-related purposes that are received by LA County DHS and expended for health services during the fiscal year.

(B) Ninety-one percent of the funds actually received by the County of Los Angeles during the fiscal year pursuant to the Master Settlement Agreement and related documents entered into on November 23, 1998, by the state and leading United States tobacco product manufacturers, less any bond payments and other costs of securitization related to the funds described in this paragraph.

(6) “Total costs” means the actual net expenditures, excluding encumbrances, for all operating budget units of the LA County DHS. Operating budget units consist of four Hospital Enterprise Funds plus the LA County DHS’s budget units within the county general fund. Net expenditures, excluding encumbrances, are those recognized within LA County DHS, net of intrafund transfers, expenditure distributions, and all other billable services recorded from and to the LA County DHS enterprise funds and the LA County DHS general fund budget units, determined based on its central accounting system known as eCAPS, as of November 30 of the year following the fiscal year, and shall include the new mandatory other entity intergovernmental transfer amounts, as defined in subdivision (ad) of Section 17612.2, and the lesser of other entity intergovernmental transfer amounts or the imputed other entity intergovernmental transfer amounts.

(7) “Total revenues” means the sum of the revenue paid or payable for all operating budget units of the LA County DHS determined based on its central accounting system known as eCAPS, as of November 30 of the year following the fiscal year.

(8) “LA County DHS” means operating budget units consisting of four hospital enterprise funds plus the DHS budget units within the county’s general fund.