(a) The Legislature finds and declares all of the following:

(1) Costs within the Medi-Cal program continue to grow due to the rising cost of providing health care throughout the state and also due to increases in enrollment, which are more pronounced during difficult economic times.

(2) In order to minimize the need for drastically cutting enrollment standards or benefits during times of economic crisis, it is crucial to find areas within the program where reimbursement levels are higher than required under the standard provided in Section 1902(a)(30)(A) of the federal Social Security Act and can be reduced in accordance with federal law.

(3) The Medi-Cal program delivers its services and benefits to Medi-Cal beneficiaries through a wide variety of health care providers, some of which deliver care via managed care or other contract models while others do so through fee-for-service arrangements.

(4) The setting of rates within the Medi-Cal program is complex and is subject to close supervision by the United States Department of Health and Human Services.

(5) As the single state agency for Medicaid in California, the State Department of Health Care Services has unique expertise that can inform decisions that set or adjust reimbursement methodologies and levels consistent with the requirements of federal law.

(b) Therefore, it is the intent of the Legislature for the department to analyze and identify where reimbursement levels can be reduced consistent with the standard provided in Section 1902(a)(30)(A) of the federal Social Security Act and also consistent with federal and state law and policies, including any exemptions contained in the act that added this section, provided that the reductions in reimbursement shall not exceed 10 percent on an aggregate basis for all providers, services, and products.

(c) (1) Notwithstanding any other provision of law and except as provided in paragraphs (2), (3), and (4), for dates of service on and after June 1, 2011, payments to intermediate care facilities for the developmentally disabled, licensed pursuant to subdivision (e), (g), or (h) of § 1250 of the Health and Safety Code, and facilities providing continuous skilled nursing care to developmentally disabled individuals pursuant to the pilot project established by Section 14132.20, as determined by the applicable methodology for setting reimbursement rates for these facilities, shall not exceed the reimbursement rates that were applicable to those providers in the 2008-09 rate year, reduced by 10 percent.

(2) Notwithstanding any other provision of law, the director may adjust the percentage reductions specified in paragraph (1), as long as the resulting reductions, in the aggregate, total no more than 10 percent.

(3) The adjustments authorized under this subdivision shall be implemented only if the director determines that the payments resulting from the adjustments comply with subdivision (d).

(4) Payments to facilities owned or operated by the state shall be exempt from the payment reduction as required in paragraph (1).

(d) (1) Notwithstanding any other provision of this section, the payment reductions and adjustments required by subdivision (c) shall be implemented only if the director determines that the payments that result from the application of subdivision (c) will comply with applicable federal Medicaid requirements and that federal financial participation will be available.

(2) In determining whether federal financial participation is available, the director shall determine whether the payments comply with applicable federal Medicaid requirements, including those set forth in Section 1396a(a)(30)(A) of Title 42 of the United States Code.

(3) To the extent that the director determines that the payments do not comply with applicable federal Medicaid requirements or that federal financial participation is not available with respect to any payment that is reduced pursuant to this section, the director retains the discretion to not implement the particular payment reduction or adjustment and may adjust the payment as necessary to comply with federal Medicaid requirements.

(4) The director shall seek any necessary federal approvals for the implementation of this section. This section shall not be implemented until federal approval is obtained. When federal approval is obtained, the payments resulting from the application of subdivision (c) shall be implemented retroactively to June 1, 2011, or on any other date or dates as may be applicable.

(e) For managed care health plans that contract with the department pursuant to this chapter and Chapter 8 (commencing with Section 14200), except for contracts with the Senior Care Action Network and AIDS Healthcare Foundation, and to the extent that these services are provided through any of those contracts, payments shall be reduced by the actuarial equivalent amount of the reduced provider reimbursements specified in subdivision (c) pursuant to contract amendments or change orders effective on July 1, 2011, or thereafter.

(Added by Stats. 2011, Ch. 3, Sec. 93. (AB 97) Effective March 24, 2011.)