(b)

1. (1) Beginning with services provided on or after July 1, 2013, nondesignated public hospitals shall be eligible to receive safety net care pool payments for uncompensated care costs to the extent that additional federal funding is made available pursuant to the Special Terms and Conditions for the safety net care pool uncompensated care limit of the successor demonstration project and if they comply with the requirements set forth in this section.
2. (2) The amount of funds that may be claimed pursuant to paragraph (1) shall not exceed the additional federal funding made available under the safety net care pool for nondesignated public hospital uncompensated care costs, and shall not reduce the amounts of federal funding for safety net care pool uncompensated care costs that would otherwise be made available to designated public hospitals in the absence of this paragraph, including the amounts available under the Special Terms and Conditions in effect as of July 1, 2013, and amounts available pursuant to Section 15916.

3. (3)

   1. (A) Notwithstanding paragraph (2), if the designated public hospitals do not have sufficient certified public expenditures to claim the full amount of federal funding made available to the designated public hospitals as referenced in paragraph (2), including consideration of the potential for the designated public hospitals to have sufficient certified public expenditures in a subsequent year, the department may authorize the funding to be claimed by the nondesignated public hospitals.
   2. (B) The department may determine whether designated public hospitals do not have sufficient certified public expenditures to claim the full amount of federal funding pursuant to subparagraph (B) no sooner than after the submission of the cost reporting information required pursuant to Section 14166.8 for the applicable successor demonstration year.
   3. (C) If the department makes the determination identified in subparagraph (B) based on as-filed cost reporting information submitted prior to a final audit, the department shall make the determination in consultation with the designated public hospitals and shall apply an audit cushion of at least 5 percent to the as-filed cost information. If the department makes the determination identified in subparagraph (B) based on audited cost reporting information, no audit cushion shall be applied.

(c) Beginning in the 2013–14 fiscal year, within five months after the end of a successor demonstration year, nondesignated public hospitals shall submit to the department all of the following reports:

1. (1) The hospital’s Medicare or Medicaid cost report for the successor demonstration year.
2. (2) Other cost reporting and statistical data necessary for the determination of amounts due to the hospital under the successor demonstration project, as requested by the department.

(g) The appropriate public official shall certify to all of the following:

1. (1) The accuracy of the reports required under this section.
2. (2) That the expenditures to meet the reported costs comply with Section 433.51 of Title 42 of the Code of Federal Regulations.
3. (3) That the sources of funds used to make the expenditures certified under this section do not include impermissible provider taxes or donations, as defined under Section 1396b(w) of Title 42 of the United States Code, or other federal funds. For this purpose, federal funds do not include delivery system reform incentive pool payments or patient care revenue received as payment for services rendered under programs such as nondesignated state health programs, the Low Income Health Program, Medicare, or Medicaid.

(h) The certification of public expenditures made pursuant to this section shall be based on a schedule established by the department in accordance with federal requirements.

1. (1) The director may require nondesignated public hospitals to submit quarterly estimates of anticipated expenditures, if these estimates are necessary to obtain interim payments of federal Medicaid funds.
2. (2) All reported expenditures shall be subject to reconciliation to allowable costs, as determined in accordance with applicable implementing documents for the successor demonstration project.

(j)

1. (1) Beginning in the 2013–14 fiscal year, safety net care pool payments for uncompensated care shall be allocated to nondesignated public hospitals as follows:

   1. (A) The department shall determine the maximum amount of safety net care pool payments for uncompensated care that is available to nondesignated public hospitals for the successor demonstration year pursuant to this section. This determination shall be made solely with respect to allowable uncompensated care costs incurred by nondesignated public hospitals and reported pursuant to subdivisions (c) to (i), inclusive.
   2. (B) The department shall establish, in consultation with the nondesignated public hospitals, an allocation methodology to determine the amount of safety net care pool payments to be made to the nondesignated public hospitals. The allocation methodology shall be implemented when the director issues a declaration stating that the methodology complies with all applicable federal requirements for federal financial participation.
2. (2) A safety net care pool payment amount may be paid to a nondesignated public hospital, or governmental entity with which it is affiliated, pursuant to this section independent of the amount of uncompensated uninsured costs that is certified as public expenditures pursuant to subdivisions (c) to (i), inclusive, provided that, in accordance with the Special Terms and Conditions for the successor demonstration project, the recipient hospital shall not return any portion of the funds received to any unit of government, excluding amounts recovered by the state or federal government.
3. (3) Nondesignated public hospitals, or governmental entities with which they are affiliated, shall receive the amount established pursuant to this subdivision, less the 50 percent retained by the state pursuant to subdivision (l), in quarterly interim payments during the successor demonstration year. The determination of the interim payments shall be made on an interim basis prior to the start of each successor demonstration year. The department shall use the cost and statistical data that is in subdivisions (c) to (i), inclusive.

(k)

1. (1) No later than April 1 following the end of the relevant reporting period for the successor demonstration year, the department shall undertake an interim reconciliation of the payment amount established pursuant to subdivision (j) for nondesignated public hospitals using Medicare and other cost, payment, and statistical data submitted by the hospitals for the successor demonstration year, and shall adjust payments to the hospitals accordingly.
2. (2) All payments to nondesignated public hospitals are subject to a final reconciliation that is subject to final audits of all applicable Medicare and other cost, payment, discharge, and statistical data for the successor demonstration year.

(l) The process for supplemental payments made in subdivisions (j) and (k) is a voluntary process the implementation of which is limited by this subdivision. The department may submit for federal approval a proposed amendment to the successor demonstration project to implement this section.

1. (1) If a nondesignated public hospital voluntarily agrees to participate in a process that, up to the amount of safety net care pool funds available, allows the certified public expenditures for uncompensated care under this section to be allocated equally between the state and the nondesignated public hospital, so that for every dollar of certified public expenditure used by the nondesignated public hospital, the nondesignated public hospital shall voluntarily allow the state to use a corresponding certified public expenditure amount for claiming purposes. Participation in the safety net care pool under this section is voluntary on the part of the nondesignated public hospital for the purposes of all applicable federal laws. If a nondesignated public hospital does not voluntarily agree to participate in this process, it shall not be eligible to receive safety net care pool funds.
2. (2) If the budget neutrality requirements established under Section XI of the Special Terms and Conditions of the successor demonstration project are exceeded, payments made under this section shall be reduced or refunded to achieve budget neutrality before any other payments under the successor demonstration project are made. The state’s share of the federal financial participation shall be reduced after the provider’s share has been exhausted.
3. (3) Notwithstanding any other provision of law, upon the receipt of a notice of disallowance or deferral from the federal government related to any certified public expenditures for uncompensated care incurred by the nondesignated public hospital that are used for federal claiming under the safety net care pool pursuant to the successor demonstration project after this section is implemented, and subject to the processes set forth in this section, the department and the nondesignated public hospitals shall each be responsible for one-half of the repayment of the federal portion of any federal disallowance or deferral for the applicable successor demonstration year, up to the amount claimed and allocated pursuant to this section for that particular year beginning with the 2013–14 fiscal year.
4. (4) This section shall be implemented only to the extent other federal financial participation is not jeopardized.