(b)

1. (1) The Nondesignated Public Hospital Supplemental Fund is hereby established in the State Treasury. For purposes of this section, “fund” means the Nondesignated Public Hospital Supplemental Fund.
2. (2) Effective December 31, 2028, the Nondesignated Public Hospital Supplemental Fund in the State Treasury, created pursuant to this section, is hereby abolished. All moneys remaining in the fund or moneys designated to be deposited to the fund shall be transferred to the General Fund.

(d) Except as otherwise limited by this section, the fund shall consist of all of the following:

1. (1) One million nine hundred thousand dollars ($1,900,000), which shall be transferred annually from General Fund amounts appropriated in the annual Budget Act for the fund.
2. (2) Any additional moneys appropriated to the fund.
3. (3) All stabilization funding transferred to the fund.
4. (4) All private moneys donated by private individuals or entities to the department for deposit in the fund as permitted under applicable federal Medicaid laws.
5. (5) Any interest that accrues on amounts in the fund.

(j)

1. (1) For each fiscal year up to and including the 2024–25 fiscal year, all amounts that are in the fund for a project year in excess of the amount necessary to make the payments under subdivision (i) shall be available for negotiation by the California Medical Assistance Commission, along with corresponding federal financial participation, for supplemental payments to nondesignated public hospitals that for the project year satisfy the criteria under subdivision (o) to be eligible to negotiate for distributions under any of those sections, and paid for services rendered during the project year pursuant to the selective provider contracting program under Article 2.6 (commencing with Section 14081).

2. (2) For the 2025–26 fiscal year, all amounts that are in the fund for a project year in excess of the amount necessary to make the payments under subdivision (i) shall be available for supplemental payments to nondesignated public hospitals, as follows:

   1. (A) Additional supplemental payments shall be made to nondesignated public hospitals that meet the criteria for supplemental payments pursuant to paragraph (1) such that the payments under this subparagraph together with the payments under subdivision (i) to those hospitals are equal to the amounts transferred to the fund pursuant to paragraph (1) of subdivision (d) plus the applicable amount of federal financial participation that is available for the nonfederal share of payments described in paragraph (1) of subdivision (d).
   2. (B) All remaining amounts in the fund, including any funds that have been carried forward pursuant to subdivision (g), shall be used for supplemental payments to nondesignated public hospitals pursuant to a methodology developed by the department that is based on all Medi-Cal inpatient days, as described in Section 1396r-4(b)(2) of Title 42 of the United States Code, in the numerator of the Medi-Cal inpatient utilization rate for each hospital, as determined in the most recent final calculation of the Medi-Cal inpatient utilization rate pursuant to paragraph (4) of subdivision (f) of Section 14105.98 as of July 1, 2025.

(n) A nondesignated public hospital that receives payment pursuant to this section for a particular project year shall not submit a notice for the termination of its participation in the selective provider contracting program established pursuant to Article 2.6 (commencing with Section 14081) until the later of the following dates:

1. (1) On or after December 31 of the next project year.
2. (2) The date specified in the hospital’s contract, if applicable.

(o) In order for a hospital to receive distributions pursuant to Article 2.6 (commencing with Section 14081), the hospital shall satisfy the eligibility criteria in paragraph (1), (2), (3), or (4) of this subdivision.

1. (1) The hospital meets all of the following criteria:

   1. (A) The hospital is contracting under Article 2.6 (commencing with Section 14081).
   2. (B) The hospital meets the criteria contained in the Medicaid State Plan for disproportionate share hospital status.

   3. (C) The hospital is one of the following:

      1. (i) A licensed provider of basic emergency services as described in Section 70411 of Title 22 of the California Code of Regulations.
      2. (ii) A licensed provider of comprehensive emergency medical services as defined in Section 70451 of Title 22 of the California Code of Regulations.
      3. (iii) A children’s hospital, as defined in Section 14087.21, that satisfies clause (i) or (ii), or that jointly provides basic or comprehensive emergency services in conjunction with another licensed hospital.
      4. (iv) A hospital owned and operated by a public agency that operates two or more hospitals that qualify under subparagraph (A) or (B) with respect to the particular state fiscal year.
      5. (v) A hospital designated by the National Cancer Institute as a comprehensive or clinical cancer research center that primarily treats acutely ill cancer patients and that is exempt from the federal Medicare prospective payment system pursuant to Section 1886(d)(1)(B)(v) of the federal Social Security Act (42 U.S.C. Sec. 1395ww(d)(1)(B)(v)).
   4. (D)
   5. (1) The hospital is able to demonstrate a purpose for additional funding under the selective provider contracting program including proposals relating to emergency services and other health care services, including infrequent yet high-cost services, such as anti-AB human antitoxin treatment for infant botulism (human botulinum immune globulin (HBIG), commonly referred to as “Baby-BIG”), that are made available, or will be made available, to Medi-Cal beneficiaries.
   6. (2) The hospital is contracting under Article 2.6 (commencing with Section 14081) and meets the definition of a university teaching hospital or major, nonuniversity, teaching hospital as set forth on page 51 and as listed on page 57 of the department’s report dated May 1991, entitled “Hospital Peer Grouping.” Payments from the fund shall be used solely for the purposes identified in the contract between the hospital and the state.

   7. (3) The hospital is contracting under Article 2.6 (commencing with Section 14081) and meets the definition of any of the following:

      1. (A) A large teaching emphasis hospital, as set forth on page 51 and listed on page 57 of the department’s report dated May 1991, entitled “Hospital Peer Grouping,” and also meets the definition of eligible hospital as defined in paragraph (3) of subdivision (a) of Section 14105.98.
      2. (B) A children’s hospital pursuant to Section 10727, and also meets the definition of eligible hospital as defined in paragraph (3) of subdivision (a) of Section 14105.98.
      3. (C) Notwithstanding the requirement in subparagraph (A) of paragraph (3) that a hospital must be listed on page 57 of the department’s report dated May 1991, entitled “Hospital Peer Grouping,” any hospital whose license pursuant to Chapter 2 (commencing with Section 1250) of Division 2 of the Health and Safety Code was consolidated during the 1999 calendar year with a large teaching emphasis hospital that is listed on page 57 of the above-described report shall be eligible. All other requirements of paragraph (3) shall continue to apply.

   8. (4) The hospital meets all of the following criteria:

      1. (A) The hospital is contracting under Article 2.6 (commencing with Section 14081).
      2. (B) The hospital satisfies the Medicaid State Plan criteria for disproportionate share hospital status.
      3. (C) The hospital is a small and rural hospital as defined in Section 124840 of the Health and Safety Code.
      4. (D) The hospital is a licensed provider of standby emergency services as described in Section 70649 of Title 22 of the California Code of Regulations.
      5. (E) The hospital is able to demonstrate a purpose for additional funding under the selective provider contracting program with proposals relating to health care services that are made available, or will be made available, to Medi-Cal beneficiaries.
      6. (F) The hospital is determined by the California Medical Assistance Commission to be a hospital that provides an important community service that otherwise would not be provided in the community.