Cal. Welf. & Inst. Code § 14166.3

(a) During the demonstration project and successor demonstration project terms, payment adjustments to disproportionate share hospitals shall not be made pursuant to Section 14105.98. Payment adjustments to disproportionate share hospitals shall be made solely in accordance with this article.
(b) Except as otherwise provided in this article, the department shall continue to make all eligibility determinations and perform all payment adjustment amount computations under the disproportionate share hospital payment adjustment program pursuant to Section 14105.98 and pursuant to the disproportionate share hospital provisions of the Medicaid state plan in effect as of the 2004–05 state fiscal year. For purposes of these determinations and computations, services that are rendered under the Health Care Coverage Initiative authorized pursuant to Part 3.5 (commencing with Section 15900) or the Low Income Health Program authorized pursuant to Part 3.6 (commencing with Section 15909) shall be included.
(c)
1. (1) Notwithstanding Section 14105.98, the federal disproportionate share hospital allotment specified for California under Section 1396r-4(f) of Title 42 of the United States Code for each of federal fiscal years 2006 to 2015, inclusive, and federal fiscal year 2016 with respect to the pro rata portion of the allotment that will apply during successor demonstration year 10 pursuant to paragraph (2), shall be distributed solely among the following hospitals:
  1. (A) Eligible hospitals, as determined pursuant to Section 14105.98 for each project year and successor demonstration year in which the particular federal fiscal year commences, which meet the definition of a public hospital as specified in paragraph (25) of subdivision (a) of Section 14105.98.
  2. (B) Hospitals that are licensed to the University of California, which meet the requirements set forth in Section 1396r-4(d) of Title 42 of the United States Code.
2. (2) The federal disproportionate share hospital allotment for each of the federal fiscal years 2006 to 2015, inclusive, shall be aligned with the project year or successor demonstration year in which the applicable federal fiscal year commences. The payment adjustment year, as used within the meaning of paragraph (6) of subdivision (a) of Section 14105.98, shall be the corresponding project year or successor demonstration year. With respect to successor demonstration year 10, the period of July 1, 2015, through October 31, 2015, shall be aligned with a pro rata portion of the federal disproportionate share hospital allotment for federal fiscal year 2016.
3. (3) Uncompensated Medi-Cal and uninsured costs as reported pursuant to Section 14166.8, shall be used by the department as the basis for determining the hospital-specific disproportionate share hospital payment limits required by Section 1396r-4(g) of Title 42 of the United States Code for the hospitals described in paragraph (1).
4. (4) The distribution of the federal disproportionate share hospital allotment to hospitals described in paragraph (1) shall satisfy the state’s payment obligations, if any, with respect to those hospitals under Section 1396r-4 of Title 42 of the United States Code.
(d) Eligible hospitals, as determined pursuant to Section 14105.98 for each project year and each successor demonstration year, which are nonpublic hospitals, nonpublic-converted hospitals, and converted hospitals, as those terms are defined in paragraphs (26), (27), and (28), respectively, of subdivision (a) of Section 14105.98, shall receive Medi-Cal disproportionate share hospital replacement payment adjustments pursuant to Section 14166.11 and other provisions of this chapter. The payment adjustments so provided shall satisfy the state’s payment obligations, if any, with respect to those hospitals under Section 1396r-4 of Title 42 of the United States Code. The federal share of these payments shall not be claimed from the federal disproportionate share hospital allotment described in subdivision (c).
(e) The nonfederal share of payments described in subdivisions (c) and (d) shall be derived from the following sources:
1. (1) With respect to the payments described in paragraph (1) of subdivision (c) that are made to designated public hospitals, the nonfederal share shall consist of certified public expenditures described in subparagraphs (A) and (C) of paragraph (2) of subdivision (a) of Section 14166.9, and intergovernmental transfer amounts described in paragraph (2) of subdivision (d) of Section 14166.6.
2. (2) With respect to the payments described in paragraph (1) of subdivision (c) that are made to nondesignated public hospitals, the nonfederal share shall consist solely of state General Fund appropriations.
3. (3) With respect to the payments described in subdivision (d), the nonfederal share shall consist of state General Fund appropriations.
(f)
1. (1) During the terms of the demonstration project and successor demonstration project, for the 2005–06 state fiscal year and any subsequent state fiscal years, no public entity shall be obligated to make any intergovernmental transfer pursuant to Section 14163, and all transfer amount determinations for those state fiscal years shall be suspended. However, during the demonstration project and successor demonstration project terms, intergovernmental transfers shall be made with respect to the disproportionate share hospital payment adjustments made in accordance with paragraph (2) of subdivision (d) of Section 14166.6, or paragraph (2) of subdivision (d) of Section 14166.61, as applicable.
2. (2) During the terms of the demonstration project and successor demonstration project, for the 2005–06 state fiscal year and any subsequent state fiscal years, transfer amounts from the Medi-Cal Inpatient Payment Adjustment Fund to the Health Care Deposit Fund, as provided for pursuant to paragraph (2) of subdivision (d) of Section 14163, are hereby reduced to zero. Unless otherwise specified in this article, this paragraph shall be disregarded for purposes of the calculations made under Section 14105.98 during the demonstration project and successor demonstration project.