(a)

1. (1) With respect to each successor demonstration year, designated public hospitals, or governmental entities with which they are affiliated, shall be eligible to receive safety net care pool payments for uncompensated care from the Health Care Support Fund established pursuant to Section 14166.21. Safety net care pool payments for uncompensated care shall be allocated to designated public hospitals as follows:

   1. (A) The department shall determine the maximum amount of safety net pool payments for uncompensated care that is available to designated public hospitals for the successor demonstration year.
   2. (B) The department shall calculate for each designated public hospital an initial SNCP claiming ability amount. For the purposes of this article, “initial SNCP claiming ability amount” means the total sum of the uncompensated Medi-Cal, Low Income Health Program, and uninsured costs of services incurred by the designated public hospital, the governmental entity, nonhospital clinics, and other provider types with which it is affiliated, that are reported as eligible certified public expenditures for safety net care pool uncompensated care claiming pursuant to Section 14166.8.
   3. (C) The available safety net pool payments shall be allocated pro rata among the designated public hospitals based upon each hospital’s initial SNCP claiming ability amount as determined pursuant to subparagraph (B).
2. (2) The department shall establish the amount of the safety net care pool payment described in paragraph (1) for each designated public hospital in a manner that maximizes federal Medicaid funding to the state during the term of the successor demonstration project.
3. (3) A safety net care pool payment amount may be paid to a designated public hospital, or governmental entity with which it is affiliated, pursuant to this section independent of the amount of uncompensated Medi-Cal and uninsured costs that is certified as public expenditures pursuant to Section 14166.8, provided that, in accordance with the Special Terms and Conditions for the successor demonstration project, the recipient hospital does not return any portion of the funds received to any unit of government, excluding amounts recovered by the state or federal government.
4. (4) In establishing the amount to be paid to each designated public hospital under this subdivision, the department shall minimize to the extent possible the redistribution of federal funds that are based on certified public expenditures as described in paragraph (3).

(b)

1. (1) Each designated public hospital, or governmental entity with which it is affiliated, shall receive the amount established pursuant to subdivision (a) 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 same cost and statistical data that is used in determining the interim payments for Medi-Cal inpatient hospital services under Section 14166.4 and for the disproportionate share hospital allocations under Section 14166.61, for the corresponding period.
2. (2) Prior to the distribution of payments in accordance with paragraph (1) and subdivision (c) to a designated public hospital that is part of a hospital system containing multiple designated public hospitals licensed to the same governmental entity, the department shall consult with the applicable governmental entity. The department shall implement any adjustments to the payment distributions for the hospitals in that hospital system as requested by the governmental entity if the net effect of the requested adjustments for those hospitals is zero. These payment redistributions shall recognize the level of care provided to Medi-Cal and uninsured patients and shall maintain the viability and effectiveness of the hospital system.

(c)

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 (a) for each designated public hospital using Medicare and other cost, payment, and statistical data submitted by the hospital for the successor demonstration year, and shall adjust payments to the hospital accordingly.
2. (2) The final payment to a designated public hospital for purposes of subdivision (b) and paragraph (1) of this subdivision, shall be subject to final audits of all applicable Medicare and other cost, payment, discharge, and statistical data for the successor demonstration year.