(

a) Each eligible facility, as described in subdivision (

b) may, in addition to the rate of payment that the facility would otherwise receive for skilled nursing services, receive supplemental Medi-Cal reimbursement to the extent provided in this section. (

b) A facility shall be eligible for supplemental reimbursement only if the facility has all of the following characteristics continuously during the department’s rate year:

(1) Provides services to Medi-Cal beneficiaries.

(2) Is either of the following: (

A) For the department’s rate year beginning August 1, 2001, and for subsequent rate years, a distinct part of an acute care hospital providing skilled nursing services. For purposes of this section, “acute care hospital” means a facility described by subdivision (

a) or (b), or both, of

Section of the Health and Safety Code. (

B) For the department’s rate year beginning August 1, 2006, and for subsequent rate years, a state home, as defined in

Section 101 (19) of Title of the United States Code.

(3) Is owned or operated by the state, or by a county, city, city and county, or health care district organized pursuant to

Chapter 1 (commencing with

Section 32000) of Division of the Health and Safety Code. (

c) An eligible facility’s supplemental reimbursement pursuant to this

section shall be calculated and paid as follows:

(1) The supplemental reimbursement to an eligible facility, as described in paragraph (4), shall be equal to the amount of federal financial participation received as a result of the claims submitted pursuant to paragraph (2) of subdivision (g).

(2) In no instance shall the amount certified pursuant to paragraph (1) of subdivision (e), when combined with the amount received from all other sources of reimbursement from the Medi-Cal program, exceed percent of allowable costs, as determined pursuant to the Medi-Cal State Plan, for distinct part skilled nursing services at each facility.

(3) Costs associated with the provision of subacute services pursuant to

Section 14132.25 shall not be certified for supplemental reimbursement pursuant to this section.

(4) The supplemental Medi-Cal reimbursement provided by this

section shall be distributed under a payment methodology based on skilled nursing services provided to Medi-Cal patients at the eligible facility, either on a per diem basis, a per discharge basis, or any other federally permissible basis. The department shall seek approval from the federal Centers for Medicare and Medicaid Services for the payment methodology to be utilized, and shall not make any payment pursuant to this

section prior to obtaining that approval. (d)

(1) It is the Legislature’s intent in enacting this

section to provide the supplemental reimbursement described in this

section without any expenditure from the General Fund. An eligible facility, as a condition of receiving supplemental reimbursement pursuant to this section, shall enter into, and maintain, an agreement with the department for the purposes of implementing this

section and reimbursing the department for the costs of administering this section.

(2) The state share of the supplemental reimbursement submitted to the federal Centers for Medicare and Medicaid Services for purposes of claiming federal financial participation shall be paid only with funds from the governmental entities described in paragraph (3) of subdivision (

b) and certified to the state as provided in subdivision (e). (

e) The particular governmental entity, described in paragraph (3) of subdivision (b), on behalf of any eligible facility shall do all of the following:

(1) Certify, in conformity with the requirements of

Section 433.51 of Title of the Code of Federal Regulations, that the claimed expenditures for distinct part nursing facility services are eligible for federal financial participation.

(2) Provide evidence supporting the certification as specified by the department.

(3) Submit data as specified by the department to determine the appropriate amounts to claim as expenditures qualifying for federal financial participation.

(4) Keep, maintain, and have readily retrievable, any records specified by the department to fully disclose reimbursement amounts to which the eligible facility is entitled, and any other records required by the federal Centers for Medicare and Medicaid Services. (

f) The department may require that any governmental entity, described in paragraph (3) of subdivision (b), seeking supplemental reimbursement under this

section enter into an interagency agreement with the department for the purpose of implementing this section. (g)

(1) The department shall promptly seek any necessary federal approvals, including a federal medicaid waiver, for the implementation of this section. If necessary to obtain federal approval, the department may limit the program to those costs that are allowable expenditures under Title XIX of the federal Social Security Act (Subchapter 19 (commencing with

Section 1396) of

Chapter of Title of the United States Code). If federal approval is not obtained for implementation of this section, this

section shall become inoperative.

(2) The department shall submit claims for federal financial participation for the expenditures for the services described in subdivision (

e) that are allowable expenditures under federal law.

(3) The department shall, on an annual basis, submit any necessary materials to the federal government to provide assurances that claims for federal financial participation will include only those expenditures that are allowable under federal law. (

h) In the event there is a final judicial determination by any court of appellate jurisdiction or a final determination by the administrator of the federal Centers for Medicare and Medicaid Services that the supplemental reimbursement provided in this

section must be made to any facility not described in this section, this

section shall become immediately inoperative. (

i) All funds expended pursuant to this

section are subject to review and audit by the department. (

j) Supplemental reimbursement made pursuant to this

section shall be subject to a reconciliation process established in the Medi-Cal State Plan to ensure that it is not made in excess of allowable costs, and to ensure that it is made up to allowable costs.