(a) For purposes of this section, the following definitions shall apply:

(1) “Type A payers” means the following sources of revenue for amounts paid to the County of Los Angeles, Department of Health Services:

(A) Title XVIII of the federal Social Security Act, known as the Medicare program.

(B) Commercial health insurance.

(C) Health care coverage for providers of in-home supportive services, consistent with Article 7 (commencing with Section 12300) of Chapter 3 and Chapter 7 (commencing with Section 14000) of Part 3 of Division 9.

(2) “Type B payers” means the following sources of revenue for amounts paid to the County of Los Angeles, Department of Health Services:

(A) Patient care revenues received for services provided to other county departments.

(B) State payments for patient financial services workers.

(C) Other federal payers, not including federal grants, Medicare, Medicaid, and payments pursuant to Section 1011 of the federal Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (Public Law 108-173).

(3) “Historical Base Type A revenues” means revenues from Type A payers in the historical fiscal years, calculated as follows:

(A) For each historical fiscal year, the actual revenue received from Type A payers.

(B) Calculate the average of the historical year’s amounts in subparagraph (A). This average shall be considered the historical Base Type A revenues.

(4) “Historical Base Type B revenues” means revenues from Type B payers in the historical fiscal years, calculated as follows:

(A) For each historical fiscal year, the actual revenue received from Type B payers.

(B) Calculate the average of the historical years amounts in subparagraph (A). This average shall be considered the historical Base Type B revenues.

(5) “Type A payer revenue” means the amount of revenue that is the greater of the following:

(A) The amount of the revenue received from Type A payers for services rendered during the fiscal year.

(B) The historical Base Type A revenues, as adjusted by the Type A adjustment, defined in paragraph (8).

(6) “Type B payer revenue” means the amount of revenue that is the greater of the following:

(A) The amount of the revenue received from Type B payers for services rendered during the fiscal year.

(B) The historical Base Type B revenues.

(7) “Baseline Type A payer costs” means the average of the costs of services provided to Type A payer patients rendered in each of the four historical fiscal years to be determined as follows:

(A) For each historical year, the actual costs incurred in providing services to Type A payer patients.

(B) Calculate the average of the historical fiscal year amounts in subparagraph (A), this average shall be considered the baseline Type A payer costs.

(8) “Type A adjustment” means the value of the revenue adjustment to historical base Type A revenues as defined in paragraph (3).

(A) This adjustment will occur only if the Type A payer revenue for the fiscal year is less than historical base, otherwise the adjustment is considered to be zero.

(B) If the requirement in subparagraph (A) is met, then there will only be an adjustment if one or more of the specified Type A payers’ data meets all of the following conditions:

(i) The Type A payer revenue for the fiscal year is less than the historical base.

(ii) The Type A payer costs for the fiscal year are less than the historical base trended by the blended CPI trend factor.

(iii) The Type A payer volume for the fiscal year is less than the historical base.

(C) For each Type A payer that meets all the conditions in subparagraph (B) the adjustment to the Type A payer revenue for that Type A payer will be as follows:

(i) Calculate the percentage decrease in cost from the baseline Type A payer cost as trended by the blended CPI trend factor as defined in paragraph (2) of subdivision (b) of Section 17612.5 and applied from the 2010–11 fiscal year to the subject fiscal year.

(ii) Calculate the percentage decrease in volume, based on the adjusted patient days, from the baseline Type A payer volume to the subject fiscal year.

(iii) Calculate the average of the percentages in clauses (i) and (ii).

(iv) The percentage reduction in clause (iii) shall be applied to the historical Base Type A payer revenue for the individual Type A payer.

(b) The Type A payer revenues included in the total revenues in subdivision (a) of Section 17612.5 shall be the greater of the adjusted historical Type A baseline or the actual revenues received from Type A payers for services rendered in the subject fiscal year.

(c) The Type B payer revenues included in the total revenues in subdivision (a) of Section 17612.5 shall be the greater of the historical Base Type B revenues or the actual revenues received from Type B payers for services rendered in the subject fiscal year.

(Amended by Stats. 2013, Ch. 358, Sec. 21. (SB 98) Effective September 26, 2013.)