Hospital Quality Assurance Fee Program

HQAF Program Overview

The California Department of Health Care Services (DHCS) implemented its first Hospital Quality Assurance Fee (HQAF) program in 2010. The program provides funding for supplemental payments to California hospitals that serve Medi-Cal and uninsured patients. Revenue from the HQAF also provides funding for children’s health care coverage, pays direct grants to public hospitals, and reimburses DHCS for the direct costs of administering the program. The program has been very successful, providing billions of dollars in supplemental payments to California hospitals. The program was made permanent by the passage of Proposition 52 in November 2016.

HQAF Program Eligibility

For a private hospital to be eligible to receive supplemental payments the following requirements must be met, as specified in Welfare and Institutions (W&I) Code §14169.51 subdivision (ap):

Is licensed pursuant to subdivision (a) of Section 1250 of the Health and Safety Code.
Is in the Charitable Research Hospital peer group, as set forth in the 1991 Hospital Peer Grouping Report published by the department, or is not designated as a specialty hospital in the hospital’s most recently filed Office of Statewide Health Planning and Development Annual Financial Disclosure Report, as of the first day of a program period.
Does not satisfy the Medicare criteria to be classified as a long-term care hospital.
Is a nonpublic hospital, nonpublic converted hospital, or converted hospital as those terms are defined in paragraphs (26) to (28), inclusive, respectively, of subdivision (a) of Section §14105.98.
Is not a non designated public hospital or a designated public hospital.

HQAF Fee Collections

The department assesses a fee on certain general acute care hospitals to be used, for the most part, as the non-federal share of supplemental Medi-Cal payments to eligible hospitals for inpatient and outpatient services. The money collected is deposited into the hospital quality assurance revenue fund.

HQAF Program Funding Calculations

The funding calculations are processed through the hospital fee model. The hospital fee model calculates the fees and payments for each participating hospital by utilizing each hospital’s daily data to determine the Medicaid utilization rate, federal upper payment limit, and various other data elements.

HQAF Change of Ownership (CHOW) Process

Private hospitals that undergo a change of ownership (CHOW) must complete the CHOW process described in the 5/13/16 CHOW Provider Bulletin within 30 calendar days of the date of the letter from the State granting Medi-Cal Certification to the new owner of the hospital. New owners can either submit a Financial Responsibility Agreement, allowing the hospital to continue its participation in the fee and payment sides of the HQAF program, or complete an Attestation Package, through which the hospital is considered a “New Hospital” and removed from the current HQAF program period. For more information, please email HQAF@dhcs.ca.gov. To ensure timely processing, please email completed CHOW packages to HQAF@dhcs.ca.gov.