AB 220 codifies a Medi‑Cal subacute care program in health facilities, directs the Department of Health Care Services (DHCS) to set reimbursement methodologies (including per‑diem, patient‑specific, or negotiated rates), and ties payment implementation to available Budget Act funds. It also authorizes DHCS to negotiate provider agreements and to set level‑of‑care criteria and utilization controls for patients transferred from acute care to subacute settings.
The bill creates detailed medical‑necessity criteria for pediatric subacute services (including specific ventilator, suctioning, IV, dialysis, feeding‑tube, and biphasic/CPAP thresholds), requires providers to file DHCS forms (DHCS 6200 / 6200A) with treatment authorization requests, prohibits Medi‑Cal managed care plans from adopting additional medical‑necessity standards or requiring a new authorization after certain hospital bed holds, and enables sanctions under Section 14197.7 for plan violations. Practically, AB 220 centralizes clinical standards while preserving DHCS control over rates and facility participation; it also imposes documentation and procedural constraints on managed care plans.
At a Glance
What It Does
Creates a formal Medi‑Cal subacute care program, directs DHCS to set reimbursement methods and to negotiate provider participation agreements, and prescribes clinical criteria and authorization paperwork for pediatric and adult subacute care. It limits managed‑care plans from using criteria beyond DHCS forms and forbids re‑authorization after specified bed holds.
Who It Affects
Designated health facilities that provide subacute services, providers seeking authorization for pediatric and adult subacute care, Medi‑Cal managed care plans operating in California, DHCS as the implementing agency, and children and adults being transferred from acute to subacute care.
Why It Matters
The bill standardizes clinical thresholds and the authorization workflow statewide, restricts managed‑care discretion, and conditions reimbursement on the Budget Act — a mix that reshapes how subacute cases are assessed, paid for, and enforced within Medi‑Cal.
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What This Bill Actually Does
AB 220 lays out a single‑place policy for subacute care in Medi‑Cal: DHCS must establish the program in health facilities that meet subacute criteria and enter into provider participation agreements. The statute gives DHCS the power to set a reimbursement methodology — expressed in regulation — and explicitly lists allowable payment approaches (all‑inclusive per diems, individualized patient rates, or negotiated arrangements).
However, DHCS may only implement those subacute rates if the Legislature provides funds in the annual Budget Act, so authorization of payment depends on fiscal appropriation.
The bill requires DHCS to set level‑of‑care criteria and utilization controls for moving patients from acute to subacute settings, and it authorizes DHCS to negotiate agreements with qualifying facilities. For pediatric care, AB 220 defines subacute services as those for people under 21 who rely on medical technologies that replace vital functions, then specifies objective medical‑necessity thresholds — for example, minimum daily hours on mechanical ventilation, frequency of suctioning, requirements for continuous IV or multiple IV agents, peritoneal dialysis exchanges, tube feeding, reliance on other continuous technologies, or use of biphasic positive airway pressure with frequent assessments.To secure authorization, providers must submit a completed DHCS form — DHCS 6200 for pediatric requests and DHCS 6200A for adult requests — with treatment authorization requests (including electronic TARs).
Medi‑Cal managed care plans are forbidden from creating or applying medical‑necessity criteria that add conditions not listed on those DHCS forms. The bill also prevents managed care plans from requiring a new treatment authorization when a patient returns from a bed hold for acute hospitalization, and it gives DHCS authority to impose sanctions on plans that violate those provisions under an existing sanctions framework (Section 14197.7).Taken together, the statute shifts clinical gatekeeping to DHCS‑defined forms and criteria while leaving reimbursement design to DHCS rulemaking and Budget Act availability.
That means clinical eligibility becomes more uniform across fee‑for‑service and managed care, but payment levels and the pace of implementation remain political and budgetary decisions.
The Five Things You Need to Know
DHCS must establish a subacute care program for health facilities and may designate any facility that meets the department’s subacute care criteria and has an approved provider agreement.
Reimbursement approaches allowed by the bill include all‑inclusive per‑diem rates, individualized patient‑specific rates, or other negotiated rates; payment at those rates is contingent on Budget Act funding.
The statute lists specific pediatric medical‑necessity thresholds (e.g.
tracheostomy with mechanical ventilation ≥6 hours/day, peritoneal dialysis ≥4 exchanges/24 hours, dependency on total parenteral nutrition plus another listed treatment) that qualify a child for pediatric subacute services.
Providers must submit DHCS form 6200 (pediatric) or 6200A (adult) with any treatment authorization request, and Medi‑Cal managed care plans may not impose criteria beyond those forms.
DHCS may sanction managed care plans under Section 14197.7 for violating the requirements on authorization forms or for improperly requiring re‑authorization after bed holds described in CCR Title 22, Section 51535.1.
Section-by-Section Breakdown
Every bill we cover gets an analysis of its key sections.
Establishes the subacute care program and facility designation
This subdivision directs DHCS to set up a subacute care program in health facilities and authorizes the director to designate facilities that meet subacute criteria and have an approved provider participation agreement. Practically, this creates a gatekeeping function at the agency level: facilities must satisfy DHCS standards and contract terms before they can bill Medi‑Cal for subacute services, which concentrates program eligibility decisions at DHCS rather than leaving them wholly to local hospitals or plans.
Reimbursement methodology and Budget Act condition
DHCS must develop reimbursement methodologies by regulation and may use per‑diem, individualized patient rates, or negotiated rates. Importantly, the statute makes payments at those rates contingent on available Budget Act funds, so the department can design payment systems but cannot implement them without legislative appropriation; that separation keeps rate design technical while tying actual spending to the budget process.
Provider agreements, level‑of‑care criteria, and utilization controls
The department may negotiate and execute participation agreements with facilities that meet subacute standards and must set level‑of‑care criteria and utilization controls for eligibility. This empowers DHCS to impose operational and quality requirements through contracts and to use utilization controls to manage program intensity and length‑of‑stay, which will affect discharge planning and transfer decisions from acute hospitals.
Definition and scope of pediatric subacute services and transfer intent
The bill defines pediatric subacute services as care for patients under 21 who rely on medical technologies compensating for lost vital functions, and it clarifies that the listed medical‑necessity tests are intended to evaluate suitability for transfer from acute to subacute care. By tying the criteria to transfer eligibility, DHCS is signaling these standards are not general coverage rules but are specific to the step‑down decision from acute settings.
Specific pediatric medical‑necessity criteria
This provision enumerates objective tests that substantiate medical necessity for pediatric subacute care: examples include tracheostomy with ≥6 hours/day mechanical ventilation; suctioning schedules combined with oxygen and other listed procedures (IV therapy, dialysis, tube feeding, continuous technologies); dependence on TPN plus another qualifying procedure; or reliance on CPAP/biphasic devices with frequent assessments. These specifics create a narrow, clinically driven eligibility gate that facilities and reviewers must apply to authorization decisions.
Authorization paperwork and a ban on additional managed‑care criteria
Providers must submit DHCS form 6200 (pediatric) or DHCS 6200A (adult) with any treatment authorization request, including electronic submissions. The statute bars Medi‑Cal managed care plans from developing or applying medical‑necessity criteria that add conditions not enumerated on those DHCS forms, which standardizes what documentation counts and limits plan‑level deviation from state clinical thresholds.
No re‑authorization after a regulated bed hold
The bill prevents a managed care plan from requiring a new treatment authorization when a patient returns from a bed hold for acute hospitalization as described in CCR Title 22, Section 51535.1. This avoids administrative churn and potential coverage interruptions tied to short acute readmissions that occur under the state’s bed‑hold rules.
Sanctions for managed care plan violations
DHCS may impose sanctions on Medi‑Cal managed care plans under Section 14197.7 for violations of the authorization form rules or the bed‑hold re‑authorization prohibition. That gives the agency an enforcement lever to ensure plans follow the statutorily mandated authorization process and clinical standards.
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Explore Healthcare in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Children and young adults meeting the specified clinical thresholds — they gain a clear statutory pathway to transfer from acute to subacute care with uniform authorization tests that reduce discretionary denials.
- Health facilities that meet DHCS subacute standards — designation plus negotiated participation agreements can open a reimbursable service line and create revenue opportunities under tailored rate methodologies.
- Providers (physicians and nurses) managing transfers — consistent DHCS criteria and required forms simplify the clinical documentation needed to obtain authorization and can reduce back‑and‑forth with plans.
Who Bears the Cost
- DHCS — the department must create regulations, develop rate methodologies, set utilization controls, administer provider agreements, and enforce plan sanctions, adding administrative workload without explicit new funding in the statute.
- Medi‑Cal managed care plans — they lose discretion to apply additional medical‑necessity standards, must accept DHCS forms as authoritative, and face potential sanctions for noncompliance, increasing compliance and operational costs.
- Health facilities seeking designation — facilities must meet DHCS standards and enter participation agreements, which may require investments in staffing, documentation systems, and quality controls to qualify and be reimbursed.
Key Issues
The Core Tension
AB 220 pits the need for uniform, objective clinical standards and protection against arbitrary plan denials against fiscal control and local flexibility: it centralizes eligibility via DHCS forms and criteria while conditioning payment on Budget Act funding and limiting managed‑care discretion, creating trade‑offs between consistent access and flexible, locally responsive program management.
The statute centralizes clinical eligibility at the state level while leaving reimbursement subject to legislative appropriation. That bifurcation creates a practical tension: providers and facilities must meet DHCS’s clinical and contractual requirements to be eligible for subacute placement, but actual payment rates and the rollout of higher subacute rates depend on the annual Budget Act.
Facilities could therefore face investment and staffing obligations without assurance of immediate reimbursement changes.
The pediatric medical‑necessity list is deliberately specific, which improves consistency but risks excluding borderline patients whose needs do not match the enumerated thresholds. The ban on managed‑care criteria beyond DHCS forms reduces plan variability but also restricts plans’ ability to use utilization management tools tailored to local capacities.
Finally, enforcement relies on DHCS’s ability to carry out sanctions under Section 14197.7; if the department lacks resources to audit and enforce, statutory protections may be toothless in practice.
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