About the California Attorney General’s Conditions imposed on Rady Children’s Health

The Monitor oversees Rady’s compliance with the Equity Impact and Competitive Conditions, which are summarized as follows:

IV:  Monitoring of Licensed Bed Count and Adherence to CMS Standards

Condition IV requires continuous maintenance of the general acute care hospital licenses, certifications from the Centers for Medicare and Medicaid Services (CMS), and maintenance of all existing levels of services and beds, including emergency services and neonatal intensive care unit spaces, licensed to CHOC, CHOC at Mission, and RCHSD for 10 years. Neither the suspension, downgrade nor eliminations of all beds designated to any basic or supplemental service unit, nor whole elimination of any one category of service may occur without justification to and approval of the Attorney General.

V:  Review / Mapping of Services

Condition V requires maintenance of existing and licensed specialty healthcare services offered in the spaces and settings of CHOC, CHOC at Mission, and RCHSD for 10 years, and prohibits the relocation or diversion of these services among the hospitals or outside of the hospital service area geographies, absent Attorney General approval.

VI:  Medi-Cal, California Children’s Services

Condition VI requires continued participation in Medi-Cal and California Children’s Services program and maintaining Medi-Cal Managed Care and county contracts for 10 years for 10 years.

VII:  Charity Care

Condition VII requires a minimum of annual charity care for 10 years at the following levels: $7,783,059 in annual charity care, increased annually by 4.08% at CHOC, $1,587,883 in annual charity care, increased annually by 4.08% at CHOC at Mission, and $11,673,961 in annual charity care, increased annually by 3.55% at RCHSD.

VIII:  Financial Assistance Policy

Condition VIII requires maintaining of a Financial Assistance Policy no less favorable than RCHSD’s current policy for 10 years, as well as certain steps to inform patients and their representatives of that Policy, such as posting it within the hospital and online.

IX:  Community Benefit Services

Condition IX requires annual minimum community benefit services amounts for 10 years at the following levels: $40,305,159, increased annually by 4.08% at CHOC, $30,056, increased annually by 4.08% at CHOC at Mission, and $77,458,612, increased annually by 3.55% at RCHSD.

X:  Language Services

Condition X requires maintenance of existing language services for 10 years, including, for example, the language hotline, Financial Assistance Program applications written in threshold languages, and translation services in languages spoken at CHOC, CHOC at Mission, and RCHSD, either as a primary language or through translation services.

XI: Cap Emergency Department Out-of-Network Reimbursement

Condition XI requires reimbursement from out-of-network payors for Emergency Department services at a rate no higher than actual expenses multiplied by the ratio between all commercial revenues to commercial expenses, plus an additional 20%, for 7 years.

XII:  Price caps and no tying, bundling or steering

Condition XII prohibits anticompetitive practices including “bundling” or “all-or-nothing” contracting, penalizing payors for contracting with individual facilities or physician groups, combining billing rates through consolidation of hospital license, national provider numbers, or taxpayer identification numbers, and interfering with certain payor practices (e.g., benefit designs that reward providers for affordability or quality) for 10 years, with the possibility of extension for three additional years. Condition XII also caps annual price increases at 4.56% for 7 years, with the possibility of an extension for three additional years, and prohibits retaliation.

XIII:  Firewalls for negotiating teams and info

Condition XIII requires maintenance of separate payor negotiating teams, segregation of payor contracting information, establishment and maintenance of informational firewalls and implementation of policies, procedures, and systems to support such requirements, all for 10 years.

XIV:  Academic institution relationships for training

Condition XIV forbids, absent a legitimate, non-pretextual reason, implicit or explicit exclusivity in academic affiliation agreements or any of the UCs placing trainees exclusively at CHOC, CHOC at Mission, or RCHSD, for pediatric physician and surgeon trainees. Also forbids implicit or explicit exclusivity in academic affiliation agreements regarding other pediatric specialty trainees, with no exceptions.

XVI:  Staff privileges, no exclusivity, collective bargaining

Condition XVI requires maintaining privileges for current medical staff in good standing, prohibits non-compete terms in medical professional contracts, limits medical professional contract term lengths, requires honoring collective bargaining agreements and other agreements with employees, and requires reporting job classifications and compensation information to labor unions and union employees for 10 years.

XVIII:  Community board

Condition XVIII requires CHOC, CHOC at Mission, and RCHSD to each maintain a community board for 10 years and requires consultation with the community board prior to making any non-emergency changes to services or community benefit programs.

XIX: Capital planning investments

Condition XIX requires specific capital planning investments and expenditure of community funds as set forth in the Affiliation Agreement between RCHHC and CHC.

If you have any questions about the Conditions, please contact us.