BILL ANALYSIS
SENATE HEALTH
COMMITTEE ANALYSIS
Senator Elaine K. Alquist, Chair
BILL NO: AB 342
A
AUTHOR: John A. P?rez
B
AMENDED: June 23, 2010
HEARING DATE: June 30, 2010
3
CONSULTANT:
4
Dunstan/
2
SUBJECT
Medi-Cal: demonstration project waiver
SUMMARY
Authorizes the Department of Health Care Services (DHCS) to
require that seniors and persons with disabilities (SPDs)
in Medi-Cal be assigned as mandatory enrollees to new or
existing managed care plans, as specified. Requires DHCS
to establish organized health care delivery models for
children eligible for California Children's Services (CCS).
Establishes pilot projects for managing the care of those
with dual eligibility in Medi-Cal and Medicare. Creates
coverage expansion and enrollment demonstration projects
for coverage of low-income individuals who are not
otherwise eligible for Medi-Cal.
CHANGES TO EXISTING LAW
Existing federal law:
Establishes the Medicaid program to provide comprehensive
health benefits to low-income persons. Establishes the
federal Medicaid Disproportionate Share Hospital (DSH)
program to provide financial assistance to hospitals that
serve large numbers of Medicaid and uninsured patients.
Continued---
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Provides that states may be granted waivers of federal law
to implement demonstration projects in their Medicaid
programs. Authorizes states to use benchmark plans in
Medicaid, which allow the state more flexibility in
determining benefits and cost sharing.
Establishes the federal Medicare program, which provides
health care benefits to persons 65 years of age and older
and to disabled persons. Provides that the Medicare
program can grant waivers of federal law for demonstration
projects.
Establishes that the federal government will provide a
match for the Medicaid program, termed the federal medical
assistance percentage (FMAP), which varies by state and
territory according to a specified formula. Pursuant to
the federal Patient Protection and Affordable Care Act
(Public Law 111-148), establishes Medicaid eligibility for
childless low-income adults and provides enhanced FMAP for
this expansion population, beginning January 1, 2014.
Existing state law:
Establishes the Medi-Cal program, the state's Medicaid
program, which is administered by DHCS, and which provides
comprehensive health benefits to low-income children; their
parents or caretaker relatives; pregnant women; elderly,
blind or disabled persons; nursing home residents and
refugees.
Creates a demonstration project on hospital financing to
implement a five-year federal Medicaid waiver for support
of public hospitals that serve uninsured patients and
patients whose health care services are covered by
Medi-Cal. Defines a designated public hospital to be one
of twenty-two hospitals specifically named in the statute
implementing the federal waiver. Creates the Safety Net
Care Pool (SNCP) containing the federal funds available
under the demonstration project to ensure continued
government support for the provision of health care
services to uninsured populations. Establishes methods for
administering the federal (DSH program payments, and a
mechanism that DHCS must use to allocate the payments to
designated public hospitals. Requires that matching funds
for SNCP and DSH payments come from the certified public
expenditures (CPE) and/or intergovernmental transfers (IGT)
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from designated public hospitals or the governmental
entities with which they are affiliated.
Establishes the Health Care Coverage Initiative and
provides that it shall operate pursuant to the special
terms and conditions of California's Section 1115
demonstration project on hospital financing in the Medi-Cal
program. Provides that coverage initiatives shall expand
health care coverage to low-income, uninsured residents of
10 selected counties for federal fiscal years 2007-08
through 2009-10.
Authorizes DHCS to contract, on a bid or nonbid basis, with
any qualified individual, organization, or entity to
provide services to, arrange for, or case manage, the care
of Medi-Cal beneficiaries. Permits the contract to be
exclusive or nonexclusive, statewide or on a more limited
geographic basis and requires that the contracts include
specified provisions. Defines a Medi-Cal managed care plan
as any entity that enters into one of several types of
contracts with DHCS including county organized health
systems (COHS), geographic managed care plans and local
initiatives.
Requires DHCS to evaluate and determine the readiness of
managed care plans prior to geographic expansion of
Medi-Cal managed care. Existing law requires enrollment of
seniors and persons with disabilities into Medi-Cal managed
care plans to be voluntary, except in COHS counties where
the enrollment of SPDs is mandatory.
Requires counties to provide medical services for the
medically indigent.
Requires the Department of Health Care Services (DHCS) to
submit a Medi-Cal Waiver or Demonstration Project to the
federal government in order to strengthen California's
health care safety net, including disproportionate share
hospitals; reduce the number of uninsured Californians;
increase federal financial participation; improve health
care quality and outcomes; and, promote home and community
based care.
Requires the waiver to include Medi-Cal restructuring
proposals in order for the program to better serve the most
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vulnerable beneficiaries, including SPDs, children with
significant medical needs, and people with behavioral
health conditions. Establishes that the goals of
restructuring care for these populations include increased
access to better coordinated and integrated care for these
populations, improved health outcomes, and reduction in the
long-term growth of the Medi-Cal program.
Requires DHCS to submit a waiver proposal to the federal
Centers for Medicare and Medicaid Services by a date that
allows sufficient time for the waiver to be approved by no
later than the later of either September 1, 2010, or the
conclusion of the current Medi-Cal Hospital (1115) waiver.
Authorizes this waiver to seek authority to enroll
beneficiaries into specified organized delivery systems,
such as managed care, enhanced primary care case management
or a medical home model. Requires the waiver to include
processes, and criteria, by which DHCS will evaluate and
grant exemptions, on an individual basis, from any
mandatory enrollment of beneficiaries into managed care.
Through the Knox-Keene Act, regulates and licenses managed
care plans. Requires the Department of Managed Health Care
(DMHC) to enforce the Knox-Keene Act by overseeing the
licensing of plans and ensuring managed care plans
compliance with state law and regulations.
Provides that services provided by CCS are not incorporated
into Medi-Cal managed care contracts.
This bill:
Grants DHCS an exemption from the Administrative Procedures
Act related to the development of regulations and allows
implementation by all-county letters or similar
instructions. Exempts the contracts from specified
provisions of the Public Contract Code.
Seniors and persons with disabilities
Allows DHCS to enroll SPDs as mandatory enrollees into new
or existing managed care health plans or county alternative
models of care.
Defines a county alternative model of care as an option
open to all counties, except those with county organized
health systems, that allows the county to develop an
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alternative model of care, subject to approval by DHCS.
Allows county models to operate without Knox-Keene
licensure as long as the model does not receive full
capitation and assumes full risk for its members. Allows
county alternative models of care to include administrative
services organizations, primary care case management plans,
outpatient managed care models and other models of care
that DHCS determines acceptable. Requires that a county
select this option prior to commencement of mandatory
enrollment of SPDS, but no later than January 1, 2012.
SPD-Plan readiness
Requires DHCS to do the following in terms of readiness
evaluation criteria and requirements, when establishing
mandatory managed care for SPDs:
Assess and ensure the readiness of the managed care
health plans or county alternative models of care.
Ensure that the managed care health plans or county
alternative models of care comply with applicable
state and federal law, including those related to
physical accessibility and the provision of plan
information in alternative formats.
Develop and implement an outreach and education
program for SPDs to inform them or their enrolment
options.
Inform SPD beneficiaries, at least three months
prior to enrollment about the changes that are
expected to occur in how they receive their health
care.
Implement an appropriate awareness and sensitivity
training program for the managed care health plans or
county alternative models of care regarding serving
SPDs.
Coordinate with the managed care health plans or
county alternative models of care in consultation with
stakeholders and consumers to develop a mechanism for
identifying those individuals with the highest risk
and most complex health care needs.
Provide managed care health plans and county
alternative models of care with an enhanced facility
site review tool for use in accessing the physical
accessibility of providers.
Develop a process to enforce legal sanctions such
as financial penalties, withholding of Medi-Cal
payments, enrollment termination and contract
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termination for the managed care health plans or
county alternative models of care for consistently or
repeatedly failing to meet performance standards.
Ensure that the managed care health plans or county
alternative models of care provide a means for
enrollees to request a specialist or clinic as a
primary care provider.
Ensure that managed care health plans or county
alternative models of care are able to provide
communication access to SPDs in suitable alternative
formats or other methods.
Require managed care health plans or county
alternative models of care to provide access to
out-of-network providers for SPDs who have an ongoing
relationship with a provider, if the provider will
accept the plan or model's rate or the applicable
Medi-Cal fee-for service rate.
Ensure that the managed care health plans or county
alternative models of care comply with existing
continuity of care requirements under the Knox Keene
Act.
Require that the medical exemption criteria in
regulation for two plan model counties and geographic
managed care counties are applied to SPDs.
SPD Plan Requirements
Requires DHCS, prior to exercising its authority to enroll
SPDs, to ensure that all managed care health plans or
county alternative models of care are able to do all of the
following:
Comply with criteria and requirements, related to
plan readiness, compliance with applicable state and
federal laws, outreach and education programs, advance
notice, awareness and sensitivity training,
identification of high risk individuals and site
review tool. Requires that the criteria related to
the assessment of network adequacy be done in
collaboration with the Department of Managed Health
Care (DMHC).
Ensure and monitor an appropriate provider network.
Assess the health care needs of SPDs and coordinate
their health care across all settings.
Ensure that the provider network and informational
materials meet the linguistic and other special needs
of SPDs.
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Provide a clear, timely and fair process for
accepting and acting upon complaints, grievances and
disenrollement requests.
Solicit stakeholder and member participation in
advisory groups.
Contract with safety-net and traditional providers.
Inform SPDs of procedures for obtaining
transportation services.
Monitor the quality and appropriateness of care.
Maintain a dedicated liaison to coordinate with
each regional center.
Apply a mechanism to identify SPDs with high or low
risk and administer a risk assessment survey tool to
determine risk level of enrollees.
Conduct the risk assessment over the telephone with
specified time frames, namely, within 45 days of plan
enrollment for higher risk beneficiaries and 105 days
for lower risk beneficiaries and develop individual
care plans that are based on the health risk
assessment for high risk beneficiaries.
Perform specified care management and care
coordination function and activities for SPDs.
Establish medical homes to which enrollees will be
assigned. Requires medical homes to have the
following characteristics:
o A primary care physician who provides
core clinical management functions.
o Care management and care coordination.
o Identification of the beneficiary's needs
and referral to appropriate services that are
outside of the managed care health plans or
county alternative models of care.
o Uses clinical data to identify the health
issues of a beneficiary.
o Ensure timely and appropriate access to
care.
o Use clinical guidelines and other
evidence-based medicine.
Other SPD managed care requirements
Requires that beneficiaries enrolled in managed care health
plans and county alternative models of care shall have the
choice to continue an established patient-provider
relationship under specified conditions.
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Provides that when an SPD is required to enroll in a
managed care or alternative model of care, the enrollee's
access to fee for service Medi-Cal shall not be terminated
until the enrollee has been assigned to a managed care
provider or county alternative model of care.
Requires that the development and negotiation of capitation
rates for managed care health plan contracts shall include
the analysis of data specific to SPDs. Authorizes DHCS to
require managed health care plans, including existing
plans, to submit financial and utilization date according
to DHCS requirements. Requires DHCS to determine an
actuarially sound rate for the county alternative models of
care that ensures access to services and is budget neutral
to the state.
Allows persons meeting eligibility requirements for a
Program for All-Inclusive Care for the Elderly (PACE) may
select a PACE plan if one is available.
Implementation of SPD managed care
Makes the implementation of the mandatory managed care
provisions dependent upon federal financial participation
or funding.
Exempts the managed care contracts from specified
provisions of the Government Code. Requires DHCS to make
the provisions of a contract available to the public within
30 days of the effective date of the contract.
Provides that if there is a conflict between the terms and
conditions of the approved demonstration project and any
provisions of state aid and medical assistance law, the
terms and conditions shall control. Provides that if there
is a conflict between any Medicaid state plan amendments
and any provisions of state aid and medical assistance law,
the state plan amendments shall control. Provides that if
there is a conflict between the article where this section
of the bill is placed and any provisions of state aid and
medical assistance law, this article shall control.
Provides that enrollment of SPDs into managed care health
plans and county alternative models of care shall be phased
in and shall not commence until necessary federal approvals
have been acquired, or until February 1, 2011, whichever is
later.
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Requires DHCS, beginning January 1, 2011 and until January
1, 2014, to provide the fiscal and policy committees of the
Legislature with semiannual updates regard core activities
for the enrollment of SPDS into managed care health plans
and county alternative models of care. Specifies
requirements for the semiannual updates.
Mandates DHCS, in collaboration with the Department of
Social Services and county welfare departments, to monitor
the utilization and caseload of the In-Home Supportive
Services program. Requires DHCS, in cooperation with DMHC,
to monitor the adequacy of provider networks on a quarterly
basis.
Requires DHCS to suspend enrollment of SPDs into managed
care health plans and county alternative models of care if
it determines there are not sufficient primary or specialty
care providers to meet the needs of enrollees.
Directs DHCS to work with counties to develop a method to
be used to determine an appropriate contribution to cover
the nonfederal share of inpatient hospital expenses for
SPDs.
Data submission by plans
Requires all managed care plans and other managed care
arrangement including county alternative models shall
submit encounter and financial data, as specified by DHCS.
Provides for payment of a two percent penalty of the
monthly capitation rate for any managed care plan or other
managed care arrangement that fails to comply with the data
submission requirement.
Provides that failure of a provider or subcontractor to
submit data shall not relieve the managed care plans and
other managed care arrangement of responsibility to comply
with these provisions, and shall not affect imposition of
the penalty.
California children's services (CCS)
Requires DHCS to establish organized health care delivery
models for children eligible for CCS. Provides that the
models shall include at least one of the following:
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An enhanced primary care case management program.
A provider-based accountable care organization.
A specialty health care plan.
A Medi-Cal managed care plan that includes payment
and coverage for CCS-eligible conditions.
Requires that regardless of which model is used, the model
shall do all of the following:
Establish clear standards and criteria for
participation, exemption, enrollment, and
disenrollment.
Provide care coordination that links children and
youth with special health care needs with appropriate
services and resources.
Establish networks that include CCS-approved
providers and maintain the current system of
regionalized pediatric specialty and subspecialty
services.
Coordinate out-of-network access.
Ensure that children enrolled in the model receive
care for their CCS-eligible medical conditions from
CCS-approved providers consistent with the CCS
standards of care.
Participate in a statewide quality improvement
collaborative that includes stakeholders
Provide the department with data for quality
monitoring and improvement measures.
Requires the models to establish and support medical homes
that meet specified principles, including that each child
has a personal physician, the medical home is a
physician-directed medical practice, the medical home
utilizes a whole child orientation, care is coordinated or
integrated, information, education, and support is provided
in a culturally competent manner, there are quality and
safety practices and measures, and payment is structured
appropriately to recognize the added value provided to
children and their families.
Provides that services provided under these models shall
not be limited to medically necessary services for CCS
conditions.
Authorizes DHCS to require eligible individuals to enroll
in these models, to the extent permitted by federal law.
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Authorizes children enrolled in Healthy Families to enroll
in the organized delivers models.
Directs DHCS to seek proposals to establish and test these
models of organized health care delivery systems. Grants
DHCS the authority to enter into exclusive or nonexclusive
contracts on a bid or negotiated basis. Allows DHCS to
amend existing managed care contracts. Exempts the
contracts from specified provisions of the Public Contract
Code and the Government Code. Mandates entities that
contract with DHCS to report their expenditures. Requires
any rates for a contract paid according to a capitated or
risk-based payment shall be actuarially sound.
Requires DHCS to conduct an evaluation to assess the
effectiveness of each model. Specifies the required
elements for the evaluation.
Coverage expansion and enrollment demonstration projects
Creates coverage expansion and enrollment demonstration
(CEED) projects to provide health care benefits for
uninsured adults 19 to 64 with incomes up to 200 percent of
the federal poverty level and who are not eligible for
Medicare or Medi-Cal. Requires DHCS to develop CEED
projects that meet the terms and conditions of the federal
waiver.
States legislative findings that these projects are
designed to take advantage of new options of federal
support for coverage of low-income adults.
Requires CEED projects to be designed and implemented to
facilitate the transition of those eligible individuals to
Medi-Cal coverage or to coverage through the state health
insurance exchange by 2014. Authorizes counties to perform
outreach and enrollment activities to target populations
for these projects.
Requires that CEED project include the following elements,
subject to the terms and conditions of the federal waiver:
Development of standardized eligibility and
enrollment procedures that interface with Medi-Cal
processes according to the milestones developed in
consultation with the counties.
Designation of a medical home, as defined, and
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assignment of enrollees to a primary care provider.
Provision of the required benefits schedule.
Provision of a provider network and service
delivery system, that includes participation by public
and private providers, to ensure delivery of the
required benefits and transition of eligible
individuals to Medi-Cal or the state health insurance
exchange in 2014.
Development of an outreach and enrollment plan for
potential enrollees and includes the public and
private providers that will be needed in 2014 to serve
those eligible individuals in Medi-Cal coverage, or
the state health insurance exchange.
Quality measurement and monitoring system.
Data tracking systems to provide DHCS with data for
quality monitoring and improvement and evaluation of
the CEED.
Demonstrate the ability of CEED projects to promote
the viability of the existing safety net.
Consumer assistance for individuals applying for
these projects.
Ability to meet program requirements.
Allows CEED projects to include contracts or subcontracts
with primary care clinics.
Conditions the creation of CEED projects on the
availability of federal financial participation. States
that nothing in the CEED project shall be construed to
create an entitlement.
Allows CEED projects to be undertaken by a county, a
consortium of counties or a city and county. Requires that
the county, consortium of counties or city and county,
shall provide the nonfederal share of funding through
certified public expenditures or an intergovernmental
transfer. Requires DHCS to develop methodologies for
distributing available federal funds.
Directs DHCS to balance funding allocations throughout
geographic areas of the state, consistent with the
requirements of the waiver. Authorizes DHCS to reallocate
available federal funds if necessary to maximize receipt of
federal funds or otherwise meet federal requirements.
Provides that no General Fund monies shall be used to fund
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CEED projects, services or local administrative costs.
Requires DHCS to ensure that CEED projects are evaluated,
and specifies the objectives of the required evaluation.
Authorizes DHCS to seek federal or private funds or enter
into a partnership to evaluate the CEED programs.
Grants DHCS the authority to continue the existing coverage
initiative projects that were part of the 2005
demonstration project.
Dual eligibles
Defines a "dual eligible" to mean an individual who is
eligible for Medi-Cal and Medicare benefits. Requires DHCS
to seek federal approval for establishing pilot projects
through a Medicare and/or Medicaid demonstration project or
waiver. Authorizes DHCS to operate as a delegated Medicare
benefit administrator, and allows DHCS to enter into
financing arrangements with CMS to share in any program
savings generated by the pilot project.
Directs DHCS to establish pilot projects, upon federal
approval, that enable dual eligibles to receive a continuum
of services and that maximize the coordination of benefits
between the Medi-Cal and Medicare programs. States that
the purpose of the pilot project is to develop effective
health care models that integrate services authorized under
Medicaid and Medicare and that may include additional
services.
Requires, by January 1, 2012, DHCS to identify health care
models that may be included in the pilot project and to
develop timelines and a process for selecting, financing,
monitoring and evaluating the pilot projects. States that
the goals for the pilot projects to include all of the
following:
Coordinating of Medi-Cal and Medicare benefits and
improved continuity of acute care, long-term care and
home- and community-based services.
Coordinating access to acute and long-term care
services for dual eligibles.
Maximizing the ability of dual eligibles to remain
in their homes in lieu of institutional care.
Increasing the availability of, and access to,
home- and community-based alternatives.
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Directs that pilot projects shall be established in up to
four counties, and shall include at least one county that
provides Medi-Cal services under a county organized health
care system, and one that provides using a two-plan model.
Requires DHCS to consider local support for integrating
medical care, long-term care and home- and community- based
services and the existence of a local stakeholder process,
as specified, in establishing the pilots.
Authorizes DHCS to enter into exclusive or nonexclusive
contracts on a bid or negotiated basis to administer the
pilot projects. Exempts the contracts from specified
provisions of the Government Code.
Authorizes DHCS to require that dual eligibles be assigned
as mandatory enrollees into managed care contracts.
Requires that, if mandatory enrollment is required for dual
eligibles, the applicable requirements of the department
and health plans related to mandatory enrollment of SPDs in
this bill are also required for dual eligibles. Any dual
eligible shall have the choice no to participate in a pilot
project for receiving their Medicare benefits.
Allows persons meeting requirements for PACE may select a
PACE plan if one is available.
Requires DHCS to provide a report to the Legislature after
the first full year of operation, and annually thereafter,
and evaluate the pilots.
Makes the implementation of this section dependent upon
federal financial participation or funding.
Grants DHCS an exemption from the Administrative Procedures
Act related to the development of regulations and allows
implementation by all-county letters or similar
instructions.
FISCAL IMPACT
This bill in its current form has not been analyzed by a
fiscal committee.
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BACKGROUND AND DISCUSSION
Given that the current hospital and uninsured demonstration
project waiver is expiring, the author notes that a new
waiver must be negotiated and established this year, and a
new authorizing statute will be needed in order to
implement its provisions. According to the author, a new
waiver offers new opportunities afforded by federal health
care reform that will strengthen the Medi-Cal program and
maximize federal funding, while making the best use of
scarce state General Fund resources. New federal Medicaid
flexibility offers the potential both to expand coverage to
traditionally ineligible groups and to offer that coverage
in innovative ways to improve care coordination, promote
quality and ensure cost effectiveness. However, the author
adds that such expansions must be coordinated with program
investments in prevention, care coordination and
management, and quality improvement to ensure that coverage
dollars are wisely spent.
The author indicates a waiver renewal is an opportunity to
ask the federal government to provide the state
flexibility, and to seek federal funding for demonstration
projects that achieve the required federal budget
neutrality. The author says that the state has embarked
upon a comprehensive waiver proposal that seeks to
accomplish the following goals:
Strengthen California's frayed and overburdened
safety net that provides most of the services to the
uninsured and low-income;
Maximize federal financial participation and
federal resources for uncompensated care;
Promote stability and more efficiency in state and
local health care funding; and,
Promote quality and value in health care services
and outcomes.
California's new pending waiver
In the 2008-09 May revision, Governor Schwarzenegger
signaled an interest in making improvements to
fee-for-service Medi-Cal. The May revision stated that
slowing the rate of growth in health care expenditures is
an essential component of efforts to restore the state's
fiscal balance and to achieve coverage for all
Californians, noting that the Medi-Cal program is the
largest purchaser of health care in California. It was
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also noted that a disproportionate share of Medi-Cal
spending is concentrated among a small segment of
enrollees, the majority of whom have complex chronic
medical conditions, including behavioral health conditions,
and that emphasizing prevention and increased use of
primary care services offers the promise of better health
outcomes and slower rates of growth in costs. The
administration concluded that it is committed to working
with the Legislature and stakeholders to identify
enhancements to the Medi-Cal fee-for-service system that
improves health outcomes and slows the overall rate of cost
growth.
With the expiration date of the hospital waiver rapidly
approaching, the administration and the Legislature began
planning for a new, more comprehensive Section 1115 waiver.
One of the budget trailer bills, ABX4 6 (Evans), outlines
the goals of a new comprehensive waiver:
Strengthening California's health care safety net;
Reducing the number of uninsured individuals;
Optimizing opportunities to increase federal
financial participation;
Promoting long-term, efficient and effective use of
state and local funds;
Improving health care quality and outcomes; and
Promoting home- and community-based care.
The bill also directed that the new waiver shall be
developed for the purposes of providing the most vulnerable
Medi-Cal enrollees with access to better coordinated and
integrated care that will improve outcomes in the Medi-Cal
program and help slow the long-term growth in program
costs. DHCS was directed to realize the goals of the bill
by considering better care coordination for seniors and
persons with disabilities, enhanced coordination of
Medi-Cal and Medicare coverage, improved coordination and
integration of care for children with significant medical
needs and improved integration of physical and behavioral
health.
The focus is on these groups because of the seriousness of
their medical conditions. As a group, those with the most
serious chronic illnesses consume the largest share of
Medi-Cal expenditures. For example, an estimated 10
percent of beneficiaries account for about 75 percent of
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program costs. Most of these are enrolled in Medi-Cal
fee-for-service program, which does not currently offer an
easy method to manage and integrate their care.
Department of Health Care Services concept paper
Late in 2009, DHCS released a concept paper for the new
waiver and held a public meeting to gain comments on the
paper. The revised concept paper was submitted to the
federal Centers for Medicare & Medicaid Services (CMS) to
initiate discussion on the design of the waiver.
The concept paper argues that many Medi-Cal enrollees have
a coordinated system of care through their enrollment in
managed care plans of various types. In Medi-Cal, families
generally are subject to mandatory enrollment in managed
care while other groups, including seniors and persons with
disabilities, may voluntarily enroll in managed care, but
most elect to stay in fee-for-service Medi-Cal. The
exception is in counties where Medi-Cal is provided by a
county organized health system. In those selected counties
all beneficiaries are enrolled in a county-created managed
care plan.
The concept paper argues that fee-for-service, does not
provide consistent and coordinated care for California's
most vulnerable populations, which are the four target
groups called out in ABX4 6-the SPDs, children with
special health care needs, Medicare and Medicaid dually
eligible individuals and children and adults with serious
mental illness. The concept paper highlights the problems
with lack of coordination of care:
The program does not integrate the primary, acute,
behavioral health, and long- term care needs of the
SPD populations.
Even those SPDs enrolled in managed care face a
similar problem of lack of integration when they seek
specialty mental health services, because such
services are carved out of Medi-Cal managed care.
Fragmentation between Medi-Cal and Medicare
contributes to poor outcomes and results in care being
provided in inappropriate and expensive settings.
Caring for the 200,000 children with special health
care needs is split between Medi-Cal and CCS programs
because, CCS services are carved out of Medi-Cal
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managed care.
The concept paper identifies four initiatives for achieving
the goals:
Promote organized delivery systems of care. Such
systems will place a strong focus on primary and
preventive care and evidence-based services which
should be able to provide the appropriate care in the
right setting at the right time. The concept paper
does not recommend a delivery system for this,
acknowledging that the state could use the existing
managed care delivery system or newly developed
enhanced medical home models and whatever mode is
chosen could vary throughout the state. The overall
goal will be to improve access and care coordination
and slow the long-term growth rate of the Medi-Cal
program.
Strengthen and expand the health care safety net.
The waiver will help the safety net by providing a
role for designated public hospitals in a system of
care for seniors and persons with disabilities,
preserving and supporting state and county health care
programs, and increasing federal financial
participation for designated public hospitals. While
the concept paper details the role of the designated
public hospitals, it is silent with regard to private
hospitals and other safety net providers.
Implement value-based purchasing strategies. The
purpose of these new strategies is to change payments
to improve health care quality and outcomes and to
slow the long-term growth rate of Medi-Cal. In
particular, California will work to design value-based
purchasing strategies for the program and for the new
systems of delivery. The concept paper lists as
possible options: pay for performance for providers,
healthy rewards and incentives for beneficiaries and
nonpayment of health care acquired conditions.
Enhance the delivery system to prepare for national
health care reform. The concept paper notes that the
last waiver funded a coverage initiative, which
resulted in DHCS awarding 10 grants in different
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counties. DHCS would now like to see these programs
made more consistent and align them more closely with
the organized delivery systems for SPDs. DHCS also
proposes expanding the number of coverage initiatives,
reforming payments and improving enrollment into the
coverage initiative.
ABX4 6 required that there be a stakeholder process, which
was used to assist in developing the implementation plan
based on the concept paper. The implementation plan is
another requirement of ABX4 6. The plan must be submitted
to the Legislature at least 60 days prior to any
appropriation.
As required by AB X4 6 DHCS convened a Stakeholder Advisory
Committee to advise on preparation of the implementation
plan. The Stakeholder Advisory Committee will also advise
on the implementation of the waiver until its expiration.
The Stakeholder Advisory Committee includes persons with
disabilities, seniors, representatives of legal services
agencies that serve clients in the affected populations,
health plans, specialty care providers, physicians,
hospitals, county government, labor, and others as
appropriate.
The Stakeholder Advisory Group has been divided into five
Technical Workgroups to provide technical support to DHCS
on the SPDs, CCS, behavioral health integration, dual
eligibles and the health care coverage initiative.
As a result of its work with the Stakeholder Advisory Group
and the technical workgroups, DHCS has prepared an
implementation plan that has been submitted to CMS. It
addresses the following major issues.
Phasing in coverage for the newly eligible adults,
who are adults between the ages of 19 and 64 who are
not otherwise eligible for Medicaid, who are also
referred to as the childless adults. Federal health
care reform requires states to cover this population
under Medicaid, beginning in 2014. The state proposed
to accomplish this by expanding the health care
initiatives that were created in the existing Section
1115 waiver.
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Phasing in coverage for adults with incomes between
133 and 200 percent of the FPL who are not otherwise
eligible for Medicaid. Beginning in 2014 most of this
population will probably transition to a basic health
plan or the health insurance exchange.
Create more accountable, coordinated systems of
care, with a focus on seniors and persons with
disabilities and dual eligibles. This will be
accomplished largely through expansion of managed
care. In addition, the state has proposed new service
delivery systems for people needing mental health or
substance abuse services who need integrated care.
Pilots are also being proposed for and children with
special health care needs and for those who are dually
eligible for Medicaid and Medicare.
Expand the safety net care pool that is provided
for in the state's existing 1115 waiver, so that it
will continue to support safety net providers and
other health care programs for low income individuals.
Implement a series of improvements to the existing
service delivery systems.
Prepare pilots for health payment reforms within
the public hospital system. The goal of these pilots
will be to better align payment and care delivery
incentives and are designed to help stabilize the
public safety net systems.
According to DHCS, these proposals will also assist the
state's fiscal situation by reducing long term costs trends
in the Medi-Cal program.
The HCCIs are an important element of this proposal. The
expansion of the health care coverage initiatives is seen
by DHCS to be a bridge to the significant coverage changes
contained within health care reform. They will become more
standardized with less variation between counties. This
will help, under the waiver proposal, transition this
population into Medi-Cal in 2014. All 58 counties would
have the option to participate in the HCCIs. Benefits and
enrollment will depend on available resources as the
program will be financed by a combination of county
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resources and federal Medicaid matching funds.
DHCS estimates that at least 56 of California's 58 counties
will opt to join the HCCI program, which will enroll
approximately 500,000 in the HCCIs. The benefits will have
to comply with federal law by 2014, which will require a
benchmark plan that provides essential health benefits as
defined in federal law. These include emergency services,
hospitalization, mental health and substance use disorder
services, among others
Part of the state's proposal is to strengthen medical homes
and care coordination for the SPDs. DHCS proposes a set of
requirements for provider for administering medical homes.
In addition, case management services will be targeted to
HCCI enrollees who are frequent users of inpatient hospital
services in addition to those with chronic illnesses.
Medi-Cal
Medi-Cal provides coverage to 6.9 million Californians,
roughly half of whom are enrolled in fee-for service and
the other half in Medi-Cal managed care, which provides
coverage through public and private health plans. SPDs
have the greatest health care needs of any eligibility
group served by Medi-Cal, and account for the highest per
capita spending in Medi-Cal. Sixty-eight percent of SPDs
have more than one chronic condition, twenty-eight percent
have a mental health diagnosis and sixteen percent have
diabetes. The average annual cost in Medi-Cal for SPDs is
$8,200 per year. Among the SPD population, approximately
20,300 individuals were identified by DHCS as having five
or more ED visits, and the cost of their care was over
three times more expensive than care for other
beneficiaries within this target population.
Medi-Cal managed care
Under the traditional Medi-Cal fee-for-service program,
providers are reimbursed for every service they provide and
assume no financial risk. Under Medi-Cal managed care,
DHCS reimburses health care plans on a "capitated" basis,
which is a set payment per enrolled person, per month,
regardless of the number of services a Medi-Cal beneficiary
receives. The health plans that contract with the state on
a capitated basis assume financial risk, in that it may
cost them more or less money than the capitated amount paid
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to them to deliver the necessary care.
Medi-Cal managed care plans operate in 23 of the state's 58
counties, which are generally urban counties with larger
populations. There are three types of Medi-Cal managed
care plans:
o COHS Plans. Under this model, there is one health
plan which is run by a public agency and governed by
an independent board that includes local
representatives. COHS plans operate in nine counties.
o Geographic Managed Care Plan (GMC). The GMC system
allows Medi-Cal beneficiaries to choose one of several
commercial HMOs operating in a county. GMC is limited
to two counties
o The Two-Plan Model. DHCS contracts with only two
managed care plans. Generally, one is locally
developed and operated and is known as a local
initiative, while the second is a commercial health
plan. Twelve counties are in the two-plan model.
The great majority of beneficiaries enrolled in managed
care are families with seniors and persons with
disabilities (SPDs) making up a small portion of the
enrollees. Most families and children residing in Medi-Cal
managed care counties are enrolled in managed care on a
mandatory basis. Under mandatory enrollment, beneficiaries
in counties with a choice of plans are free to choose a
plan or, if they do not make a choice, DHCS automatically
assigns them based on several criteria. SPDs in counties
with managed care plans have the option of participating in
fee-for-service or managed care, but generally choose
fee-for-service. The exceptions are the nine COHS
counties, where nearly all Medi-Cal beneficiaries are
required to receive their care from a COHS plan. Only
about 16 percent of SPDs are enrolled in managed care
plans, including those in COHS counties.
Medi-Cal managed care plans are currently regulated by both
DHCS and the Department of Managed Health Care. Medi-Cal
managed care plans must comply with the Knox-Keene Act,
which focuses on the accessibility and adequacy of health
plan provider networks; internal quality systems; health
plan financial solvency; consumer rights and disclosure
requirements; and, complaint resolution, including
STAFF ANALYSIS OF ASSEMBLY BILL 342 (John A. P?rez) Page
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complaints related to the adequacy of the care provided.
Medi-Cal managed care regulations have many similar
provisions to the Knox-Keene Act, but go beyond those
requirements to focus on Medi-Cal enrollment procedures,
scope of services, contractual reporting requirements,
financial performance, capitation payments, member billing,
and the handling of beneficiary grievances in the context
of Medi-Cal benefits and eligibility. There is significant
overlap between the two regulatory frameworks, including
two consumer hotlines and grievance processes.
COHS are exempted from the requirement to have a Knox-Keene
license. However many of the COHS obtained Knox-Keene
license in order to participate in the Healthy Families
Program. In the most recent contracts, DHCS required each
COHS to meet the Knox-Keene Act requirements.
DMHC conducts a licensing audit of each plan every three
years. The audit is not specific to Medi-Cal. The DMHC
operates an "HMO Help Center" with a toll free hotline that
is answered 24 hours a day. Through coordination among
help center, licensing, and enforcement staff, additional
audits, investigations or enforcement activities are
initiated if DMHC identifies a pattern of problems through
consumer or provider complaints.
Current medical exemption process
Under current Medi-Cal regulations, individuals required to
enroll in a managed care plan on a mandatory basis are able
to apply for a medical exemption. If individuals are being
treated for a complex medical condition, as defined in
regulation, by a provider that is not contracting with the
managed care plans available in their county, they may
qualify for a temporary exemption from mandatory enrollment
for up to 12 months. In some instances, the exemption can
also be renewed. Complex medical conditions include
pregnancy, cancer, scheduled organ transplant, renal
disease and dialysis, disease affecting more than one organ
system (i.e., diabetes), participant in adult day health
care, HIV and other conditions.
Medicaid waivers
Section 1115 waivers are authorized under the Social
Security Act and provide the Secretary of Health and Human
Services (HHS) with broad authority to waive provisions of
STAFF ANALYSIS OF ASSEMBLY BILL 342 (John A. P?rez) Page
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the Medicaid statute, to allow states to institute
demonstration projects and provide federal funding that
would not normally be eligible under federal law. To avoid
Congressional approval, these waivers must be
budget-neutral over the life of the waiver, meaning that
they cannot cost the federal government more than it would
normally pay through Medicaid in the absence of the waiver.
Waivers allow states flexibility to institute new systems
of care delivery, service eligibility for non-Medicaid
eligible populations or to provide services that may not be
a covered benefit under Medicaid. All waivers are subject
to approval by the Centers for Medicare and Medicaid
Services (CMS), the Office of Management and Budget, and
the Department of Health and Human Services.
Several states, such as Indiana, Massachusetts and Vermont
have reformed their health care systems using federal
Medicaid waivers. A common element in these state programs
has been the expansion of each state's Medicaid program.
However, some states have gone beyond this and have
combined expansions with additional programs such as
investments in prevention, care coordination and
management, and quality improvements.
Medi-Cal waivers
California has 16 waivers currently, including a Section
1115 Medicaid waiver, entitled the Medi-Cal
Hospital/Uninsured Care Demonstration Project, or the
hospital waiver, as it is commonly known, which expires on
August 31, 2010. The hospital waiver was implemented by SB
1100 of 2005 (Perata and Ducheny). SB 1100 has had
widespread effects on both public and private safety net
hospitals. The proposed waiver outlined in DHCS's concept
paper would replace the hospital waiver.
The result of SB 1100 was a wholesale change in how
designated public hospitals (as defined in the waiver) and
private and other public hospitals are paid under the
Medi-Cal program. The current hospital waiver also
contains a coverage component that has provided $180
million in federal funds annually to the state. The first
two years of that funding were conditioned upon the state
mandating that seniors and persons with disabilities be
enrolled in managed care models of delivery service. The
state did not enact legislation that would have allowed the
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state to use that portion of the funds during the first two
years. The remaining three years of the waiver have
provided $180 million in federal funds for a coverage
initiative, which were pilot projects for covering the
uninsured.
Under the waiver, federal funds match "certified public
expenditures" (CPEs) for health care services provided in
public hospitals and county clinics. CPEs are expenditures
for providing health care to Medi-Cal recipients and the
uninsured. Twenty-two selected public hospitals, including
the five UC hospitals, use CPEs to claim federal funds
under Medi-Cal, including DSH payments.
Under the current waiver, for uncompensated care provided
to Medi-Cal and uninsured patients, public hospitals have
access to over $1 billion in federal DSH funds. Public
hospitals are also able to access SNCP funding, which is a
federal allotment of over $700 million.
Health care coverage initiative (HCCI)
The basic requirements for the existing HCCI projects are
as follows:
Enrollees must be citizens or legal residents that
meet the criteria for receiving federal matching
funds.
Income below 200 percent of the federal poverty
level (FPL).
Age between 19 and 64 years.
No asset tests.
Ineligible for Medicaid, Health Families and
Medicare.
No insurance within last three months for the
higher income enrollees.
During the course of the current waiver, grants were
awarded to 10 counties, Alameda, Contra Costa, Kern, Los
Angeles, Orange, San Diego, San Francisco, San Mateo, Santa
Clara and Venture. Each of these programs must follow
general state and federal criteria, but retain some
flexibility. For example, three counties require a
premium, to enroll while seven require co-payments for
selected services. Some counties have used public
providers, while others a mix of public and private
providers. Orange County has used a clinic network
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comprised entirely of private providers.
HCCI counties are required to provide enrollees with a
medical home that that meets the requirements for
maintenance of records. All of the counties have gone
beyond this requirement and are providing a
patient-centered medical home
Seniors and persons with disabilities
According to federal law, an individual is considered
disabled if he or she is unable to engage in any
substantially gainful activity by reason of any medically
determinable physical or mental impairment that can be
expected to result in death or which has lasted, or can be
expected to last, for a continuous period of not less than
12 months. Different definitions apply for children,
people who are visually impaired and people who qualify for
Medi-Cal's working disabled program.
To be eligible for Medi-Cal, people with disabilities must
also meet Medi-Cal's requirements for income, assets,
residence and citizenship. In general, people with
disabilities who qualify for Medi-Cal can be grouped into
one of two broad categories:
1.Those who are categorically needy and, therefore,
automatically qualify for Medi-Cal; or,
2.Those who are medically needy and may become eligible by
incurring medical expenses each month.
In addition, a small number of people qualify for Medi-Cal
through federal waivers or state-only programs. Nearly 90
percent of non-elderly beneficiaries with disabilities are
categorically needy, and qualify for Medi-Cal based on
their eligibility for cash assistance under the
Supplemental Security Income/State Supplemental Program
(SSI/SSP).
People who qualify for Medi-Cal based on eligibility for
SSI/SSP are a heterogeneous group. Some are relatively
high-functioning individuals who qualify primarily based on
age and income. Among the disabled, there are a wide
variety of physical impairments, mental, developmental and
other chronic conditions. According to the CHCF, SPDs
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represent only 27 percent of Medi-Cal beneficiaries, but
account for 63 percent of expenditures. In particular, 28
percent of Medi-Cal benefits are for seniors and 35 percent
are for individuals with disabilities.
There has been considerable debate over the issue of
mandatory enrollment of SPDs into Medi-Cal managed care.
Mandatory enrollment of SPDs was an important element in
the Governor's 2005 proposal to redesign Medi-Cal, which
would have placed almost 600,000 SPDs in mandatory
enrollment in Medi-Cal managed care. While this was not
adopted by the Legislature, in 2005, the Legislature did
approve an expansion of managed care to 13 additional
counties. This approved expansion includes the mandatory
enrollment of an estimated 60,000 SPDs through geographic
expansion of COHS. During consideration of the Medi-Cal
hospital waiver later that year, there were additional
discussions of expanding managed care, but the
administration eventually dropped its proposal for managed
care expansion. Following those efforts, the pilot project
approach was considered by the Legislature several times,
but was not enacted.
Performance measurement project
In November 2005, the CHCF completed and released a set of
recommended health plan performance standards and measures
to improve the way people with disabilities and chronic
conditions receive services in the Medi-Cal managed care
program. The report resulted from a two-month feasibility
study involving three consulting groups. The consulting
team found that, in a mandatory program, more extensive
standards and measures are practical, desirable, and
potentially cost-efficient over time. Among other things,
the CHCF report identified 53 recommendations to improve
the Medi-Cal managed care program, including 23 that they
considered essential.
Previous hearings
A joint hearing of the Senate and Assembly Budget and
Health Committees was conducted on August 16, 2005, to
examine the Governor's managed care proposal. The hearing
revealed that important information needed for implementing
managed care expansion that needed to be developed. This
information includes indicators to measure health plan
performance and health improvement outcomes for seniors and
STAFF ANALYSIS OF ASSEMBLY BILL 342 (John A. P?rez) Page
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the disabled and better information to establish managed
care capitation rates. A report by George Washington
University School of Public Health and Health Services,
funded by the California Endowment concluded that the
state's experience so far with managed care for this
population is so limited that it is not possible to predict
what issues may arise as compulsory arrangements.
California Children's Services
The California Children's Services (CCS) program, which is
administered by DHCS, provides medical care and medical
therapy for children with certain physical limitations and
chronic health conditions or diseases. Eligibility is
limited to children under 21 years of age who must have one
or more of the specified medical conditions and be in a
family that meets one of three family income eligibility
criteria. The eligibility criteria are: the families have
an adjusted gross income of $40,000 or less, the children
have Healthy Families coverage, or the family has medical
care costs in excess of 20 percent of the family's adjusted
gross income. Healthy Families covers children in families
up to 250 percent of the federal poverty level (FPL). The
CCS program also provides medical therapy treatment for
children whose disability would impede educational or
physical development, a program element that is unaffected
by the income ceiling.
The dual eligible population
Low-income seniors and persons with disabilities who are
enrolled in both Medicaid and Medicare are called dual
eligibles. In California, 1.1 million of those seniors and
permanently disabled persons who qualify for Medicare also
qualify for Medi-Cal due to low income. According to the
DHCS waiver proposal, dual eligible beneficiaries are the
most chronically ill patients within both Medicare and
Medicaid, requiring a complex array of services form
multiple providers. Because seniors and people with
disabilities generally must have incomes well below the
poverty line and minimal assets to qualify for Medi-Cal,
dual eligibles are much poorer than other Medicare
beneficiaries. More than 60 percent live below the poverty
level.
Dual eligibles also tend to have more extensive health care
needs than other Medicare beneficiaries. More than 50
STAFF ANALYSIS OF ASSEMBLY BILL 342 (John A. P?rez) Page
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percent of dual eligibles have limitations in the
activities of daily living. They have higher rates of
Alzheimer's disease, diabetes, pulmonary disease and
stroke. Nearly four in ten have a mental or cognitive
impairment, making it very difficult for dual eligibles to
make their way through complicated program changes, even if
they receive education and communication efforts otherwise
appropriate for an elderly population. One in four dual
eligibles lives in a nursing home or other long-term care
facility. Dual eligibles, like other Medicare
beneficiaries, were entitled to receive coverage for
outpatient prescription drugs by enrolling in a Medicare
Part D plan when the program began in January 2006.
Under the current system, Medicare is administered and
funded by the federal government and generally covers
primary and acute care and pharmacy. Medi-Cal is the
secondary payer for low-income beneficiaries and covers
primary and acute care, medical equipment and long-term
care. Medi-Cal also pays for home- and community-based
services but these may be administered separately such as
In Home Support Services (IHSS).
The Section 1115 waiver proposal and AB 342 seek to
implement pilot projects in up to four counties to test
integration of services for dual eligibles in COHS and
other managed care plans that operate both Medi-Cal managed
care plans and Medicare Special Needs Plans (SNPs). The
Section 1115 waiver proposal also states that in addition
to the pilot projects, the state will continue development
of an expanded strategy that provides full integration of
funding and benefits. According to the Section 1115 waiver
proposal, this will be added as an amendment at a later
date. Consultation with stakeholders and CMS regarding how
to develop an integrated funding approach will continue.
The Section 1115 waiver proposal states that Medi-Cal would
integrate dual eligible beneficiaries into the organized
systems of care that will be developed first for the
Medi-Cal-only SPD population. Medi-Cal will ensure that
the systems of care align for both populations, and that
these include mandatory medical homes, care management,
better connection to specialty providers, incentives that
reward providers and beneficiaries for achieving the
desired clinical, utilization, and cost-specific outcomes.
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The systems of care will use existing home- and
community-based service programs, such as In-Home
Supportive Services, to shift care from the institution to
the community by leveraging existing HCBS infrastructure
and providers where possible.
After Medi-Cal-only SPD systems of care are developed, dual
eligible beneficiaries will be integrated in phases,
according to organizational readiness in various regions.
According to the Section 1115 waiver proposal, Medi-Cal
would act as the administrator of the integrated program
and assume the risk for managing the Medicare benefit,
subject to discussions between California and CMS.
Medi-Cal would be responsible for coordinating payment,
coverage, and benefits for all Medicare and Medicaid acute
care, behavioral health, pharmacy, and long-term support
and services, including institutional care and home- and
community-based services. CMS and Medi-Cal would negotiate
an appropriate, risk-adjusted global amount or per member,
per month amount of Medicare funding for participating
dually eligible beneficiaries that would be provided by CMS
to Medi-Cal to administer the Medicare benefit. The
specific elements of risk sharing would be subject to
discussion.
Medicare Advantage Special Needs Plans (SNPs)
The Medicare Modernization Act of 2003 (MMA) gave CMS the
authority to designate certain Medicare Advantage plans as
SNPs. A SNP may limit its enrollment only to people in
certain long-term care facilities (like a nursing home),
people who are dual eligibles, or people with certain
chronic or disabling conditions. The goal of SNPs is to
provide health care and services to those who can benefit
the most from the special expertise of the plans' providers
and focused care management. SNPs are available in some
areas of California, but not all. Three of the five COHs
operate SNPs-CalOptima (OneCare), Health Plan of San Mateo
and Partnership Helath Plan of California. Enrollment is
voluntary.
Medical homes
Many states have adopted medical home legislation and
programs, mostly for Medicaid and Children's Health
Insurance Program (CHIP) enrollees. Some states, such as
Iowa, Oregon, Pennsylvania and Vermont, also allow or
STAFF ANALYSIS OF ASSEMBLY BILL 342 (John A. P?rez) Page
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encourage private sector participation. Community Care of
North Carolina, the state's Medicaid program, is a working
example of a patient centered medical home. The goals of
the program are to improve the care of the Medicaid
population, control costs, develop community-based networks
to manage care of populations in partnership with the
state, and fully develop the medical home model. The
program has demonstrated excellent quality and cost
outcomes through disease management, evidence-based
clinical practice, and an emphasis on a physician-led team
approach. Two evaluations of this program indicate it
saved the State of North Carolina $195 to $215 million in
2003 and between $230 and $260 million in 2004 when
compared to historical fee-for-service.
In a 2008 report to the United States (U.S.) Congress, the
federal Medicare Payment Advisory Commission recommended
that Congress establish a budget-neutral payment increase
for primary care services furnished by primary-care-focused
practitioners (defined as those whose specialty designation
is defined as primary care or whose pattern of claims meets
a minimum threshold of furnishing primary care services).
The commission also recommended that Congress initiate a
Medicare medical home pilot project, with stringent
specified criteria and a physician pay-for-performance
program.
According to a 2007 Commonwealth Fund report, "Closing the
Divide: How Medical Homes Promote Equity in Health Care,"
when adults have health insurance coverage and a medical
home, racial and ethnic disparities in access and quality
tend to disappear. The analysis, based on a Commonwealth
Fund national survey, reveals that linking minority
patients to a medical home can help them better manage
chronic conditions and obtain critical preventive care.
Related bills
SB 208 (Steinberg and Alquist) is identical to AB 342.
This bill is in the Assembly Health Committee and is set
for hearing June 29, 2010.
AB 2025 (De La Torre) would require DHCS to submit to CMS
any proposed amendments to the state plan that are
necessary to continue the hospital waiver. This bill is on
the Assembly Appropriations Committee suspense file.
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Prior legislation
SB 1332 (Negrete-McLeod) of 2008 would have established a
mandatory enrollment Medi-Cal managed care pilot program,
and authorizes the Department of Health Care Services
(DHCS) to require that in the San Bernardino and Riverside
Counties, SPDs be assigned as mandatory enrollees to new or
existing managed care plans, as specified. SB 1332 was
held on the Senate Appropriations Committee suspense file.
ABX1 1 (Nunez) of 2008 among its many provisions, would
have expanded eligibility for the Medi-Cal and Healthy
Families programs, and express intent that a portion of the
financing for the bill's provisions would have come from a
variety of sources, including revenues from counties. This
bill failed passage by the Senate Health Committee.
SB 1448 (Kuehl), Chapter 76, Statutes of 2006, established
the Health Care Coverage Act, which establishes a health
care coverage initiative as required in the waiver Special
Terms and Conditions.
AB 2607 (De La Torre) of 2006 was substantially similar to
SB 1332. AB 2607 was held on the Senate Appropriations
Committee suspense file.
SB 1100 (Perata and Ducheny), Chapter 560 Statutes of 2005
provides the framework for implementing the new federal
hospital finance waiver, including establishing a new
mechanism for funding of safety-net hospitals.
AB 2979 (Richman) of 2006 was an administration sponsored
bill that would have authorized DHCS to implement two
Medi-Cal managed care pilot projects that would require
mandatory enrollment for SPDs. AB 2979 was held on the
Senate Appropriations Committee suspense file.
AB 131 (Committee on Budget), Chapter 80, Statutes of 2005,
requires DHCS to evaluate the readiness of a Medi-Cal
managed care plan to commence operations to expand the
geographic areas they cover, and also requires DHCS to
provide to the fiscal and policy committees of the
Legislature quarterly updates, regarding activities to
improve the Medi-Cal managed care program and to expand to
new counties, as directed by the Budget Act of 2005.
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Arguments in support
The California Association of Public Hospitals and Health
Systems (CAPH) supports AB 342 in concept. They argue that
approval of the next waiver is critical to California's
public hospitals and encompasses their core funding for
essential outpatient and inpatient services provided to
Medi-Cal beneficiaries and the uninsured. CAPH also
supports the inclusion of a county alternative option in an
organized system of care for SPDs but states that key
issues remain to be fully worked out such as the definition
of medical home and ensuring adequate rates. CAPH further
states that the sections relating to CEED should be
considered placeholder language and that further changes
will be needed particularly with regard to network
structure, scope of benefits and definition of medical
home.
Aging Services of California supports in concept, but
expresses concerns that the time frame for the
implementation process for SPDs into a managed care model
is very aggressive and details about integrating medical
care, long-term care and home and community-based services
is unclear. Aging Services also states that it is troubled
by the lack of mention of adult day health care, which is a
vital, cost effective, community-based program for frail
persons and their caregivers and is crucial for a cost
effective system.
The Children's Specialty Care Coalition writes in support,
if amended, that although a number of their suggested
amendments were incorporated, the foremost remaining
concern is about children in the SPD population and the
recently stated intent to mandate enrollment of disabled
children into managed care. They request that children
should remain in the optional managed care enrollment
category so that additional work can be done to develop
contract and reporting requirements. With regard to CCS
pilots, they request additional amendments including an
appeal process for opting out of mandatory enrollment,
approval from the Legislature prior to any expansion, that
the definition of medical home meet the nationally accepted
criteria set by the American Academy of Pediatrics and that
there be additional specifications for the evaluation.
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The AIDS Healthcare Foundation (AHF) supports the direction
of the proposed 1115 waiver, however their support of the
bill is conditioned upon amendments. They state that the
current version of the bill does not acknowledge or
accommodate AHF's unique position, potentially forcing AHF
out of the managed care market. AHF is request amendments
to authorize Medi-Cal beneficiaries with HIV/AIDS to choose
a plan like AHF's and ensure that a plan like AHFs can
operate in a two-plan managed care county and that the
definition include a person with a confirmed HIV positive
test.
Concern and comments
The California State Association of Counties, Urban
Counties Caucus, County Welfare Directors Association and
the County Health Executives Association of California
write to express support for certain concepts, such as the
expansion of the CEED projects. They are concerned however
because they note that expansion relies on availability of
county funds, therefore they ask for sufficient
flexibility, including phasing in of new requirements, in
order for these projects to be managed within the limits of
available resources.
Molina Healthcare supports the concept of what they see as
improvements in health care for SPDs. However, they argue
that effective plan performance standards are already in
place and the enhanced standards in the bill are
unnecessary. They are also concerned about the provisions
that allow a beneficiary to choose a specialist as a
primary care provider. Molina Healthcare also states that
the proposed quarterly monitoring of provider networks by
DMHS and DHCS would be costly and unnecessary.
Molina Healthcare and the California Association of Health
Plans expressed concern that the county alternative options
would not be required to have a Knox-Keene license.
The Local Health Plans of California (LHPC) expressed
support of the effort to implement the new Medi-Cal 115
waiver, but they are concerned that some provisions of the
bill will be a detriment to the success of the waiver.
They argue that the survey of providers for accessibility
standards is unworkable and will force the desperately
needed specialists out away from Medi-Cal managed care.
STAFF ANALYSIS OF ASSEMBLY BILL 342 (John A. P?rez) Page
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They note that they encourage accessibility, but the truth
is that many providers' offices are not accessible. LHPC
also states that the survey itself will take hours of time
for a medical providers and this extra effort could drive
them away from the program. This concern is shared by
Molina Healthcare and the California Association of Health
Plans.
LHPC, Molina Healthcare and the California Association of
Health Plans also object to what they describe as punitive
cuts in health plan rates if they do not provide the
encounter data that DHCS wants.
The California Children's Hospital Association (CCHA) is
concerned about AB 342, principally because they argue that
the limitations on access to pediatric subspecialty care
must be addressed and mitigated in waiver and implementing
legislation. They request an amendment which would
dedicate the General Fund saving achieved in the waiver to
private safety net hospitals to ensure access to care for
low-income Californians. CCHA also requests a specific
amendment to strengthen the network provider provisions for
SPDS, which is a population that does include disabled
children, who have vastly different medical needs than
disabled adults.
The California Hospital Association (CHA) states that it is
critical that changes and ideas for the waiver be balanced
with the financial realties that hospitals must deal with
under federal health care reform, the state budget crisis
and a transition period to health care reform that will put
greater financial pressure on hospitals with little
improvement in coverage of the uninsured. They see this
five-year period as one where Medicare payments to
hospitals will be reduced, with the result being greater
losses and higher costs for hospitals. They note that the
significant coverage expansions do not begin until 2014
which will put intensified pressures on hospitals during
the next waiver. CHA argues that preserving the public and
private safety net must be the top priority of the 1115
waiver.
Arguments in opposition
Western Center on Law and Poverty (WCLP) has a position of
opposition, unless amended, because of concern that AB 342
STAFF ANALYSIS OF ASSEMBLY BILL 342 (John A. P?rez) Page
36
does not go far enough to protect the most vulnerable
Californians during the transitions that this waiver will
bring for SPDs, in particular that there are inadequate
protections for this significant change of moving SPDS into
mandatory Medi-Cal managed care. WCLP has suggested that
additional consumer protections are needed. These include
more specific requirements for primary and specialty care
providers as part of network adequacy, providing
beneficiaries 90 days to make a choice, a requirement of
in-person assessment of new SPDs within 30 days, a standard
of care for higher risk individuals where both the
potential for increased outcomes and for cost savings is
greatest and a requirement to arrange transportation.
WCLP is also concerned with provisions related to the
mandatory enrollment of dual eligibles, arguing that
requiring dual eligibles to enroll in a managed care plan
is a serious policy decision with potential disastrous
effects for dual eligibles and allowing an opt-out on the
Medicare side will not necessarily address the coordination
problems. WCLP further states that the Department should
not be granted broad mandatory enrollment authority and
that DHCS should be required to return for more specific
enrollment authority once more details about the pilots
have been developed. With regard to the coverage
expansion, WCLP requests amendments to the enrollment and
renewal language requiring development of a simple, working
enrollment process and a screen for other health coverage
programs, more specific definitions and standards for
"health care homes," "enhanced health care homes" and "care
coordination" and at least min minimal standards both on
network adequacy and timely access to care.
Disability Rights California writes in opposition, unless
amended, stating that they are not opposed to managed care,
but do oppose the mandatory managed care requirement in the
bill. They also expressed concern that the timing of this
significant policy change is left to DHCS and is being
planned too quickly. They note that the readiness
standards are imprecise and that the standards in the
California Healthcare Foundation study be adopted. Another
concerns is that the assessment to identify high risk
individuals, are not being done in a timely enough fashion
they argue.
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The Corporation for Supportive Housing (CSH) writes that by
receiving health care home services, the frequent user
initiative participants who were Medi-Cal beneficiaries
experienced a 60 percent decrease in emergency room visits
and a 69 percent decrease in inpatient days. CSH argues
that based on evaluations of this initiative, very
intensive face-to-face care coordination was a cornerstone
of success in improving health outcomes and decreasing
costs among this population. CSH requests amendments to
require health plans to deliver higher levels of services
to individuals considered high risk, in person assessments,
requirements to link high risk beneficiaries with community
resources and a definition of medical home using nationally
recognized standards. CSH further requests amendments to
promote medical homes in counties without managed care
plans.
The Alzheimer's Association writes that they are opposed
unless amended. With regard to mandatory enrollment of
SPDs, they request an amendment requiring supplemental
criteria to the plan readiness that is specific to this
population, expedited transmission of historical
utilization data and in-person comprehensive assessment.
They also request mandatory reporting to the Legislature on
outcomes.
The California Primary Care Association (CPCA) has an
opposed unless amended position and requests that the
pending legislation make clear that it is the State's
intention for the customary Medicaid requirements, such as
the prospective payment system or PPS reimbursement, to be
in effect come 2014, when coverage for the population under
133 percent of poverty becomes mandatory (and the federal
government begins to pay 100 percent of the coverage).
Similar protections should be included for the subsidized
populations that will be transitioned to the new insurance
exchange. CPCA is also seeking contracting protections for
the SPDs who will be transitioning into Medi-Cal managed
care.
The Congress of California Seniors adds, with regard to
mandatory enrollment of SPDs, that additional specificity
is needed with regard to coordinating services with home-
and community-based services and objects to exceptions to
the normal regulation and contracting processes.
STAFF ANALYSIS OF ASSEMBLY BILL 342 (John A. P?rez) Page
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PRIOR ACTIONS
Prior Version of the bill
Assembly Health: 18-0
Assembly Appropriations: 11-0
Assembly Floor: 78-0
COMMENTS
1. Urgency clause and urgency of issue. The bill contains
an urgency clause in order that an approved waiver can be
implemented as soon as possible. The existing waiver
expires on August 31, 2010.
2. This bill is likely to be significantly amended during
the remainder of the 2010 session. The state will be
negotiating with stakeholders and the federal government
through the remainder of the current session. Additional
changes are likely, including significant amendments that
would reflect federal direction or any other changes that
need to be made as a result of the negotiations. Should
this bill pass out of committee, the committee may want to
rehear it when these details are finalized.
3. There are no details on the financing elements of the
waiver proposal yet. A major part of the waiver proposal
is the hospital financing section. The plan proposes
significant changes in the way that hospitals are paid.
There is nothing in this bill that relates to the hospital
financing. Presumably either this bill will be amended or
another vehicle will be used to implement those portions,
once negotiations with CMS yield some agreement.
POSITIONS
Support: Aging Services of California (support in
concept)
AIDS Healthcare Foundation (if amended)
Association of California Healthcare Districts
(earlier version of bill)
California Association of Public Hospitals (in
concept)
STAFF ANALYSIS OF ASSEMBLY BILL 342 (John A. P?rez) Page
39
Children's Specialty Care Coalition (if amended),
Oppose: Alzheimer's Association (unless amended)
AARP (unless amended)
California Primary Care Association (unless amended)
Corporation for Supportive Housing (unless amended)
Congress of California Seniors (unless amended)
Disability Rights California (unless amended)
Western Center on Law & Poverty (unless amended)
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