BILL ANALYSIS
AB 1076
Page 1
Date of Hearing: May 12, 2009
ASSEMBLY COMMITTEE ON HEALTH
Dave Jones, Chair
AB 1076 (Jones) - As Amended: May 5, 2009
SUBJECT : Medi-Cal.
SUMMARY : Requires the Department of Health Care Services
(DHCS) to expand the Medical Case Management (MCM) Program to
include Medi-Cal beneficiaries who have two or more chronic
conditions and have used the hospital emergency department (ED)
four or more times in the previous twelve months, and specifies
the type of services which must be included in case management
services. Requires the Medi-Cal disease management benefit to
include the designation of a primary care provider as a
patient's medical home. Contains an urgency clause to ensure
that the provisions of this bill go into immediate effect upon
enactment. Specifically, this bill :
1)Requires the director of DHCS, if he or she has established a
program of aggressive case management (known as the MCM
Program), to expand the program to include Medi-Cal
beneficiaries who meet all of the following conditions:
a) Have two or more chronic conditions, including substance
abuse disorders and mental health conditions;
b) Are not enrolled in a managed care plan;
c) Are not eligible for Medicare benefits;
d) Have received ED services on four or more occasions in
the previous 12 months; and,
e) Are currently seeking care for a condition that could
have been prevented with timely primary care access and
case management.
2)Requires case management services provided to include, but not
be limited to: coordinating services to ensure continuity of
care; establishing links to health care professionals; and,
community social services resources that would assist in
stabilizing the target population, and expediting the
authorization of medically necessary services.
3)Requires the existing Medi-Cal disease management benefit to
include the designation of a primary care provider as a
patient's medical home.
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EXISTING LAW :
1)Authorizes DHCS, where it is expected to be cost-effective, in
conducting Medi-Cal acute care inpatient hospital utilization
control, to establish a program of aggressive case management
of elective, nonemergency acute care hospital admissions for
the purpose of reducing both the numbers and duration of acute
care hospital stays by Medi-Cal beneficiaries. This program
is known as the MCM Program.
2)Permits DHCS, in conducting the MCM program, to conduct daily
reviews to determine the need for additional days of inpatient
care.
3)Requires DHCS to apply for a waiver of federal law to test the
efficacy of providing a disease management benefit to Medi-Cal
beneficiaries. This waiver is known as the Disease Management
Waiver.
4)Requires the Disease Management Waiver benefit established
under 3) above to include, but not be limited to, the use of
evidence-based practice guidelines, supporting adherence to
care plans, and providing patient education, monitoring, and
healthy lifestyle changes.
FISCAL EFFECT : This bill has not been analyzed by a fiscal
committee.
COMMENTS :
1)PURPOSE OF THIS BILL . According to the author, this is a
two-part bill that seeks to improve access to medically
necessary services, to better coordinate care and to provide
care in a more cost-effective setting by reducing the use of
hospital EDs. In expanding the MCM program, the author states
patients with chronic conditions who frequently use the
hospital ED will have assistance with care coordination by
linking patients to health care providers and community social
services, thereby reducing preventable hospitalizations and
frequent inappropriate emergency room visits. By requiring
the primary care provider be included in the benefits provided
under the current Disease Management Waiver, the author argues
this bill would benefit Medi-Cal beneficiaries in the
fee-for-service (FFS) program by establishing a medical home
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that would integrate the current disease management benefit
with the person's primary care provider.
The author points to a December 2008 presentation at a
conference sponsored by the California HealthCare Foundation
(CHCF) in which DHCS reported that several states are using
medical homes and targeted case management to increase health
outcomes and reduce avoidable ED visits and inpatient hospital
stays. The author also points to the success of the Frequent
Users of Care Initiative, where six pilot programs designed to
test new models of care for "frequent users" of hospital EDs
resulted in reduced avoidable use of ED services, decreased
inpatient hospital utilization, and connected participants to
housing, income benefits, health insurance, and a primary care
home.
2)BACKGROUND . Medi-Cal provides coverage to nearly 6.7 million
Californians, roughly half of whom are enrolled in FFS and the
other half in Medi-Cal managed care through both public and
private health plans. DHCS data indicate individuals enrolled
in FFS Medi-Cal include approximately 380,000 individuals who
are seniors or persons with disabilities (SPDs). 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, 29% have a mental health diagnosis and 16%
have diabetes. The average annual cost in Medi-Cal for SPDs
is $8,200 per year. Of the 380,000 individuals, approximately
20,300 individuals were identified by DHCS as having five or
more ED visits, and the cost of care was 3.3 times more
expensive than care for other beneficiaries within this target
population.
Disease management is used to describe a wide range of
approaches designed to identify patients with potentially
costly health conditions and encourage adherence to
recommended treatment plans and self-care strategies.
Traditional disease management programs focus on a defined
population of members with a specific health condition such as
diabetes or asthma. By comparison, case management programs
target members with a wide array of health conditions and
risks, including multiple chronic conditions, and establish
care plans that are customized to the needs of individual
patients.
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3)MEDICAL CASE MANAGEMENT PROGRAM . Existing law authorizes DHCS
to establish a program of aggressive case management of
elective non-emergency acute care hospital admissions for the
purpose of reducing the number and duration of acute care
hospital stays by Medi-Cal beneficiaries. The MCM Program was
enacted in statute through the health budget trailer bill in
1992 (SB 485 (Bronzan), Chapter 722, Statutes of 1992). MCM
is a voluntary non-disease-specific program in FFS Medi-Cal
designed to provide integrated care for complex, chronically,
or catastrophically ill patients. Beneficiaries considered
for MCM services include individuals who have been identified
as having a catastrophic or chronic illness and who may have
multiple diagnoses that have or may result in serious
complications but the program is not disease or condition
specific. DHCS indicates the typical case profile of a MCM
patient is someone who has a medical condition which may have
resulted in multiple hospital admissions without the MCM's
case management services. Beneficiaries who are dually
eligible for Medicare and Medi-Cal or who are enrolled in a
Medi-Cal managed care plan are not eligible for MCM services.
Enrollment is voluntary for beneficiaries and occurs through
the telephone, face-to-face contact, mail, or some combination
thereof.
MCM case managers are registered nurses employed by the state
that coordinate and authorize outpatient services which may
expedite a Medi-Cal beneficiary's hospital discharge to a
private residence or maintain them in a home-care setting.
Nurse case managers do not provide hands-on care but instead
work directly with hospitals, home health agencies,
physicians, and other Medi-Cal providers to ensure the
appropriate and expedited authorization of medically necessary
services. The goals of MCM are to ensure safe hospital
discharges, continuity of medical care in the home-care
setting, and to stabilize recipients with complex, chronic
and/or catastrophic medical conditions.
The MCM program has a staff of 109 individuals, of whom 106 are
registered nurses. MCM nurse case managers are stationed in
five field offices throughout the state and are assigned to
various hospitals and conduct site visits. Under federal law,
health care professionals such as nurses are reimbursed at a
higher matching rate (75% federal funds/25% state funds) by
the federal government. The MCM program has a total budget of
$14.7 million, of which $3.69 million is from the General
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Fund, and served approximately 12,400 Medi-Cal beneficiaries
in 2008.
DHCS indicates it does not have a specific cost/benefit return
on investment formula for the MCM program. DHCS tracks
program cases by region, diagnosis and other factors on a
monthly basis and in aggregate for a three-year period as
follows: a) Twelve months prior to receiving MCM services; b)
The period of time the person is receiving MCM services; and,
c) Twelve months following receipt of MCM services. Staffing
for the MCM program was expanded through Budget Change
Proposals (BCP) proposed by the Davis Administration during
the 2001-02 and 2002-03 fiscal years that assumed significant
savings. In 2001-02, the BCP assumed gross Medi-Cal savings
of $418,823 per nurse case manager, and the 2002-03 BCP
assumed gross Medi-Cal savings of $467,512 per year per nurse
case manager.
4)DISEASE MANAGEMENT WAIVER PROGRAM . The health budget trailer
bill of 2003 (AB 1762 (Committee on Budget), Chapter 230,
Statutes of 2003) established the Disease Management Waiver to
test the effectiveness of providing a Medi-Cal disease
management benefit. Eligibility for the Disease Management
Waiver is limited to those persons who are eligible for the
Medi-Cal Program as SPDs, or those persons over 21 years of
age who are not enrolled in a Medi-Cal managed care plan, or
are ineligible for Medicare, and who are determined by the
DHCS to be at risk of, or diagnosed with, select chronic
diseases, including, but not limited to, advanced
atherosclerotic disease syndromes, congestive heart failure,
and diabetes.
DHCS contracts with two separate vendors which operate two
disease management programs for Medi-Cal beneficiaries.
McKesson Health Solutions provides disease management services
in Alameda County (3,370 enrollees as of March 31, 2009) and
slightly over 120 zip codes in Los Angeles County (14,125
enrollees as of March 31, 2009) under a three-year $4 million
per year contract. The McKesson contract is in its second
year of operation. Positive Health Care (PHC) is a disease
management program for Medi-Cal beneficiaries who have
diagnosed with HIV or AIDS. PHC has a three-year $4 million
per year contract and began enrollment in March 2009.
Existing law requires DHCS to evaluate the effectiveness of the
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Disease Management Waiver, and DHCS has contracted with the
UCLA Center for Health Policy Research to evaluate the
following outcomes as compared to a control group in non-pilot
counties:
a) Financial: provision of services as a cost neutral or
cost savings benefit;
b) Beneficiaries: improved health outcomes;
c) Organizational: provider satisfaction, effectiveness of
community case workers, nurse triage line, and an outbound
calling system; and,
d) Clinical: vendor collected scores of a diabetic measure,
access to medications and a measurement used to compare
health plan performance.
According to DHCS' December 2008 presentation at the CHCF
conference, the first year results from the UCLA evaluation
are expected in July 2009. At the December 2008 CHCF
conference, DHCS indicated California's Disease Management
Waiver was introduced as a stand-alone intervention, and other
states are finding that other strategies magnify the effect of
disease management. The other strategies cited by DHCS
include a reliable medical home as a coordination partner,
better integration of disease management with other providers
and care systems through formalized working relationships, and
interoperable data sharing between disease management, primary
care providers, specialists, and mental health providers.
5)FREQUENT USERS OF CARE INITIATIVE . Many hospital EDs treat
individuals who visit hospitals multiple times a year, often
because of complex physical, mental, and social needs. Known
as "frequent users," these individuals often experience
chronic illness, mental health and substance abuse disorders,
and homelessness. Launched in 2002, the Frequent Users of
Health Services Initiative (the Initiative) was a six-year $10
million joint project of The California Endowment and CHCF,
with program direction and technical assistance provided by
the Corporation for Supportive Housing. The Initiative
included six pilot programs designed to test new models of
care for "frequent users" of hospital EDs. The Initiative
focused on building a more responsive system of care to
decrease frequent users' avoidable ED visits and hospital
stays.
An evaluation of the six pilot programs funded through the
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Initiative by the Lewin Group (Lewin) found the six programs
funded through the Initiative showed evidence of a reduction
in avoidable use of ED services, a reduction in inpatient
hospital utilization, and an increased connection of clients
to housing, income benefits, health insurance, and a primary
care home. Overall, the programs yielded statistically
significant reductions in ED utilization (30%) and hospital
charges (17%) in the first year of enrollment. Based on
analyses of a subset of individuals for whom two years of data
were available, ED utilization and charges decreased by an
even greater magnitude in the second year after enrollment. ED
visits decreased by 35% in the first year of the program for
this subset of individuals, and by year two, utilization
decreased by more than 60% from the pre-enrollment period.
Lewin's analysis of clients with two years of data showed
modest reductions in inpatient admissions and charges (17% and
14% respectively) and slight increases in cumulative inpatient
days (+3%) in the first year of enrollment in the programs.
However, second year post-enrollment reflected significant
decreases in inpatient admissions (-64%), cumulative days
(-62%), and charges (-69%) for all sites. Lewin hypothesized
that year one post-enrollment increases were due, in part, to
clients accessing appropriate primary care treatment through
which medical treatment needs, such as surgery, were
identified and scheduled. Once clients' health conditions
were stabilized through these interventions, the need for
hospitalizations was reduced.
Lewin also found connection to stabilizing services such as
housing, health insurance, and income benefits has been an
important intermediate outcome of the intervention models, and
most of the programs were successful in connecting clients to
needed resources. Sixty-three percent of program enrollees
had no insurance or were underinsured at enrollment. Among
the clients without adequate insurance at enrollment, 64% were
connected to coverage through the county indigent program, and
Medi-Cal applications were filed for 25%. Nearly half (45%)
of the frequent user clients enrolled in the six programs were
homeless at the time of enrollment. Among these, more than a
third were connected to permanent housing through HUD vouchers
through the U.S. Department of Housing and Urban Development,
and 54% were placed in shelters, board and care homes, or
other similar placements.
6)SUPPORT . The Corporation for Supportive Housing (CSH), a
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national non-profit dedicated to preventing and ending
homelessness, writes that it supports this bill out of its
experience with the Initiative. CSH writes this bill would
allow California to receive federal matching funds for
Medi-Cal reimbursement for services like case management and
care coordination for individuals who visit the EDs frequently
and experience psychosocial barriers to appropriate health
care. CSH states a significant percentage of individuals who
EDs identify as frequent users are Medi-Cal beneficiaries, and
though these beneficiaries incur disproportionately high costs
for emergency room and inpatient care, Medi-Cal restricts
reimbursement for multidisciplinary services, even though
studies indicate that these services significantly decrease
expensive ED visits and hospital stays. CSH states that
programs that currently provide these services have created
positive outcomes, including reduced homelessness, improved
health outcomes, decreased substance abuse, and less stress on
EDs. Additionally, CSH argues the previous year Budget Change
Proposal estimates show that this bill would be cost neutral
or better to the state, even in the first year of
implementation, due to resulting decreases in hospital costs.
The Western Center on Law & Poverty (WCLP) writes in support
that this bill offers a humane and cost-effective approach to
addressing the needs of frequent users. WCLP states some
"frequent users" of Medi-Cal services, particularly emergency
room services, could receive more appropriate and less
expensive care with case management, particularly those
frequent users who are homeless and have multiple chronic
illnesses, often including a mental illness. WCLP states this
bill will help meet the needs of this population by providing
them with a range of case management services, both within the
formal medical world and with social service resources. By
providing help with both medical and social service resources,
WCLP states this bill can help vulnerable low-income
populations achieve a more stable quality of life and limit
Medi-Cal expenditures.
7)RELATED LEGISLATION . AB 1542 (Committee on Health), which is
also before the Assembly Health Committee on May 12, 2009,
would establish the Patient-Centered Medical Home Act of 2009
to encourage health care providers and patients to partner in
a patient-centered medical home, as defined, that promotes
access to high-quality, comprehensive care. AB 1542 defines a
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"medical home," as one which meets the standards set forth by
the National Committee for Quality Assurance, and includes
specified characteristics, including quality and safety
components, and where care is coordinated and integrated
across all elements of the complex health care system and the
patient's community.
8)PREVIOUS LEGISLATION . SB 1738 (Steinberg) of 2008 would have
required DHCS, by July 1, 2009, to establish, in consultation
with specified stakeholders, the Frequent Users of Health Care
Pilot Program. The pilot program would have provided
supplemental services to Medi-Cal beneficiaries in at least
six eligibility categories of frequent users of health care in
addition to an individual's existing benefits under the
Medi-Cal Program. Benefits under SB 1738 were designed to
reduce a participating individual's use of hospital EDs when
more effective care, including primary, specialty, and social
services, could be provided in less costly settings. Under SB
1738, DHCS would have been required to prepare an evaluation
of the first two years of participant enrollment in the
program, and to report to the Legislature upon the completion
of the evaluation of the pilot program. SB 1738 would have
implemented the pilot program only if federal financial
participation was available and federal approvals were
obtained, and only to the extent that state funds were
available for use as the nonfederal share. SB 1738 would have
provided for the repeal of its provisions upon the completion
of the program or one year after the evaluation was released,
whichever was later. SB 1738 was vetoed by Governor
Schwarzenegger. In this veto message, the Governor wrote:
I strongly agree with the need to focus attention on
improving health outcomes of disabled Medi-Cal
beneficiaries. Strategies to slow the rate of
growth in Medi-Cal expenditures are an essential
component to restoring the state's fiscal balance
and achieving coverage for all Californians through
comprehensive health care reform.
Unfortunately, I cannot support this bill in its
current form with our ongoing fiscal challenges.
Instead, I would ask the author and stakeholders to
work with my Administration to identify strategies
to ensure these beneficiaries receive the right
care, at the right time, in the right setting. This
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solution should be a statewide solution that focuses
on primary care and comprehensive coordinated care
management.
I look forward to supporting a future proposal in
this area.
9)MAY REVISE OF 2008-09 . The Governor's summary of his May
Revision to his proposed 2008-09 budget signaled an interest
in making improvements to the FFS Medi-Cal. The May Revision
summary stated 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 and Medi-Cal spending
is concentrated among a small segment of enrollees, the
majority of whom have complex chronic medical conditions,
coupled with additional conditions, including behavioral
health conditions. Five percent of Medi-Cal enrollees incur
60% of all FFS Medi-Cal expenditures, and 2% of the most
expensive enrollees incur more than 40% of all FFS Medi-Cal
benefit expenditures. The May Revise summary stated these
statistics underscore the need to look carefully at the health
care needs of persons with serious health conditions to assure
that the right care is delivered at the right time in the
right setting to maximize health outcomes and contain overall
costs. 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 FFS
system that improve health outcomes and slows the overall rate
of cost growth.
10) POLICY ISSUE . The Administration has signaled its
intention, through the May Revise of last year and through the
Governor's veto message of SB 1738, and its interest in
improving FFS Medi-Cal to improve health outcomes and slow the
rate of cost growth in the program. One consideration for the
Legislature is that any net savings from expanding the MCM
Program and Disease Management Waiver Program, or in a
different approach that is put forth by the Administration,
would probably not be realized until the following budget year
because such programs often require up-front spending that
offset potential savings in the short run. However, if the
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proposals produce savings in the long term by reducing
hospitalization and other expensive medical services, a
long-term investment in such efforts may nonetheless make
sense on fiscal grounds, given the state's current budget
environment.
REGISTERED SUPPORT / OPPOSITION :
Support
American Federation of State, County & Municipal Employees,
AFL-CIO (prior version)
AstraZeneca
California Alliance for Retired Americans
Corporation for Supportive Housing
Western Center on Law & Poverty
Opposition
None on file.
Analysis Prepared by : Scott Bain / HEALTH / (916) 319-2097