BILL ANALYSIS
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UNFINISHED BUSINESS
Bill No: SB 208
Author: Steinberg (D), et al
Amended: 10/6/10
Vote: 27 - Urgency
SENATE HEALTH COMMITTEE : 11-0, 4/22/09
AYES: Alquist, Strickland, Aanestad, Cedillo, Cox,
DeSaulnier, Leno, Maldonado, Negrete McLeod, Pavley, Wolk
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SENATE FLOOR : 38-0, 5/14/09
AYES: Aanestad, Alquist, Ashburn, Benoit, Calderon,
Cogdill, Corbett, Correa, Cox, Denham, DeSaulnier,
Ducheny, Dutton, Florez, Hancock, Harman, Hollingsworth,
Huff, Kehoe, Leno, Liu, Lowenthal, Maldonado, Negrete
McLeod, Oropeza, Padilla, Pavley, Romero, Runner,
Simitian, Steinberg, Strickland, Walters, Wiggins, Wolk,
Wright, Wyland, Yee
NO VOTE RECORDED: Cedillo, Vacancy
ASSEMBLY FLOOR : Not available
SUBJECT : Medi-Cal: demonstration project waiver
SOURCE : Author
DIGEST : This bill enacts statutory changes necessary for
the Department of Health Care Services and counties to
implement a proposed Section 1115 Comprehensive
CONTINUED
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Demonstration Project Waiver in the Medi-Cal Program.
Assembly Amendments expand the Senate version of the bill
relating to the Medi-Cal Waiver Program.
ANALYSIS : Existing federal law establishes the Medicaid
program to provide comprehensive health benefits to
low-income persons. Existing law establishes the federal
Medicaid Disproportionate Share Hospital program to provide
financial assistance to hospitals that serve large numbers
of Medicaid and uninsured patients. Existing law also
provides that states may be granted waivers of federal law
to implement their Medicaid programs.
Existing state law establishes the Medi-Cal program, the
state's Medicaid program, administered by the Department of
Health Care Services (DHCS), 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.
Existing law creates a hospital demonstration project 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
(California's Medicaid program). Existing law also creates
the Safety Net Care Pool as the federal funds available
under the demonstration project to ensure continued
government support for the provision of health care
services to uninsured populations. Existing law defines a
designated public hospital to be one of twenty-two
hospitals specifically named in the statute implementing
the federal waiver.
Existing law requires counties to provide medical services
for the medically indigent.
This bill:
1. Requires existing statutory provisions, enacted by SB
1100 (Perata), Chapter 560, Statutes of 2005,
implementing the hospital financing provisions of the
2005 Medi-Cal Hospital/Uninsured Care Waiver remain in
effect to the extent there is no conflict with this bill
or the terms and conditions of the new Medi-Cal Section
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1115 demonstration project.
2. Requires, in the event of a conflict between this bill
and the special terms and conditions required by the
federal Centers for Medicare and Medicaid Services (CMS)
for approval of the new demonstration project, the terms
and conditions to control.
3. Requires the state have priority to claim the first $500
million in federal funds obtained under the new
demonstration project as a match for expenditures
incurred under state-only programs.
4. Authorizes funds from the first $500 million be
re-allocated, if necessary as determined by the director
of DHCS to ensure that at least the $681.64 million of
"base funding", as defined, from the original waiver is
available to the designated public hospitals.
5. Grants the director authority to maximize available
federal funds including the use of intergovernmental
transfer funding for district hospitals that do not have
a contract through the Selective Provider Contracting
Program.
6. Establishes the Public Hospital Investment, Improvement
and Incentive Fund consisting of intergovernmental
transfers from counties or other specified governmental
entities, to be matched with federal funds if approved
by CMS and authorized by the waiver, and to be used for
investment, improvement and incentive payments for
designated public hospitals and the affiliated
governmental entities (Counties and UC).
7. Provides that participation in intergovernmental funding
is voluntary and that the transferring entity is
responsible for the administrative and staff costs to
the DHCS.
8. Requires DHCS to seek federal approval for a Medicare,
Medicaid, or combination, demonstration project or
waiver for persons who are Medi-Cal and Medicare
eligible (dual eligible) in up to four counties.
Authorizes DHCS to require dual eligibles to be assigned
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as mandatory enrollees as part of the pilot project. And
to identify the models for the pilot project by March 1,
2011.
9. Provides that mandatory enrollment in the dual eligible
pilot project applies only to an enrollees Medi-Cal
benefits and that enrollment in the Medicare Advantage
Special Needs Plan will continue to be optional.
10.Requires any pilot project to utilize existing
mechanisms, including contract, direct hire, public
authority or nonprofit consortium, when providing
In-Home Support Services (IHSS).
11.Authorizes DHCS to require the mandatory enrollment of
seniors and people with disabilities (SPDs) in a
Medi-Cal managed care plan commencing the later of June
1, 2011, or obtaining federal approval and allows a
phase-in over a 12 month period.
12.Establishes a methodology for the assignment of SPDs who
do not choose a plan that is based on utilizations
history, plan quality and the inclusion of safety net
providers; establishes a stakeholder workgroup to advise
on the development of quality data submission standards
and establishes penalties for plan noncompliance.
13.Establishes contract, performance, quality and network
adequacy measures and standards that must be met in
order to implement mandatory enrollment.
14.Provides that the terms and conditions of the CMS
approved demonstration project shall control in the
event of a conflict and in such event requires DHCS to
identify the specific provision and provide notice to
the Legislature.
15.Requires the health plans to develop a mechanism to
identify higher risk enrollees with complex health
needs, in consultation with individual plan member
consumers and stakeholders, and requires DHCS to review
and approve the mechanism.
16.Requires the plans to use a facility site review tool to
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assess the physical accessibility of providers and
requires it to be publicly available.
17.Specifies that the elements of a medical home include
providing referrals and assuring timely preventive,
acute and chronic illness treatment in the appropriate
setting.
18.Authorizes DHCS to make additional modifications to the
elements of a medical home, if necessary to secure
federal funding that is available under the Patient
Protection and Affordable Care Act (Public Law 111-148).
19.Authorizes, except in a county with a County Organized
Health System, DHCS to contract with additional plans to
provide services to SPDs in any county with less than
two existing Medi-Cal managed health care plans.
20.Authorizes DHCS, for a three-year period, to include a
risk sharing mechanism in the contract with the Medi-Cal
Managed Care Local Initiative demonstrating the highest
potential cost risk in a conversion from fee for service
to capitation in a specified rate study.
21.Provides, at the director's discretion, authority to
allow mandatory enrollment of SPDs in Los Angeles to be
phased in over a 12-month period using geography as a
factor.
22.Requires IHSS services provided to enrollees of Medi-Cal
managed health care plans to be provided by means of
existing mechanisms (contract, direct hire, public
authority or nonprofit consortium).
23.Establishes a mechanism, conditioned on federal
approval, for the voluntary transfer of public funds by
designated public hospitals, the University of
California, counties and other entities, to be used as
the nonfederal share of payments to Medi-Cal managed
care plans for services provided to Medi-Cal enrollees.
Require payments made by Medi-Cal managed care plans,
for services provided by these transferring entities, to
be no less than the entity would have received on a fee
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for service basis.
24.Requires DHCS to establish, by January 1, 2012,
organized health care delivery models for children
eligible for CCS and Medi-Cal. Any model selected must
be one of the following:
A. An enhanced primary care case management;
B. A provider-based accountable care
organization;
C. A specialty health care plan; or,
D. A Medi-Cal managed care plan that
includes payment and coverage for CCS-eligible
conditions.
25.Authorizes DHCS to require mandatory enrollment of CCS
eligible children in a pilot project.
26.Adds legislative findings related to the essential role
of safety net hospitals in serving the uninsured and
Medi-Cal enrollees and the effect that recent health
care reform will have in moving payment for health care
services to risk-based models and states that it is the
intent of the Legislature that funding provided to
designated public hospital, private disproportionate
share hospitals and district hospitals through a future
hospital quality assurance fee and under a new waiver is
implemented with the goal of providing balance and
fiscal equity, as specified, predictable and stable
funding and to ensure that hospitals have sufficient
resources to move towards efficient care and achieving
health reform goals and states that the development of
specific mechanisms to achieve these goals requires
future legislation.
27.Makes technical and clarifying changes to the hospital
provider fee enacted by AB 1383 (Jones) Chapter 627,
Statutes of 2009 and as amended by AB 1653, Chapter 218,
Statutes of 2010, to conform to the Medi-Cal State Plan
Amendment and modifications requested by CMS.
28.Clarifies the obligation of a hospital to pay the
provider fee.
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29.Authorizes the director to waive interest and penalties
if a hospital agrees to make up past due payments as
specified.
30.Authorizes Sacramento County to establish a stakeholder
advisory committee, as specified, to provide input on
the delivery of health care services to Medi-Cal
enrollees by the county safety net providers and
authorize the committee to submit input to the
department on specified subjects related to health care
providers and the county's health care delivery system.
31.Requires DHCS to consult with stakeholders and provide
notice to the Legislature prior to issuing specified
implementing notices in lieu of regulatory action.
32.Makes other technical, conforming and clarifying
changes.
33.Provides that enactment is contingent upon enactment of
AB 342 (John A. Perez and Monning).
Background
In 2005, California sought a five year federal waiver as a
Medicaid demonstration project under the authority of
Section 1115(a) of the Social Security Act. Under this
waiver, hospital financing was fundamentally restructured.
The non-federal share of Medi-Cal funds for 22 county and
University of California hospitals known as Designated
Public Hospitals was shifted from State General Funds to
certified public expenditures.
Federal authority to continue this financing structure
expires September 1, 2010. DHCS is in the process of
negotiating a new waiver, but the specific terms and
conditions have not yet been finalized. On August 19,
2010, DHCS requested a 60 day extension. On August 27,
2010 CMS granted the request. Given that the current
hospital financing waiver is expiring, a new waiver must be
negotiated and established by November 1, 2010. This bill
and the companion bill, AB 342, synthesize proposed
language submitted by the Governor at the May revision,
informal feedback from preliminary discussions with CMS,
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legislative revisions, and input from stakeholders.
Comments
This bill authorizes DHCS to continue to negotiate with CMS
in order to finalize the details of a new waiver that will
result in savings of up to $500 million per year by
obtaining federal funds to offset General Fund
expenditures. In addition, DHCS is estimating up to $250
million annually in savings in the Medi-Cal program. This
bill is also necessary to begin implementation of mandatory
enrollment of SPDs into Medi-Cal managed care plans and
development of pilot projects for CCS children and dual
eligbles.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
CTW:nl 10/6/10 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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