BILL ANALYSIS Senate Appropriations Committee Fiscal Summary Senator Christine Kehoe, Chair 438 (Yee) Hearing Date: 5/18/2009 Amended: 5/6/2009 Consultant: Katie Johnson Policy Vote: Health 9-2 _________________________________________________________________ ____ BILL SUMMARY: SB 438 would require the Department of Health Care Services (DHCS) to seek federal approval to implement a program for accelerated enrollment of children and pregnant women in the Medi-Cal program. _________________________________________________________________ ___ Fiscal Impact (in thousands) Major Provisions 2009-10 2010-11 2011-12 Fund DHCS administration upon implementation, unknown, General/ and accelerated benefits but significant ongoing costs likely Federal in the millions of dollars driven by the number of applicants, the utilization of services, and the type of health plan Data system update and unknown, but up to millions of General/ feasibility study report dollars in one-time system updatesFederal _________________________________________________________________ ____ STAFF COMMENTS: This bill meets the criteria for referral to the Suspense File. Existing law provides for the Medi-Cal program, administered by the DHCS, to be the state's version of the federal Medicaid program. Medi-Cal provides comprehensive health benefits to low-income persons, including the aged, blind, disabled, pregnant women, and children and their families. Existing law provides for the Healthy Families Program (HFP), as administered by the Managed Risk Medical Insurance Board (MRMIB), which is the state's version of the federal Children's Health Insurance Program. HFP provides low-cost medical, dental, and vision benefits to low-income children. Existing law provides for the accelerated enrollment of children in Medi-Cal for children making enrollment changes between HFP and Medi-Cal, enrolling in Medi-Cal through the Child Health and Disability Program (CHDP), applying for free lunches through the National School Lunch program, and enrolling through the single point of entry, a central administrative entity that receives applications and sends them to the appropriate counties for eligibility determination. This bill would require the DHCS to seek federal approval of any state plan amendments necessary to implement a program for the accelerated enrollment of children and pregnant women in the Medi-Cal program. This bill would require the DHCS to commence implementation of this program on the first day of the second Page 2 SB 438 (Yee) month following the month in which the federal government approves the state plan amendments or on July 1, 2010, whichever is later. This bill would provide that the DHCS should implement this bill only if federal financial participation is available. This bill would require a county, upon the application of a child or pregnant woman, to determine whether the applicant appears eligible for Medi-Cal benefits, and if so, to grant accelerated enrollment to the applicant. This bill would require that a county, upon granting accelerated enrollment for a child or pregnant woman, the county would determine whether or not the applicant was eligible for Medi-Cal. If the applicant is determined to be ineligible, the county would be required to report the finding to the Medical Eligibility Data System (MEDS) so that benefits would be discontinued. It takes approximately up to 45 days to process a Medi-Cal application. Thus, the state would pay for an extra 45 days of coverage for all Medi-Cal children and pregnant women applicants that appear to be eligible at the time of application and if the applicant is determined ineligible, the state could likely not claim federal reimbursement. Although the costs of implementing this bill's provisions are unknown, they are likely in the millions of dollars in general and federal funds. The costs would depend on several factors, including the number of potential applicants, which is unknown, but is potentially in the tens to hundreds of thousands each month, and whether or not the applicant would be enrolled in a managed care or a fee-for-service plan. The more people enrolled in managed care, the more expensive the 45 days would be because the DHCS would pay a health care service plan a fixed rate to cover the person, whereas a person enrolled in a fee-for-service plan would produce costs for each service he or she sought from a provider, the total of which would likely be less than the managed care rate. This bill would also require a county that determines that a child is eligible for the Medi-Cal program with a share of cost to enroll that child in Medi-Cal and subsequently forward the application to the Managed Risk Medical Insurance Board (MRMIB) for an assessment of the child's eligibility for the Healthy Families Program (HFP). This provision would increase a county welfare office's administrative expenses in an unknown, but possibly significant, amount that would depend on the number of children deemed eligible for Medi-Cal with a share of cost. In addition, to implement this bill, the DHCS would need to update the MEDS system to accommodate the accelerated enrollment. It is estimated that the DHCS would need an unknown amount likely in the millions of dollars to complete a feasibility study report for the technology changes and then the actual changes. Medi-Cal costs are generally shared 50 percent General Fund and 50 percent federal funds. However, in February of 2009, President Obama signed the American Reinvestment and Recovery Act (ARRA) into law. As a result, the Federal Medical Assistance Percentage (FMAP) increased from 50 percent to 61.59 percent. Thus, retroactively from October 1, 2008, through December 31, 2010, the federal government would pay for approximately 62 percent and the state General Fund would pay for 38 percent of benefit-related Medi-Cal expenditures. Page 3 SB 438 (Yee) Additionally, Medi-Cal technology upgrades are shared 10 percent General Fund and 90 percent federal funds. It is possible that the changes to MEDS necessitated by this bill could be funded at that cost sharing ratio. However, if that is not the case, then the sharing ratio would be 50 percent General Fund and 50 percent federal funds. This bill is similar to SB 1459 (Yee) of 2008 that would have, among its other provisions, established presumptive eligibility for pregnant women applying for Medi-Cal at county eligibility offices. SB 1459 was held in the Senate Appropriations Committee.