BILL ANALYSIS                                                                                                                                                                                                    

                   Senate Appropriations Committee Fiscal Summary
                           Senator Christine Kehoe, Chair

                                           438 (Yee)
          Hearing Date:  5/28/2009        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  
                                   in the tens of millions of dollars  
          driven by 
                                   the number of applicants, the  
                                   of services, and the type of health  

          Data system update and          unknown, but up to millions of    
          feasibility study report dollars in one-time system  


          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 tens of 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  

          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