BILL ANALYSIS Ó
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THIRD READING
Bill No: AB 97
Author: Assembly Budget Committee
Amended: 3/14/11 in Senate
Vote: 27 - Urgency
PRIOR VOTES NOT RELEVANT
SUBJECT : Budget Act of 2011: Health Programs
SOURCE : Author
DIGEST : This bill makes various changes to statutes
related to Medi-Cal, the Healthy Families Program, and the
Maddy Fund in order to implement the 2011-12 Budget Act.
Senate Floor Amendments of 3/14/11 delete the prior version
of the bill and inserts the current language to make
various changes to statutes related to Medi-Cal, the
Healthy Families Program, and the Maddy Fund.
ANALYSIS : This is the Omnibus Health Trailer Bill for
2011-12. It contains necessary changes to enact
modifications in the Budget Bill for 2011-12. It makes the
following key changes:
Establishment of a State Emergency Services Fund. A series
of laws provide revenues to compensate physicians,
hospitals and others for emergency services. The first of
these laws (Maddy), Chapter 1240, Statues of 1987, allows
for counties to establish Emergency Medical Services Funds.
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Although counties are not required to establish "Maddy
Funds," at least 49 counties have done so. Counties have
several sources of revenue for their "Maddy Funds," derived
from county penalty assessments on various criminal
offenses, motor vehicle violations, and traffic violator
school fees.
SB 1173 (Alarcon), Chapter 841, Statues of 2006, authorized
counties to elect to levy an additional $2 dollars for
every $10 dollars in based fines (above the Maddy Fund) for
purposes of supporting local emergency medical services and
to provide for specified pediatric trauma services.
This bill modifies statute associated with changes enacted
in SB 1173, Statutes of 2006. Specifically, this bill
provides for up to $9 million for local emergency medical
services and specified pediatric trauma services as
intended under the original enabling legislation.
In addition, effective as of July 1, 2011, it applies the
additional $2 penalty for every $10 dollars in base fines,
as established by SB 1173, Statutes of 2006 on a statewide
basis, previously a county board of supervisors could elect
to levy this penalty. These additional funds, anticipated
to be about $55 million, are to be used to offset $55
million in General Fund support in the Medi-Cal Program.
These funds can be used to match federal funds available
under the Medi-Cal Program whereas previously at the local
level, they were not eligible for a federal fund match.
Healthy Families Program. This bill makes three changes to
the Healthy Families Program which provides health, vision
and dental services to children from 133 percent to 250
percent of federal poverty. These changes are as follows:
A. Increase to Premiums. The Budget Bill reflects the
Governor's proposal to increase premiums for low-income
families enrolled in the Healthy Families Program. For
families with income from 151 percent to 200 percent of
poverty, an increase of $14 per child (total of $30 per
month), with a family maximum of $90 per month for three
or more children, was approved. For families with
income from 201 percent to 250 percent of poverty, an
increase of $18 per child (total of $42 per child per
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month), with a family maximum of $126 per month for
three or more children was approved. A total of $63.3
million ($22.2 million General Fund) is reflected in the
Budget Bill from this action.
B. Vision Benefit Change. In lieu of eliminating
Vision coverage for children, as proposed by the
Governor, this bill modifies how both eye-glass frames
and lenses are designed by the Healthy Families Program.
The Budget Bill reflects a reduction of $3 million
(General Fund) from this action.
C. Conform to Medi-Cal Mandatory Copayment for Hospital
Services. This bill makes changes to the Healthy
Families statute to conform to changes in the Medi-Cal
Program related to mandatory copayments for hospital
services. These are: (1) Emergency Room visits which
do not result in hospitalizations or outpatient
observation would increase from $15 to $50; and (2)
Hospital Inpatient days would have a copayment of $100
per day, with a maximum of $200 per day. The Budget
Bill reflects a reduction of $15.9 million ($5.3 million
General Fund) from this action.
Medi-Cal: Extension of AB 1422 (Bass), Chapter 157,
Statutes of 2009. The Medi-Cal provider gross premium tax,
authorized by AB 1422, Statutes of 2009, establishes a
funding source for essential preventative and primary
health care services provided through the Healthy Families
Program and Medi-Cal Program by adding Medi-Cal Managed
Care Plans to the list of insurers subject to California's
gross premiums tax of 2.35 percent. Existing statute
sunsets as of June 30, 2011.
This bill extends the sunset to January 1, 2014. The
Budget Bill appropriates a total of $194.4 million from
this special fund, including $97.2 million for the Medi-Cal
Program and $97.2 million for Healthy Families.
Medi-Cal: Managed Care and Transition from Lanterman
Developmental Center. The Budget Bill reflects baseline
expenditures related to the provision of Medi-Cal Managed
Care services provided to people with developmental
disabilities who have transitioned from Agnews
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Developmental Center or Lanterman Developmental Center.
This bill provides clarifying language to enable the
Department of Health Care Services to reimburse for all
Medi-Cal services provided under contract with health plans
that are not reimbursed by the federal Medicare Program
(related to the "dual eligible" population). It also
clarifies that Medi-Cal reimbursement shall be paid at
full-risk capitation levels as specified for this unique
population.
Medi-Cal: 250 Percent Working Disabled Program. This bill
temporarily rescinds a monthly premium increase in this
program since it could violate existing maintenance of
effort (MOE) requirements under the federal American
Recovery Act of 2009 provisions.
The language requires that if the Director of Health Care
Services determines that federal ARRA MOE requirements no
longer apply, the Director shall give notice to the Joint
Legislative Budget Committee and DOF, as well as post this
information on the DHCS website.
Medi-Cal: Extend Roger's Amendment for One-Year. The
Budget Bill reflects a reduction of $6.4 million (General
Fund) by extending the sunset date of Section 14091.3 of
Welfare and Institutions Code by one-year (to January
2013). This bill provides for the extension.
Specifically, this code section is based on federal law and
regulation (known as the Roger's amendment) that requires
state Medicaid Programs (Medi-Cal) to establish separate
payment amounts for emergency services and
post-stabilization services. The intent of the law is to
establish a basis for Medi-Cal Managed Care Plans to make
reasonable payments to Hospitals who are "out-of-network"
for these services. Historically, some hospitals have
litigated payments from Managed Care Plans that were high
enough for the federal CMS to determine them to be
unreasonable for the services provided.
Medi-Cal: Technical Sunset for Previous Rate Reduction.
This bill provides a sunset as of June 1, 2011 for previous
Medi-Cal rate reductions enacted in prior budgets as noted
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in Section 14105.191 of the Welfare and Institutions Code.
Medi-Cal: Intermediate Care Facilities Rate Reduction.
ICF-DD facilities provide 24-hour care to individuals with
developmental disabilities.
The Budget Bill reflects a reduction of $41.1 million
($20.5 million General Fund) by reducing Medi-Cal Provider
reimbursement by up to 10 percent for Intermediate Care
Facilities for the Developmentally Disabled (ICF-DD). This
bill reflects necessary statutory changes for this action.
Medi-Cal: Legislature's Intent and 10 Percent Provider
Reduction. The Budget Bill reflects a reduction of $1.1
billion ($537.1 million General Fund) in 2011-12 through
enactment of Medi-Cal Provider Payment reductions of up to
10 percent, effective as of June 1, 2011. This reduction
is applicable to both Medi-Cal Fee-for-Service and Medi-Cal
Managed Care providers. The Medi-Cal Provider Payment
reductions vary by Provider Type. The general intent of
this reduction is to reflect an overall 10 percent ongoing
reduction. DHCS intends to conduct rate analyses and
studies where necessary in order to obtain federal Centers
for Medicare and Medicaid (CMS) approval.
The bill specifies the Legislature's findings and
declarations, including the following key aspects:
In order to minimize the need for drastically
cutting enrollment standards or benefits during times
of economic crisis, it is crucial to find areas within
the program where reimbursement levels are higher than
required under the standard provided in Section
1902(a)(30)(A) of the federal Social Security Act and
can be reduced in accordance with federal law.
The setting of rates within the Medi-Cal program is
complex and is subject to close supervision by the
United States Department of Health and Human Services.
As the single state agency for Medicaid in
California, the DHCS has unique expertise that can
inform decisions that set or adjust reimbursement
methodologies and levels consistent with the
requirements of federal law.
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It is the intent of the Legislature for the DHCS to
analyze and identify where reimbursement levels can be
reduced consistent with the standard provided in
Section 1902(a)(30)(A) of the federal Social Security
Act and consistent with federal and state law and
policies, including any exemptions contained in the
provisions of the act that added this section,
provided that the reductions in reimbursement shall
not exceed 10 percent on an aggregate basis for all
providers, services and products.
This bill provides that the Director of the DHCS shall
adjust provider payments by up to 10 percent as specified
for Medi-Cal Fee-for-Service, Medi-Cal Managed Care, and
certain non-Medi-Cal Programs as specified.
This bill provides discretion to the Director of the DHCS
to be able to adjust the payments as specified with respect
to one or more categories of Medi-Cal providers, or for one
or more products or services rendered, or any combination
thereof, so long as the resulting reductions to any
category of Medi-Cal providers, in the aggregate, total no
more than 10 percent.
This bill specifies that payment reductions and adjustments
shall be implemented only if the Director determines that
the payments that result from the application of this
section will comply with applicable federal Medicaid
reimbursements and that federal financial participation
will be available. The Director shall determine whether
the payments comply with applicable federal Medicaid
requirements, including those set forth in Section
1396a(a)(30)(A) of Title 42 of the United States Code.
This bill specifies that certain services, facilities, and
payments are exempt from the payment reductions.
Medi-Cal: Managed Care Drug Rebate. The federal Patient
Protection and Affordable Care Act authorized states to
begin collecting rebates on drugs dispensed through
Medicaid managed care plans. The Budget Bill reflects
savings of $64 million (General Fund) by having the DHCS
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collect additional drug rebates for drugs dispensed through
Medi-Cal Managed Care Plans. The DHCS was also provided 15
state positions for this purpose.
This bill provides DHCS authority to make these collections
and clarifies the meaning of "State rebate".
Medi-Cal: Legislative Intent to Develop New Reimbursement
Methodology. This bill contains findings and declarations
that the Legislature recognizes that a new pharmacy
reimbursement rate, based on a pricing benchmark that
reflects actual acquisition costs, needs to be developed.
It is the intent of the Legislature to enact legislation by
August 1, 2011, that provides for development of a new
reimbursement methodology that will enable the DHCS to
achieve savings while continuing to reimburse pharmacy
providers in compliance with federal law. It also
recognizes that the DHCS may require providers,
manufacturers, and wholesalers to submit any data the
Director determines necessary or useful in preparing for
the transition from a methodology based on average
wholesale price to a methodology based on actual
acquisition cost.
Medi-Cal: Legislative Intent and 10 Percent Reduction on
Long-Term Care. The Budget Bill reflects a reduction of
$392.9 million ($172 million General Fund) in 2011-12
through enactment of a reduction of up to 10 percent,
effective as of June 1, 2011, for Long-Term Care facilities
as specified.
The bill specifies the Legislature's findings and
declarations, including the following key aspects:
In order to minimize the need for drastically
cutting enrollment standards or benefits during times
of economic crisis, it is crucial to find areas within
the program where reimbursement levels are higher than
required under the standard provided in Section
1902(a)(30)(A) of the federal Social Security Act and
can be reduced in accordance with federal law.
The setting of rates within the Medi-Cal program in
complex and is subject to close supervision by the
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United States Department of Health and Human Services.
As the single state agency for Medicaid in
California, the DHCS has unique expertise that can
inform decisions that set or adjust reimbursement
methodologies and levels consistent with the
requirements of federal law.
It is the intent of the Legislature for the DHCS to
analyze and identify where reimbursement levels can be
reduced consistent with the standard provided in
Section 1902(a)(30)(A) of the federal Social Security
Act and consistent with federal and state law and
policies, including any exemptions contained in the
provisions of the act that added this section,
provided that the reductions in reimbursement shall
not exceed 10 percent on an aggregate basis for all
providers, services, and products.
This bill provides for the Director of the DHCS to reduce
by up to 10 percent the Medi-Cal reimbursement provided to
Long-Term Care facilities as specified. It provides the
Director authority to adjust the percentage reduction as
along as the resulting reductions in the aggregate total no
more than 10 percent.
This bill specifies that payment reductions and adjustments
shall be implemented only if the Director determines that
the payments that result from the application of this
section will comply with applicable federal Medicaid
reimbursements and that federal financial participation
will be available. The Director shall determine whether
the payments comply with applicable federal Medicaid
requirements, including those set forth in Section
1396a(a)(30)(A) of Title 42 of the United States Code.
Medi-Cal: Hearing Aid Cap. Hearing Aids are a benefit in
Medi-Cal when supplied by a Hearing Aid Dispenser through
the prescription of an Otolaryngologist or attending
Physician. The Budget Bill reflects a reduction of
$507,000 (General Fund) by capping the maximum expenditures
per Medi-Cal enrollee for Hearing Aid expenditures at
$1,510 annually. This cap includes expenditures for the
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Hearing Aid, ear molds, and repairs. This dollar limit
applies to Adults.
It is anticipated that about 10 percent of Medi-Cal
enrollees, or 2,293 people, may be above this expenditure
cap. The average amount expended by this 10th percentile
group is $1,579 annually, or about $80 higher than the
proposed cap.
This bill places the $1,510 annual limit in statute and
assumes an implementation date of 60 days after the date
the DHCS secures all necessary federal approvals. Children
(21 years and under), pregnant women and people in
Long-Term Care Facilities are exempt.
The bill states that this benefit cap will only be
implemented to the extent permitted by federal law.
Medi-Cal: Physician "Soft Cap" After 7 Visits. The Budget
Bill reflects a reduction of $44.9 million (General Fund)
through implementation of a "soft cap" on Physician
Services provided under the Medi-Cal Program. This "soft
cap" would apply to Adults. Children (aged 21 years and
under), pregnant women, and residents in Long-Term Care
facilities are exempt.
The "soft cap" would apply to both Medi-Cal Fee-for-Service
and Managed Care plans. It affects outpatient primary care
and specialty care provided under the direction of a
Physician in the following general settings:
Hospital Outpatient Department;
Outpatient Clinic;
Federally Qualified Health Centers (FQHCs);
Rural Health Centers; and
Physician Offices.
This bill implements a cap of seven visits on the total
number of Physician Office and Clinic Visits for Physician
Services provided by a Physician, or under the direction of
a Physician, that are covered under the Medi-Cal Program.
For the purpose of this limit, a visit includes Physician
Services provided at any FQHC, Rural Health Clinic,
community clinic, outpatient clinic, and hospital
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outpatient department.
Visits exceeding the seven per Medi-Cal beneficiary will be
required to be certified by the Physician, or medical
professional under the supervision of a Physician,
attesting that one or more of the following circumstances
is applicable:
Will prevent deterioration in a beneficiary's
condition that would otherwise result in an admission
to an emergency department;
Will prevent deterioration in a beneficiary's
condition that would otherwise result in inpatient
admission;
Will prevent disruption in ongoing medical therapy
or surgical therapy, or both, including but not
limited to medications, radiation, or wound
management;
Are necessary for diagnostic workup in progress
that would otherwise result in inpatient or emergency
department admission; or
Are necessary for the purpose of assessment and
form completion for Medi-Cal recipients seeking or
receiving in-home supportive services.
The certification is a written declaration as specified in
the legislation. The certification is to be maintained
onsite at the medical location as specified.
Services not subject to this 7 visit cap limit include: (1)
Specialty Mental Health Services as specified; (2) any
pregnancy-related visit as specified.
The 7 visit cap limit shall not apply to the following
Medi-Cal beneficiaries: (1) Children (aged 21 and under)
in the Early and Periodic Screening, Diagnosis, and
Treatment (EPSDT) Program; and (2) an individual residing
in a Long-Term Care facility as defined.
For Managed Care Plans, except for the Senior Care Action
Network, or AIDS Healthcare Foundation, payment shall be
reduced by the actuarial equivalent amount of the benefit
reductions from the implementation of the benefit cap
amounts.
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The bill states that the DHCS may seek input from consumer
organizations and the provider community, as applicable,
prior to implementation.
Implementation is to occur no sooner than 60 days after the
date the DHCS secures all necessary federal approvals.
Medi-Cal: Over-the-Counter Drug Change. The Budget Bill
reflects a reduction of $2.2 million (General Fund) by
eliminating non-prescription cough and cold products for
Adults. Specifically, these are "over-the-counter"
products such as Nyquil, Robitussin, Alka-Seltzer, and
similar cough and cold products.
This bill specifies that non-legend acetaminophen
containing products are no longer covered benefits, except
for Children (aged 21 years and under) enrolled in the
EPSDT Program.
Medi-Cal: Limit to Enteral Nutrition. The Budget Bill
reflects a reduction of $14.5 million (General Fund) by
limiting Enteral Nutrition products provided to Adults.
Specifically, these products would only be provided for
Adults who must be tube-fed. Conditions which require tube
feeding include, but are not limited to, anatomical defects
of the digestive tract or neuromuscular diseases.
This bill specifies that enteral nutrition products are
limited to, those products to be administered through a
feeding tube, including, but not limited to, a gastric,
nasogastric, or jejunostomy tube. Patients with diagnoses,
including but not limited to, malabsorption and inborn
errors of metabolism, if the product has been shown to be
neither investigational nor experimental when used as part
of a therapeutic regimen to prevent serious disability or
death, will be exempt.
Medi-Cal: Legislative Intent and Mandatory Copayments.
The Budget Bill reflects reductions by implementing
mandatory copayments for specified services in Medi-Cal.
The reductions are as follows:
$152.8 million (General Fund) by implementing
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mandatory copayments of $5 per visit at the point of
service.
$140.3 million (General Fund) by implementing
mandatory copayments of $3 per prescription for
preferred drugs (Generics) and $5 per prescription for
non-preferred (Brand) at the point of service.
$262.8 million (General Fund) by implementing
mandatory copayments of (1) $50 for Non-Emergency Room
use of an Emergency Room; (2) $50 for Emergency Room
use; and (3) $100 for an Inpatient Day, with a maximum
of $200 per Inpatient stay.
$27.9 million (General Fund) by implementing
mandatory copayments of $5 per Dental Office visit.
The bill specifies the Legislature's findings and
declarations, including the following key aspects:
In order to minimize the need for drastically
cutting enrollment standards or benefits during times
of economic crisis, it is crucial to find areas within
the program were beneficiaries can share
responsibility for utilization of health care whether
they are participating in the Fee-for-Service or
Managed Care model of service delivery;
As the single State agency for Medicaid in
California, the DHCS has a unique expertise that can
inform decisions that set or adjust cost sharing
responsibilities for Medi-Cal beneficiaries receiving
health care services;
It is the intent of the Legislature for the DHCS to
obtain federal approval to implement cost-sharing for
Medi-Cal beneficiaries and permit providers to require
that individuals meet their cost-sharing obligation
prior to receiving care or services.
This bill requires Medi-Cal beneficiaries to make
copayments as described. The copayments shall be set by
the DHCS, at the maximum amount provided for as noted,
except that each copayment amount shall not exceed the
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maximum amount allowable pursuant to State Plan Amendments
or other federal approvals.
Medi-Cal: County Administration Suspension of
Cost-of-Doing-Business. The Budget Bill reflects a
reduction of $11.8 million (General Fund) by eliminating
the cost-of-doing-business for Medi-Cal eligibility
administration conducted by the counties. This bill
contains language for this suspension.
Medi-Cal: Legislative Intent and Cessation of Adult Day
Health Care Services and Transition Program. The Budget
Bill reflects (1) elimination of Adult Day Health Care
Services as a Medi-Cal Optional Benefit; and (2) provides
$85 million (General Fund), and federal matching funds to
provide for a transition for existing ADHC enrollees to
other Medi-Cal appropriate services, and to facilitate when
applicable transition to newly-developed federal Waiver
services once implemented.
This bill specifies the Legislature's findings and
declarations, including the following key aspects:
During times of economic crisis, it is crucial to
find areas within the Medi-Cal Program where
efficiencies can be achieved while continuing to
provide community-based services that support
independence.
Adult Day Health Care has been vulnerable to fraud
and despite attempts to curtail and prevent fraud,
including but not limited to, a moratorium on new
facilities and onsite treatment authorization request
review, fraud continues in this area.
California has added services and programs to
enable vulnerable populations to remain in the
community, as specified.
There are alternative services to meet the needs of
Medi-Cal beneficiaries utilizing ADHC, including
in-home supportive services, physical, occupational,
and speech therapies, nonemergency medical
transportation, and home health services.
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It is the intent of the Legislature for the DHCS to
obtain federal approval to eliminate ADHC as a
Medi-Cal Optional Benefit.
This bill states that notwithstanding any other provision
of law related to the Medi-Cal program or to Adult Day
Health Care, Adult Day Health Care is excluded from
coverage under the Medi-Cal Program. This shall become
implemented on the first day of the first calendar month
following 90 days after the effective date of the act that
adds this section or on the first day of the first calendar
month following 60 days after the date the DHCS secures all
necessary federal approvals to implement this section,
whichever is later.
This bill provides that as a result of enactment to
eliminate Adult Day Health Care as an Optional Benefit, the
DHCS shall implement a short-term program to fund
organizations to assist individuals receiving ADHC services
to transition to other Medi-Cal services, social services,
and respite programs, or to provide social activities and
respite assistance for individuals who were receiving ADHC
services at the time the services were eliminated. The
goal of this funding is to minimize the risk of
institutionalization by identifying needed services
available in the community and providing beneficiaries
assistance in accessing those services.
This bill requires existing ADHC centers to provide
relevant participant information as specified to ensure a
smooth transition.
This bill provides the DHCS certain public contract code
exemptions to enable the DHCS to contract with public or
private entities as specified to enter into contracts for
the purposes of implementing this article and providing for
a smooth transition.
This bill states that the specified short term program to
assist individuals receiving ADHC services to transition to
other Medi-Cal services, social services, and respite
programs, or to provide social activities and respite
assistance for individuals who were receiving ADHC services
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at the time the services were eliminated, is subject to an
appropriation in the annual Budget Act.
Medi-Cal: Legislative Intent for Legislation on Federal
Waiver. This bill states that during the 2011-12 Regular
Session of the Legislature, legislation will be adopted to
create a new program called the Keeping Adults Free from
Institutions Program. This program will provide a
well-defined scope of services to eligible beneficiaries
who meet a high medical acuity standard and are at
significant risk of institutionalization in the absence of
such community-based services. As prescribed by subsequent
statute the DHCS shall develop a federal Waiver to maximize
federal reimbursement for this program to the extent
permitted by federal law. The Budget Act of 2011 incudes
funding for the KAFI program.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: Yes
CTW:nl 3/15/11 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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