BILL ANALYSIS Ó
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THIRD READING
Bill No: AB 97
Author: Assembly Budget Committee
Amended: 3/16/11 in Senate
Vote: 27 - Urgency
PRIOR VOTES NOT RELEVANT
SENATE BUDGET & FISCAL REVIEW COMMITTEE : 11-5, 3/16/11
AYES: Leno, Alquist, DeSaulnier, Evans, Liu, Lowenthal,
Rubio, Simitian, Wright, Hancock, Wolk
NOES: Huff, Emmerson, Fuller, Anderson, La Malfa
SENATE FLOOR : 36-2, 3/16/11
AYES: Alquist, Anderson, Berryhill, Blakeslee, Calderon,
Cannella, Corbett, De León, DeSaulnier, Dutton, Emmerson,
Evans, Fuller, Gaines, Hancock, Harman, Hernandez, Huff,
Kehoe, Leno, Lieu, Liu, Lowenthal, Negrete McLeod,
Padilla, Pavley, Price, Rubio, Runner, Simitian,
Steinberg, Strickland, Vargas, Wolk, Wright, Wyland
NOES: Correa, Yee
NO VOTE RECORDED: La Malfa, Walters
ASSEMBLY FLOOR : 59-14, 3/16/11 - See last page for vote
SUBJECT : Budget Act of 2011: Health Programs
SOURCE : Author
DIGEST : This bill makes various changes to statutes
related to Medi-Cal and the Healthy Families Program in
CONTINUED
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order to implement the 2011-12 Budget Act.
Senate Floor Amendments of 3/14/11 delete the prior version
of the bill and insert the current language to make various
changes to statutes related to Medi-Cal, the Healthy
Families Program, and the Maddy Fund.
Note: Senate Budget Committee amendments of 3/16/11 deleted
language regarding Medi-Cal Managed Care Tax and
Maddy Emergency Service Fund provisions, and
appropriated $1,000 from the General Fund to the
State Department of Health Care Services for
administration purposes.
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:
1. 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 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
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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.
2. 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 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.
3. 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
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DOF, as well as post this information on the DHCS
website.
4. 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.
5. 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 in Section 14105.191 of the Welfare and
Institutions Code.
6. 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.
7. 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
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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.
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.
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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 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.
8. 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 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".
9. 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
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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.
10. 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
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
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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.
11. 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 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
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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.
12. 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
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 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
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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.
This 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
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the date the DHCS secures all necessary federal
approvals.
13. 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
14. 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.
15. 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
mandatory copayments of $5 per visit at the point of
service.
$140.3 million (General Fund) by implementing
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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.
This 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
maximum amount allowable pursuant to State Plan
Amendments or other federal approvals.
16. Medi-Cal: County Administration Suspension of
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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.
17. 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.
It is the intent of the Legislature for the DHCS to
obtain federal approval to eliminate ADHC as a
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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 at the time the services were
eliminated, is subject to an appropriation in the annual
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Budget Act.
This bill appropriates $1,000 from the General Fund to
the State Department of Health Care Services for
administrative purposes.
18. 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 (KAFI) 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: No
ASSEMBLY FLOOR :
AYES: Alejo, Allen, Ammiano, Atkins, Beall, Block,
Blumenfield, Bonilla, Bradford, Brownley, Buchanan,
Butler, Charles Calderon, Campos, Carter, Cedillo,
Chesbro, Davis, Dickinson, Donnelly, Eng, Feuer,
Fletcher, Fong, Fuentes, Furutani, Galgiani, Gatto,
Gordon, Hall, Harkey, Hayashi, Roger Hernández, Hill,
Huber, Hueso, Huffman, Lara, Bonnie Lowenthal, Ma,
Mendoza, Mitchell, Monning, Nestande, Norby, Olsen, Pan,
Perea, V. Manuel Pérez, Portantino, Skinner, Smyth,
Solorio, Swanson, Torres, Wieckowski, Williams, Yamada,
John A. Pérez
NOES: Achadjian, Bill Berryhill, Conway, Cook, Garrick,
Hagman, Halderman, Jeffries, Knight, Mansoor, Miller,
Morrell, Valadao, Wagner
NO VOTE RECORDED: Gorell, Grove, Jones, Logue, Nielsen,
Silva, Vacancy
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CTW:mw 3/17/11 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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