BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 301
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          Date of Hearing:   March 29, 2011

                            ASSEMBLY COMMITTEE ON HEALTH
                              William W. Monning, Chair
                   AB 301 (Pan) - As Introduced:  February 9, 2011
           
          SUBJECT  :  Medi-Cal: managed care.

           SUMMARY  :  Extends the sunset date, from January 1, 2012 to 
          January 1, 2018, on the prohibition on incorporating California 
          Children's Services (CCS) covered services in a Medi-Cal managed 
          care (MCMC) contract.  

           EXISTING LAW  :

          1)Establishes the Medi-Cal Program, administered by 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 who 
            meet specified eligibility criteria.

          2)Establishes the CCS Program to provide specified medical care 
            and therapy services to children with eligible conditions.

          3)Authorizes the state to contract for comprehensive managed 
            health care services for Medi-Cal beneficiaries and requires 
            mandatory enrollment of beneficiaries in specified eligibility 
            categories.

          4)Prohibits, until January 1, 2012, CCS covered services from 
            being incorporated into MCMC contracts, except in county 
            organized health systems (COHS) plans in the counties of San 
            Mateo, Santa Barbara, Solano, Yolo, Marin, and Napa.

          5)Requires DHCS to seek proposals to establish models of 
            organized health care delivery for Medi-Cal eligible children 
            with CCS-eligible conditions and conduct an evaluation.

           FISCAL EFFECT  :  This bill has not been analyzed by a fiscal 
          committee.

           COMMENTS  : 

           1)PURPOSE OF THIS BILL  .  According to the author, the CCS 








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            Program has an important partnership with managed care plans 
            that protects children with certain complex and catastrophic 
            health conditions.  Children with serious and chronic health 
            conditions such as congenital heart disease, cancer, cleft 
            palate, premature birth, and other life-threatening conditions 
            depend on the CCS Program for high quality care.  The author 
            argues that this bill is necessary because CCS is an organized 
            delivery system with quality standards for providers that 
            ensure critically sick children are referred to the 
            appropriate pediatric trained provider and require physicians, 
            hospitals, and other providers meet strict quality and volume 
            standards in order to participate in the program.

          According to the author, the 2018 extension date proposed by 
            this bill was chosen because DHCS will begin four CCS pilot 
            projects in 2012 that are expected to last for five years.  
            The pilots are estimated to end in 2017, and the state would 
            need at least one more year to look at the results of the 
            evaluation of the pilots and determine the next phase for the 
            CCS delivery system.  This is important because four different 
            models will be piloted and careful decisions need to be made 
            about the future of CCS based on the results of the pilots. 

           2)BACKGROUND  .  Originally established in 1927, the CCS Program 
            provides diagnostic and treatment services, medical case 
            management, and physical and occupational therapy services to 
            children under age 21 with CCS-eligible medical conditions.  
            Examples of CCS-eligible conditions include, but are not 
            limited to, chronic medical conditions such as cystic 
            fibrosis, hemophilia, cerebral palsy, heart disease, cancer, 
            traumatic injuries, and certain infectious diseases.  CCS also 
            provides medical therapy services that are delivered at public 
            schools. 

            The CCS Program is administered as a partnership between 
            county health departments and DHCS.  As of January, 2010, 
            there were 178,530 children enrolled in CCS; 76% of which were 
            also eligible for Medi-Cal.  The Medi-Cal Program reimburses 
            for their care.  Of the remainder, 14% were also eligible for 
            the Healthy Families Program and 10% were CCS-only or other 
            insurance.

            CCS is a statewide program.  In counties with populations 
            greater than 200,000 (independent counties), county staff 
            perform all case management activities for eligible children 








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            residing within their county.  This includes determining all 
            phases of program eligibility, evaluating needs for specific 
            services, determining the appropriate provider(s), and 
            authorizing for medically necessary care.  For counties with 
            populations under 200,000 (dependent counties), the Children's 
            Medical Services Branch of DHCS provides medical case 
            management and eligibility and benefits determination through 
            its regional offices located in Sacramento, San Francisco, and 
            Los Angeles.  CCS authorizes and pays for specific medical 
            services and equipment provided by CCS-approved specialists.  

           3)MEDI-CAL MANAGED CARE  .  Mandatory enrollment of families and 
            children into a Medi-Cal managed care full risk plan was 
            authorized as part of the state budget of 1992.  In 
            implementing this mandatory enrollment, the former Department 
            of Health Services (now DHCS) released a strategic plan in 
            1993.  With regard to CCS, the Strategic Plan stated that the 
            department desired Medi-Cal children participating in managed 
            care to continue to have direct access to the level of highly 
            specialized services provided under the CCS Program.  In order 
            to assure that CCS-eligible children received the benefit of 
            fully-coordinated care, it would be the responsibility of the 
            managed care plan to identify children with CCS-eligible 
            conditions, arrange for referral to the local CCS office and 
            coordinate the provision of care.  CCS services would continue 
            to be provided through the CCS program while children would be 
            mandatorily enrolled in a health plan in the counties covered 
            by the managed care expansion for purposes of receiving 
            primary care and other services unrelated to the conditions 
            being treated by the CCS Program.  

            As of October 2010, managed care covered about 4.1 million 
            Medi-Cal enrollees in 25 counties with three different models. 
             The two-plan model covers about 2.7 million of the state's 
            7.6 million Medi-Cal recipients in 12 counties.  Geographic 
            Managed Care (GMC) serves about 420,000 in two counties, San 
            Diego and Sacramento.  COHS plans serve about 900,000 
            beneficiaries through five health plans in 11 counties.  
            Beginning June 1, 2011, DHCS will be implementing mandatory 
            enrollment of seniors and persons with disabilities in the 12 
            two-pan and two GMC counties.  This includes additional 
            CCS-eligible children who are in the disabled category.  

           4)CCS "CARVE-OUT  ."  Consistent with the Strategic Plan, SB 
            1371(Bergeson), Chapter 917, Statutes of 1994 was enacted to 








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            provide that CCS-covered services, for CCS-eligible children 
            would not be incorporated into managed care and would be 
            provided and paid for on a Fee-for Service basis through the 
            CCS Program for three years.  Also in line with the Strategic 
            Plan Strategic Plan, SB 1371 authorized pilot projects to test 
            alternative managed care models tailored to the special health 
            care needs of CCS Program, including using different payment 
            and incentive models.  No pilot projects were ever approved.  

          The "carve-out" has been extended repeatedly since then, usually 
            for three or four year periods.  The first extension allowed 
            the COHS in the counties of San Mateo, Santa Barbara, Solano, 
            and Napa to include CCS services ("carve-in").

           5)SECTION 1115 MEDI-CAL DEMONSTRATION/PILOT PROJECT WAIVER  .  
            California recently received federal approval for a new five 
            year Section 1115 Medi-Cal Demonstration Project Waiver, 
            entitled "A Bridge to Reform."  Section 1115 of the Social 
            Security Act authorizes the federal Secretary of Health and 
            Human Services to allow states to receive federal Medicaid 
            matching funds without complying with all of the federal 
            Medicaid rules.  Traditionally designed as research and 
            demonstration programs to test innovative program improvements 
            and to facilitate coverage expansions to populations not 
            otherwise eligible, they are also used to modify benefits 
            structures and financing mechanisms.  This waiver is a 
            successor to the Hospital Financing /Uninsured Waiver that was 
            approved in 2005 and includes a continuation of the hospital 
            financing provisions from the 2005 waiver.  Consistent with 
            the mandate of AB 6 X4 (Evans), Chapter 6, Statutes of 2009 
            Fourth Extraordinary Session, a primary focus of the successor 
            demonstration project is the coordination and integration of 
            services.  As required by AB 6 X4, and in preparation of the 
            waiver request, DHCS established a stakeholder process.  The 
            40-plus member stakeholder advisory committee (SAC) has been 
            holding public meetings since December 2009.  DHCS also 
            appointed five technical workgroups, to advise and assist, 
            including a Children with Special Health Care Needs Technical 
            Workgroup.

           6)CCS PILOTS  .  According to DHCS, the need to submit a new 
            waiver application presented an opportunity to transform the 
            delivery of health care to children with significant health 
            care needs enrolled in the CCS Program and to provide services 
            in a more efficient manner that improves coordination and 








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            quality of care through integration of delivery systems, uses 
            and supports medical homes, and provides incentives for 
            specialty and non-specialty care.  In preparation for the 
            redesign process, the California HealthCare Foundation (CHCF), 
            in the fall of 2009, engaged Health Management Associates to 
            provide technical assistance and explore, in discussion with a 
            large group of stakeholders, the issues that must be addressed 
            in the process.  The discussion was focused on exploring 
            potential options to redesign the CCS Program and see if a new 
            service delivery model would improve the CCS Program and meet 
            both stakeholder and the state's needs.

          Four potential models for CCS pilot projects emerged from the 
            CCS Technical Working Group and the SAC:

             a)   Existing Medi-Cal Managed Care Plans (MCO);
             b)   Specialty Health Care Plan (SHCP);
             c)   Enhanced Primary Care Case Management (EPCCM), and
          d)Provider-based Accountable Care Organization (ACO).

          DHCS has released two draft Request for Proposals (RFPs), one in 
            July 2010 and one in January 2011.  Fourteen Letters of Intent 
            were received in response to the July RFP.  DHCS plans to 
            release a final RFP in March 2011 with responses due in May.  
            Decisions would be announced in July 2011 and operations 
            planned to begin in January 2012.  

          SB 208 (Steinberg), Chapter 714, Statutes of 2010, the 
            legislation that implemented the 2010 renewal waiver required 
            DHCS to seek proposals to test these models either statewide 
            or on a more limited geographic basis and not limited to the 
            provision of CCS services.  DHCS is authorized to require 
            enrollment.  Payment may be on a capitated or risk-based 
            methodology.  DHCS is required to conduct an evaluation to 
            assess the effectiveness of the models.  SB 208 requires the 
            models to be established by January 1, 2012 and requires they 
            be selected from among the models developed by the Children 
            with Special Health Care Needs Technical Workgroup.  There is 
            no specified number of pilots and no ending date.  The models 
            must meet specified standards including establishing a network 
            that includes CCS-approved providers and maintain the current 
            system of regionalized pediatric specialty and subspecialty 
            services.  SB 208 also requires DHCS to conduct a simultaneous 
            evaluation, to assess the effectiveness of each model in 
            improving the delivery of health care services for these 








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            children and specifies the measures for the evaluation. 

            According to DHCS, CHCF and the Lucile Packard Foundation for 
            Children's Health are assisting with evaluation efforts.  The 
            evaluation will provide information about whether various 
            models help children or not, but instead of a classic 
            case-control study will be providing an evaluation in 
            real-time.  CCS clients who are also identified as Medi-Cal 
            Seniors and Persons with Disabilities beneficiaries will not 
            be mandatorily enrolled in MCMC at least until the 
            geographical locations for the CCS pilots have been 
            identified.  

           7)PREVIOUS LEGISLATION  .

             a)   AB 2379 (Chan), Chapter 333, Statutes of 2007, extended 
               the sunset date from August 1, 2008, to January 1, 2012 on 
               the CCS carve-out.

             b)    SB 1103 (Committee on Budget and Fiscal Review), 
               Chapter 228, Statutes of 2004, extended the sunset on the 
               carve-out from August 1, 2005 to September 1, 2008. 

             c)   AB 3049 (Committee on Health), Chapter 536, Statutes of 
               2002, extended the sunset on the carve-out from August 1, 
               2003 to August 1, 2005 and added COHS in Yolo and Marin 
               counties to the list of exceptions to the carve-out.  

             d)   AB 1107 (Cedillo), Chapter 146, Statutes of 1999, 
               extended the sunset on the carve-out until August 1, 2003.  


             e)   AB 469 (Papan) of 1999 would have allowed Medi-Cal 
               beneficiaries in the CCS Program to disenroll from 
               mandatory managed care if certain conditions are met.  AB 
               469 was vetoed by then Governor Davis.

             f)    SB 391 (Solis), Chapter 294, Statutes of 1997, extended 
               the CCS carve-out until August 1, 2000, except for 
               contracts entered into for COHS in the counties of San 
               Mateo, Santa Barbara, Solano, and Napa.  

             g)   SB 1371 required that CCS-eligible services be 
               "carved-out" of any Medi-Cal managed care contract until 
               three years after the effective date of the contract.  








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           8)SUPPPORT  .  The sponsors of this bill, the Children's Specialty 
            Care Coalition, point out that the CCS Program is currently 
            developing pilot projects to test different models of care for 
            children with serious and chronic health conditions.  
            According to the sponsors, there are four models under 
            consideration: MCO, SHCP, EPCCM, and ACO.  The sponsors argue 
            that it would be premature to end a carve-out that has been in 
            place for nearly twenty years until the pilot projects are 
            completed, evaluated and sound decisions can be made about the 
            best way to deliver medical care for children with serious, 
            life, threatening and chronic conditions.  In further support, 
            the sponsors point out that during the 1990's, as California 
            began enrolling low-income families into managed care, 
            policymakers became concerned that children in CCS would fail 
            to receive the same quality of care as they did through CCS.  
            As a result the CCS carve-out became law in 1994.  

          The California Children's Hospital Association writes in support 
            that this carve-out has enabled CCS to maintain an integrated, 
            statewide system of specialized health services for children 
            with serious and catastrophic health conditions.  This 
            important carve-out has been extended four times by the 
            Legislature.  The supporters write that the State is currently 
            developing pilot projects to test different systems of care 
            for CCS children and the children's hospitals have been in 
            discussion with the State about the possibility of 
            participation in the pilots.  The supporters argue the RFP for 
            the demonstrations, which the State has said will start 
            January 1, 2012, has not been released and as the 
            demonstrations are said to run up to five years, ending the 
            carve-out before 2018 would be premature. 

           REGISTERED SUPPORT / OPPOSITION  :   

           Support 
           
          Children's Specialty Care Coalition (sponsor) 
          American Federation of State, County and Municipal Employees 
          (AFSCME)
          California Children's Health Initiative
          California Children's Hospital Association
          California Medical Association
          California Primary Care Association
          Children's Hospital & Research Center Oakland








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          Children's Hospital Central California
          Children's Hospital Los Angeles
          CHOC Children's Hospital Orange County
          Hemophilia Council of California
          Lucile Packard Children's Hospital
          PICO California
          The 100% Campaign (The Children's Partnership, Children NOW, 
          Children's Defense Fund-California
          United Ways of California

           Opposition 

           None on file.

           Analysis Prepared by  :    Marjorie Swartz / HEALTH / (916) 
          319-2097