BILL ANALYSIS Ó AB 301 Page 1 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 AB 301 Page 2 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 AB 301 Page 3 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 AB 301 Page 4 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 AB 301 Page 5 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 AB 301 Page 6 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. AB 301 Page 7 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 AB 301 Page 8 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