BILL NUMBER: AB 574 ENROLLED
BILL TEXT
PASSED THE SENATE AUGUST 30, 2011
PASSED THE ASSEMBLY SEPTEMBER 2, 2011
AMENDED IN SENATE AUGUST 15, 2011
AMENDED IN SENATE JUNE 22, 2011
AMENDED IN ASSEMBLY MARCH 23, 2011
INTRODUCED BY Assembly Member Bonnie Lowenthal
(Coauthor: Assembly Member Chesbro)
FEBRUARY 16, 2011
An act to amend Sections 1231.5, 1343.1, 1367.63, 1580.1, 1734.5,
and 100315 of the Health and Safety Code, and to amend Sections
14002.5, 14005.12, 14041.1, 14091.3, 14105.19, 14105.191, 14115.75,
14131.10, 14167.1, 14168.1, and 14182 of, and to add Chapter 8.75
(commencing with Section 14591) to, and to repeal Chapter 8.75
(commencing with Section 14590) of, Part 3 of Division 9 of, the
Welfare and Institutions Code, relating to the elderly.
LEGISLATIVE COUNSEL'S DIGEST
AB 574, Bonnie Lowenthal. Program of All-Inclusive Care for the
Elderly.
Existing law establishes the federal Medicaid Program,
administered by each state, California's version of which is the
Medi-Cal program. The Medi-Cal program, which is administered by the
State Department of Health Care Services under the direction of the
Director of Health Care Services, provides qualified low-income
persons with health care services. Existing federal law establishes
the Program of All-Inclusive Care for the Elderly (PACE), which
provides specified services for older individuals so that they may
continue living in the community. Federal law authorizes states to
implement the PACE program as a Medicaid state option.
Existing state law authorizes the director to establish the
California Program of All-Inclusive Care for the Elderly and contract
with up to 10 demonstration projects to develop risk-based,
long-term care pilot programs. Existing law also establishes PACE
program services as a covered benefit of the Medi-Cal program.
Existing law authorizes the department to enter into specified
contracts for implementation of the PACE program, and also enter into
separate contracts with certain PACE organizations, to fully
implement the single state agency responsibilities assumed by the
department, as specified. Existing law authorizes the department to
enter into separate contracts with up to 10 PACE organizations, but
prohibits certain contracts unless a Medicaid state plan amendment,
electing PACE as a state Medicaid option, has been approved by the
federal Centers for Medicare and Medicaid Services.
This bill would, instead, require the department to establish the
California Program of All-Inclusive Care for the Elderly and would
delete the pilot program and demonstration project requirements in
these provisions. This bill would also provide that the department
may enter into contracts with public or private nonprofit
organizations for implementation of the PACE program and increase to
15 the number of separate contracts the department may enter into
with PACE organizations, as defined. This bill would make other
conforming changes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 1231.5 of the Health and Safety Code is amended
to read:
1231.5. The department may grant to a PACE program, as defined in
Chapter 8.75 (commencing with Section 14591) of Part 3 of Division 9
of the Welfare and Institutions Code, exemptions from the provisions
contained in this chapter in accordance with the requirements of
Section 100315.
SEC. 2. Section 1343.1 of the Health and Safety Code is amended to
read:
1343.1. This chapter shall not apply to any program developed
under the authority of Chapter 8.75 (commencing with Section 14591)
of Part 3 of Division 9 of the Welfare and Institutions Code.
SEC. 3. Section 1367.63 of the Health and Safety Code is amended
to read:
1367.63. (a) Every health care service plan contract, except a
specialized health care service plan contract, that is issued,
amended, renewed, or delivered in this state on or after July 1,
1999, shall cover reconstructive surgery, as defined in subdivision
(c), that is necessary to achieve the purposes specified in
subparagraph (A) or (B) of paragraph (1) of subdivision (c). Nothing
in this section shall be construed to require a plan to provide
coverage for cosmetic surgery, as defined in subdivision (d).
(b) No individual, other than a licensed physician competent to
evaluate the specific clinical issues involved in the care requested,
may deny initial requests for authorization of coverage for
treatment pursuant to this section. For a treatment authorization
request submitted by a podiatrist or an oral and maxillofacial
surgeon, the request may be reviewed by a similarly licensed
individual, competent to evaluate the specific clinical issues
involved in the care requested.
(c) (1) "Reconstructive surgery" means surgery performed to
correct or repair abnormal structures of the body caused by
congenital defects, developmental abnormalities, trauma, infection,
tumors, or disease to do either of the following:
(A) To improve function.
(B) To create a normal appearance, to the extent possible.
(2) As of July 1, 2010, "reconstructive surgery" shall include
medically necessary dental or orthodontic services that are an
integral part of reconstructive surgery, as defined in paragraph (1),
for cleft palate procedures.
(3) For purposes of this section, "cleft palate" means a condition
that may include cleft palate, cleft lip, or other craniofacial
anomalies associated with cleft palate.
(d) "Cosmetic surgery" means surgery that is performed to alter or
reshape normal structures of the body in order to improve
appearance.
(e) In interpreting the definition of reconstructive surgery, a
health care service plan may utilize prior authorization and
utilization review that may include, but need not be limited to, any
of the following:
(1) Denial of the proposed surgery if there is another more
appropriate surgical procedure that will be approved for the
enrollee.
(2) Denial of the proposed surgery or surgeries if the procedure
or procedures, in accordance with the standard of care as practiced
by physicians specializing in reconstructive surgery, offer only a
minimal improvement in the appearance of the enrollee.
(3) Denial of payment for procedures performed without prior
authorization.
(4) For services provided under the Medi-Cal program (Chapter 7
(commencing with Section 14000) of Part 3 of Division 9 of the
Welfare and Institutions Code), denial of the proposed surgery if the
procedure offers only a minimal improvement in the appearance of the
enrollee, as may be defined in any regulations that may be
promulgated by the State Department of Health Care Services.
(f) As applied to services described in paragraph (2) of
subdivision (c) only, this section shall not apply to Medi-Cal
managed care plans that contract with the State Department of Health
Care Services pursuant to Chapter 7 (commencing with Section 14000)
of, Chapter 8 (commencing with Section 14200) of, or Chapter 8.75
(commencing with Section 14591) of, Part 3 of Division 9 of the
Welfare and Institutions Code, where such contracts do not provide
coverage for California Children's Services (CCS) or dental services.
SEC. 4. Section 1580.1 of the Health and Safety Code is amended to
read:
1580.1. The State Department of Health Care Services, and as
applicable, the State Department of Public Health and the California
Department of Aging, may grant to entities contracting with the State
Department of Health Care Services under the PACE program, as
defined in Chapter 8.75 (commencing with Section 14591) of Part 3 of
Division 9 of the Welfare and Institutions Code, exemptions from the
provisions contained in this chapter in accordance with the
requirements of Section 100315.
SEC. 5. Section 1734.5 of the Health and Safety Code is amended to
read:
1734.5. The department may grant to entities contracting with the
department under the PACE program, as defined in Chapter 8.75
(commencing with Section 14591) of Part 3 of Division 9 of the
Welfare and Institutions Code, exemptions from the provisions
contained in this chapter in accordance with the requirements of
Section 100315.
SEC. 6. Section 100315 of the Health and Safety Code is amended to
read:
100315. (a) The department and as applicable, the California
Department of Aging, the State Department of Public Health, and the
State Department of Social Services, may grant to a PACE program, as
defined in Chapter 8.75 (commencing with Section 14591) of Part 3 of
Division 9 of the Welfare and Institutions Code, exemptions from
duplicative, conflicting, or inconsistent requirements in Chapter 1
(commencing with Section 1200), Chapter 3 (commencing with Section
1500), Chapter 3.2 (commencing with Section 1569), Chapter 3.3
(commencing with Section 1570), and Chapter 8 (commencing with
Section 1725) of Division 2, and Divisions 3 and 5 of Title 22 of the
California Code of Regulations, including the use of alternate
concepts, methods, procedures, techniques, space, equipment,
personnel, personnel qualifications, or the conducting of pilot
projects, provided that the exemptions are implemented in a manner
that does not jeopardize the health and welfare of participants
receiving services under PACE, or deprive beneficiaries of rights
specified in federal or state laws or regulations. In determining
whether to grant exemptions under this section, the departments shall
consult with each other.
(b) A written request and substantiating evidence supporting the
request for an exemption under subdivision (a) shall be submitted by
the PACE program to the department. A PACE program may submit a
single request for an exemption from the licensing requirements
applicable to two or more licenses held by that organization, so long
as the request lists the locations and license numbers held by that
organization and the requested exemption is the same and appropriate
for all licensed locations. The written request shall include, but
shall not be limited to, all of the following:
(1) A description of how the applicable state requirement
duplicates, conflicts with, or is inconsistent with state or federal
requirements related to the PACE model.
(2) An analysis demonstrating why the duplication, conflict, or
inconsistency cannot be resolved without an exemption.
(3) A description of how the PACE program plans to comply with the
intent of the requirements described in paragraph (1).
(4) A description of how the PACE program will monitor its
compliance with the terms and conditions under which the exemption is
granted.
(c) The department shall approve or deny any request within 60
days of submission. An approval shall be in writing and shall provide
for the terms and conditions under which the exemption is granted. A
denial shall be in writing and shall specify the basis therefor. Any
decision to deny a request shall be a final administrative decision.
(d) If, after investigation, the department determines that a PACE
program that has been granted an exemption under this section is
operating in a manner contrary to the terms and conditions of the
exemption, the department shall immediately suspend or revoke the
exemption. If the exemption is applicable to more than one location
or more than one category of licensure, or both, the department may
suspend or revoke an exemption as to one or more license categories
or locations as deemed appropriate by the department.
SEC. 7. Section 14002.5 of the Welfare and Institutions Code is
amended to read:
14002.5. For the purposes of this article, the following
definitions shall apply:
(a) "Annuity" means a contract that names an annuitant and gives a
person or entity the right to receive periodic payments of a fixed
or variable sum for a described period of time, which may include a
lump-sum payment or periodic payments upon the death of the
annuitant.
(b) "Community spouse" means the spouse of an institutionalized
spouse.
(c) "Home and facility care" means the following services that are
subject to Medi-Cal reimbursement:
(1) Nursing facility care services.
(2) A level of care in any institution equivalent to that of
nursing facility care services.
(3) Home- or community-based care services furnished under a
waiver granted pursuant to subsection (c) or (d) of Section 1396n of
Title 42 of the United States Code.
(d) "Institutionalized spouse" means any individual to whom all of
the following apply:
(1) The individual is in a medical institution or nursing facility
or is a person who is receiving institutional or noninstitutional
services from a Program of All-Inclusive Care for the Elderly
organization pursuant to Chapter 8.75 (commencing with Section
14591), and is likely to meet that requirement for at least 30
consecutive days.
(2) The individual is married to a spouse who is not in a medical
institution or nursing facility, or to a spouse who is not receiving
services from a Program of All-Inclusive Care for the Elderly
organization pursuant to Chapter 8.75 (commencing with Section
14591).
(3) Except for purposes of Sections 14005.7, 14005.12, 14005.16,
and 14005.17, an individual who is admitted to a medical institution
or nursing facility on or after September 30, 1989, and who applies
for Medi-Cal benefits on or after January 1, 1990, or a Medi-Cal
recipient who is admitted to a medical institution or nursing
facility on or after January 1, 1990.
(e) "Medical institution" has the same meaning as defined in
Section 435.1010 of Title 42 of the Code of Federal Regulations.
(f) "Nursing facility" has the same meaning as defined in Section
1250 of the Health and Safety Code.
SEC. 8. Section 14005.12 of the Welfare and Institutions Code is
amended to read:
14005.12. (a) For the purposes of Sections 14005.4 and 14005.7,
the department shall establish the income levels for maintenance need
at the lowest levels that reasonably permit medically needy persons
to meet their basic needs for food, clothing, and shelter, and for
which federal financial participation will still be provided under
Title XIX of the federal Social Security Act. It is the intent of the
Legislature that the income levels for maintenance need for
medically needy aged, blind, and disabled adults, in particular,
shall be based upon amounts that adequately reflect their needs.
(1) Subject to paragraph (2), reductions in the maximum aid
payment levels set forth in subdivision (a) of Section 11450 in the
1991-92 fiscal year, and thereafter, shall not result in a reduction
in the income levels for maintenance under this section.
(2) (A) The department shall seek any necessary federal
authorization for maintaining the income levels for maintenance at
the levels in effect June 30, 1991.
(B) If federal authorization is not obtained, medically needy
persons shall not be required to pay the difference between the share
of cost as determined based on the payment levels in effect on June
30, 1991, under Section 11450, and the share of cost as determined
based on the payment levels in effect on July 1, 1991, and
thereafter.
(3) Any medically needy person who was eligible for benefits under
this chapter as categorically needy for the calendar month
immediately preceding the effective date of the reductions in the
minimum basic standards of adequate care for the Aid to Families with
Dependent Children program as set forth in Section 11452.018 made in
the 1995-96 Regular Session of the Legislature shall not be
responsible for paying his or her share of cost if all of the
following apply:
(A) He or she had eligibility as categorically needy terminated by
the reductions in the minimum basic standards of adequate care.
(B) He or she, but for the reductions, would be eligible to
continue receiving benefits under this chapter as categorically
needy.
(C) He or she is not eligible to receive benefits without a share
of cost as a medically needy person pursuant to paragraph (1) or (2).
(b) In the case of a single individual, the amount of the income
level for maintenance per month shall be 80 percent of the highest
amount that would ordinarily be paid to a family of two persons,
without any income or resources, under subdivision (a) of Section
11450, multiplied by the federal financial participation rate.
(c) In the case of a family of two adults, the income level for
maintenance per month shall be the highest amount that would
ordinarily be paid to a family of three persons without income or
resources under subdivision (a) of Section 11450, multiplied by the
federal financial participation rate.
(d) For the purposes of Sections 14005.4 and 14005.7, for a person
in a medical institution or nursing facility, or for a person
receiving institutional or noninstitutional services from a Program
of All-Inclusive Care for the Elderly organization pursuant to
Chapter 8.75 (commencing with Section 14591), the amount considered
as required for maintenance per month shall be computed in accordance
with, and for those purposes required by, Title XIX of the federal
Social Security Act, and regulations adopted pursuant thereto. Those
amounts shall be computed pursuant to regulations which include
providing for the following purposes:
(1) Personal and incidental needs in the amount of not less than
thirty-five dollars ($35) per month while a patient. The department
may, by regulation, increase this amount as necessitated by
increasing costs of personal and incidental needs. A long-term health
care facility shall not charge an individual for the laundry
services or periodic hair care specified in Section 14110.4.
(2) The upkeep and maintenance of the home.
(3) The support and care of his or her minor children, or any
disabled relative for whose support he or she has contributed
regularly, if there is no community spouse.
(4) If the person is an institutionalized spouse, for the support
and care of his or her community spouse, minor or dependent children,
dependent parents, or dependent siblings of either spouse, provided
the individuals are residing with the community spouse.
(5) The community spouse monthly income allowance shall be
established at the maximum amount permitted in accordance with
Section 1924(d)(1)(B) of Title XIX of the federal Social Security Act
(42 U.S.C. Sec. 1396r-5(d)(1)(B)).
(6) The family allowance for each family member residing with the
community spouse shall be computed in accordance with the formula
established in Section 1924(d)(1)(C) of Title XIX of the federal
Social Security Act (42 U.S.C. Sec. 1396r-5(d)(1)(C)).
(e) For the purposes of Sections 14005.4 and 14005.7, with regard
to a person in a licensed community care facility, the amount
considered as required for maintenance per month shall be computed
pursuant to regulations adopted by the department which provide for
the support and care of his or her spouse, minor children, or any
disabled relative for whose support he or she has contributed
regularly.
(f) The income levels for maintenance per month, except as
specified in subdivisions (b) to (d), inclusive, shall be equal to
the highest amounts that would ordinarily be paid to a family of the
same size without any income or resources under subdivision (a) of
Section 11450, multiplied by the federal financial participation
rate.
(g) The "federal financial participation rate," as used in this
section, shall mean 1331/3 percent, or such other rate set forth in
Section 1903 of the federal Social Security Act (42 U.S.C. Sec. 1396
(b)), or its successor provisions.
(h) The income levels for maintenance per month shall not be
decreased to reflect the presence in the household of persons
receiving forms of aid other than Medi-Cal.
(i) When family members maintain separate residences, but
eligibility is determined as a single unit under Section 14008, the
income levels for maintenance per month shall be established for each
household in accordance with subdivisions (b) to (h), inclusive. The
total of these levels shall be the level for the single eligibility
unit.
(j) The income levels for maintenance per month established
pursuant to subdivisions (b) to (i), inclusive, shall be calculated
on an annual basis, rounded to the next higher multiple of one
hundred dollars ($100), and then prorated.
SEC. 9. Section 14041.1 of the Welfare and Institutions Code is
amended to read:
14041.1. (a) Notwithstanding any other provision of law, and to
the extent not otherwise conflicting with federal law, the department
may hold for a period of one month, or direct the medical fiscal
intermediary for the Medi-Cal program to hold for a period of one
month, payments to providers or their designated agents for health
care services that are provided pursuant to this chapter, and
payments to entities that contract with the department pursuant to
this chapter, Chapter 8 (commencing with Section 14200) and Chapter
8.75 (commencing with Section 14591) for the delivery of health care
services.
(b) The authority described in subdivision (a) shall be limited to
payments for one month only, and only for a month ending prior to
June 30, 2009.
SEC. 10. Section 14091.3 of the Welfare and Institutions Code is
amended to read:
14091.3. (a) For purposes of this section, the following
definitions shall apply:
(1) "Medi-Cal managed care plan contracts" means those contracts
entered into with the department by any individual, organization, or
entity pursuant to Article 2.7 (commencing with Section 14087.3),
Article 2.8 (commencing with Section 14087.5), Article 2.91
(commencing with Section 14089) of this chapter, or Article 1
(commencing with Section 14200) or Article 7 (commencing with Section
14490) of Chapter 8, or Chapter 8.75 (commencing with Section
14591).
(2) "Medi-Cal managed care health plan" means an individual,
organization, or entity operating under a Medi-Cal managed care plan
contract with the department under this chapter, Chapter 8
(commencing with Section 14200), or Chapter 8.75 (commencing with
Section 14591).
(b) The department shall take all appropriate steps to amend the
Medicaid State Plan, if necessary, to carry out this section. This
section shall be implemented only to the extent that federal
financial participation is available. The department shall adopt
rules and regulations to carry out this section. Until January 1,
2010, any rules and regulations adopted pursuant to this subdivision
may be adopted as emergency regulations in accordance with the
Administrative Procedure Act (Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code).
The adoption of these regulations shall be deemed an emergency and
necessary for the immediate preservation of the public peace, health,
and safety or general welfare. The regulations shall become
effective immediately upon filing with the Secretary of State.
(c) Any hospital that does not have in effect a contract with a
Medi-Cal managed care health plan, as defined in paragraph (2) of
subdivision (a), that establishes payment amounts for services
furnished to a beneficiary enrolled in that plan shall accept as
payment in full, from all these plans, the following amounts:
(1) For outpatient services, the Medi-Cal fee-for-service (FFS)
payment amounts.
(2) For emergency inpatient services, the average per diem
contract rate specified in paragraph (2) of subdivision (b) of
Section 14166.245, except that the payment amount shall not be
reduced by 5 percent. For the purposes of this paragraph, this
payment amount shall apply to all hospitals, including hospitals that
contract with the department under the Medi-Cal Selective Provider
Contracting Program described in Article 2.6 (commencing with Section
14081), and small and rural hospitals specified in Section 124840 of
the Health and Safety Code.
(3) For poststabilization services following an emergency
admission, payment amounts shall be consistent with subdivision (e)
of Section 438.114 of Title 42 of the Code of Federal Regulations.
This paragraph shall only be implemented to the extent that contract
amendment language providing for these payments is approved by CMS.
For purposes of this paragraph, this payment amount shall apply to
all hospitals, including hospitals that contract with the department
under the Medi-Cal Selective Provider Contracting Program pursuant to
Article 2.6 (commencing with Section 14081).
(d) Medi-Cal managed care health plans that, pursuant to the
department's encouragement in All Plan Letter 07003, have been paying
out-of-network hospitals the most recent California Medical
Assistance Commission regional average per diem rate as a temporary
rate for purposes of Section 1932(b)(2)(D) of the Social Security Act
(SSA), which became effective January 1, 2007, shall make
reconciliations and adjustments for all hospital payments made since
January 1, 2007, based upon rates published by the department
pursuant to Section 1932(b)(2)(D) of the SSA and effective January 1,
2007, to June 30, 2008, inclusive, and, if applicable, provide
supplemental payments to hospitals as necessary to make payments that
conform with Section 1932(b)(2)(D) of the SSA. In order to provide
managed care health plans with 60 working days to make any necessary
supplemental payments to hospitals prior to these payments becoming
subject to the payment of interest, Section 1300.71 of Title 28 of
the California Code of Regulations shall not apply to these
supplemental payments until 30 working days following the publication
by the department of the rates.
(e) (1) The department shall provide a written report to the
policy and fiscal committees of the Legislature on October 1, 2009,
and May 1, 2010, on the implementation and impact made by this
section, including the impact of these changes on access to hospitals
by managed care enrollees and on contracting between hospitals and
managed care health plans, including the increase or decrease in the
number of these contracts.
(2) Not later than August 1, 2010, the department shall report to
the Legislature on the implementation of this section. The report
shall include, but not be limited to, information and analyses
addressing managed care enrollee access to hospital services, the
impact of this section on managed care health plan capitation rates,
the impact of this section on the extent of contracting between
managed care health plans and hospitals, and fiscal impact on the
state.
(3) For the purposes of preparing the annual status reports and
the final evaluation report required pursuant to this subdivision,
Medi-Cal managed care health plans shall provide the department with
all data and documentation, including contracts with providers,
including hospitals, as deemed necessary by the department to
evaluate the impact of the implementation of this section. In order
to ensure the confidentiality of managed care health plan proprietary
information, and thereby enable the department to have access to all
of the data necessary to provide the Legislature with accurate and
meaningful information regarding the impact of this section, all
information and documentation provided to the department pursuant to
this section shall be considered proprietary and shall be exempt from
disclosure as official information pursuant to subdivision (k) of
Section 6254 of the Government Code as contained in the California
Public Records Act (Division 7 (commencing with Section 6250) of
Title 1 of the Government Code).
(f) This section shall remain in effect only until January 1,
2013, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2013, deletes or extends
that date.
SEC. 11. Section 14105.19 of the Welfare and Institutions Code is
amended to read:
14105.19. (a) Notwithstanding any other provision of law, in
order to implement changes in the level of funding for health care
services, the director shall reduce provider payments as specified in
this section.
(b) (1) Except as provided in subdivision (c), payments shall be
reduced by 10 percent for Medi-Cal fee-for-service benefits for dates
of service on and after July 1, 2008, through and including dates of
service on February 28, 2009.
(2) Except as provided in subdivision (c), payments shall be
reduced by 10 percent for non-Medi-Cal programs described in Article
6 (commencing with Section 124025) of Chapter 3 of Part 2 of Division
106 of the Health and Safety Code, and Section 14105.18 of this
code, for dates of service on and after July 1, 2008, through and
including dates of service on February 28, 2009.
(3) For managed health care plans that contract with the
department pursuant to this chapter, Chapter 8 (commencing with
Section 14200), and Chapter 8.75 (commencing with Section 14591),
payments shall be reduced by the actuarial equivalent amount of the
payment reduction specified in this subdivision pursuant to contract
amendments or change orders effective on July 1, 2008.
(4) Notwithstanding paragraphs (1) and (2), payment reductions set
forth in this subdivision shall apply to small and rural hospitals,
as defined in Section 124840 of the Health and Safety Code, for dates
of service on and after July 1, 2008, through and including October
31, 2008.
(c) The services listed in this subdivision shall be exempt from
the payment reductions specified in subdivision (b):
(1) Acute hospital inpatient services, except for payments to
hospitals not under contract with the State Department of Health Care
Services, as provided in Section 14166.245.
(2) Federally qualified health center services, including those
facilities deemed to have federally qualified health center status
pursuant to a waiver under
subdivision (a) of Section 1315 of Title 42 of the United States
Code.
(3) Rural health clinic services.
(4) All of the following facilities:
(A) A skilled nursing facility licensed pursuant to subdivision
(c) of Section 1250 of the Health and Safety Code, except a skilled
nursing facility that is a distinct part of a general acute care
hospital. For purposes of this paragraph, "distinct part" has the
same meaning as defined in Section 72041 of Title 22 of the
California Code of Regulations.
(B) An intermediate care facility for the developmentally disabled
licensed pursuant to subdivision (e), (g), or (h) of Section 1250 of
the Health and Safety Code, or a facility providing continuous
skilled nursing care to developmentally disabled individuals pursuant
to the pilot project established by Section 14495.10.
(C) A subacute care unit, as defined in Section 51215.5 of Title
22 of the California Code of Regulations.
(5) Payments to facilities owned or operated by the State
Department of Mental Health or the State Department of Developmental
Services.
(6) Hospice.
(7) Contract services as designated by the director pursuant to
subdivision (e).
(8) Payments to providers to the extent that the payments are
funded by means of a certified public expenditure or an
intergovernmental transfer pursuant to Section 433.51 of Title 42 of
the Code of Federal Regulations.
(9) Services pursuant to local assistance contracts and
interagency agreements to the extent the funding is not included in
the funds appropriated to the department in the annual Budget Act.
(10) Payments to Medi-Cal managed care plans pursuant to Section
4474.5 for services to consumers transitioning from Agnews
Developmental Center into Alameda, San Mateo, and Santa Clara
Counties pursuant to the Plan for the Closure of Agnews Developmental
Center.
(11) Breast and cervical cancer treatment provided pursuant to
Section 14007.71.
(12) The Family Planning, Access, Care, and Treatment (Family
PACT) Waiver Program pursuant to Section 14105.18.
(d) Subject to the exception for services listed in subdivision
(c), the payment reductions required by subdivision (b) shall apply
to the services rendered by any provider who may be authorized to
bill for the service, including, but not limited to, physicians,
podiatrists, nurse practitioners, certified nurse-midwives, nurse
anesthetists, and organized outpatient clinics.
(e) Notwithstanding Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code, the
department may implement this section by means of a provider
bulletin, or similar instruction, without taking regulatory action.
(f) The reductions described in this section shall apply only to
payments for services when the General Fund share of the payment is
paid with funds directly appropriated to the department in the annual
Budget Act and shall not apply to payments for services paid with
funds appropriated to other departments or agencies.
(g) The department shall promptly seek any necessary federal
approvals for the implementation of this section.
SEC. 12. Section 14105.191 of the Welfare and Institutions Code is
amended to read:
14105.191. (a) Notwithstanding any other provision of law, in
order to implement changes in the level of funding for health care
services, the director shall reduce provider payments, as specified
in this section.
(b) (1) Except as otherwise provided in this section, payments
shall be reduced by 1 percent for Medi-Cal fee-for-service benefits
for dates of service on and after March 1, 2009.
(2) Except as provided in subdivision (d), for dates of service on
and after March 1, 2009, payments to the following classes of
providers shall be reduced by 5 percent for Medi-Cal fee-for-service
benefits:
(A) Intermediate care facilities, excluding those facilities
identified in paragraph (5) of subdivision (d). For purposes of this
section, "intermediate care facility" has the same meaning as defined
in Section 51118 of Title 22 of the California Code of Regulations.
(B) Skilled nursing facilities that are distinct parts of general
acute care hospitals. For purposes of this section, "distinct part"
has the same meaning as defined in Section 72041 of Title 22 of the
California Code of Regulations.
(C) Rural swing-bed facilities.
(D) Subacute care units that are, or are parts of, distinct parts
of general acute care hospitals. For purposes of this subparagraph,
"subacute care unit" has the same meaning as defined in Section
51215.5 of Title 22 of the California Code of Regulations.
(E) Pediatric subacute care units that are, or are parts of,
distinct parts of general acute care hospitals. For purposes of this
subparagraph, "pediatric subacute care unit" has the same meaning as
defined in Section 51215.8 of Title 22 of the California Code of
Regulations.
(F) Adult day health care centers.
(3) Except as provided in subdivision (d), for dates of service on
and after March 1, 2009, Medi-Cal fee-for-service payments to
pharmacies shall be reduced by 5 percent.
(4) Except as provided in subdivision (d), payments shall be
reduced by 1 percent for non-Medi-Cal programs described in Article 6
(commencing with Section 124025) of Chapter 3 of Part 2 of Division
106 of the Health and Safety Code, and Section 14105.18, for dates of
service on and after March 1, 2009.
(5) For managed health care plans that contract with the
department pursuant to this chapter, Chapter 8 (commencing with
Section 14200), and Chapter 8.75 (commencing with Section 14591),
payments shall be reduced by the actuarial equivalent amount of the
payment reductions specified in this subdivision pursuant to contract
amendments or change orders effective on July 1, 2008, or
thereafter.
(c) Notwithstanding any other provision of this section, payments
to hospitals that are not under contract with the State Department of
Health Care Services pursuant to Article 2.6 (commencing with
Section 14081) for inpatient hospital services provided to Medi-Cal
beneficiaries and that are subject to Section 14166.245 shall be
governed by that section.
(d) To the extent applicable, the services, facilities, and
payments listed in this subdivision shall be exempt from the payment
reductions specified in subdivision (b):
(1) Acute hospital inpatient services that are paid under
contracts pursuant to Article 2.6 (commencing with Section 14081).
(2) Federally qualified health center services, including those
facilities deemed to have federally qualified health center status
pursuant to a waiver pursuant to subsection (a) of Section 1115 of
the federal Social Security Act (42 U.S.C. Sec. 1315(a)).
(3) Rural health clinic services.
(4) Skilled nursing facilities licensed pursuant to subdivision
(c) of Section 1250 of the Health and Safety Code other than those
specified in paragraph (2) of subdivision (b).
(5) Intermediate care facilities for the developmentally disabled
licensed pursuant to subdivision (e), (g), or (h) of Section 1250 of
the Health and Safety Code, or facilities providing continuous
skilled nursing care to developmentally disabled individuals pursuant
to the pilot project established by Section 14495.10.
(6) Payments to facilities owned or operated by the State
Department of Mental Health or the State Department of Developmental
Services.
(7) Hospice services.
(8) Contract services, as designated by the director pursuant to
subdivision (g).
(9) Payments to providers to the extent that the payments are
funded by means of a certified public expenditure or an
intergovernmental transfer pursuant to Section 433.51 of Title 42 of
the Code of Federal Regulations.
(10) Services pursuant to local assistance contracts and
interagency agreements to the extent the funding is not included in
the funds appropriated to the department in the annual Budget Act.
(11) Payments to Medi-Cal managed care plans pursuant to Section
4474.5 for services to consumers transitioning from Agnews
Developmental Center into the Counties of Alameda, San Mateo, and
Santa Clara pursuant to the Plan for the Closure of Agnews
Developmental Center.
(12) Breast and cervical cancer treatment provided pursuant to
Section 14007.71 and as described in paragraph (3) of subdivision (a)
of Section 14105.18 or Article 1.5 (commencing with Section 104160)
of Chapter 2 of Part 1 of Division 103 of the Health and Safety Code.
(13) The Family Planning, Access, Care, and Treatment (Family
PACT) Program pursuant to subdivision (aa) of Section 14132.
(14) Small and rural hospitals, as defined in Section 124840 of
the Health and Safety Code.
(e) Subject to the exemptions listed in subdivision (d), the
payment reductions required by paragraph (1) of subdivision (b) shall
apply to the benefits rendered by any provider who may be authorized
to bill for provision of the benefit, including, but not limited to,
physicians, podiatrists, nurse practitioners, certified nurse
midwives, nurse anesthetists, and organized outpatient clinics.
(f) (1) Notwithstanding any other provision of law, Medi-Cal
reimbursement rates applicable to the classes of providers identified
in paragraph (2) of subdivision (b), for services rendered during
the 2009-10 rate year and each rate year thereafter, shall not exceed
the reimbursement rates that were applicable to those classes of
providers in the 2008-09 rate year.
(2) In addition to the classes of providers described in paragraph
(1), Medi-Cal reimbursement rates applicable to the following
classes of facilities for services rendered during the 2009-10 rate
year, and each rate year thereafter, shall not exceed the
reimbursement rates that were applicable to those facilities and
services in the 2008-09 rate year:
(A) Facilities identified in paragraph (5) of subdivision (d).
(B) Freestanding pediatric subacute care units, as defined in
Section 51215.8 of Title 22 of the California Code of Regulations.
(3) Paragraphs (1) and (2) shall not apply to providers that are
paid pursuant to Article 3.8 (commencing with Section 14126), or to
services, facilities, and payments specified in subdivision (d), with
the exception of facilities described in paragraph (5) of
subdivision (d).
(4) The limitation set forth in this subdivision shall be applied
only after the reductions in paragraph (2) of subdivision (b) have
been made.
(g) Notwithstanding Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code, the
department may implement and administer this section by means of
provider bulletins, or similar instructions, without taking
regulatory action.
(h) The reductions and limitations described in this section shall
apply only to payments for benefits when the General Fund share of
the payment is paid with funds directly appropriated to the
department in the annual Budget Act, and shall not apply to payments
for benefits paid with funds appropriated to other departments or
agencies.
(i) The department shall promptly seek any necessary federal
approvals for the implementation of this section. To the extent that
federal financial participation is not available with respect to any
payment that is reduced or limited pursuant to this section, the
director may elect not to implement that reduction or limitation.
SEC. 13. Section 14115.75 of the Welfare and Institutions Code is
amended to read:
14115.75. (a) As a condition of payment for goods, supplies, and
merchandise provided to Medi-Cal beneficiaries by a provider that
receives or makes annual payments of at least five million dollars
($5,000,000) under the Medi-Cal program, the provider shall comply
with the federal False Claims Act employee training and policy
requirements contained in Section 1902(a) of the federal Social
Security Act (42 U.S.C. Sec. 1396a(a)(68)), and with any requirements
that the United States Secretary of Health and Human Services may
specify. The calculation of the five million dollar ($5,000,000)
threshold shall be based on federal law and regulations and guidance
from the United States Secretary of Health and Human Services.
(b) For purposes of this section, "provider" has the same meaning
as that term is defined in Section 14043.1, and also includes any
Medi-Cal managed care plan authorized under this chapter, Chapter 8
(commencing with Section 14200), or Chapter 8.75 (commencing with
Section 14591).
SEC. 14. Section 14131.10 of the Welfare and Institutions Code is
amended to read:
14131.10. (a) Notwithstanding any other provision of this
chapter, Chapter 8 (commencing with Section 14200), or Chapter 8.75
(commencing with Section 14591), in order to implement changes in the
level of funding for health care services, specific optional
benefits are excluded from coverage under the Medi-Cal program.
(b) (1) The following optional benefits are excluded from coverage
under the Medi-Cal program:
(A) Adult dental services, except as specified in paragraph (2).
(B) Acupuncture services.
(C) Audiology services and speech therapy services.
(D) Chiropractic services.
(E) Optometric and optician services, including services provided
by a fabricating optical laboratory.
(F) Podiatric services.
(G) Psychology services.
(H) Incontinence creams and washes.
(2) Medical and surgical services provided by a doctor of dental
medicine or dental surgery, which, if provided by a physician, would
be considered physician services, and which services may be provided
by either a physician or a dentist in this state, are covered.
(3) Pregnancy-related services and services for the treatment of
other conditions that might complicate the pregnancy are not excluded
from coverage under this section.
(c) The optional benefit exclusions do not apply to either of the
following:
(1) Beneficiaries under the Early and Periodic Screening Diagnosis
and Treatment Program.
(2) Beneficiaries receiving long-term care in a nursing facility
that is both:
(A) A skilled nursing facility or intermediate care facility as
defined in subdivisions (c) and (d) of Section 1250 of the Health and
Safety Code.
(B) Licensed pursuant to subdivision (k) of Section 1250 of the
Health and Safety Code.
(d) This section shall only be implemented to the extent permitted
by federal law.
(e) Notwithstanding Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code, the
department may implement the provisions of this section by means of
all-county letters, provider bulletins, or similar instructions,
without taking further regulatory action.
(f) This section shall be implemented on the first day of the
month following 90 days after the operative date of this section.
SEC. 15. Section 14167.1 of the Welfare and Institutions Code is
amended to read:
14167.1. For purposes of this article, the following definitions
shall apply:
(a) "Acute psychiatric days" means the total number of Short-Doyle
administrative days, Short-Doyle acute care days, acute psychiatric
administrative days, and acute psychiatric acute days identified in
the Final Medi-Cal Utilization Statistics for the 2008-09 state
fiscal year as calculated by the department on September 15, 2008.
(b) "Converted hospital" means a private hospital that becomes a
designated public hospital or a nondesignated public hospital after
the implementation date, a nondesignated public hospital that becomes
a private hospital or a designated public hospital after the
implementation date, or a designated public hospital that becomes a
private hospital or a nondesignated public hospital after the
implementation date.
(c) "Current Section 1115 Waiver" means California's Medi-Cal
Hospital/Uninsured Care Section 1115 Waiver Demonstration in effect
on the effective date of the article.
(d) "Designated public hospital" shall have the meaning given in
subdivision (d) of Section 14166.1 as that section may be amended
from time to time.
(e) "General acute care days" means the total number of Medi-Cal
general acute care days paid by the department to a hospital in the
2008 calendar year, as reflected in the state paid claims files on
July 10, 2009.
(f) "High acuity days" means Medi-Cal coronary care unit days,
pediatric intensive care unit days, intensive care unit days,
neonatal intensive care unit days, and burn unit days paid by the
department during the 2008 calendar year, as reflected in the state
paid claims files on July 10, 2009.
(g) "Hospital inpatient services" means all services covered under
Medi-Cal and furnished by hospitals to patients who are admitted as
hospital inpatients and reimbursed on a fee-for-service basis by the
department directly or through its fiscal intermediary. Hospital
inpatient services include outpatient services furnished by a
hospital to a patient who is admitted to that hospital within 24
hours of the provision of the outpatient services that are related to
the condition for which the patient is admitted. Hospital inpatient
services do not include services for which a managed health care plan
is financially responsible.
(h) "Hospital outpatient services" means all services covered
under Medi-Cal furnished by hospitals to patients who are registered
as hospital outpatients and reimbursed by the department on a
fee-for-service basis directly or through its fiscal intermediary.
Hospital outpatient services do not include services for which a
managed health care plan is financially responsible, or services
rendered by a hospital-based federally qualified health center for
which reimbursement is received pursuant to Section 14132.100.
(i) (1) "Implementation date" means the latest effective date of
all federal approvals or waivers necessary for the implementation of
this article and Article 5.22 (commencing with Section 14167.31),
including, but not limited to, any approvals on amendments to
contracts between the department and managed health care plans or
mental health plans necessary for the implementation of this article.
The effective date of a federal approval or waiver shall be the
earlier of the stated effective date or the first day of the first
quarter to which the computation of the payments or fee under the
federal approval or waiver is applicable, which may be prior to the
date that the federal approval or waiver is granted or the applicable
contract is amended.
(2) If federal approval is sought initially for only the 2008-09
federal fiscal year and separately secured for subsequent federal
fiscal years, the implementation date for the 2008-09 federal fiscal
year shall occur when all necessary federal approvals have been
secured for that federal fiscal year.
(j) "Individual hospital acute psychiatric supplemental payment"
means the total amount of acute psychiatric hospital supplemental
payments to a subject hospital for a quarter for which the
supplemental payments are made. The "individual hospital acute
psychiatric supplemental payment" shall be calculated for subject
hospitals by multiplying the number of acute psychiatric days for the
individual hospital for which a mental health plan was financially
responsible by four hundred eighty-five dollars ($485) and dividing
the result by 4.
(k) (1) "Managed health care plan" means a health care delivery
system that manages the provision of health care and receives prepaid
capitated payments from the state in return for providing services
to Medi-Cal beneficiaries.
(2) (A) Managed health care plans include county organized health
systems and entities contracting with the department to provide
services pursuant to two-plan models and geographic managed care.
Entities providing these services contract with the department
pursuant to any of the following:
(i) Article 2.7 (commencing with Section 14087.3).
(ii) Article 2.8 (commencing with Section 14087.5).
(iii) Article 2.81 (commencing with Section 14087.96).
(iv) Article 2.91 (commencing with Section 14089).
(B) Managed health care plans do not include any of the following:
(i) Mental health plan contracting to provide mental health care
for Medi-Cal beneficiaries pursuant to Part 2.5 (commencing with
Section 5775) of Division 5.
(ii) Health plan not covering inpatient services such as primary
care case management plans operating pursuant to Section 14088.85.
(iii) Program of All-Inclusive Care for the Elderly operating
pursuant to Chapter 8.75 (commencing with Section 14591).
(l) "Medi-Cal managed care days" means the total number of general
acute care days, including well baby days, listed for the county
organized health system and prepaid health plans identified in the
Final Medi-Cal Utilization Statistics for the 2008-09 state fiscal
year, as calculated by the department on September 15, 2008, except
that the general acute care days, including well baby days, for the
Santa Barbara Health Care Initiative shall be derived from the Final
Medi-Cal Utilization Statistics for the 2007-08 state fiscal year.
(m) "Medicaid inpatient utilization rate" means Medicaid inpatient
utilization rate as defined in Section 1396r-4 of Title 42 of the
United States Code and as set forth in the final disproportionate
share hospital eligibility list for the 2008-09 state fiscal year
released by the department on October 22, 2008.
(n) "Mental health plan" means a mental health plan that contracts
with the State Department of Mental Health to furnish or arrange for
the provision of mental health services to Medi-Cal beneficiaries
pursuant to Part 2.5 (commencing with Section 5775) of Division 5.
(o) "New hospital" means a hospital that was not in operation
under current or prior ownership as a private hospital, a
nondesignated public hospital, or a designated public hospital for
any portion of the 2008-09 state fiscal year.
(p) "Nondesignated public hospital" means either of the following:
(1) A public hospital that is licensed under subdivision (a) of
Section 1250 of the Health and Safety Code, is not designated as a
specialty hospital in the hospital's annual financial disclosure
report for the hospital's latest fiscal year ending in 2007, and
satisfies the definition in paragraph (25) of subdivision (a) of
Section 14105.98, excluding designated public hospitals.
(2) A tax-exempt nonprofit hospital that is licensed under
subdivision (a) of Section 1250 of the Health and Safety Code, is not
designated as a specialty hospital in the hospital's annual
financial disclosure report for the hospital's latest fiscal year
ending in 2007, is operating a hospital owned by a local health care
district, and is affiliated with the health care district hospital
owner by means of the district's status as the nonprofit corporation'
s sole corporate member.
(q) "Outpatient base amount" means the total amount of payments
for hospital outpatient services made to a hospital in the 2007
calendar year, as reflected in state paid claims files on January 26,
2008.
(r) "Private hospital" means a hospital that meets all of the
following conditions:
(1) Is licensed pursuant to subdivision (a) of Section 1250 of the
Health and Safety Code.
(2) Is in the Charitable Research Hospital peer group, as set
forth in the 1991 Hospital Peer Grouping Report published by the
department, or is not designated as a specialty hospital in the
hospital's Office of Statewide Health Planning and Development Annual
Financial Disclosure Report for the hospital's latest fiscal year
ending in 2007.
(3) Does not satisfy the Medicare criteria to be classified as a
long-term care hospital.
(4) Is a nonpublic hospital, nonpublic converted hospital, or
converted hospital as those terms are defined in paragraphs (26) to
(28), inclusive, respectively, of subdivision (a) of Section
14105.98.
(s) "Subject federal fiscal year" means a federal fiscal year that
ends after the implementation date and begins before December 31,
2010.
(t) "Subject fiscal quarter" means a fiscal quarter beginning on
or after the implementation date and ending before January 1, 2011.
(u) "Subject fiscal year" means a state fiscal year that ends
after the implementation date and begins before December 31, 2010.
(v) "Subject hospital" shall mean a hospital that meets all of the
following conditions:
(1) Is licensed pursuant to subdivision (a) of Section 1250 of the
Health and Safety Code.
(2) Is in the Charitable Research Hospital peer group, as set
forth in the 1991 Hospital Peer Grouping Report published by the
department, or is not designated as a specialty hospital in the
hospital's Office of Statewide Health Planning and Development Annual
Financial Disclosure Report for the hospital's latest fiscal year
ending in 2007.
(3) Does not satisfy the Medicare criteria to be classified as a
long-term care hospital.
(w) "Subject month" means a calendar month beginning on or after
the implementation date and ending before January 1, 2011.
(x) "Upper payment limit" means a federal upper payment limit on
the amount of the Medicaid payment for which federal financial
participation is available for a class of service and a class of
health care providers, as specified in Part 447 of Title 42 of the
Code of Federal Regulations.
SEC. 16. Section 14168.1 of the Welfare and Institutions Code is
amended to read:
14168.1. For the purposes of this article, the following
definitions shall apply:
(a) "Acute psychiatric days" means the total number of Short-Doyle
administrative days, Short-Doyle acute care days, acute psychiatric
administrative days, and acute psychiatric acute days identified in
the Final Medi-Cal Utilization Statistics for the 2008-09 state
fiscal year as calculated by the department on September 15, 2008.
(b) "Converted hospital" means a private hospital that becomes a
designated public hospital or a nondesignated public hospital on or
after January 1, 2011, a nondesignated public hospital that becomes a
private hospital or a designated public hospital on or after January
1, 2011, or a designated public hospital that becomes a private
hospital or a nondesignated public hospital on or after January 1,
2011.
(c) "Days data source" means the following:
(1) For a hospital that did not submit an Annual Financial
Disclosure Report to the Office of Statewide Health Planning and
Development for a fiscal year ending during 2007, but submitted that
report for a fiscal period ending in 2008 that includes at least 10
months of 2007, the Annual Financial Disclosure Report submitted by
the hospital to the Office of Statewide Health Planning and
Development for the fiscal period in 2008 that
includes at least 10 months of 2007.
(2) For a hospital owned by Kaiser Foundation Hospitals that
submitted corrections to reported patient days to the Office of
Statewide Health Planning and Development for its fiscal year ending
in 2007 before July 31, 2009, the corrected data.
(3) For all other hospitals, the hospital's Annual Financial
Disclosure Report in the Office of Statewide Health Planning and
Development files as of October 31, 2008, for its fiscal year ending
during 2007.
(d) "Designated public hospital" shall have the meaning given in
subdivision (d) of Section 14166.1 as of January 1, 2011.
(e) "General acute care days" means the total number of Medi-Cal
general acute care days paid by the department to a hospital in the
2008 calendar year, as reflected in the state paid claims files on
July 10, 2009.
(f) "High acuity days" means Medi-Cal coronary care unit days,
pediatric intensive care unit days, intensive care unit days,
neonatal intensive care unit days, and burn unit days paid by the
department during the 2008 calendar year, as reflected in the state
paid claims files on July 10, 2009.
(g) "Hospital inpatient services" means all services covered under
Medi-Cal and furnished by hospitals to patients who are admitted as
hospital inpatients and reimbursed on a fee-for-service basis by the
department directly or through its fiscal intermediary. Hospital
inpatient services include outpatient services furnished by a
hospital to a patient who is admitted to that hospital within 24
hours of the provision of the outpatient services that are related to
the condition for which the patient is admitted. Hospital inpatient
services do not include services for which a managed health care plan
is financially responsible.
(h) "Hospital outpatient services" means all services covered
under Medi-Cal furnished by hospitals to patients who are registered
as hospital outpatients and reimbursed by the department on a
fee-for-service basis directly or through its fiscal intermediary.
Hospital outpatient services do not include services for which a
managed health care plan is financially responsible, or services
rendered by a hospital-based federally qualified health center for
which reimbursement is received pursuant to Section 14132.100.
(i) "Individual hospital acute psychiatric supplemental payment"
means the total amount of acute psychiatric hospital supplemental
payments to a subject hospital for a quarter for which the
supplemental payments are made. The "individual hospital acute
psychiatric supplemental payment" shall be calculated for subject
hospitals by multiplying the number of acute psychiatric days for the
individual hospital for which a mental health plan was financially
responsible by four hundred eighty-five dollars ($485) and dividing
the result by four.
(j) (1) "Managed health care plan" means a health care delivery
system that manages the provision of health care and receives prepaid
capitated payments from the state in return for providing services
to Medi-Cal beneficiaries.
(2) (A) Managed health care plans include county organized health
systems and entities contracting with the department to provide
services pursuant to two-plan models and geographic managed care.
Entities providing these services contract with the department
pursuant to any of the following:
(i) Article 2.7 (commencing with Section 14087.3).
(ii) Article 2.8 (commencing with Section 14087.5).
(iii) Article 2.81 (commencing with Section 14087.96).
(iv) Article 2.91 (commencing with Section 14089).
(B) Managed health care plans do not include any of the following:
(i) Mental health plan contracting to provide mental health care
for Medi-Cal beneficiaries pursuant to Part 2.5 (commencing with
Section 5775) of Division 5.
(ii) Health plan not covering inpatient services such as primary
care case management plans operating pursuant to Section 14088.85.
(iii) Program of All-Inclusive Care for the Elderly operating
pursuant to Chapter 8.75 (commencing with Section 14591).
(k) "Medi-Cal managed care days" means the total number of general
acute care days, including well baby days, listed for the county
organized health system and prepaid health plans identified in the
Final Medi-Cal Utilization Statistics for the 2008-09 fiscal year, as
calculated by the department on September 15, 2008, except that the
general acute care days, including well baby days, for the Santa
Barbara Health Care Initiative shall be derived from the Final
Medi-Cal Utilization Statistics for the 2007-08 fiscal year.
(l) "Medicaid inpatient utilization rate" means Medicaid inpatient
utilization rate as defined in Section 1396r-4 of Title 42 of the
United States Code and as set forth in the final disproportionate
share hospital eligibility list for the 2008-09 fiscal year released
by the department on October 22, 2008.
(m) "Mental health plan" means a mental health plan that contracts
with the State Department of Mental Health to furnish or arrange for
the provision of mental health services to Medi-Cal beneficiaries
pursuant to Part 2.5 (commencing with Section 5775) of Division 5.
(n) "New hospital" means a hospital operation, business, or
facility functioning under current or prior ownership as a private
hospital that does not have a days data source or a hospital that has
a days data source in whole, or in part, from a previous operator
where there is an outstanding monetary liability owed to the state in
connection with the Medi-Cal program and the new operator did not
assume liability for the outstanding monetary obligation.
(o) "New noncontract hospital" means a private hospital that was a
contract hospital on March 1, 2011, and elects to become a
noncontract hospital at any time between March 1, 2011, and the end
of the program period.
(p) "Nondesignated public hospital" means either of the following:
(1) A public hospital that is licensed under subdivision (a) of
Section 1250 of the Health and Safety Code, is not designated as a
specialty hospital in the hospital's annual financial disclosure
report for the hospital's latest fiscal year ending in 2007, and
satisfies the definition in paragraph (25) of subdivision (a) of
Section 14105.98, excluding designated public hospitals.
(2) A tax-exempt nonprofit hospital that is licensed under
subdivision (a) of Section 1250 of the Health and Safety Code, is not
designated as a specialty hospital in the hospital's annual
financial disclosure report for the hospital's latest fiscal year
ending in 2007, is operating a hospital owned by a local health care
district, and is affiliated with the health care district hospital
owner by means of the district's status as the nonprofit corporation'
s sole corporate member.
(q) "Outpatient base amount" means the total amount of payments
for hospital outpatient services made to a hospital in the 2007
calendar year, as reflected in state paid claims files on January 26,
2008.
(r) "Private hospital" means a hospital that meets all of the
following conditions:
(1) Is licensed pursuant to subdivision (a) of Section 1250 of the
Health and Safety Code.
(2) Is in the Charitable Research Hospital peer group, as set
forth in the 1991 Hospital Peer Grouping Report published by the
department, or is not designated as a specialty hospital in the
hospital's Office of Statewide Health Planning and Development Annual
Financial Disclosure Report for the hospital's latest fiscal year
ending in 2007.
(3) Does not satisfy the Medicare criteria to be classified as a
long-term care hospital.
(4) Is a nonpublic hospital, nonpublic converted hospital, or
converted hospital as those terms are defined in paragraphs (26) to
(28), inclusive, respectively, of subdivision (a) of Section
14105.98.
(s) "Program period" means the period from January 1, 2011, to
June 30, 2011, inclusive.
(t) "Subject fiscal quarter" means a state fiscal quarter
beginning on or after January 1, 2011, and ending before July 1,
2011.
(u) "Subject hospital" shall mean a hospital that meets all of the
following conditions:
(1) Is licensed pursuant to subdivision (a) of Section 1250 of the
Health and Safety Code.
(2) Is in the Charitable Research Hospital peer group, as set
forth in the 1991 Hospital Peer Grouping Report published by the
department, or is not designated as a specialty hospital in the
hospital's Office of Statewide Health Planning and Development Annual
Financial Disclosure Report for the hospital's latest fiscal year
ending in 2007.
(3) Does not satisfy the Medicare criteria to be classified as a
long-term care hospital.
(v) "Subject month" means a calendar month beginning on or after
January 1, 2011, and ending before July 1, 2011.
(w) "Upper payment limit" means a federal upper payment limit on
the amount of the Medicaid payment for which federal financial
participation is available for a class of service and a class of
health care providers, as specified in Part 447 of Title 42 of the
Code of Federal Regulations.
SEC. 17. Section 14182 of the Welfare and Institutions Code is
amended to read:
14182. (a) (1) In furtherance of the waiver or demonstration
project developed pursuant to Section 14180, the department may
require seniors and persons with disabilities who do not have other
health coverage to be assigned as mandatory enrollees into new or
existing managed care health plans. To the extent that enrollment is
required by the department, an enrollee's access to fee-for-service
Medi-Cal shall not be terminated until the enrollee has been assigned
to a managed care health plan.
(2) For purposes of this section:
(A) "Other health coverage" means health coverage providing the
same full or partial benefits as the Medi-Cal program, health
coverage under another state or federal medical care program, or
health coverage under contractual or legal entitlement, including,
but not limited to, a private group or indemnification insurance
program.
(B) "Managed care health plan" means an individual, organization,
or entity that enters into a contract with the department pursuant to
Article 2.7 (commencing with Section 14087.3), Article 2.81
(commencing with Section 14087.96), Article 2.91 (commencing with
Section 14089), or Chapter 8 (commencing with Section 14200).
(b) In exercising its authority pursuant to subdivision (a), the
department shall do all of the following:
(1) Assess and ensure the readiness of the managed care health
plans to address the unique needs of seniors or persons with
disabilities pursuant to the applicable readiness evaluation criteria
and requirements set forth in paragraphs (1) to (8), inclusive, of
subdivision (b) of Section 14087.48.
(2) Ensure the managed care health plans provide access to
providers that comply with applicable state and federal laws,
including, but not limited to, physical accessibility and the
provision of health plan information in alternative formats.
(3) Develop and implement an outreach and education program for
seniors and persons with disabilities, not currently enrolled in
Medi-Cal managed care, to inform them of their enrollment options and
rights under the demonstration project. Contingent upon available
private or public dollars other than moneys from the General Fund,
the department or its designated agent for enrollment and outreach
may partner or contract with community-based, nonprofit consumer or
health insurance assistance organizations with expertise and
experience in assisting seniors and persons with disabilities in
understanding their health care coverage options. Contracts entered
into or amended pursuant to this paragraph shall be exempt from
Chapter 2 (commencing with Section 10290) of Part 2 of Division 2 of
the Public Contract Code and any implementing regulations or policy
directives.
(4) At least three months prior to enrollment, inform
beneficiaries who are seniors or persons with disabilities, through a
notice written at no more than a sixth grade reading level, about
the forthcoming changes to their delivery of care, including, at a
minimum, how their system of care will change, when the changes will
occur, and who they can contact for assistance with choosing a
delivery system or with problems they encounter. In developing this
notice, the department shall consult with consumer representatives
and other stakeholders.
(5) Implement an appropriate cultural awareness and sensitivity
training program regarding serving seniors and persons with
disabilities for managed care health plans and plan providers and
staff in the Medi-Cal Managed Care Division of the department.
(6) Establish a process for assigning enrollees into an organized
delivery system for beneficiaries who do not make an affirmative
selection of a managed care health plan. The department shall develop
this process in consultation with stakeholders and in a manner
consistent with the waiver or demonstration project developed
pursuant to Section 14180. The department shall base plan assignment
on an enrollee's existing or recent utilization of providers, to the
extent possible. If the department is unable to make an assignment
based on the enrollee's affirmative selection or utilization history,
the department shall base plan assignment on factors, including, but
not limited to, plan quality and the inclusion of local health care
safety net system providers in the plan's provider network.
(7) Review and approve the mechanism or algorithm that has been
developed by the managed care health plan, in consultation with their
stakeholders and consumers, to identify, within the earliest
possible timeframe, persons with higher risk and more complex health
care needs pursuant to paragraph (11) of subdivision (c).
(8) Provide managed care health plans with historical utilization
data for beneficiaries upon enrollment in a managed care health plan
so that the plans participating in the demonstration project are
better able to assist beneficiaries and prioritize assessment and
care planning.
(9) Develop and provide managed care health plans participating in
the demonstration project with a facility site review tool for use
in assessing the physical accessibility of providers, including
specialists and ancillary service providers that provide care to a
high volume of seniors and persons with disabilities, at a clinic or
provider site, to ensure that there are sufficient physically
accessible providers. Every managed care health plan participating in
the demonstration project shall make the results of the facility
site review tool publicly available on their Internet Web site and
shall regularly update the results to the department's satisfaction.
(10) Develop a process to enforce legal sanctions, including, but
not limited to, financial penalties, withholding of Medi-Cal
payments, enrollment termination, and contract termination, in order
to sanction any managed care health plan in the demonstration project
that consistently or repeatedly fails to meet performance standards
provided in statute or contract.
(11) Ensure that managed care health plans provide a mechanism for
enrollees to request a specialist or clinic as a primary care
provider. A specialist or clinic may serve as a primary care provider
if the specialist or clinic agrees to serve in a primary care
provider role and is qualified to treat the required range of
conditions of the enrollee.
(12) Ensure that managed care health plans participating in the
demonstration project are able to provide communication access to
seniors and persons with disabilities in alternative formats or
through other methods that ensure communication, including assistive
listening systems, sign language interpreters, captioning, written
communication, plain language or written translations and oral
interpreters, including for those who are limited English-proficient,
or non-English speaking, and that all managed care health plans are
in compliance with applicable cultural and linguistic requirements.
(13) Ensure that managed care health plans participating in the
demonstration project provide access to out-of-network providers for
new individual members enrolled under this section who have an
ongoing relationship with a provider if the provider will accept the
health plan's rate for the service offered, or the applicable
Medi-Cal fee-for-service rate, whichever is higher, and the health
plan determines that the provider meets applicable professional
standards and has no disqualifying quality of care issues.
(14) Ensure that managed care health plans participating in the
demonstration project comply with continuity of care requirements in
Section 1373.96 of the Health and Safety Code.
(15) Ensure that the medical exemption criteria applied in
counties operating under Chapter 4.1 (commencing with Section 53800)
or Chapter 4.5 (commencing with Section 53900) of Subdivision 1 of
Division 3 of Title 22 of the California Code of Regulations are
applied to seniors and persons with disabilities served under this
section.
(16) Ensure that managed care health plans participating in the
demonstration project take into account the behavioral health needs
of enrollees and include behavioral health services as part of the
enrollee's care management plan when appropriate.
(17) Develop performance measures that are required as part of the
contract to provide quality indicators for the Medi-Cal population
enrolled in a managed care health plan and for the subset of
enrollees who are seniors and persons with disabilities. These
performance measures may include measures from the Healthcare
Effectiveness Data and Information Set (HEDIS) or measures indicative
of performance in serving special needs populations, such as the
National Committee for Quality Assurance (NCQA) Structure and Process
measures, or both.
(18) Conduct medical audit reviews of participating managed care
health plans that include elements specifically related to the care
of seniors and persons with disabilities. These medical audits shall
include, but not be limited to, evaluation of the delivery model's
policies and procedures, performance in utilization management,
continuity of care, availability and accessibility, member rights,
and quality management.
(19) Conduct financial audit reviews to ensure that a financial
statement audit is performed on managed care health plans annually
pursuant to the Generally Accepted Auditing Standards, and conduct
other risk-based audits for the purpose of detecting fraud and
irregular transactions.
(c) Prior to exercising its authority under this section and
Section 14180, the department shall ensure that each managed care
health plan participating in the demonstration project is able to do
all of the following:
(1) Comply with the applicable readiness evaluation criteria and
requirements set forth in paragraphs (1) to (8), inclusive, of
subdivision (b) of Section 14087.48.
(2) Ensure and monitor an appropriate provider network, including
primary care physicians, specialists, professional, allied, and
medical supportive personnel, and an adequate number of accessible
facilities within each service area. Managed care health plans shall
maintain an updated, accurate, and accessible listing of a provider's
ability to accept new patients and shall make it available to
enrollees, at a minimum, by phone, written material, and Internet Web
site.
(3) Assess the health care needs of beneficiaries who are seniors
or persons with disabilities and coordinate their care across all
settings, including coordination of necessary services within and,
where necessary, outside of the plan's provider network.
(4) Ensure that the provider network and informational materials
meet the linguistic and other special needs of seniors and persons
with disabilities, including providing information in an
understandable manner in plain language, maintaining toll-free
telephone lines, and offering member or ombudsperson services.
(5) Provide clear, timely, and fair processes for accepting and
acting upon complaints, grievances, and disenrollment requests,
including procedures for appealing decisions regarding coverage or
benefits. Each managed care health plan participating in the
demonstration project shall have a grievance process that complies
with Section 14450, and Sections 1368 and 1368.01 of the Health and
Safety Code.
(6) Solicit stakeholder and member participation in advisory
groups for the planning and development activities related to the
provision of services for seniors and persons with disabilities.
(7) Contract with safety net and traditional providers as defined
in subdivisions (hh) and (jj) of Section 53810, of Title 22 of the
California Code of Regulations, to ensure access to care and
services. The managed care health plan shall establish participation
standards to ensure participation and broad representation of
traditional and safety net providers within a service area.
(8) Inform seniors and persons with disabilities of procedures for
obtaining transportation services to service sites that are offered
by the plan or are available through the Medi-Cal program.
(9) Monitor the quality and appropriateness of care for children
with special health care needs, including children eligible for, or
enrolled in, the California Children Services Program, and seniors
and persons with disabilities.
(10) Maintain a dedicated liaison to coordinate with each regional
center operating within the plan's service area to assist members
with developmental disabilities in understanding and accessing
services and act as a central point of contact for questions, access
and care concerns, and problem resolution.
(11) At the time of enrollment apply the risk stratification
mechanism or algorithm described in paragraph (7) of subdivision (b)
approved by the department to determine the health risk level of
beneficiaries.
(12) (A) Managed care health plans shall assess an enrollee's
current health risk by administering a risk assessment survey tool
approved by the department. This risk assessment survey shall be
performed within the following timeframes:
(i) Within 45 days of plan enrollment for individuals determined
to be at higher risk pursuant to paragraph (11).
(ii) Within 105 days of plan enrollment for individuals determined
to be at lower risk pursuant to paragraph (11).
(B) Based on the results of the current health risk assessment,
managed care health plans shall develop individual care plans for
higher risk beneficiaries that shall include the following minimum
components:
(i) Identification of medical care needs, including primary care,
specialty care, durable medical equipment, medications, and other
needs with a plan for care coordination as needed.
(ii) Identification of needs and referral to appropriate community
resources and other agencies as needed for services outside the
scope of responsibility of the managed care health plan.
(iii) Appropriate involvement of caregivers.
(iv) Determination of timeframes for reassessment and, if
necessary, circumstances or conditions that require redetermination
of risk level.
(13) (A) Establish medical homes to which enrollees are assigned
that include, at a minimum, all of the following elements, which
shall be considered in the provider contracting process:
(i) A primary care physician who is the primary clinician for the
beneficiary and who provides core clinical management functions.
(ii) Care management and care coordination for the beneficiary
across the health care system including transitions among levels of
care.
(iii) Provision of referrals to qualified professionals, community
resources, or other agencies for services or items outside the scope
of responsibility of the managed care health plan.
(iv) Use of clinical data to identify beneficiaries at the care
site with chronic illness or other significant health issues.
(v) Timely preventive, acute, and chronic illness treatment in the
appropriate setting.
(vi) Use of clinical guidelines or other evidence-based medicine
when applicable for treatment of beneficiaries' health care issues or
timing of clinical preventive services.
(B) In implementing this section, and the Special Terms and
Conditions of the demonstration project, the department may alter the
medical home elements described in this paragraph as necessary to
secure the increased federal financial participation associated with
the provision of medical assistance in conjunction with a health
home, as made available under the federal Patient Protection and
Affordable Care Act (Public Law 111-148), as amended by the federal
Health Care and Education Reconciliation Act of 2010 (Public Law
111-152), and codified in Section 1945 of Title XIX of the federal
Social Security Act. The department shall notify the appropriate
policy and fiscal committees of the Legislature of its intent to
alter medical home elements under this section at least five days in
advance of taking this action.
(14) Perform, at a minimum, the following care management and care
coordination functions and activities for enrollees who are seniors
or persons with disabilities:
(A) Assessment of each new enrollee's risk level and health needs
shall be conducted through a standardized risk assessment survey by
means such as telephonic, Web-based, or in-person communication or by
other means as determined by the department.
(B) Facilitation of timely access to primary care, specialty care,
durable medical equipment, medications, and other health services
needed by the enrollee, including referrals to address any physical
or cognitive barriers to access.
(C) Active referral to community resources or other agencies for
needed services or items outside the managed care health plans
responsibilities.
(D) Facilitating communication among the beneficiaries' health
care providers, including mental health and substance abuse providers
when appropriate.
(E) Other activities or services needed to assist beneficiaries in
optimizing their health status, including assisting with
self-management skills or techniques, health education, and other
modalities to improve health status.
(d) Except in a county where Medi-Cal services are provided by a
county organized health system, and notwithstanding any other
provision of law, in any county in which fewer than two existing
managed care health plans contract with the department to provide
Medi-Cal services under this chapter, the department may contract
with additional managed care health plans to provide Medi-Cal
services for seniors and persons with disabilities and other Medi-Cal
beneficiaries.
(e)
Beneficiaries enrolled in managed care health plans pursuant to this
section shall have the choice to continue an established
patient-provider relationship in a managed care health plan
participating in the demonstration project if his or her treating
provider is a primary care provider or clinic contracting with the
managed care health plan and agrees to continue to treat that
beneficiary.
(f) The department may contract with existing managed care health
plans to operate under the demonstration project to provide or
arrange for services under this section. Notwithstanding any other
provision of law, the department may enter into the contract without
the need for a competitive bid process or other contract proposal
process, provided the managed care health plan provides written
documentation that it meets all qualifications and requirements of
this section.
(g) This section shall be implemented only to the extent that
federal financial participation is available.
(h) (1) The development of capitation rates for managed care
health plan contracts shall include the analysis of data specific to
the seniors and persons with disabilities population. For the
purposes of developing capitation rates for payments to managed care
health plans, the director may require managed care health plans,
including existing managed care health plans, to submit financial and
utilization data in a form, time, and substance as deemed necessary
by the department.
(2) (A) Notwithstanding Section 14301, the department may
incorporate, on a one-time basis for a three-year period, a
risk-sharing mechanism in a contract with the local initiative health
plan in the county with the highest normalized fee-for-service risk
score over the normalized managed care risk score listed in Table 1.0
of the Medi-Cal Acuity Study Seniors and Persons with Disabilities
(SPD) report written by Mercer Government Human Services Consulting
and dated September 28, 2010, if the local initiative health plan
meets the requirements of subparagraph (B). The Legislature finds and
declares that this risk-sharing mechanism will limit the risk of
beneficial or adverse effects associated with a contract to furnish
services pursuant to this section on an at-risk basis.
(B) The local initiative health plan shall pay the nonfederal
share of all costs associated with the development, implementation,
and monitoring of the risk-sharing mechanism established pursuant to
subparagraph (A) by means of intergovernmental transfers. The
nonfederal share includes the state costs of staffing, state
contractors, or administrative costs directly attributable to
implementing subparagraph (A).
(C) This subdivision shall be implemented only to the extent
federal financial participation is not jeopardized.
(i) Persons meeting participation requirements for the Program of
All-Inclusive Care for the Elderly (PACE) pursuant to Chapter 8.75
(commencing with Section 14591), may select a PACE plan if one is
available in that county.
(j) Persons meeting the participation requirements in effect on
January 1, 2010, for a Medi-Cal primary care case management (PCCM)
plan in operation on that date, may select that PCCM plan or a
successor health care plan that is licensed pursuant to the
Knox-Keene Health Care Service Plan Act of 1975 (Chapter 2.2
(commencing with Section 1340) of Division 2 of the Health and Safety
Code) to provide services within the same geographic area that the
PCCM plan served on January 1, 2010.
(k) Notwithstanding Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code, the
department may implement, interpret, or make specific this section
and any applicable federal waivers and state plan amendments by means
of all-county letters, plan letters, plan or provider bulletins, or
similar instructions, without taking regulatory action. Prior to
issuing any letter or similar instrument authorized pursuant to this
section, the department shall notify and consult with stakeholders,
including advocates, providers, and beneficiaries. The department
shall notify the appropriate policy and fiscal committees of the
Legislature of its intent to issue instructions under this section at
least five days in advance of the issuance.
(l) Consistent with state law that exempts Medi-Cal managed care
contracts from Chapter 2 (commencing with Section 10290) of Part 2 of
Division 2 of the Public Contract Code, and in order to achieve
maximum cost savings, the Legislature hereby determines that an
expedited contract process is necessary for contracts entered into or
amended pursuant to this section. The contracts and amendments
entered into or amended pursuant to this section shall be exempt from
Chapter 2 (commencing with Section 10290) of Part 2 of Division 2 of
the Public Contract Code and the requirements of State
Administrative Management Manual Memo 03-10. The department shall
make the terms of a contract available to the public within 30 days
of the contract's effective date.
(m) In the event of a conflict between the Special Terms and
Conditions of the approved demonstration project, including any
attachment thereto, and any provision of this part, the Special Terms
and Conditions shall control. If the department identifies a
specific provision of this article that conflicts with a term or
condition of the approved waiver or demonstration project, or an
attachment thereto, the term or condition shall control, and the
department shall so notify the appropriate fiscal and policy
committees of the Legislature within 15 business days.
(n) In the event of a conflict between the provisions of this
article and any other provision of this part, the provisions of this
article shall control.
(o) Any otherwise applicable provisions of this chapter, Chapter 8
(commencing with Section 14200), or Chapter 8.75 (commencing with
Section 14500) not in conflict with this article or with the terms
and conditions of the demonstration project shall apply to this
section.
(p) To the extent that the director utilizes state plan amendments
or waivers to accomplish the purposes of this article in addition to
waivers granted under the demonstration project, the terms of the
state plan amendments or waivers shall control in the event of a
conflict with any provision of this part.
(q) (1) Enrollment of seniors and persons with disabilities into a
managed care health plan under this section shall be accomplished
using a phased-in process to be determined by the department and
shall not commence until necessary federal approvals have been
acquired or until June 1, 2011, whichever is later.
(2) Notwithstanding paragraph (1), and at the director's
discretion, enrollment in Los Angeles County of seniors and persons
with disabilities may be phased-in over a 12-month period using a
geographic region method that is proposed by Los Angeles County
subject to approval by the department.
(r) A managed care health plan established pursuant to this
section, or under the Special Terms and Conditions of the
demonstration project pursuant to Section 14180, shall be subject to,
and comply with, the requirement for submission of encounter data
specified in Section 14182.1.
(s) (1) Commencing January 1, 2011, and until January 1, 2014, the
department shall provide the fiscal and policy committees of the
Legislature with semiannual updates regarding core activities for the
enrollment of seniors and persons with disabilities into managed
care health plans pursuant to the pilot program. The semiannual
updates shall include key milestones, progress toward the objectives
of the pilot program, relevant or necessary changes to the program,
submittal of state plan amendments to the federal Centers for
Medicare and Medicaid Services, submittal of any federal waiver
documents, and other key activities related to the mandatory
enrollment of seniors and persons with disabilities into managed care
health plans. The department shall also include updates on the
transition of individuals into managed care health plans, the health
outcomes of enrollees, the care management and coordination process,
and other information concerning the success or overall status of the
pilot program.
(2) (A) The requirement for submitting a report imposed under
paragraph (1) is inoperative on January 1, 2015, pursuant to Section
10231.5 of the Government Code.
(B) A report to be submitted pursuant to paragraph (1) shall be
submitted in compliance with Section 9795 of the Government Code.
(t) The department, in collaboration with the State Department of
Social Services and county welfare departments, shall monitor the
utilization and caseload of the In-Home Supportive Services (IHSS)
program before and during the implementation of the pilot program.
This information shall be monitored in order to identify the impact
of the pilot program on the IHSS program for the affected population.
(u) Services under Section 14132.95 or 14132.952, or Article 7
(commencing with Section 12300) of Chapter 3 that are provided to
individuals assigned to managed care health plans under this section
shall be provided through direct hiring of personnel, contract, or
establishment of a public authority or nonprofit consortium, in
accordance with and subject to the requirements of Section 12302 or
12301.6, as applicable.
(v) The department shall, at a minimum, monitor on a quarterly
basis the adequacy of provider networks of the managed care health
plans.
(w) The department shall suspend new enrollment of seniors and
persons with disabilities into a managed care health plan if it
determines that the managed care health plan does not have sufficient
primary or specialty providers to meet the needs of their enrollees.
SEC. 18. Chapter 8.75 (commencing with Section 14590) of Part 3 of
Division 9 of the Welfare and Institutions Code is repealed.
SEC. 19. Chapter 8.75 (commencing with Section 14591) is added to
Part 3 of Division 9 of the Welfare and Institutions Code, to read:
CHAPTER 8.75. PROGRAM OF ALL-INCLUSIVE CARE FOR THE ELDERLY
14591. The Legislature finds and declares all of the following:
(a) Community-based services to the frail elderly are often
uncoordinated, fragmented, inappropriate, or insufficient to meet the
needs of frail elderly who are at risk of institutionalization,
often resulting in unnecessary placement in nursing homes.
(b) Steadily increasing health care costs for the frail elderly
provide incentive to develop programs providing quality services at
reasonable costs.
(c) Capitated "risk-based" financing provides an alternative to
the traditional fee-for-service payment system by providing a fixed,
per capita monthly payment for a package of health care services and
requiring the provider to assume financial responsibility for cost
overruns.
(d) On Lok Senior Health Services began as a federal and state
demonstration program in 1973 to test whether comprehensive
community-based services could be provided to the frail elderly at no
greater cost than nursing home care.
(e) Since 1983, On Lok Senior Health Services of San Francisco has
successfully provided a comprehensive package of services and
operated within a cost-effective, capitated risk-based financing
system.
(f) Recognizing On Lok's success, Congress passed legislation in
1986 and 1987 encouraging the expansion of capitated long-term care
programs by permitting federal Medicare and Medicaid waivers to be
granted indefinitely to On Lok and authorizing the federal Centers
for Medicare and Medicaid Services (CMS) to grant waivers in up to 10
new sites throughout the nation in order to replicate the On Lok
model.
(g) In response, the Legislature authorized the State Department
of Health Care Services to seek a waiver to contract with up to 10
demonstration projects to develop risk-based, long-term care pilot
programs modeled upon On Lok Senior Health Services.
(h) The demonstration projects authorized by the Legislature
proved to be successful at providing comprehensive, community-based
services to frail elderly individuals at no greater cost than
providing nursing home care.
(i) In 1997, Congress passed the Balanced Budget Act of 1997
(Public Law 105-33) authorizing states to offer PACE program services
as optional services under the state's Medicaid state plan.
(j) Based upon the success of the demonstration projects in
California, the state is now providing community-based, risk-based,
and capitated long-term care services under the PACE program as
optional services under California's Medi-Cal State Plan.
14592. (a) For purposes of this chapter, "PACE organization"
means an entity as defined in Section 460.6 of Title 42 of the Code
of Federal Regulations.
(b) The Director of Health Care Services shall establish the
California Program of All-Inclusive Care for the Elderly, to provide
community-based, risk-based, and capitated long-term care services as
optional services under the state's Medi-Cal State Plan and under
contracts entered into between the federal Centers for Medicare and
Medicaid Services, the department, and PACE organizations, meeting
the requirements of the Balanced Budget Act of 1997 (Public Law
105-33) and Part 460 (commencing with Section 460.2) of Title 42 of
the Code of Federal Regulations.
14593. (a) (1) The department may enter into contracts with
public or private nonprofit organizations for implementation of the
PACE program, and also may enter into separate contracts with PACE
organizations, to fully implement the single state agency
responsibilities assumed by the department in those contracts,
Section 14132.94, and any other state requirement found necessary by
the department to provide comprehensive community-based, risk-based,
and capitated long-term care services to California's frail elderly.
(2) The department may enter into separate contracts as specified
in subdivision (a) with up to 15 PACE organizations.
(b) The requirements of the PACE model, as provided for pursuant
to Section 1894 (42 U.S.C. Sec. 1395eee) and Section 1934 (42 U.S.C.
Sec. 1396u-4) of the federal Social Security Act, shall not be waived
or modified. The requirements that shall not be waived or modified
include all of the following:
(1) The focus on frail elderly qualifying individuals who require
the level of care provided in a nursing facility.
(2) The delivery of comprehensive, integrated acute and long-term
care services.
(3) The interdisciplinary team approach to care management and
service delivery.
(4) Capitated, integrated financing that allows the provider to
pool payments received from public and private programs and
individuals.
(5) The assumption by the provider of full financial risk.
(6) The provision of a PACE benefit package for all participants,
regardless of source of payment, that shall include all of the
following:
(A) All Medicare-covered items and services.
(B) All Medicaid-covered items and services, as specified in the
state's Medicaid plan.
(C) Other services determined necessary by the interdisciplinary
team to improve and maintain the participant's overall health status.
(c) Sections 14002, 14005.12, 14005.17, and 14006 shall apply when
determining the eligibility for Medi-Cal of a person receiving the
services from an organization providing services under this chapter.
(d) Provisions governing the treatment of income and resources of
a married couple, for the purposes of determining the eligibility of
a nursing-facility certifiable or institutionalized spouse, shall be
established so as to qualify for federal financial participation.
(e) (1) The department shall establish capitation rates paid to
each PACE organization at no less than 90 percent of the
fee-for-service equivalent cost, including the department's cost of
administration, that the department estimates would be payable for
all services covered under the PACE organization contract if all
those services were to be furnished to Medi-Cal beneficiaries under
the fee-for-service Medi-Cal program provided for pursuant to Chapter
7 (commencing with Section 14000).
(2) This subdivision shall be implemented only to the extent that
federal financial participation is available.
(f) Contracts under this chapter may be on a nonbid basis and
shall be exempt from Chapter 2 (commencing with Section 10290) of
Part 2 of Division 2 of the Public Contract Code.