BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 1467|
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THIRD READING
Bill No: AB 1467
Author: Assembly Budget Committee
Amended: 6/13/12 in Senate
Vote: 21
SENATE BUDGET & FISCAL REVIEW COMMITTEE : 11-0, 6/14/12
AYES: Leno, Alquist, DeSaulnier, Evans, Hancock, Liu,
Lowenthal, Negrete McLeod, Simitian, Wolk, Wright
NO VOTE RECORDED: Emmerson, Anderson, Fuller, Gaines, La
Malfa
ASSEMBLY FLOOR : Not relevant
SUBJECT : Health Omnibus Budget Trailer Bill
SOURCE : Author
DIGEST : This is the Health Omnibus Budget Trailer Bill
for 2012-13. It contains necessary changes to enact
modifications in the Budget Bill for 2012-13 to achieve
over $430 million in General Fund savings.
ANALYSIS :
1. California Children's Services (CCS) Program and
Educationally Related Therapy . This bill requires that
all services assessed and determined as educationally
necessary by the Individualized Education Program (IEP)
team and contained in the child's IEP shall be provided
in accordance with the federal Individuals with
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Disabilities Education Act (IDEA), rather than the CCS
program. This change provides for $24.6 million in
savings ($12.2 million General Fund and $12.4 million
county funds). This reflects that 5,352 children would
now be covered using special education funds with annual
cost per child at a Medical Therapy Unit (MTU) of
$4,595. This estimate is based on 75 percent (or 10,705)
of the 14,273 children with an IEP receiving therapy at
an MTU that is included in their IEP and of these
children, 50 percent (or 5,352) of therapy is included
in the IEP and covered under federal special education
law.
2. Extends the CalOHII Sunset Date . This bill extends the
sunset date of the California Office of HIPAA (CalOHII)
from January 1, 2013 to June 30, 2016, so that
continuing and changing federal Health Insurance
Portability and Accountability Act (HIPAA) requirements
are effectively implemented within the state.
3. California Health Facilities Financing Authority (CHFFA)
Competitive Grant Program . This bill creates a
competitive grant program with $6.5 million from CHFFA's
reserve for one or more projects to demonstrate new or
enhanced methods of delivery of health care services to
improve access and health outcomes for vulnerable
populations or communities, or both that are effective
at enhancing health outcomes and improving access to
quality health care and preventive services. Those
funds not awarded as a competitive grant would revert
back to the fund balance on January 1, 2020.
4. Transfers Direct Health Service Programs to Department
of Health Care Services( DHCS) . This bill transfers
three direct services programs from the Department of
Public Health (DPH) to the DHCS effective July 1, 2012.
These programs are the Every Women Counts Program, the
Prostate Cancer Treatment Program, and the Family
Planning Access Care and Treatment Program. These
programs will be transferred to the Health Care Benefits
and Eligibility Division at DHCS.
These three programs provide direct health care services
to individuals and have eligibility requirements
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designed to serve low-income Californians, thus aligning
more closely with the scope of services provided by
DHCS. Additionally, as federal health care reform is
implemented, the transferring of these programs to DHCS
will facilitate a more seamless transition to Medi-Cal
enrollment and maximize opportunities to leverage
federal Medicaid funds to cover the costs currently
supported with state funds.
5. Establishes the Long-Term Care Quality Assurance Fund .
This bill establishes the Long-Term Care Quality
Assurance Fund effective August 1, 2013. Revenues from
the AB 1629 (Halderman, 2012) nursing home quality
assurance fee, Intermediate Care Facility/Developmental
Disabilities (ICF/DD) quality assurance fee, ICF/DD
transportation/day care quality assurance fee, and
freestanding pediatric subacute facility quality
assurance fee would be deposited into this fund.
6. Eliminates the Genetically Handicapped Persons Program
(GHPP) Advisory Committee . This bill eliminates the
GHPP Advisory Committee. This Committee was established
in the 1970s and has never convened.
7. Establishes Office of Health Equity (OHE) . This bill
creates the OHE at the DPH. The OHE is a consolidation
of functions of the Office of Women's Health at the
DHCS, the Office of Multicultural Services at the
Department of Mental Health, the Office of Multicultural
Health at DPH, the Health in All Policies Task Force at
DPH, and the Healthy Places Team at DPH.
The OHE will take a more comprehensive and integrative
approach to address the issues of health and mental
health disparities and inequities and promote healthy
communities.
8. DPH- Special Fund Efficiencies . This bill eliminates
the Retail Food Safety and Defense Fund and directs the
deposit of user fees (about $21,000) for retail food
related activities collected by the DPH to the existing
Food Safety Special Fund. This bill also eliminates the
Recreational Health Fund and Program which was set to
sunset in 2014, as work has been completed by DPH.
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9. Seismic Retrofitting Notification Date . This bill
provides for a six month extension (from March 2012 to
September 2012) by which hospitals need to notify the
state on seismic retrofitting to reflect agreements
associated with the hospital quality assurance fee.
10. Creates a New Deputy Director for Mental Health and
Substance Use Disorders Services at DHCS . This bill
creates a new Deputy Director for Mental Health and
Substance Use Disorders Services at DHCS. This position
is subject to confirmation by the Senate.
11. Transfers Caregiver Resource Centers Program to DHCS .
This bill transfers the Caregiver Resource Centers
program from the Department of Mental Health to DHCS, as
the Department of Mental Health is eliminated in the
2012 Budget.
12. Changes to the Mental Health Services Act . This bill
transfers Mental Health Service Act (MHSA) functions
from Department of Mental Health to the DHCS and the
Office of Statewide Health Planning and Development.
Requires county mental health program and expenditure
plans to be adopted by the county board of supervisors
and submitted to the Mental Health Services Oversight
and Accountability Commission (OAC), and requires county
plans to be certified by the county mental health
director and the county auditor controller as complying
with the MHSA. Authorizes the OAC, in collaboration
with DHCS and in consultation with specified entities,
to work in designing a comprehensive joint plan for a
coordinated evaluation of client outcomes in the
community-based mental health system, and requires the
Health and Human Services Agency to lead this
comprehensive joint plan effort. Permits prevention and
early intervention funds to be used to broaden the
provision of community-based mental health services, and
codifies Innovation Program project requirements.
13. Medi-Cal: Closes Prior Supplemental Funds for
Disproportionate Share Hospitals . This bill adds sunset
dates for the following special funds that are no longer
used:
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The Emergency Services and Supplemental Payments
Fund
The Medi-Cal Medical Education Supplemental Payment
Fund
The Large Teaching Emphasis Hospital and Children's
Hospital Medi-Cal Medical Education Supplemental
Payment Fund
The Small and Rural Hospital Supplemental Payments
Fund
14. Medi-Cal: Rates for Non-Contract Hospitals . This bill
extends the Rogers Amendment sunset date from January 1,
2013, to July 1, 2013, for capitation rates (known as
Rogers Rates) paid to non-contract hospitals for
emergency inpatient and post-stabilization services
provided to Medi-Cal managed care plan enrollees.
Specifically, this code section is based on federal law
and regulation (known as the Roger's amendment) that
requires state Medicaid Programs (Medi-Cal) to establish
separate payment amounts for emergency services and
post-stabilization services. The intent of the law is
to establish a basis for Medi-Cal Managed Care Plans to
make reasonable payments to Hospitals who are
"out-of-network" for these services. Historically, some
hospitals have litigated payments from Managed Care
Plans that were high enough for the federal Medicare &
Medicaid Services to determine them to be unreasonable
for the services provided.
15. Medi-Cal: Provides for Supplemental Payments to Primary
Care Providers . This bill conforms to the federal
Affordable Care Act which requires Medi-Cal to increase
certain physician primary care service rates to no less
than 100 percent of the Medicare rate for specific
services beginning January 1, 2013 to December 31, 2014.
For services furnished during this time period, the
federal Centers for Medicare & Medicaid Services
provides for 100 percent federal funding for the
differential between Medi-Cal baseline rates (the level
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of payment in effect on July 1, 2009) and Medicare
rates. Regular federal matching applies for any payment
amounts above the minimum requirement or for any
increases necessary to achieve the July 2009 rate.
16. Medi-Cal: County Administration Suspension of
Cost-of-Doing-Business . The Budget Bill reflects a
reduction of $13.1 million (General Fund) by eliminating
the cost-of-doing-business for Medi-Cal eligibility
administration conducted by the counties. This bill
contains language for this suspension.
17. Medi-Cal: California Medical Assistance Commission
transfer to DHCS . This bill creates a transition plan
for the staff of the California Medical Assistance
Commission (CMAC) and redirects the twelve
non-commissioner positions, in their exempt status, to
DHCS on July 1, 2012. These positions would be funded
with $658,000 General Fund and $657,000 federal funds.
The CMAC staff will continue to operate the Selective
Provider Contracting Program until the new inpatient
hospital payment system based on diagnosis-related
groups (DRG) is implemented. Upon implementation of the
DRG payment system, the twelve exempt positions will be
abolished, at which point the CMAC staff shall be
transferred into civil service classifications, for
which they are eligible, within DHCS.
18. Medi-Cal: Laboratory Services Rate Reduction . This
bill provides DHCS with the authority to establish a
reimbursement rate methodology for setting Medi-Cal
rates of reimbursement for clinical lab services
provided to Medi-Cal beneficiaries. The proposed
methodology will develop rates that are based on the
lowest amounts other payers are paying for similar
clinical laboratory services. Until the implementation
of the new methodology, payments for clinical laboratory
services would be subject to an additional 10 percent
provider payment reduction. This achieves $7.7 million
in General Fund savings.
19. Medi-Cal Copays for Non-Emergency Emergency Room Usage .
This bill makes the definition of emergency and
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nonemergency services for purposes of copays consistent
in law. The budget includes the implementation of a $15
copayment for non-emergency use of the emergency room.
This copayment will be implemented in the managed care
setting and does not apply to those who are in the
Family Planning, Access, Care, and Treatment program.
The hospital will collect the $15 copayment from
enrollees at the time of service, and the hospital will
be reimbursed the appropriate Medi-Cal reimbursement
rate minus the $15 copayment. This copay will result in
$7.1 million General Fund savings in the budget year.
20. Medi-Cal: Redirect Unpaid Hospital Stabilization
Funding . This bill redirects all unpaid private and
nondesignated public hospitals' stabilization funding
for fiscal years 2005-06 through 2009-10 (including the
extension period of the Medi-Cal Hospital/Uninsured
Demonstration through October 31, 2010) for purposes of
General Fund savings. Of the $54.7 million unpaid
funding, $11.89 million will be paid to a hospital that
incorrectly received underpayments in 2005-06 and
2006-07. The difference, $42.8 million, will be used to
offset General Fund expenditures.
21. Medi-Cal: Changes Non-Designated Public Hospitals
Payment Methodology . This bill changes the
reimbursement methodology of non-designated public
hospitals (NDPHs). Currently, NDPHs receive either the
CMAC negotiated per diem rates or cost-based
reimbursement for inpatient Medi-Cal fee-for-service
(FFS). These reimbursements are paid with 50 percent
General Fund and 50 percent federal funds. With the
proposed change in methodology, NDPHs would be funded
for their inpatient Medi-Cal FFS in the same manner as
Designated Public Hospitals in that they will use their
certified public expenditures to draw down federal
funds. This will result in $94.4 million General Fund
savings (as General Fund will no longer be used to
reimburse NDPHs).
In addition, qualified NDPHs receive supplemental
reimbursements from the NDPH Supplemental Fund, which is
funded with 50 percent General Fund and 50 percent
federal funds. This supplemental reimbursement will no
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longer be available, resulting in a General Fund savings
of $1.9 million.
Finally, NDPHs will no longer be eligible for the
supplemental payments authorized by AB 113 (Monning),
Chapter 20, Statutes of 2011, which are funded by
intergovernmental transfers and federal funds.
These changes will be contingent on DHCS receiving
federal approval (via a waiver amendment) to increase
Safety Net Care Pool and Delivery System Reform
Incentive Pool funding available to California. The
additional funds will be made available to NDPHs to
offset their uncompensated care costs and to support
their efforts to enhance the quality of care and the
health of the patients and families they serve. NDPHs
are currently not eligible for these funds.
22. Medi-Cal: Changes Hospital Quality Assurance Fee
Allocations . This bill changes hospital quality
assurance fee revenue allocations for a total of $150
million General Fund savings. These changes include:
Redirecting $150 million in hospital fee revenue in
2012-13 to the General Fund. This revenue was
intended to fund supplemental payments to private
hospitals by managed care plans.
Redirecting $95 million in fee revenue in 2013-14
to the General Fund. Under current law, this funding
will be provided to managed care plans ($75 million
will have supported supplemental payments to private
hospitals and $20 million for supplemental payments to
designated public hospitals).
Eliminating direct grants to designated public
hospitals in 2013-14 ($21.5 million) and will instead
use the funds for children's health coverage under
Medi-Cal.
23. Medi-Cal: Rollover of Unexpended Public Hospital Waiver
Funds . This bill provides a mechanism for the state to
retain 50 percent of the federal funding attributable to
the Health Care Coverage Initiative rollover that will
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have gone to Designated Public Hospitals (DPHs). There
is a total of $218 million in rollover. This will
result in $100 million in General Fund savings in
2012-13.
DPHs will voluntarily utilize their certified public
expenditures (CPE) to claim the additional Safety Net
Care Pool Uncompensated Care (SNCP) and allow the state
to obtain 50 percent of this federal funding. This
proposal relies on DPHs spending their CPEs to draw down
federal funds, of which the state is proposing to take
50 percent.
Additionally, this bill will allow the state to utilize
DPHs' excess CPE to achieve its designated General Fund
savings of $400 million for SNCP.
24. Medi-Cal: Increases Interest Rates on Medi-Cal
Overpayments . This bill requires DHCS to assess
interest against Medi-Cal provider overpayments at the
Surplus Money Investment Fund rate or seven percent per
year, whichever is higher. The legislation also
requires DHCS to pay interest at the same rate to a
provider who prevails in an appeal of a payment
disallowed by DHCS. This will result in $1.5 million
($750,000 General Fund) savings in 2012-13 and $3
million ($1.5 million General Fund) savings in 2013-14.
25. Medi-Cal: Medi-Cal Dental Managed Care - Sacramento and
Los Angeles counties . This bill provides for the
establishment of a stakeholder advisory committee to
provide input on the delivery of oral health and dental
care services in Sacramento County. It also provides
the Director of DHCS with the authority to establish a
beneficiary dental exception process in which Medi-Cal
beneficiaries mandatorily enrolled in dental health
plans in Sacramento County can move to fee-for-service
Denti-Cal. This bill also establishes a list of
performance measures to ensure that dental health plans
meet quality criteria.
26. Medi-Cal: Default Assignment Algorithm . This bill
directs DHCS to consult with the Auto Assignment
Performance Incentive Program stakeholder workgroup to
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develop cost factor disregards related to safety net
providers. The budget includes the addition of health
plan costs as a factor in the default assignment
algorithm and achieves $2.4 million General Fund
savings.
27. Medi-Cal: Medi-Cal Electronic Health Records Incentive
Payment Program . This bill allows up to $200,000
General Fund to be used for state support of the
Medi-Cal Electronic Health Records Incentive Payment
Program.
28. Medi-Cal: Expand Medi-Cal Managed Care to Rural
Counties . This bill provides for the expansion of
Medi-Cal managed care into the 28 rural counties that
are now fee-for-service. This proposal will result in
General Fund savings of $2.7 million in 2012-13.
29. Medi-Cal: Low Income Health Program and Public
Hospitals . Current law allows Low Income Health
Programs (LIHPs) to be reimbursed under a capitated
model. It also requires an LIHP to agree to a capitated
rate with DHCS during a given demonstration year. That
rate may then be implemented retroactively back to the
first day of the demonstration year if it is agreed upon
during the same demonstration year.
Public hospital systems are evolving their LIHPs from
feeforservice to riskbased programs to using capitated
rates. This bill contains technical language to
preserve the states option under the existing 1115
Medi-Cal Waiver with the federal government to utilize a
capitation rate under the LIHP. It is necessary to take
this action before June 30, 2012.
30. Medi-Cal: Hospital Quality Assurance Fee Accounting .
This bill allows hospitals to book hospital quality
assurance fee revenue generated from fee-for-service for
accounting purposes without having to wait for federal
approval of the managed care component of the hospital
quality assurance fee.
31. Cash Flow Loan for County Medical Services Program
(CMSP) . This bill would permit the Director of Finance
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to approve no more than $100 million General Fund in
cash flow loans in fiscal years 2012-13 and 2013-14 for
CMSP Governing Board expenditures associated with a LIHP
operated by the CMSP Governing Board. Any cash flow
loans made would be considered short term and would not
constitute General Fund expenditures. The loans and
their repayment will not affect the General Fund
reserve. Interest on this loan will be charged at the
Pooled Money Investment Account rate.
The CMSP Governing Board elected to administer a LIHP;
however, due to the fiscal challenges its member
counties currently face, it requires a loan to bridge
the time between when it will be required to pay-out its
first claims and when federal funds will begin to flow
back to the program. This proposal allows the CMSP
Governing Board, upon approval from the Director of
Finance, access to a cash flow loan of no more than $100
million over two fiscal years, 2012-13 and 2013-14, in
order to ensure the Board's ability to maintain a
financially solvent LIHP.
32. Transition of Ryan White Clients to the Low Income
Health Program . This bill strengthens consumer
protections for Ryan White Clients (e.g., AIDS Drug
Assistance Program clients ÝADAP]) as they transition to
the Low Income Health Program. It requires the DPH and
the DHCS to consult with community representatives to
obtain expert advice on policy decisions regarding the
transition of clients living with HIV/AIDS from Ryan
White funded programs to LIHP. This bill also requires
the DPH to report to the Legislature if the assumptions
it used to determine the transition of ADAP clients to
LIHP may result in an inability to provide ADAP services
to eligible ADAP clients.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: No
CTW:do 6/14/12 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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