BILL ANALYSIS Ó ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 1468| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ THIRD READING Bill No: AB 1468 Author: Assembly Budget Committee Amended: 6/25/12 in Senate Vote: 21 ASSEMBLY FLOOR : Not relevant SUBJECT : Budget Act of 2012: Duals Demonstration Project SOURCE : Author DIGEST : This bill implements the Duals Demonstration Pilot Projects. These demonstration projects will achieve $611.5 million General Fund savings in 2012-13, as specified in the analysis below. ANALYSIS : This bill includes the following provisions: 1. Dual Demonstration Projects A. Expands, from four to eight, the number of counties in which dual demonstration sites may be established. Existing law authorizes the Department of Health Care Services to establish dual demonstration projects in up to four counties to enable dual beneficiaries, who are eligible for both Medicare and Medicaid services, to receive a continuum of services that maximizes coordination of benefits between Medicare and Medicaid programs. CONTINUED AB 1468 Page 2 B. Provides that implementation of the demonstration project in up to eight counties may not begin sooner than March 1, 2013. Requires that the department director consult with the Legislature, federal government, and stakeholders when determining the implementation date. C. States legislative intent for the demonstration project to expand statewide within three years of the start of the demonstration project. Requires that expansion beyond the initial eight counties is contingent upon statutory authorization and a subsequent budget appropriation. D. Includes additional goals for the demonstration project: (1) Coordinate access to necessary and appropriate behavioral health services, including mental health and substance use disorders services. (2) Improve the quality of care for dual eligible beneficiaries. (3) Promote a system that is both sustainable and person- and family-centered by providing dual eligible beneficiaries with timely access to appropriate, coordinated health care services and community resources that enable them to attain or maintain personal health goals. E. Requires the department to enter into a memorandum of understanding with the federal government in developing the process for selecting, financing, monitoring, and evaluating the models for the demonstration project. Requires the completed memorandum of understanding to be provided to the Legislature and posted on the department's Internet Web site. F. Requires dual beneficiaries to be enrolled into a demonstration site unless the beneficiary makes an CONTINUED AB 1468 Page 3 affirmative choice to opt out of enrollment or is enrolled in the Program of All-Inclusive Care for the Elderly (PACE) or an AIDS Healthcare Foundation (AHF) plan, as specified. G. Allows beneficiaries who meet the requirements for PACE or AHF to select either of these managed care health plans for their Medicare and Medi-Cal benefits if one is available in that county. Requires that in areas where a PACE plan is available, the PACE plan shall be presented as an enrollment option, included in all enrollment materials, enrollment assistance programs, and outreach programs related to the demonstration project, and made available to beneficiaries whenever enrollment choices and options are presented. H. Requires that dual beneficiaries who opt out of enrollment into a demonstration site may choose to remain enrolled in fee-for-service Medicare or a Medicare Advantage plan for their Medicare benefits, but shall be mandatorily enrolled into a Medi-Cal managed care health plan, with exceptions. I. Allows, to the extent federal approval is obtained, the department to require that any beneficiary, upon enrollment in a demonstration site, to remain enrolled in the Medicare portion of the demonstration project on a mandatory basis for six months from the date of initial enrollment. Includes criteria for which a beneficiary may continue receiving services from an out-of-network Medicare provider for primary and specialty care services. Requires the department to develop a process to inform providers and beneficiaries of the availability of continuity of services from an existing provider and ensure that the beneficiary continues to receive services without interruption. J. Provides the following exemptions from enrollment in the dual demonstration project: (1) The beneficiary has a prior diagnosis of end-stage renal disease. The exemption does not CONTINUED AB 1468 Page 4 apply to beneficiaries diagnosed with end-stage renal disease subsequent to enrollment in the demonstration project. (2) The beneficiary has other health coverage, as specified. (3) The beneficiary is enrolled in a home- and community-based waiver, as specified, except for persons enrolled in Community-Based Adult Services or Multipurpose Senior Services Program services. (4) The beneficiary is receiving services through a regional center or state developmental center. (5) The beneficiary resides in a geographic area or Zip Code not included in managed care. (6) The beneficiary resides in one of the Veterans' Homes of California. K. Allows beneficiaries who have been diagnosed with HIV/AIDS to opt out of the demonstration project at the beginning of any month. L. Requires that for the 2013 calendar year, the department shall offer federal "Medicare Improvements for Patient and Providers Act of 2008" compliant contracts to existing Medicare Advantage Special Needs Plans (D-SNP plans) to continue to provide Medicare benefits to their enrollees in their service areas as approved on January 1, 2012. Requires that in the 2013 calendar year, beneficiaries in Medicare Advantage and D-SNP plans shall be exempt from mandatory enrollment in the demonstration project, but may voluntarily choose to enroll in the demonstration project. M. Requires that for the 2013 calendar year, demonstration sites shall not offer to enroll dual beneficiaries eligible for the demonstration project into the demonstration site's D-SNP. CONTINUED AB 1468 Page 5 N. Requires that the department shall not terminate contracts in a demonstration site with AHF or PACE, except as provided in the contract or pursuant to state or federal law. O. Requires that to the extent permitted under the demonstration, demonstration sites shall pay noncontracted hospitals prevailing Medicare fee-for-service rates for traditionally Medicare covered benefits and prevailing Medi-Cal fee-for-service rates for traditionally Medi-Cal covered benefits. P. Requires the department, in consultation with the hospital industry, to seek federal approval to ensure that Medicare supplemental payments for direct graduate medical education and Medicare add-on payments, including indirect medical education and disproportionate share hospital adjustments continue to be made available to hospitals for services provided under the demonstration. Requires the department to seek federal approval to continue these payments either outside the capitation rates or, if contained within the capitation rates, and to the extent permitted under the demonstration requiring demonstration sites to provide this reimbursement to hospitals. Q. Requires that to the extent allowed under the demonstration, the default rate for non-contracting providers of physician services shall be the prevailing Medicare fee schedule for services covered by the Medicare program and the prevailing Medi-Cal fee schedule for services covered by the Medi-Cal program. R. Includes requirements for payments to nursing facility services. S. Requires the department to enter into an interagency agreement with the Department of Managed Health Care to perform some or all of the department's oversight and readiness review activities, including providing consumer assistance CONTINUED AB 1468 Page 6 to beneficiaries and conducting financial audits, medical surveys, and a review of the adequacy of provider networks of the managed care plans participating in the demonstration. T. Requires the department to report to the Legislature on the enrollment status, quality measures, and state costs related to the demonstration. U. Requires the department to develop, in consultation with the federal government and stakeholders, quality and fiscal measures for health plans. Requires the department to require health plans to submit Medicare and Medi-Cal data to determine the results of these measures. Requires the department to publish the results of these measures, including via posting on the department's Internet Web site, on a quarterly basis. 2. Enrollment of Dual Beneficiaries into Medi-Cal Managed Care A. Requires that Medi-Cal beneficiaries who have dual eligibility in Medi-Cal and the Medicare Program be assigned as mandatory enrollees into new or existing Medi-Cal managed care health plans for their Medi-Cal benefits in counties participating in the dual demonstration projects only. B. Exempts dual beneficiaries from mandatory enrollment in a managed care if the dual beneficiary: (1) Has other health coverage, except in counties with county organized health systems. (2) Receives services through a foster care program. (3) Is under 21 years of age. (4) Is enrolled in a home- and community-based waiver, as specified, except for persons enrolled in Community-Based Adult Services, Multipurpose CONTINUED AB 1468 Page 7 Senior Services Program services, or a Section 1915(c) waiver for persons with developmental disabilities. (5) Is not eligible for enrollment in managed care plans for medically necessary reasons determined by the department. (6) Resides in one of the Veterans Homes of California. (7) Is enrolled in PACE or AHF. C. Allows a beneficiary who has been diagnosed with HIV/AIDS from opting out of managed care enrollment at the beginning of any month. D. Requires that to the extent that mandatory enrollment is required by the department, an enrollee's access to fee-for-service Medi-Cal shall not be terminated until the enrollee has selected or been assigned to a managed care health plan. E. Requires the department to suspend new enrollment of dual beneficiaries into a managed care plan if it determines that the managed care plan does not have sufficient primary or specialty care providers and long-term service and supports to meet the needs of its enrollees. F. Allows the department to implement an intergovernmental transfer arrangement with a public entity that elects to transfer public funds to the state to be used solely as the nonfederal share of Medi-Cal payments to managed care plans for the provision of services to dual beneficiaries. G. Requires that a managed care plan that contracts with the department for the provision of services shall ensure that beneficiaries have access to the same categories of licensed providers that are available under Medicare fee for service. Provides that nothing shall prevent a managed care plan from CONTINUED AB 1468 Page 8 contracting with selected providers within a category of licensure. 3. Long-Term Services and Supports (LTSS) Integration A. Requires that, no sooner than March 1, 2013, all Medi-Cal LTSS services, as defined, shall be services that are covered under managed care plan contracts and shall be available only through managed care plans to beneficiaries residing in counties participating in the dual demonstration counties only. B. Defines LTSS services to include In-Home Supportive Services (IHSS), Community-Based Adult Services (CBAS), Multipurpose Senior Services Program (MSSP), and skilled nursing facility services. C. Defines "home- and community-based services (HCBS) benefits" that may be covered services that are provided under managed care plan contracts for beneficiaries residing in counties participating in the dual demonstration counties. D. Requires that beneficiaries who are not mandatorily enrolled in managed care pursuant to current law exemptions or specified new exemptions are not required to receive LTSS, other than CBAS, through a managed care plan. E. Exempts beneficiaries from receiving LTSS services through managed care plans who meet the following: (1) Has other health coverage, except in counties with county organized health systems. (2) Receives services through a foster care program. (3) Is under 21 years of age. (4) Is enrolled in a home- and community-based waiver, as specified, except for persons enrolled in Community-Based Adult Services, Multipurpose CONTINUED AB 1468 Page 9 Senior Services Program services, or a Section 1915(c) waiver for persons with developmental disabilities. (5) Is not eligible for enrollment in managed care plans for medically necessary reasons determined by the department. (6) Resides in one of the Veterans Homes of California. (7) Is enrolled in PACE or AHF. F. Allows the department to exempt other categories of beneficiaries based on extraordinary medical needs of specific patient groups or to meet federal requirements, in consultation with stakeholders. G. Allows beneficiaries who have been diagnosed with HIV/AIDS to opt out of managed care enrollment at the beginning of any month. H. Requires that no sooner than July 1, 2012, CBAS shall be a Medi-Cal benefit covered under every managed care plan contract and available only through managed care plans. This provision applies to all counties, except in counties where Medi-Cal benefits are not covered through managed care plans. I. Requires that effective January 1, 2015, or 19 months after the commencement of beneficiary enrollment in the dual demonstration project, or on the date that any necessary federal approvals or waivers are obtained, whichever is later, MSSP services in counties where the dual demonstration project is implemented shall transition from a federal waiver to a benefit administered by managed care plans. Includes various program requirements regarding the transition. J. Requires that no sooner than March 1, 2013, or on the date that any necessary federal approvals or waivers are obtained, whichever is later, nursing CONTINUED AB 1468 Page 10 facility services and subacute facility services shall be Medi-Cal benefits available only through managed care plans in counties participating in the dual demonstration project. K. Allows the department director, after consulting with the Director of Finance, stakeholders, and the Legislature, to retain discretion to forgo provisions of LTSS services integration into managed care if and to the extent the director determines that the quality of care for managed care beneficiaries, efficiency, or cost-effectiveness of the program would be jeopardized. L. Requires the department to enter into an interagency agreement with the Department of Managed Health Care to perform some or all of the department's oversight and readiness review activities, including providing consumer assistance to beneficiaries and conducting financial audits, medical surveys, and a review of the adequacy of provider networks of the managed care plans. M. Requires the department to report to the Legislature on enrollment status, quality measures, and state costs. N. Requires the department to develop, in consultation with the federal government and stakeholders, quality and fiscal measures for health plans. Requires the department to require health plans to submit Medicare and Medi-Cal data to determine the results of these measures. Requires the department to publish the results of these measures, including via posting on the department's Internet Web site, on a quarterly basis. 4. Readiness Requirements A. Requires that before the department contracts with managed care plans or Medi-Cal providers to furnish Medi-Cal benefits and services under the dual demonstration project, mandatory enrollment of dual beneficiaries into Medi-Cal managed care, and LTSS CONTINUED AB 1468 Page 11 integration, the department shall do all of the following: (1) Ensure timely and appropriate communications with beneficiaries. (2) Require that managed care plans perform an assessment process. (3) Ensure that managed care plans arrange for primary care. (4) Ensure that managed care plans perform care coordination and care management activities. (5) Ensure that managed care plans comply with network adequacy requirements. (6) Ensure that managed care plans address medical and social needs. (7) Ensure that managed care plans provide a grievance and appeal process. (8) Monitor managed care plans' performance and accountability for provision of services. (9) Develop requirements for managed care plans to solicit stakeholder and member participation in advisory groups for the planning and development activities relating to the provision of services for dual beneficiaries. B. Requires the department to submit, to the Legislature within specified timelines, the following: (1) Copy of any report submitted to the federal government, as specified. (2) A transition plan developed together with the Department of Social Services, Department of Aging, Department of Managed Health Care, in CONTINUED AB 1468 Page 12 consultation with stakeholders. (3) Report on the readiness of managed care plans based on specified readiness evaluation criteria. 5. Medical Exemption Review Requires the department to provide notice to the requesting provider and any person in the Medi-Cal program who is a senior or a person with a disability when a request for a medical exemption from mandatory enrollment into a Medi-Cal managed care plan is denied and requires plans to maintain a dedicated liaison to coordinate continuity of care. 6. Other Provisions A. Revises the rate methodology for AHF plans. B. Authorizes the department director to defer payments to Medi-Cal managed care plans contracting with the department, as specified, which are payable to the plans during the final month of the 2012-13 state fiscal year. C. Requires that in the event the department has not received, by February 1, 2013, federal approval, or notification indicating pending approval, of a mutual ratesetting process, shared federal savings as defined, and a six-month enrollment period in the dual demonstration project, then effective March 1, 2013 the provisions of the dual demonstration project, enrollment of dual beneficiaries into Medi-Cal managed care, and LTSS integration become inoperative. D. Requires that the bill become operative only if AB 1496 or SB 1036 of the 2011-12 Regular Session of the Legislature is enacted and takes effect. FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes Local: No CONTINUED AB 1468 Page 13 According to the Senate Budget and Fiscal Review Committee: Duals Demonstration Projects/Coordinated Care Savings (dollars in millions) ----------------------------------------------------------- | | General Fund| |----------------------------------------+------------------| |Medicare Shared Savings | -$12.3| |----------------------------------------+------------------| |Long-Term Supports and Services | 111.6| |Integration | | |----------------------------------------+------------------| |Defer Managed Care Payment | -635.5| |----------------------------------------+------------------| |Delay Check-write | -75.2| |----------------------------------------+------------------| |Total |-$611.5 | | | | ----------------------------------------------------------- CTW:k 6/26/12 Senate Floor Analyses SUPPORT/OPPOSITION: NONE RECEIVED **** END **** CONTINUED