BILL NUMBER: SB 42	AMENDED
	BILL TEXT

	AMENDED IN SENATE  APRIL 27, 2011

INTRODUCED BY   Senator Alquist

                        DECEMBER 8, 2010

    An act to add Section 1349.5 to the Health and Safety
Code, relating to health care coverage.   An act to add
Section 14107.14 to the Welfare and Institutions Code, relating to
public health. 



	LEGISLATIVE COUNSEL'S DIGEST


   SB 42, as amended, Alquist.  Health care service plans:
shared savings agreements.   Medi-Cal: contracts. 

   Existing law provides for the Medi-Cal program, which is
administered by the State Department of Health Care Services, under
which qualified low-income individuals receive health care services.
The Medi-Cal program is, in part, governed and funded by federal
Medicaid Program provisions. Existing law authorizes the department
to enter into various types of contracts for the provision of
services to beneficiaries, including contracts with managed care
systems and prepaid health plans.  
   This bill would prohibit the department from entering into a new
contract, or extending an existing contract, with an organization
that the department or another state entity has determined received
state funds to coordinate services for patients eligible for both
Medicare and Medi-Cal pursuant to a contract and was overpaid
inconsistent with, or profited from capitated payments from the state
in excess of, what was authorized under the contract or state law.
This bill would provide that the department may enter into a
contract, or extend an existing contract, with an organization as
described above if the organization has repaid the amount of the
overpayment and any penalties that have been assessed.  

   Existing law, the Knox-Keene Health Care Service Plan Act of 1975
(Knox-Keene Act), provides for the licensure and regulation of health
care service plans by the Department of Managed Health Care and
makes a willful violation of the act a crime. Existing law requires a
contract between a plan and a risk-bearing organization, as defined,
to include certain provisions concerning the administrative and
financial capacity of the risk-bearing organization, including a
requirement that the organization file quarterly and annual financial
surveys with the department.  
   This bill would require a person that enters into a shared savings
agreement, or other risk or risk-sharing arrangement, related to the
provision of health care services to file the shared savings
agreement, or the agreement that forms the basis of the risk or
risk-sharing arrangement, and any other documents deemed appropriate
by the department, with the department for review to determine if the
person is subject to the Knox-Keene Act.  
   Because a willful violation of this requirement would be a crime,
the bill would impose a state-mandated local program. 

   The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.  
   This bill would provide that no reimbursement is required by this
act for a specified reason. 
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program:  yes   no  .


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

   SECTION 1.    Section 14107.14 is added to the 
 Welfare and Institutions Code   , to read:  
   14107.14.  (a) If the department or another state entity
determines that an organization that received state funds to
coordinate services for patients eligible for both Medicare and
Medi-Cal pursuant to a contract was overpaid inconsistent with, or
profited from capitated payments from the state in excess of, what
was authorized under the contract or state law, the department shall
not enter into a new contract, or extend an existing contract, with
that organization.
   (b) The department may enter into a contract, or extend an
existing contract, with an organization described in subdivision (a)
if the organization has repaid the amount of the overpayment and any
penalties that have been assessed.  
  SECTION 1.    Section 1349.5 is added to the
Health and Safety Code, to read:
   1349.5.  (a) A person that enters into a shared savings agreement,
or other risk or risk-sharing arrangement, related to the provision
of health care services shall file the shared savings agreement, or
the agreement that forms the basis of the risk or risk-sharing
arrangement, and any other documents deemed appropriate by the
department, with the department for review to determine if the person
is subject to the requirements of this chapter.
   (b) For purposes of this section, "a person that enters into a
shared savings agreement, or other risk or risk-sharing arrangement,
related to the provision of health care services" includes, but is
not limited to, an accountable care organization that enters into a
shared savings agreement, or other risk or risk-sharing arrangement,
with the United States Secretary of Health and Human Services
pursuant to Section 1899 of Title XVIII of the federal Social
Security Act (42 U.S.C. Sec. 1395jjj).  
  SEC. 2.    No reimbursement is required by this
act pursuant to Section 6 of Article XIII B of the California
Constitution because the only costs that may be incurred by a local
agency or school district will be incurred because this act creates a
new crime or infraction, eliminates a crime or infraction, or
changes the penalty for a crime or infraction, within the meaning of
Section 17556 of the Government Code, or changes the definition of a
crime within the meaning of Section 6 of Article XIII B of the
California Constitution.