BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 222|
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THIRD READING
Bill No: SB 222
Author: Alquist (D)
Amended: As introduced
Vote: 21
SENATE HEALTH COMMITTEE : 7-2, 04/27/11
AYES: Hernandez, Alquist, Blakeslee, De León, DeSaulnier,
Rubio, Wolk
NOES: Strickland, Anderson
SENATE APPROPRIATIONS COMMITTEE : 6-3, 5/26/11
AYES: Kehoe, Alquist, Lieu, Pavley, Price, Steinberg
NOES: Walters, Emmerson, Runner
SUBJECT : Health plans: joint ventures
SOURCE : Author
DIGEST : This bill permits a health plan that is
governed, owned, or operated by a county board of
supervisors, a county special commission, a
county-organized health system, a county health authority,
or the County Medical Services Program, to form joint
ventures for the joint or coordinated offering of health
plans to individuals and groups
ANALYSIS :
Existing law :
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1. Provides for the regulation of health care services
plans (health plans) by the Department of Managed Health
Care (DMHC), and for the regulation of health insurers
by the California Department of Insurance (CDI).
2. Establishes the Knox-Keene Health Care Service Plan Act
of 1975 (Knox-Keene Act) which, among other things,
imposes requirements on health plans pertaining to the
provision of mandatory basic services, financial
stability, availability and accessibility of providers,
review of provider contracts, cost sharing, and consumer
disclosure and grievance requirements.
3. Establishes various public health benefits programs
administered by the Department of Health Care Services
(DHCS), the Managed Risk Medical Insurance Board
(MRMIB), and various local entities.
4. Establishes the Medi-Cal program, administered by DHCS,
which provides comprehensive health benefits to
low-income children up to age 21, their parents or
caretaker relatives, pregnant women, elderly, blind or
disabled persons, nursing home residents, and refugees
who meet specified eligibility criteria.
5. Authorizes DHCS to contract, on a bid or non-bid basis,
with any qualified individual, organization, or entity
to provide services to, arrange for, or case-manage the
care of Medi-Cal beneficiaries.
6. Permits the contract to be exclusive or nonexclusive,
statewide or on a more limited geographic basis, and
requires that the contracts include specified
provisions.
7. Provides, through regulations, for the delivery of
Medi-Cal services in designated counties through two
prepaid health plans, one of which is referred to as a
"local initiative or "LI", which is organized by one or
more county government(s), or stakeholders, in a region
designated by the DHCS director.
8. Authorizes a county or counties to establish a special
commission or authority for the delivery of Medi-Cal
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services, and to negotiate an exclusive contract with
the California Medical Assistance Commission to provide
or arrange for health care services under the Medi-Cal
program. These programs are referred to as
county-organized health systems (COHS).
9. Provides for the County Medical Services Program (CMSP),
under which counties with a population below 300,000, or
as specified, may contract with DHCS to provide health
care services to medically indigent adults, as
specified.
10.Establishes the Joint Exercise of Powers Act, which
permits two or more public agencies to enter into
agreements to jointly exercise any power common to the
contracting parties.
This bill:
1. Permits a health plan that is governed, owned, or
operated by a county board of supervisors, a county
special commission, a COHS, or a county health authority
to form joint ventures for the joint or coordinated
offering of health plans to individuals and groups.
2. Permits a CMSP governing board to develop and
participate in joint ventures, provided that the joint
venture is funded separately from the program and does
not impair its financial stability.
3. Permits the joint ventures to consist of either:
A. Contractual relationships entered into in order
to pool risk or share networks, or both.
B. Contractual relationships entered into in order
to provide for the joint offering or marketing of
health plans to individuals and groups.
4. Requires participating health plans, in forming joint
ventures, contracts with designated public hospitals,
county health clinics, community health centers, and
other traditional safety net providers.
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5. Permits a CMSP governing board, if it elects to
participate in a joint venture, to contract with a
third-party administrator to provide coverage under the
joint venture.
6. Requires joint ventures to meet all of the requirements
of the Knox-Keene Act.
7. Makes various legislative findings and declarations.
Background
Local coverage plan models under Medi-Cal managed care .
According to DHCS, as of February 2011, Medi-Cal managed
care served about 4.2 million Medi-Cal beneficiaries in 27
counties (representing 58 percent of the total Medi-Cal
population). To provide coverage to this population,
California uses three managed care delivery models: COHS,
the Two-Plan model, and Geographic Managed Care.
COHS are managed care plans, organized and operated
by a governing board (appointed by a county board of
supervisors), that contract with DHCS to provide
services to Medi-Cal beneficiaries. In creating these
locally-run plans, input can be provided by local
government, health care providers, community groups
and Medi-Cal beneficiaries. In a COHS county,
everyone is in the same managed care plan, including
seniors and people with disabilities. Under a COHS
model, there is no Medi-Cal fee-for-service option.
There are currently five COHS providing services to
864,000 Medi-Cal beneficiaries in 11 counties: Merced,
Monterey, Napa, Orange, Santa Barbara, Santa Cruz, San
Luis Obispo, San Mateo, Solano, Sonoma, and Yolo.
Ventura's program is in formation.
Under the Two-Plan model, a public, non-profit LI
created by the county competes with a commercial plan,
selected through a competitive bidding process. Local
government, community groups and health care providers
all can give input in creating the LI, which is
designed to meet the needs and concerns of the
community. California has eight LIs providing health
care coverage for California's Medi-Cal and Healthy
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Families populations. These LIs provide services
through networks comprised of county health system
providers, safety net providers, and county hospitals.
Currently, LIs serve 2.9 million Medi-Cal
beneficiaries in 14 counties: Alameda, Contra Costa,
Fresno, Kern, Kings, Los Angeles, Madera, Riverside,
San Bernardino, San Francisco, San Joaquin, Santa
Clara, Stanislaus, and Tulare. Several of the LIs
have expanded to offer coverage to In-Home Supportive
Services (IHSS) workers, children who are not eligible
for other state-sponsored health care coverage, and
Medicare beneficiaries.
Geographic Managed Care (GMC), found only in
Sacramento and San Diego counties, allows Medi-Cal
beneficiaries to choose among multiple competing
commercial health plans. There are 433,000 Medi-Cal
patients receiving care through GMC.
In addition to the three delivery models for Medi-Cal
described above, CMSP is a county-administered coverage
program for medically indigent adults in primarily smaller
rural counties. CMSP provides medical care services in 34
counties to indigent adults, ages 21 to 64 with incomes at
or below 200 percent federal poverty level who are not
eligible for Medi-Cal, and who are U.S. citizens or legal
residents. Individuals above 200 percent of the federal
poverty level may be eligible for the program with a share
of cost. County welfare departments determine eligibility.
Most individuals on CMSP are on the program for only three
to seven months and the average monthly enrollment is
40,000.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee analysis:
Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13
2013-14 Fund
DMHC licensing $100 per joint
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venture Special*
joint ventures
DMHC licensing fee (up to $25 per
license application) Special*
revenue
*Managed Care Fund
SUPPORT : (Verified 5/26/11)
American Federation of State, County and Municipal
Employees
California Labor Federation
California Pan-Ethnic Health Network
California School Employees Association
Center for Policy Analysis/EQUAL Health Care
Consumers Union
Having Our Say
Health Access California
Planned Parenthood Affiliates of California
United Nurses Association of California/Union of Health
Care Professionals
OPPOSITION : (Verified 5/26/11)
Orange County Board of Supervisors
ARGUMENTS IN SUPPORT : The California Labor Federation is
in support of this bill and states that California's health
care purchasers need an alternative to the state's private
health insurers and that publicly administered plans can
and do lower costs by eliminating profit and minimizing
administrative costs.
The American Federation of State, County and Municipal
Employees points out that many Californians live in one
county and work in another, while the existing public
system is tied to county boundaries. By building on
existing LIs and COHS, this bill allows the existing
Medi-Cal managed care plans to provide regional networks,
thus providing more viable coverage options for those who
commute.
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Health Access concurs and points out that by knitting
together local LIs and county-based health plans, this bill
has the potential to create a cost-effective alternative
for individuals and employers.
The California Pan-Ethnic Health Network also writes in
support, stating that local health plans have proven that
they can deliver cost-effective care to Medi-Cal and
Healthy Families beneficiaries. By removing barriers in
current law that limit their ability to form joint
ventures, this bill allows these plans to integrate their
operations and offer coverage on broader geographic basis.
ARGUMENTS IN OPPOSITION : The Orange County Board of
Supervisors write in opposition, stating that allowing
public agencies to sell health insurance in competition
with private health plans and insurers would introduce the
"public option" rejected by the public and Congress in
relation to federal health reform.
CTW:do 5/27/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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