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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