BILL ANALYSIS Ó ------------------------------------------------------------ |SENATE RULES COMMITTEE | SB 222| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ 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 : CONTINUED SB 222 Page 2 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 CONTINUED SB 222 Page 3 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. CONTINUED SB 222 Page 4 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 CONTINUED SB 222 Page 5 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 CONTINUED SB 222 Page 6 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. CONTINUED SB 222 Page 7 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 **** END **** CONTINUED