BILL ANALYSIS Ó SB 222 Page 1 Date of Hearing: July 13, 2011 ASSEMBLY COMMITTEE ON APPROPRIATIONS Felipe Fuentes, Chair SB 222 (Alquist) - As Introduced: February 9, 2011 Policy Committee: HealthVote:13-6 Urgency: No State Mandated Local Program: No Reimbursable: No SUMMARY This bill authorizes specified health plans to form joint ventures to offer health coverage to individuals and groups. Specifically, this bill: 1)Authorizes a health plan governed, owned, or operated by a county board of supervisors, a county special commission, a county-organized health system (COHS), a county health authority, or a County Medical Services Program (CMSP) to form joint ventures to offer health coverage to individuals and groups. 2)Requires any joint ventures established pursuant to this bill to be licensed under the Knox-Keene Act, which regulates California managed care plans. 3)Authorizes joint ventures to consist of either: a) Contractual relationships to pool risk and/or to share provider networks, or, b) Contractual relationships for the joint offering or marketing of health coverage. 4)Requires joint ventures to pursue contracts with designated public hospitals, county health clinics, community health centers, and other traditional safety net providers. FISCAL EFFECT 1)To the extent that this bill leads to the formation of new joint ventures, potential one-time fee-supported licensure costs to DMHC in the range of $100,000 per licensee (special SB 222 Page 2 fund). Since the number potential licensees is unlikely to exceed five, the one-time costs would not exceed $500,000. 2)It is uncertain whether increased costs would occur as a result of this bill, as the local entities specified in this bill are not specifically prohibited from forming joint ventures, nor applying for licensure as a Knox-Keene plan, under current law. COMMENTS 1)Rationale . This bill, supported by a variety of consumer and labor groups, aims to increase health coverage options statewide by increasing public alternatives to commercial health coverage. This bill authorizes new alliances between specified local health entities. This bill requires newly-formed joint ventures to emphasize care provided by safety net providers. According to the author, local managed care entities have proven the ability to deliver cost-effective health care. The author intends to provide more alternatives to commercial coverage than are currently available. This bill establishes clear authority for local health plans to establish joint ventures without relying on current law related to joint powers agreements, which is less clear. 2)County Health Delivery Modes . This bill authorizes expansions of health coverage through new arrangements between health delivery entities at the local level. California utilizes three managed care delivery models to provide health care to Medi-Cal enrollees. These models are the County-Operated Health System (COHS) model, the Two-Plan model and Geographic Managed Care. The County Medical Services Program (CMSP) is a county-administered coverage program to allow smaller counties to provide health coverage to medically indigent adults. Additional detail on these health delivery modes is provided below: a) COHS are managed care arrangements organized and operated by a governing board appointed by a county board of supervisors. There are currently five COHS providing services to 800,000 Medi-Cal beneficiaries in 11 California counties: Merced, Monterey, Napa, Orange, Santa Barbara, Santa Cruz, San Luis Obispo, San Mateo, Solano, Sonoma, and Yolo. SB 222 Page 3 b) Two-Plan model counties provide Medi-Cal managed care services via contracts with a commercial plan selected through competitive bidding and a local initiative. Local initiatives provide services through networks comprised of county health system providers, safety net providers, and county hospitals. Currently, local initiatives serve 2.6 million Medi-Cal beneficiaries in 12 counties: Alameda, Contra Costa, Fresno, Kern, Los Angeles, Riverside, San Bernardino, San Francisco, San Joaquin, Santa Clara, Stanislaus, and Tulare. c) Geographic Managed Care (GMC), found only in Sacramento and San Diego, allows Medi-Cal beneficiaries to choose among competing commercial health plans. GMC is distinct from the COHS model because of the availability of multiple health plans and beneficiary choice of a health plan. There are 400,000 Medi-Cal patients receiving care through GMC. d) CMSP provides medical care services in smaller counties to indigent adults 18-64 years of age with incomes at or below 200% of the federal poverty level (FPL) who are not eligible for Medi-Cal and who are U.S. citizens or legal residents. Individuals above 200% FPL may be eligible 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. 3)Related Legislation . a) SB 56 (Alquist) in 2010 was substantially similar to this bill. SB 56 was vetoed, with a veto message citing concerns about the necessity of the bill. b) SB 973 (Simitian) in 2007 and SB 1622 (Simitian) in 2008 created the California Health Benefits Service Program within DHCS to facilitate the creation of joint ventures and to authorize local health plans to enter into joint ventures in order to pool risk and share provider networks. SB 973 was vetoed due to concerns about a piecemeal approach to health reform. SB 1622 was held on Suspense in Senate Appropriations. SB 222 Page 4 Analysis Prepared by : Lisa Murawski / APPR. / (916) 319-2081