BILL NUMBER: SB 1008	CHAPTERED
	BILL TEXT

	CHAPTER  33
	FILED WITH SECRETARY OF STATE  JUNE 27, 2012
	APPROVED BY GOVERNOR  JUNE 27, 2012
	PASSED THE SENATE  JUNE 27, 2012
	PASSED THE ASSEMBLY  JUNE 27, 2012
	AMENDED IN ASSEMBLY  JUNE 25, 2012

INTRODUCED BY   Committee on Budget and Fiscal Review

                        FEBRUARY 6, 2012

   An act to amend Sections 14132.275, 14182, 14183.6, and 14301.1
of, to add Sections 14132.276, 14182.16, 14182.17, and 14301.2 to,
and to add Article 5.7 (commencing with Section 14186) of Chapter 7
of Part 3 of Division 9 to, the Welfare and Institutions Code,
relating to public social services, and making an appropriation
therefor, to take effect immediately, bill related to the budget.



	LEGISLATIVE COUNSEL'S DIGEST


   SB 1008, Committee on Budget and Fiscal Review. Public social
services: Medi-Cal.
   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. One of the methods by which these
services are provided is pursuant to contracts with various types of
managed care health plans.
   Existing federal law provides for the federal Medicare Program,
which is a public health insurance program for persons 65 years of
age and older and specified persons with disabilities who are under
65 years of age. Existing law provides for the county-administered
In-Home Supportive Services (IHSS) program, under which, either
through employment by the recipient, by or through contract by the
county, by the creation of a public authority, or pursuant to a
contract with a nonprofit consortium, qualified aged, blind, and
disabled persons receive services enabling them to remain in their
own homes.
   Existing law, to the extent that federal financial participation
is available, and pursuant to a demonstration project or waiver of
federal law, requires the department to establish pilot projects in
up to 4 counties, to develop effective health care models to provide
services to persons who are dually eligible under both the Medi-Cal
and Medicare programs. Existing law requires the department to, not
sooner than March 1, 2011, identify health care models that may be
included in a pilot project, develop a timeline and process for
selecting, financing, monitoring, and evaluating the pilot projects,
and provide this timeline and process to certain committees of the
Legislature.
   This bill would revise terminology used in these provisions and
would require the department to establish demonstration sites, as
defined, in up to 8 counties not sooner than March 1, 2013. This bill
would require the department to enter into a memorandum of
understanding (MOU), with specified terms and conditions, with the
federal Centers for Medicare and Medicaid Services (CMS) in
developing the process for selecting, financing, monitoring, and
evaluating the health care models for the demonstration project, and
would require the department to require a demonstration site, as
defined, to comply with specified requirements to the extent that the
terms and conditions of the MOU do not address the specific
selection, financing, monitoring, and evaluation criteria. This bill
would require the department, with exceptions, to enroll dual
eligible beneficiaries into a demonstration site unless the dual
eligible beneficiary makes an affirmative choice to opt out of
enrollment or is already enrolled in specific entities, as specified.

   Existing law requires the department to seek a demonstration
project or federal waiver of Medicaid law to implement specified
objectives, which may include better care coordination for seniors,
persons with disabilities, and children with special health care
needs. Existing law authorizes the department to require certain
seniors and persons with disabilities to be assigned as mandatory
enrollees into managed care health plans, and requires the department
to meet prescribed conditions if the department exercises this
authority.
   This bill would add prescribed conditions to those requirements,
including, among other things, requiring the department to provide to
a beneficiary a written notice with prescribed information when a
request for exemption from plan enrollment is denied.
   This bill would require the department, in addition to the dual
eligibles demonstration project, to assign Medi-Cal beneficiaries who
have dual eligibility in Medi-Cal and the Medicare Program as
mandatory enrollees into new and existing Medi-Cal managed care
health plans, as defined, for their Medi-Cal benefits in counties
participating in the demonstration project unless the beneficiary is
exempt, as specified. This bill would authorize the department to
contract with additional managed care health plans to provide
Medi-Cal services in specified counties. This bill would require the
department to ensure and improve the care coordination and
integration of health care services for Medi-Cal beneficiaries
residing in counties participating in the demonstration project who
are dual eligible beneficiaries and receive Medi-Cal benefits and
services through the demonstration project or through mandatory
enrollment in managed care health plans, and for Medi-Cal
beneficiaries who receive long-term services and supports, as
defined, and would require the department to perform various duties
before the department contracts with managed care health plans or
Medi-Cal providers to furnish Medi-Cal benefits and services, as
specified.
   This bill would provide that it is the intent of the Legislature
that long-term services and supports be provided through managed care
health plans in counties participating in the demonstration project.
This bill would require that Medi-Cal long-term services and
supports, including in-home supportive services, community-based
adult services, Multipurpose Senior Services Program (MSSP) services,
and skilled nursing facility and subacute care services, as
specified, be covered services under managed care health plan
contracts and would, with some exceptions, provide that these
services only be available through managed care health plan contracts
to beneficiaries residing in counties participating in the
demonstration project. This bill would provide that home- and
community-based services plan benefits, as defined, may be covered
services under managed care health plan contracts for beneficiaries
in counties participating in the demonstration project.
   Existing law requires the State Department of Health Care Services
to pay capitation rates to health plans participating in the
Medi-Cal managed care program using actuarial methods and authorizes
the department to establish health-plan- and county-specific rates,
as specified.
   This bill would apply those provisions to specified managed care
organizations and to the capitation rates the department pays on and
after the effective date of this bill under any managed care health
plan contract, as specified.
   This bill would, to the extent consistent with federal law,
authorize the department to defer payments to Medi-Cal managed care
health plans and providers, as applicable, contracting with the
department, as specified, which are payable to the plans during the
final month of the 2012-13 state fiscal year, if certain conditions
are satisfied.
   This bill would provide that specified sections shall become
inoperative under certain circumstances.
   This bill would appropriate $1,000 from the General Fund to the
State Department of Health Care Services for administration.
   This bill would become operative only if AB 1496 or SB 1036 of the
2011-12 Regular Session is enacted and takes effect.
   This bill would declare that it is to take effect immediately as a
bill providing for appropriations related to the Budget Bill.
   Appropriation: yes.


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

  SECTION 1.  Section 14132.275 of the Welfare and Institutions Code
is amended to read:
   14132.275.  (a) The department shall seek federal approval to
establish the demonstration project described in this section
pursuant to a Medicare or a Medicaid demonstration project or waiver,
or a combination thereof. Under a Medicare demonstration, the
department may contract with the federal Centers for Medicare and
Medicaid Services (CMS) and demonstration sites to operate the
Medicare and Medicaid benefits in a demonstration project that is
overseen by the state as a delegated Medicare benefit administrator,
and may enter into financing arrangements with CMS to share in any
Medicare program savings generated by the demonstration project.
   (b) After federal approval is obtained, the department shall
establish the demonstration project that enables dual eligible
beneficiaries to receive a continuum of services that maximizes
access to, and coordination of, benefits between the Medi-Cal and
Medicare programs and access to the continuum of long-term services
and supports and behavioral health services, including mental health
and substance use disorder treatment services. The purpose of the
demonstration project is to integrate services authorized under the
federal Medicaid Program (Title XIX of the federal Social Security
Act (42 U.S.C. Sec. 1396 et seq.)) and the federal Medicare Program
(Title XVIII of the federal Social Security Act (42 U.S.C. Sec. 1395
et seq.)). The demonstration project may also include additional
services as approved through a demonstration project or waiver, or a
combination thereof.
   (c) For purposes of this section, the following definitions shall
apply:
   (1) "Behavioral health" means Medi-Cal services provided pursuant
to Section 51341 of Title 22 of the California Code of Regulations
and Drug Medi-Cal substance abuse services provided pursuant to
Section 51341.1 of Title 22 of the California Code of Regulations,
and any mental health benefits available under the Medicare Program.
   (2) "Capitated payment model" means an agreement entered into
between CMS, the state, and a managed care health plan, in which the
managed care health plan receives a capitation payment for the
comprehensive, coordinated provision of Medi-Cal services and
benefits under Medicare Part C (42 U.S.C. Sec. 1395w-21 et seq.) and
Medicare Part D (42 U.S.C. Sec. 1395w-101 et seq.), and CMS shares
the savings with the state from improved provision of Medi-Cal and
Medicare services that reduces the cost of those services. Medi-Cal
services include long-term services and supports as defined in
Section 14186.1, behavioral health services, and any additional
services offered by the demonstration site.
   (3) "Demonstration site" means a managed care health plan that is
selected to participate in the demonstration project under the
capitated payment model.
   (4) "Dual eligible beneficiary" means an individual 21 years of
age or older who is enrolled for benefits under Medicare Part A (42
U.S.C. Sec. 1395c et seq.) and Medicare Part B (42 U.S.C. Sec. 1395j
et seq.) and is eligible for medical assistance under the Medi-Cal
State Plan.
   (d) No sooner than March 1, 2011, the department shall identify
health care models that may be included in the demonstration project,
shall develop a timeline and process for selecting, financing,
monitoring, and evaluating the demonstration sites, and shall provide
this timeline and process to the appropriate fiscal and policy
committees of the Legislature. The department may implement these
demonstration sites in phases.
   (e) The department shall provide the fiscal and appropriate policy
committees of the Legislature with a copy of any report submitted to
CMS to meet the requirements under the demonstration project.
   (f) Goals for the demonstration project shall include all of the
following:
   (1) Coordinate Medi-Cal and Medicare benefits across health care
settings and improve the continuity of care across acute care,
long-term care, behavioral health, including mental health and
substance use disorder services, and home- and community-based
services settings using a person-centered approach.
   (2) Coordinate access to acute and long-term care services for
dual eligible beneficiaries.
   (3) Maximize the ability of dual eligible beneficiaries to remain
in their homes and communities with appropriate services and supports
in lieu of institutional care.
   (4) Increase the availability of and access to home- and
community-based services.
   (5) Coordinate access to necessary and appropriate behavioral
health services, including mental health and substance use disorder
services.
   (6) Improve the quality of care for dual eligible beneficiaries.
   (7) Promote a system that is both sustainable and person and
family centered by providing dual eligible beneficiaries with timely
access to appropriate, coordinated health care services and community
resources that enable them to attain or maintain personal health
goals.
   (g) No sooner than March 1, 2013, demonstration sites shall be
established in up to eight counties, and shall include at least one
county that provides Medi-Cal services via a two-plan model pursuant
to Article 2.7 (commencing with Section 14087.3) and at least one
county that provides Medi-Cal services under a county organized
health system pursuant to Article 2.8 (commencing with Section
14087.5). The director shall consult with the Legislature, CMS, and
stakeholders when determining the implementation date for this
section. In determining the counties in which to establish a
demonstration site, the director shall consider the following:
   (1) Local support for integrating medical care, long-term care,
and home- and community-based services networks.
   (2) A local stakeholder process that includes health plans,
providers, mental health representatives, community programs,
consumers, designated representatives of in-home supportive services
personnel, and other interested stakeholders in the development,
implementation, and continued operation of the demonstration site.
   (h) In developing the process for selecting, financing,
monitoring, and evaluating the health care models for the
demonstration project, the department shall enter into a memorandum
of understanding with CMS. Upon completion, the memorandum of
understanding shall be provided to the fiscal and appropriate policy
committees of the Legislature and posted on the department's Internet
Web site.
   (i) The department shall negotiate the terms and conditions of the
memorandum of understanding, which shall address, but are not
limited to, the following:
   (1) Reimbursement methods for a capitated payment model. Under the
capitated payment model, the demonstration sites shall meet all of
the following requirements:
   (A) Have Medi-Cal managed care health plan and Medicare dual
eligible-special needs plan contract experience, or evidence of the
ability to meet these contracting requirements.
   (B) Be in good financial standing and meet licensure requirements
under the Knox-Keene Health Care Service Plan Act of 1975 (Chapter
2.2 (commencing with Section 1340) of Division 2 of the Health and
Safety Code), except for county organized health system plans that
are exempt from licensure pursuant to Section 14087.95.
   (C) Meet quality measures, which may include Medi-Cal and Medicare
Healthcare Effectiveness Data and Information Set measures and other
quality measures determined or developed by the department or CMS.
   (D) Demonstrate a local stakeholder process that includes dual
eligible beneficiaries, managed care health plans, providers, mental
health representatives, county health and human services agencies,
designated representatives of in-home supportive services personnel,
and other interested stakeholders that advise and consult with the
demonstration site in the development, implementation, and continued
operation of the demonstration project.
   (E) Pay providers reimbursement rates sufficient to maintain an
adequate provider network and ensure access to care for
beneficiaries.
   (F) Follow final policy guidance determined by CMS and the
department with regard to reimbursement rates for providers pursuant
to paragraphs (4) to (7), inclusive, of subdivision (o).
   (G) To the extent permitted under the demonstration, pay
noncontracted hospitals prevailing Medicare fee-for-service rates for
traditionally Medicare covered benefits and prevailing Medi-Cal
fee-for-service rates for traditionally Medi-Cal covered benefits.
   (2) Encounter data reporting requirements for both Medi-Cal and
Medicare services provided to beneficiaries enrolling in the
demonstration project.
   (3) Quality assurance withholding from the demonstration site
payment, to be paid only if quality measures developed as part of the
memorandum of understanding and plan contracts are met.
   (4) Provider network adequacy standards developed by the
department and CMS, in consultation with the Department of Managed
Health Care, the demonstration site, and stakeholders.
   (5) Medicare and Medi-Cal appeals and hearing process.
   (6) Unified marketing requirements and combined review process by
the department and CMS.
   (7) Combined quality management and consolidated reporting process
by the department and CMS.
   (8) Procedures related to combined federal and state contract
management to ensure access, quality, program integrity, and
financial solvency of the demonstration site.
   (9) To the extent permissible under federal requirements,
implementation of the provisions of Sections 14182.16 and 14182.17
that are applicable to beneficiaries simultaneously eligible for
full-scope benefits under Medi-Cal and the Medicare Program.
   (10) (A) In consultation with the hospital industry, CMS approval
to ensure that Medicare supplemental payments for direct graduate
medical education and Medicare add-on payments, including indirect
medical education and disproportionate share hospital adjustments
continue to be made available to hospitals for services provided
under the demonstration.
   (B) The department shall seek CMS approval for CMS to continue
these payments either outside the capitation rates or, if contained
within the capitation rates, and to the extent permitted under the
demonstration project, shall require demonstration sites to provide
this reimbursement to hospitals.
   (11) To the extent permitted under the demonstration project, the
default rate for non-contracting providers of physician services
shall be the prevailing Medicare fee schedule for services covered by
the Medicare program and the prevailing Medi-Cal fee schedule for
services covered by the Medi-Cal program.
   (j) (1) The department shall comply with and enforce the terms and
conditions of the memorandum of understanding with CMS, as specified
in subdivision (i). To the extent that the terms and conditions do
not address the specific selection, financing, monitoring, and
evaluation criteria listed in subdivision (i), the department:
   (A) Shall require the demonstration site to do all of the
following:
   (i) Comply with additional site readiness criteria specified by
the department.
   (ii) Comply with long-term services and supports requirements in
accordance with Article 5.7 (commencing with Section 14186).
   (iii) To the extent permissible under federal requirements, comply
with the provisions of Sections 14182.16 and 14182.17 that are
applicable to beneficiaries simultaneously eligible for full-scope
benefits under both Medi-Cal and the Medicare Program.
   (iv) Comply with all transition of care requirements for Medicare
Part D benefits as described in Chapters 6 and 14 of the Medicare
Managed Care Manual, published by CMS, including transition
timeframes, notices, and emergency supplies.
   (B) May require the demonstration site to forgo charging premiums,
coinsurance, copayments, and deductibles for Medicare Part C and
Medicare Part D services.
   (2) The department shall notify the Legislature within 30 days of
the implementation of each provision in paragraph (1).
   (k) The director may enter into exclusive or nonexclusive
contracts on a bid or negotiated basis and may amend existing managed
care contracts to provide or arrange for services provided under
this section. Contracts entered into or amended pursuant to this
section shall be exempt from the provisions of Chapter 2 (commencing
with Section 10290) of Part 2 of Division 2 of the Public Contract
Code and Chapter 6 (commencing with Section 14825) of Part 5.5 of
Division 3 of Title 2 of the Government Code.
   (l) (1) (A) Except for the exemptions provided for in this
section, the department shall enroll dual eligible beneficiaries into
a demonstration site unless the beneficiary makes an affirmative
choice to opt out of enrollment or is already enrolled on or before
June 1, 2013, in a managed care organization licensed under the
Knox-Keene Health Care Service Plan Act of 1975 (Chapter 2.2
(commencing with Section 1340) of Division 2 of the Health and Safety
Code) that has previously contracted with the department as a
primary care case management plan pursuant to Article 2.9 (commencing
with Section 14088) to provide services to beneficiaries who are HIV
positive or who have been diagnosed with AIDS or in any entity with
a contract with the department pursuant to Chapter 8.75 (commencing
with Section 14591).
   (B) Dual eligible beneficiaries who opt out of enrollment into a
demonstration site may choose to remain enrolled in fee-for-service
Medicare or a Medicare Advantage plan for their Medicare benefits,
but shall be mandatorily enrolled into a Medi-Cal managed care health
plan pursuant to Section 14182.16, except as exempted under
subdivision (c) of Section 14182.16.
   (C) (i) Persons meeting requirements for the Program of
All-Inclusive Care for the Elderly (PACE) pursuant to Chapter 8.75
(commencing with Section 14591) or a managed care organization
licensed under the Knox-Keene Health Care Service Plan Act of 1975
(Chapter 2.2 (commencing with Section 1340) of Division 2 of the
Health and Safety Code) that has previously contracted with the
department as a primary care case management plan pursuant to Article
2.9 (commencing with Section 14088) of Chapter 7 to provide services
to beneficiaries who are HIV positive or who have been diagnosed
with AIDS may select either of these managed care health plans for
their Medicare and Medi-Cal benefits if one is available in that
county.
   (ii) In areas where a PACE plan is available, the PACE plan shall
be presented as an enrollment option, included in all enrollment
materials, enrollment assistance programs, and outreach programs
related to the demonstration project, and made available to
beneficiaries whenever enrollment choices and options are presented.
Persons meeting the age qualifications for PACE and who choose PACE
shall remain in the fee-for-service Medi-Cal and Medicare programs,
and shall not be assigned to a managed care health plan for the
lesser of 60 days or until they are assessed for eligibility for PACE
and determined not to be eligible for a PACE plan. Persons enrolled
in a PACE plan shall receive all Medicare and Medi-Cal services from
the PACE program pursuant to the three-way agreement between the PACE
program, the department, and the Centers for Medicare and Medicaid
Services.
   (2) To the extent that federal approval is obtained, the
department may require that any beneficiary, upon enrollment in a
demonstration site, remain enrolled in the Medicare portion of the
demonstration project on a mandatory basis for six months from the
date of initial enrollment. After the sixth month, a dual eligible
beneficiary may elect to enroll in a different demonstration site, a
different Medicare Advantage plan, fee-for-service Medicare, PACE, or
a managed care organization licensed under the Knox-Keene Health
Care Service Plan Act of 1975 (Chapter 2.2 (commencing with Section
1340) of Division 2 of the Health and Safety Code) that has
previously contracted with the department as a primary care case
management plan pursuant to Article 2.9 (commencing with Section
14088) to provide services to beneficiaries who are HIV positive or
who have been diagnosed with AIDS, for his or her Medicare benefits.
   (A) During the six-month mandatory enrollment in a demonstration
site, a beneficiary may continue receiving services from an
out-of-network Medicare provider for primary and specialty care
services only if all of the following criteria are met:
   (i) The dual eligible beneficiary demonstrates an existing
relationship with the provider prior to enrollment in a demonstration
site.
   (ii) The provider is willing to accept payment from the
demonstration site based on the current Medicare fee schedule.
   (iii) The demonstration site would not otherwise exclude the
provider from its provider network due to documented quality of care
concerns.
   (B) The department shall develop a process to inform providers and
beneficiaries of the availability of continuity of services from an
existing provider and ensure that the beneficiary continues to
receive services without interruption.
   (3) (A) Notwithstanding subparagraph (A) of paragraph (1) of
subdivision (1), a dual eligible beneficiary shall be excluded from
enrollment in the demonstration project if the beneficiary meets any
of the following:
   (i) The beneficiary has a prior diagnosis of end-stage renal
disease. This clause shall not apply to beneficiaries diagnosed with
end-stage renal disease subsequent to enrollment in the demonstration
project. The director may, with stakeholder input and federal
approval, authorize beneficiaries with a prior diagnosis of end-stage
renal disease in specified counties to voluntarily enroll in the
demonstration project.
   (ii) The beneficiary has other health coverage, as defined in
paragraph (4) of subdivision (b) of Section 14182.16.
   (iii) The beneficiary is enrolled in a home- and community-based
waiver that is a Medi-Cal benefit under Section 1915(c) of the
federal Social Security Act (42 U.S.C. Sec. 1396n et seq.), except
for persons enrolled in Community-Based Adult Services or
Multipurpose Senior Services Program services.
   (iv) The beneficiary is receiving services through a regional
center or state developmental center.
   (v) The beneficiary resides in a geographic area or ZIP Code not
included in managed care, as determined by the department and CMS.
   (vi) The beneficiary resides in one of the Veterans' Homes of
California, as described in Chapter 1 (commencing with Section 1010)
of Division 5 of the Military and Veterans Code.
   (B) (i) Beneficiaries who have been diagnosed with HIV/AIDS may
opt out of the demonstration project at the beginning of any month.
The State Department of Public Health may share relevant data
relating to a beneficiary's enrollment in the AIDS Drug Assistance
Program with the department, and the department may share relevant
data relating to HIV-positive beneficiaries with the State Department
of Public Health.
   (ii) The information provided by the State Department of Public
Health pursuant to this subparagraph shall not be further disclosed
by the State Department of Health Care Services, and shall be subject
to the confidentiality protections of subdivisions (d) and (e) of
Section 121025 of the Health and Safety Code, except this information
may be further disclosed as follows:
   (I) To the person to whom the information pertains or the
designated representative of that person.
   (II) To the Office of AIDS within the State Department of Public
Health.
   (III) To county administrators of the local low-income health
programs (LIHPs).
   (C) Beneficiaries who are Indians receiving Medi-Cal services in
accordance with Section 55110 of Title 22 of the California Code of
Regulations may opt out of the demonstration project at the beginning
of any month.
   (D) The department, with stakeholder input, may exempt specific
categories of dual eligible beneficiaries from enrollment
requirements in this section based on extraordinary medical needs of
specific patient groups or to meet federal requirements.
   (4) For the 2013 calendar year, the department shall offer federal
Medicare Improvements for Patients and Providers Act of 2008 (Public
Law 110-275) compliant contracts to existing Medicare Advantage
Special Needs Plans (D-SNP plans) to continue to provide Medicare
benefits to their enrollees in their service areas as approved on
January 1, 2012. In the 2013 calendar year, beneficiaries in Medicare
Advantage and D-SNP plans shall be exempt from the enrollment
provisions of subparagraph (A) of paragraph (1), but may voluntarily
choose to enroll in the demonstration project. Enrollment into the
demonstration project's managed care health plans shall be reassessed
in 2014 depending on federal reauthorization of the D-SNP model and
the department's assessment of the demonstration plans.
   (5) For the 2013 calendar year, demonstration sites shall not
offer to enroll dual eligible beneficiaries eligible for the
demonstration project into the demonstration site's D-SNP.
   (6) The department shall not terminate contracts in a
demonstration site with a managed care organization licensed under
the Knox-Keene Health Care Service Plan Act of 1975 (Chapter 2.2
(commencing with Section 1340) of Division 2 of the Health and Safety
Code) that has previously contracted with the department as a
primary care case management plan pursuant to Article 2.9 (commencing
with Section 14088) to provide services to beneficiaries who are HIV
positive beneficiaries or who have been diagnosed with AIDS and with
any entity with a contract pursuant to Chapter 8.75 (commencing with
Section 14591), except as provided in the contract or pursuant to
state or federal law.
   (m) Notwithstanding Section 10231.5 of the Government Code, the
department shall conduct an evaluation, in partnership with CMS, to
assess outcomes and the experience of dual eligibles in these
demonstration sites and shall provide a report to the Legislature
after the first full year of demonstration operation, and annually
thereafter. A report submitted to the Legislature pursuant to this
subdivision shall be submitted in compliance with Section 9795 of the
Government Code. The department shall consult with stakeholders
regarding the scope and structure of the evaluation.
   (n) This section shall be implemented only if and to the extent
that federal financial participation or funding is available.
   (o) It is the intent of the Legislature that:
   (1) In order to maintain adequate provider networks, demonstration
sites shall reimburse providers at rates sufficient to ensure access
to care for beneficiaries.
   (2) Savings under the demonstration project are intended to be
achieved through shifts in utilization, and not through reduced
reimbursement rates to providers.
   (3) Reimbursement policies shall not prevent demonstration sites
and providers from entering into payment arrangements that allow for
the alignment of financial incentives and provide opportunities for
shared risk and shared savings in order to promote appropriate
utilization shifts, which encourage the use of home- and
community-based services and quality of care for dual eligible
beneficiaries enrolled in the demonstration sites.
   (4) To the extent permitted under the demonstration project, and
to the extent that a public entity voluntarily provides an
intergovernmental transfer for this purpose, both of the following
shall apply:
   (A) The department shall work with CMS in ensuring that the
capitation rates under the demonstration project are inclusive of
funding currently provided through certified public expenditures
supplemental payment programs that would otherwise be impacted by the
demonstration project.
   (B) Demonstration sites shall pay to a public entity voluntarily
providing intergovernmental transfers that previously received
reimbursement under a certified public expenditures supplemental
payment program, rates that include the additional funding under the
capitation rates that are funded by the public entity's
intergovernmental transfer.
   (5) The department shall work with CMS in developing other
reimbursement policies and shall inform demonstration sites,
providers, and the Legislature of the final policy guidance.
   (6) The department shall seek approval from CMS to permit the
provider payment requirements contained in subparagraph (G) of
paragraph (1) and paragraphs (10) and (11) of subdivision (i), and
Section 14132.276.
   (7) Demonstration sites that contract with hospitals for hospital
services on a fee-for-service basis that otherwise would have been
traditionally Medicare services will achieve savings through
utilization changes and not by paying hospitals at rates lower than
prevailing Medicare fee-for-service rates.
   (p) The department shall enter into an interagency agreement with
the Department of Managed Health Care to perform some or all of the
department's oversight and readiness review activities specified in
this section. These activities may include providing consumer
assistance to beneficiaries affected by this section and conducting
financial audits, medical surveys, and a review of the adequacy of
provider networks of the managed care health plans participating in
this section. The interagency agreement shall be updated, as
necessary, on an annual basis in order to maintain functional clarity
regarding the roles and responsibilities of the Department of
Managed Health Care and the department. The department shall not
delegate its authority under this section as the single state
Medicaid agency to the Department of Managed Health Care.
   (q) (1) Beginning with the May Revision to the 2013-14 Governor's
Budget, and annually thereafter, the department shall report to the
Legislature on the enrollment status, quality measures, and state
costs of the actions taken pursuant to this section.
   (2) (A) By January 1, 2013, or as soon thereafter as practicable,
the department shall develop, in consultation with CMS and
stakeholders, quality and fiscal measures for health plans to reflect
the short- and long-term results of the implementation of this
section. The department shall also develop quality thresholds and
milestones for these measures. The department shall update these
measures periodically to reflect changes in this program due to
implementation factors and the structure and design of the benefits
and services being coordinated by managed care health plans.
   (B) The department shall require health plans to submit Medicare
and Medi-Cal data to determine the results of these measures. If the
department finds that                                            a
health plan is not in compliance with one or more of the measures set
forth in this section, the health plan shall, within 60 days, submit
a corrective action plan to the department for approval. The
corrective action plan shall, at a minimum, include steps that the
health plan shall take to improve its performance based on the
standard or standards with which the health plan is out of
compliance. The plan shall establish interim benchmarks for
improvement that shall be expected to be met by the health plan in
order to avoid a sanction pursuant to Section 14304. Nothing in this
subparagraph is intended to limit Section 14304.
   (C) The department shall publish the results of these measures,
including via posting on the department's Internet Web site, on a
quarterly basis.
   (r) Notwithstanding Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code, the
department may implement, interpret, or make specific this section
and any applicable federal waivers and state plan amendments by means
of all-county letters, plan letters, plan or provider bulletins, or
similar instructions, without taking regulatory action. Prior to
issuing any letter or similar instrument authorized pursuant to this
section, the department shall notify and consult with stakeholders,
including advocates, providers, and beneficiaries. The department
shall notify the appropriate policy and fiscal committees of the
Legislature of its intent to issue instructions under this section at
least five days in advance of the issuance.
  SEC. 2.  Section 14132.276 is added to the Welfare and Institutions
Code, to read:
   14132.276.  For nursing facility services provided under the
demonstration project as established in Section 14132.275, to the
extent these services are authorized under the demonstration project,
the following shall apply:
   (a) The demonstration site shall not combine the rates of payment
for post-acute skilled and rehabilitation care provided by a nursing
facility and long-term and chronic care provided by a nursing
facility in order to establish a single payment rate for dual
eligible beneficiaries requiring skilled nursing services.
   (b) The demonstration site shall pay nursing facilities providing
post-acute skilled and rehabilitation care or long-term and chronic
care rates that reflect the different level of services and intensity
required to provide these services.
   (c) For the purposes of determining the appropriate rate for the
type of care identified in subdivision (b), the demonstration site
shall pay no less than the recognized rates under Medicare and
Medi-Cal for these service types.
   (d) With respect to services under this section, the demonstration
site shall not offer, and the nursing facility shall not accept, any
discounts, rebates, or refunds as compensation or inducements for
the referral of patients or residents.
   (e) It is the intent of the Legislature that savings under the
demonstration projects be achieved through shifts in utilization, and
not through reduced reimbursement rates to providers.
   (f) In order to encourage quality improvement and promote
appropriate utilization incentives, including reduced
rehospitalization and shorter lengths of stay, for nursing facilities
providing the services under this section, the demonstration sites
may do any of the following:
   (1) Utilize incentive or bonus payment programs that are in
addition to the rates identified in subdivisions (b) and (c).
   (2) Opt to direct beneficiaries to facilities that demonstrate
better performance on quality or appropriate utilization factors.
  SEC. 3.  Section 14182 of the Welfare and Institutions Code is
amended to read:
   14182.  (a) (1) In furtherance of the waiver or demonstration
project developed pursuant to Section 14180, the department may
require seniors and persons with disabilities who do not have other
health coverage to be assigned as mandatory enrollees into new or
existing managed care health plans. To the extent that enrollment is
required by the department, an enrollee's access to fee-for-service
Medi-Cal shall not be terminated until the enrollee has been assigned
to a managed care health plan.
   (2) For purposes of this section:
   (A) "Other health coverage" means health coverage providing the
same full or partial benefits as the Medi-Cal program, health
coverage under another state or federal medical care program, or
health coverage under contractual or legal entitlement, including,
but not limited to, a private group or indemnification insurance
program.
   (B) "Managed care health plan" means an individual, organization,
or entity that enters into a contract with the department pursuant to
Article 2.7 (commencing with Section 14087.3), Article 2.81
(commencing with Section 14087.96), Article 2.91 (commencing with
Section 14089), or Chapter 8 (commencing with Section 14200).
   (b) In exercising its authority pursuant to subdivision (a), the
department shall do all of the following:
   (1) Assess and ensure the readiness of the managed care health
plans to address the unique needs of seniors or persons with
disabilities pursuant to the applicable readiness evaluation criteria
and requirements set forth in paragraphs (1) to (8), inclusive, of
subdivision (b) of Section 14087.48.
   (2) Ensure the managed care health plans provide access to
providers that comply with applicable state and federal laws,
including, but not limited to, physical accessibility and the
provision of health plan information in alternative formats.
   (3) Develop and implement an outreach and education program for
seniors and persons with disabilities, not currently enrolled in
Medi-Cal managed care, to inform them of their enrollment options and
rights under the demonstration project. Contingent upon available
private or public dollars other than moneys from the General Fund,
the department or its designated agent for enrollment and outreach
may partner or contract with community-based, nonprofit consumer or
health insurance assistance organizations with expertise and
experience in assisting seniors and persons with disabilities in
understanding their health care coverage options. Contracts entered
into or amended pursuant to this paragraph shall be exempt from
Chapter 2 (commencing with Section 10290) of Part 2 of Division 2 of
the Public Contract Code and any implementing regulations or policy
directives.
   (4) At least three months prior to enrollment, inform
beneficiaries who are seniors or persons with disabilities, through a
notice written at no more than a sixth grade reading level, about
the forthcoming changes to their delivery of care, including, at a
minimum, how their system of care will change, when the changes will
occur, and who they can contact for assistance with choosing a
delivery system or with problems they encounter. In developing this
notice, the department shall consult with consumer representatives
and other stakeholders.
   (5) Implement an appropriate cultural awareness and sensitivity
training program regarding serving seniors and persons with
disabilities for managed care health plans and plan providers and
staff in the Medi-Cal Managed Care Division of the department.
   (6) Establish a process for assigning enrollees into an organized
delivery system for beneficiaries who do not make an affirmative
selection of a managed care health plan. The department shall develop
this process in consultation with stakeholders and in a manner
consistent with the waiver or demonstration project developed
pursuant to Section 14180. The department shall base plan assignment
on an enrollee's existing or recent utilization of providers, to the
extent possible. If the department is unable to make an assignment
based on the enrollee's affirmative selection or utilization history,
the department shall base plan assignment on factors, including, but
not limited to, plan quality and the inclusion of local health care
safety net system providers in the plan's provider network.
   (7) Review and approve the mechanism or algorithm that has been
developed by the managed care health plan, in consultation with their
stakeholders and consumers, to identify, within the earliest
possible timeframe, persons with higher risk and more complex health
care needs pursuant to paragraph (11) of subdivision (c).
   (8) Provide managed care health plans with historical utilization
data for beneficiaries upon enrollment in a managed care health plan
so that the plans participating in the demonstration project are
better able to assist beneficiaries and prioritize assessment and
care planning.
   (9) Develop and provide managed care health plans participating in
the demonstration project with a facility site review tool for use
in assessing the physical accessibility of providers, including
specialists and ancillary service providers that provide care to a
high volume of seniors and persons with disabilities, at a clinic or
provider site, to ensure that there are sufficient physically
accessible providers. Every managed care health plan participating in
the demonstration project shall make the results of the facility
site review tool publicly available on their Internet Web site and
shall regularly update the results to the department's satisfaction.
   (10) Develop a process to enforce legal sanctions, including, but
not limited to, financial penalties, withholding of Medi-Cal
payments, enrollment termination, and contract termination, in order
to sanction any managed care health plan in the demonstration project
that consistently or repeatedly fails to meet performance standards
provided in statute or contract.
   (11) Ensure that managed care health plans provide a mechanism for
enrollees to request a specialist or clinic as a primary care
provider. A specialist or clinic may serve as a primary care provider
if the specialist or clinic agrees to serve in a primary care
provider role and is qualified to treat the required range of
conditions of the enrollee.
   (12) Ensure that managed care health plans participating in the
demonstration project are able to provide communication access to
seniors and persons with disabilities in alternative formats or
through other methods that ensure communication, including assistive
listening systems, sign language interpreters, captioning, written
communication, plain language or written translations and oral
interpreters, including for those who are limited English-proficient,
or non-English speaking, and that all managed care health plans are
in compliance with applicable cultural and linguistic requirements.
   (13) Ensure that managed care health plans participating in the
demonstration project provide access to out-of-network providers for
new individual members enrolled under this section who have an
ongoing relationship with a provider if the provider will accept the
health plan's rate for the service offered, or the applicable
Medi-Cal fee-for-service rate, whichever is higher, and the health
plan determines that the provider meets applicable professional
standards and has no disqualifying quality of care issues.
   (14) Ensure that managed care health plans participating in the
demonstration project comply with continuity of care requirements in
Section 1373.96 of the Health and Safety Code.
   (15) Ensure that the medical exemption criteria applied in
counties operating under Chapter 4.1 (commencing with Section 53800)
or Chapter 4.5 (commencing with Section 53900) of Subdivision 1 of
Division 3 of Title 22 of the California Code of Regulations are
applied to seniors and persons with disabilities served under this
section.
   (16) Ensure that managed care health plans participating in the
demonstration project take into account the behavioral health needs
of enrollees and include behavioral health services as part of the
enrollee's care management plan when appropriate.
   (17) Develop performance measures that are required as part of the
contract to provide quality indicators for the Medi-Cal population
enrolled in a managed care health plan and for the subset of
enrollees who are seniors and persons with disabilities. These
performance measures may include measures from the Healthcare
Effectiveness Data and Information Set (HEDIS) or measures indicative
of performance in serving special needs populations, such as the
National Committee for Quality Assurance (NCQA) Structure and Process
measures, or both.
   (18) Conduct medical audit reviews of participating managed care
health plans that include elements specifically related to the care
of seniors and persons with disabilities. These medical audits shall
include, but not be limited to, evaluation of the delivery model's
policies and procedures, performance in utilization management,
continuity of care, availability and accessibility, member rights,
and quality management.
   (19) Conduct financial audit reviews to ensure that a financial
statement audit is performed on managed care health plans annually
pursuant to the Generally Accepted Auditing Standards, and conduct
other risk-based audits for the purpose of detecting fraud and
irregular transactions.
   (20) Ensure that managed care health plans maintain a dedicated
liaison to coordinate with the department, affected providers, and
new individual members for all of the following purposes:
   (A) To ensure a mechanism for new members to obtain continuity of
care as described in paragraph (13).
   (B) To receive notice, including that a new member has been denied
a medical exemption as described in paragraph (15), which is
required to include the name or names of the requesting provider, and
ensure that the provider's ability to treat the member is continued
as described in paragraphs (11) and (13), if applicable, or, if not
applicable, ensure the member is immediately referred to a qualified
provider or specialty care center.
   (C) To assist new members in maintaining an ongoing relationship
with a specialist or specialty care center when the specialist is
contracting with the plan and the assigned primary care provider has
approved a standing referral pursuant to Section 1374.16 of the
Health and Safety Code.
   (21) Ensure that written notice is provided to the beneficiary and
the requesting provider if a request for exemption from plan
enrollment is denied. The notice shall set out with specificity the
reasons for the denial or failure to unconditionally approve the
request for exemption from plan enrollment. The notice shall inform
the beneficiary and the provider of the right to appeal the decision,
how to appeal the decision, and if the decision is not appealed,
that the beneficiary shall enroll in a Medi-Cal plan and how that
enrollment shall occur. The notice shall also include information of
the possibility of continued access to an out-of-network provider
pursuant to paragraph (13). A beneficiary who has not been enrolled
in a plan shall remain in fee-for-service Medi-Cal if a request for
an exemption from plan enrollment or appeal is submitted, until the
final resolution. The department shall also require the plans to
ensure that these beneficiaries receive continuity of care.
   (22) Develop a process to track a beneficiary who has been denied
a request for exemption from plan enrollment and to notify the plan,
if applicable, of the denial, including information identifying the
provider. Notwithstanding paragraph (12) of subdivision (c), the plan
shall immediately refer the beneficiary for a risk assessment survey
and an individual care plan shall be developed within 10 days,
including authorization for 30 days of continuity of prescription
drugs.
   (c) Prior to exercising its authority under this section and
Section 14180, the department shall ensure that each managed care
health plan participating in the demonstration project is able to do
all of the following:
   (1) Comply with the applicable readiness evaluation criteria and
requirements set forth in paragraphs (1) to (8), inclusive, of
subdivision (b) of Section 14087.48.
   (2) Ensure and monitor an appropriate provider network, including
primary care physicians, specialists, professional, allied, and
medical supportive personnel, and an adequate number of accessible
facilities within each service area. Managed care health plans shall
maintain an updated, accurate, and accessible listing of a provider's
ability to accept new patients and shall make it available to
enrollees, at a minimum, by phone, written material, and Internet Web
site.
   (3) Assess the health care needs of beneficiaries who are seniors
or persons with disabilities and coordinate their care across all
settings, including coordination of necessary services within and,
where necessary, outside of the plan's provider network.
   (4) Ensure that the provider network and informational materials
meet the linguistic and other special needs of seniors and persons
with disabilities, including providing information in an
understandable manner in plain language, maintaining toll-free
telephone lines, and offering member or ombudsperson services.
   (5) Provide clear, timely, and fair processes for accepting and
acting upon complaints, grievances, and disenrollment requests,
including procedures for appealing decisions regarding coverage or
benefits. Each managed care health plan participating in the
demonstration project shall have a grievance process that complies
with Section 14450, and Sections 1368 and 1368.01 of the Health and
Safety Code.
   (6) Solicit stakeholder and member participation in advisory
groups for the planning and development activities related to the
provision of services for seniors and persons with disabilities.
   (7) Contract with safety net and traditional providers as defined
in subdivisions (hh) and (jj) of Section 53810, of Title 22 of the
California Code of Regulations, to ensure access to care and
services. The managed care health plan shall establish participation
standards to ensure participation and broad representation of
traditional and safety net providers within a service area.
   (8) Inform seniors and persons with disabilities of procedures for
obtaining transportation services to service sites that are offered
by the plan or are available through the Medi-Cal program.
   (9) Monitor the quality and appropriateness of care for children
with special health care needs, including children eligible for, or
enrolled in, the California Children Services Program, and seniors
and persons with disabilities.
   (10) Maintain a dedicated liaison to coordinate with each regional
center operating within the plan's service area to assist members
with developmental disabilities in understanding and accessing
services and act as a central point of contact for questions, access
and care concerns, and problem resolution.
   (11) At the time of enrollment apply the risk stratification
mechanism or algorithm described in paragraph (7) of subdivision (b)
approved by the department to determine the health risk level of
beneficiaries.
   (12) (A) Managed care health plans shall assess an enrollee's
current health risk by administering a risk assessment survey tool
approved by the department. This risk assessment survey shall be
performed within the following timeframes:
   (i) Within 45 days of plan enrollment for individuals determined
to be at higher risk pursuant to paragraph (11).
   (ii) Within 105 days of plan enrollment for individuals determined
to be at lower risk pursuant to paragraph (11).
   (B) Based on the results of the current health risk assessment,
managed care health plans shall develop individual care plans for
higher risk beneficiaries that shall include the following minimum
components:
   (i) Identification of medical care needs, including primary care,
specialty care, durable medical equipment, medications, and other
needs with a plan for care coordination as needed.
   (ii) Identification of needs and referral to appropriate community
resources and other agencies as needed for services outside the
scope of responsibility of the managed care health plan.
   (iii) Appropriate involvement of caregivers.
   (iv) Determination of timeframes for reassessment and, if
necessary, circumstances or conditions that require redetermination
of risk level.
   (13) (A) Establish medical homes to which enrollees are assigned
that include, at a minimum, all of the following elements, which
shall be considered in the provider contracting process:
   (i) A primary care physician who is the primary clinician for the
beneficiary and who provides core clinical management functions.
   (ii) Care management and care coordination for the beneficiary
across the health care system including transitions among levels of
care.
   (iii) Provision of referrals to qualified professionals, community
resources, or other agencies for services or items outside the scope
of responsibility of the managed care health plan.
   (iv) Use of clinical data to identify beneficiaries at the care
site with chronic illness or other significant health issues.
   (v) Timely preventive, acute, and chronic illness treatment in the
appropriate setting.
   (vi) Use of clinical guidelines or other evidence-based medicine
when applicable for treatment of beneficiaries' health care issues or
timing of clinical preventive services.
   (B) In implementing this section, and the Special Terms and
Conditions of the demonstration project, the department may alter the
medical home elements described in this paragraph as necessary to
secure the increased federal financial participation associated with
the provision of medical assistance in conjunction with a health
home, as made available under the federal Patient Protection and
Affordable Care Act (Public Law 111-148), as amended by the federal
Health Care and Education Reconciliation Act of 2010 (Public Law
111-152), and codified in Section 1945 of Title XIX of the federal
Social Security Act. The department shall notify the appropriate
policy and fiscal committees of the Legislature of its intent to
alter medical home elements under this section at least five days in
advance of taking this action.
   (14) Perform, at a minimum, the following care management and care
coordination functions and activities for enrollees who are seniors
or persons with disabilities:
   (A) Assessment of each new enrollee's risk level and health needs
shall be conducted through a standardized risk assessment survey by
means such as telephonic, Web-based, or in-person communication or by
other means as determined by the department.
   (B) Facilitation of timely access to primary care, specialty care,
durable medical equipment, medications, and other health services
needed by the enrollee, including referrals to address any physical
or cognitive barriers to access.
   (C) Active referral to community resources or other agencies for
needed services or items outside the managed care health plans
responsibilities.
   (D) Facilitating communication among the beneficiaries' health
care providers, including mental health and substance abuse providers
when appropriate.
   (E) Other activities or services needed to assist beneficiaries in
optimizing their health status, including assisting with
self-management skills or techniques, health education, and other
modalities to improve health status.
   (d) Except in a county where Medi-Cal services are provided by a
county organized health system, and notwithstanding any other
provision of law, in any county in which fewer than two existing
managed care health plans contract with the department to provide
Medi-Cal services under this chapter, the department may contract
with additional managed care health plans to provide Medi-Cal
services for seniors and persons with disabilities and other Medi-Cal
beneficiaries.
   (e) Beneficiaries enrolled in managed care health plans pursuant
to this section shall have the choice to continue an established
patient-provider relationship in a managed care health plan
participating in the demonstration project if his or her treating
provider is a primary care provider or clinic contracting with the
managed care health plan and agrees to continue to treat that
beneficiary.
   (f) The department may contract with existing managed care health
plans to operate under the demonstration project to provide or
arrange for services under this section. Notwithstanding any other
provision of law, the department may enter into the contract without
the need for a competitive bid process or other contract proposal
process, provided the managed care health plan provides written
documentation that it meets all qualifications and requirements of
this section.
   (g) This section shall be implemented only to the extent that
federal financial participation is available.
   (h) (1) The development of capitation rates for managed care
health plan contracts shall include the analysis of data specific to
the seniors and persons with disabilities population. For the
purposes of developing capitation rates for payments to managed care
health plans, the director may require managed care health plans,
including existing managed care health plans, to submit financial and
utilization data in a form, time, and substance as deemed necessary
by the department.
   (2) (A) Notwithstanding Section 14301, the department may
incorporate, on a one-time basis for a three-year period, a
risk-sharing mechanism in a contract with the local initiative health
plan in the county with the highest normalized fee-for-service risk
score over the normalized managed care risk score listed in Table 1.0
of the Medi-Cal Acuity Study Seniors and Persons with Disabilities
(SPD) report written by Mercer Government Human Services Consulting
and dated September 28, 2010, if the local initiative health plan
meets the requirements of subparagraph (B). The Legislature finds and
declares that this risk-sharing mechanism will limit the risk of
beneficial or adverse effects associated with a contract to furnish
services pursuant to this section on an at-risk basis.
   (B) The local initiative health plan shall pay the nonfederal
share of all costs associated with the development, implementation,
and monitoring of the risk-sharing mechanism established pursuant to
subparagraph (A) by means of intergovernmental transfers. The
nonfederal share includes the state costs of staffing, state
contractors, or administrative costs directly attributable to
implementing subparagraph (A).
   (C) This subdivision shall be implemented only to the extent
federal financial participation is not jeopardized.
   (i) Persons meeting participation requirements for the Program of
All-Inclusive Care for the Elderly (PACE) pursuant to Chapter 8.75
(commencing with Section 14591), may select a
                   PACE plan if one is available in that county.
   (j) Persons meeting the participation requirements in effect on
January 1, 2010, for a Medi-Cal primary care case management (PCCM)
plan in operation on that date, may select that PCCM plan or a
successor health care plan that is licensed pursuant to the
Knox-Keene Health Care Service Plan Act of 1975 (Chapter 2.2
(commencing with Section 1340) of Division 2 of the Health and Safety
Code) to provide services within the same geographic area that the
PCCM plan served on January 1, 2010.
   (k) Notwithstanding Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code, the
department may implement, interpret, or make specific this section
and any applicable federal waivers and state plan amendments by means
of all-county letters, plan letters, plan or provider bulletins, or
similar instructions, without taking regulatory action. Prior to
issuing any letter or similar instrument authorized pursuant to this
section, the department shall notify and consult with stakeholders,
including advocates, providers, and beneficiaries. The department
shall notify the appropriate policy and fiscal committees of the
Legislature of its intent to issue instructions under this section at
least five days in advance of the issuance.
   (l) Consistent with state law that exempts Medi-Cal managed care
contracts from Chapter 2 (commencing with Section 10290) of Part 2 of
Division 2 of the Public Contract Code, and in order to achieve
maximum cost savings, the Legislature hereby determines that an
expedited contract process is necessary for contracts entered into or
amended pursuant to this section. The contracts and amendments
entered into or amended pursuant to this section shall be exempt from
Chapter 2 (commencing with Section 10290) of Part 2 of Division 2 of
the Public Contract Code and the requirements of State
Administrative Management Manual Memo 03-10. The department shall
make the terms of a contract available to the public within 30 days
of the contract's effective date.
   (m) In the event of a conflict between the Special Terms and
Conditions of the approved demonstration project, including any
attachment thereto, and any provision of this part, the Special Terms
and Conditions shall control. If the department identifies a
specific provision of this article that conflicts with a term or
condition of the approved waiver or demonstration project, or an
attachment thereto, the term or condition shall control, and the
department shall so notify the appropriate fiscal and policy
committees of the Legislature within 15 business days.
   (n) In the event of a conflict between the provisions of this
article and any other provision of this part, the provisions of this
article shall control.
   (o) Any otherwise applicable provisions of this chapter, Chapter 8
(commencing with Section 14200), or Chapter 8.75 (commencing with
Section 14500) not in conflict with this article or with the terms
and conditions of the demonstration project shall apply to this
section.
   (p) To the extent that the director utilizes state plan amendments
or waivers to accomplish the purposes of this article in addition to
waivers granted under the demonstration project, the terms of the
state plan amendments or waivers shall control in the event of a
conflict with any provision of this part.
   (q) (1) Enrollment of seniors and persons with disabilities into a
managed care health plan under this section shall be accomplished
using a phased-in process to be determined by the department and
shall not commence until necessary federal approvals have been
acquired or until June 1, 2011, whichever is later.
   (2) Notwithstanding paragraph (1), and at the director's
discretion, enrollment in Los Angeles County of seniors and persons
with disabilities may be phased-in over a 12-month period using a
geographic region method that is proposed by Los Angeles County
subject to approval by the department.
   (r) A managed care health plan established pursuant to this
section, or under the Special Terms and Conditions of the
demonstration project pursuant to Section 14180, shall be subject to,
and comply with, the requirement for submission of encounter data
specified in Section 14182.1.
   (s) (1) Commencing January 1, 2011, and until January 1, 2014, the
department shall provide the fiscal and policy committees of the
Legislature with semiannual updates regarding core activities for the
enrollment of seniors and persons with disabilities into managed
care health plans pursuant to the pilot program. The semiannual
updates shall include key milestones, progress toward the objectives
of the pilot program, relevant or necessary changes to the program,
submittal of state plan amendments to the federal Centers for
Medicare and Medicaid Services, submittal of any federal waiver
documents, and other key activities related to the mandatory
enrollment of seniors and persons with disabilities into managed care
health plans. The department shall also include updates on the
transition of individuals into managed care health plans, the health
outcomes of enrollees, the care management and coordination process,
and other information concerning the success or overall status of the
pilot program.
   (2) (A) The requirement for submitting a report imposed under
paragraph (1) is inoperative on January 1, 2015, pursuant to Section
10231.5 of the Government Code.
   (B) A report to be submitted pursuant to paragraph (1) shall be
submitted in compliance with Section 9795 of the Government Code.
   (t) The department, in collaboration with the State Department of
Social Services and county welfare departments, shall monitor the
utilization and caseload of the In-Home Supportive Services (IHSS)
program before and during the implementation of the pilot program.
This information shall be monitored in order to identify the impact
of the pilot program on the IHSS program for the affected population.

   (u) Services under Section 14132.95 or 14132.952, or Article 7
(commencing with Section 12300) of Chapter 3 that are provided to
individuals assigned to managed care health plans under this section
shall be provided through direct hiring of personnel, contract, or
establishment of a public authority or nonprofit consortium, in
accordance with and subject to the requirements of Section 12302 or
12301.6, as applicable.
   (v) The department shall, at a minimum, monitor on a quarterly
basis the adequacy of provider networks of the managed care health
plans.
   (w) The department shall suspend new enrollment of seniors and
persons with disabilities into a managed care health plan if it
determines that the managed care health plan does not have sufficient
primary or specialty providers to meet the needs of their enrollees.

  SEC. 4.  Section 14182.16 is added to the Welfare and Institutions
Code, to read:
   14182.16.  (a) The department shall require Medi-Cal beneficiaries
who have dual eligibility in Medi-Cal and the Medicare Program to be
assigned as mandatory enrollees into new or existing Medi-Cal
managed care health plans for their Medi-Cal benefits in counties
participating in the demonstration project pursuant to Section
14132.275.
   (b) For the purposes of this section and Section 14182.17, the
following definitions shall apply:
   (1) "Dual eligible beneficiary" means an individual 21 years of
age or older who is enrolled for benefits under Medicare Part A (42
U.S.C. Sec. 1395c et seq.) or Medicare Part B (42 U.S.C. Sec. 1395j
et seq.), or both, and is eligible for medical assistance under the
Medi-Cal State Plan.
   (2) "Full-benefit dual eligible beneficiary" means an individual
21 years of age or older who is eligible for benefits under Medicare
Part A (42 U.S.C. Sec. 1395c et seq.), Medicare Part B (42 U.S.C.
Sec. 1395j et seq.), and Medicare Part D (42 U.S.C. Sec. 1395w-101),
and is eligible for medical assistance under the Medi-Cal State Plan.

   (3) "Managed care health plan" means an individual, organization,
or entity that enters into a contract with the department pursuant to
Article 2.7 (commencing with Section 14087.3), Article 2.81
(commencing with Section 14087.96), or Article 2.91 (commencing with
Section 14089), of this chapter, or Chapter 8 (commencing with
Section 14200).
   (4) "Other health coverage" means health coverage providing the
same full or partial benefits as the Medi-Cal program, health
coverage under another state or federal medical care program except
for the Medicare Program (Title XVIII of the federal Social Security
Act (42 U.S.C. Sec. 1395 et seq.)), or health coverage under a
contractual or legal entitlement, including, but not limited to, a
private group or indemnification insurance program.
   (5) "Out-of-network Medi-Cal provider" means a health care
provider that does not have an existing contract with the beneficiary'
s managed care health plan or its subcontractors.
   (6) "Partial-benefit dual eligible beneficiary" means an
individual 21 years of age or older who is enrolled for benefits
under Medicare Part A (42 U.S.C. Sec. 1395c et seq.), but not
Medicare Part B (42 U.S.C. Sec. 1395j et seq.), or who is eligible
for Medicare Part B (42 U.S.C. Sec. 1395j et seq.), but not Medicare
Part A (42 U.S.C. Sec. 1395c et seq.), and is eligible for medical
assistance under the Medi-Cal State Plan.
   (c) (1) Notwithstanding subdivision (a), a dual eligible
beneficiary is exempt from mandatory enrollment in a managed care
health plan if the dual eligible beneficiary meets any of the
following:
   (A) Except in counties with county organized health systems
operating pursuant to Article 2.8 (commencing with Section 14087.5),
the beneficiary has other health coverage.
   (B) The beneficiary receives services through a foster care
program, including the program described in Article 5 (commencing
with Section 11400) of Chapter 2.
   (C) The beneficiary is under 21 years of age.
   (D) The beneficiary is enrolled in a home- and community-based
waiver that is a Medi-Cal benefit under Section 1915(c) of the
federal Social Security Act (42 U.S.C. Sec. 1396n), except for
persons enrolled in Community-Based Adult Services, Multipurpose
Senior Services Program services, or a Section 1915(c) waiver for
persons with developmental disabilities.
   (E) The beneficiary is not eligible for enrollment in managed care
health plans for medically necessary reasons determined by the
department.
   (F) The beneficiary resides in one of the Veterans Homes of
California, as described in Chapter 1 (commencing with Section 1010)
of Division 5 of the Military and Veterans Code.
   (G) The beneficiary is enrolled in any entity with a contract with
the department pursuant to Chapter 8.75 (commencing with Section
14591).
   (H) The beneficiary is enrolled in a managed care organization
licensed under the Knox-Keene Health Care Service Plan Act of 1975
(Chapter 2.2 (commencing with Section 1340) of Division 2 of the
Health and Safety Code) that has previously contracted with the
department as a primary care case management plan pursuant to Article
2.9 (commencing with Section 14088) of Chapter 7.
   (2) A beneficiary who has been diagnosed with HIV/AIDS is not
exempt from mandatory enrollment, but may opt out of managed care
enrollment at the beginning of any month.
   (d) Implementation of this section shall incorporate the
provisions of Section 14182.17 that are applicable to beneficiaries
eligible for benefits under Medi-Cal and the Medicare Program.
   (e) At the director's sole discretion, in consultation with
stakeholders, the department may determine and implement a phased-in
enrollment approach that may include Medi-Cal beneficiary enrollment
into managed care health plans immediately upon implementation of
this section in a specific county, over a 12-month period, or other
phased approach. The phased-in enrollment shall commence no sooner
than March 1, 2013, and not until all necessary federal approvals
have been obtained.
   (f) To the extent that mandatory enrollment is required by the
department, an enrollee's access to fee-for-service Medi-Cal shall
not be terminated until the enrollee has selected or been assigned to
a managed care health plan.
   (g) Except in a county where Medi-Cal services are provided by a
county organized health system, and notwithstanding any other law, in
any county in which fewer than two existing managed health care
plans contract with the department to provide Medi-Cal services under
this chapter that are available to dual eligible beneficiaries,
including long-term services and supports, the department may
contract with additional managed care health plans to provide
Medi-Cal services.
   (h) For partial-benefit dual eligible beneficiaries, the
department shall inform these beneficiaries of their rights to
continuity of care from out-of-network Medi-Cal providers pursuant to
subparagraph (G) of paragraph (5) of subdivision (d) of Section
14182.17, and that the need for medical exemption criteria applied to
counties operating under Chapter 4.1 (commencing with Section 53800)
of Subdivision 1 of Division 3 of Title 22 of the California Code of
Regulations may not be necessary to continue receiving Medi-Cal
services from an out-of-network provider.
   (i) The department may contract with existing managed care health
plans to provide or arrange for services under this section.
Notwithstanding any other law, the department may enter into the
contract without the need for a competitive bid process or other
contract proposal process, provided that the managed care health plan
provides written documentation that it meets all of the
qualifications and requirements of this section and Section 14182.17.

   (j) The development of capitation rates for managed care health
plan contracts shall include the analysis of data specific to the
dual eligible population. For the purposes of developing capitation
rates for payments to managed care health plans, the department shall
require all managed care health plans, including existing managed
care health plans, to submit financial, encounter, and utilization
data in a form, at a time, and including substance as deemed
necessary by the department. Failure to submit the required data
shall result in the imposition of penalties pursuant to Section
14182.1.
   (k) Persons meeting participation requirements for the Program of
All-Inclusive Care for the Elderly (PACE) pursuant to Chapter 8.75
(commencing with Section 14591) may select a PACE plan if one is
available in that county.
   (l) Except for dual eligible beneficiaries participating in the
demonstration project pursuant to Section 14132.275, persons meeting
the participation requirements in effect on January 1, 2010, for a
Medi-Cal primary case management plan in operation on that date, may
select that primary care case management plan or a successor health
care plan that is licensed pursuant to the Knox-Keene Health Care
Service Plan Act of 1975 (Chapter 2.2 (commencing with Section 1340)
of Division 2 of the Health and Safety Code) to provide services
within the same geographic area that the primary care case management
plan served on January 1, 2010.
   (m) The department may implement an intergovernmental transfer
arrangement with a public entity that elects to transfer public funds
to the state to be used solely as the nonfederal share of Medi-Cal
payments to managed care health plans for the provision of services
to dual eligible beneficiaries pursuant to Section 14182.15.
   (n) To implement this section, the department may contract with
public or private entities. Contracts or amendments entered into
under this section may be on an exclusive or nonexclusive basis and
on a noncompetitive bid basis and shall be exempt from all of the
following:
   (1) Part 2 (commencing with Section 10100) of Division 2 of the
Public Contract Code and any policies, procedures, or regulations
authorized by that part.
   (2) Article 4 (commencing with Section 19130) of Chapter 5 of Part
2 of Division 5 of Title 2 of the Government Code.
   (3) Review or approval of contracts by the Department of General
Services.
   (o) Any otherwise applicable provisions of this chapter, Chapter 8
(commencing with Section 14200), or Chapter 8.75 (commencing with
Section 14591) not in conflict with this section or with the Special
Terms and Conditions of the waiver shall apply to this section.
   (p) The department shall, in coordination with and consistent with
an interagency agreement with the Department of Managed Health Care,
at a minimum, monitor on a quarterly basis the adequacy of provider
networks of the managed care health plans.
   (q) The department shall suspend new enrollment of dual eligible
beneficiaries into a managed care health plan if it determines that
the managed care health plan does not have sufficient primary or
specialty care providers and long-term service and supports to meet
the needs of its enrollees.
   (r) Managed care health plans shall pay providers in accordance
with Medicare and Medi-Cal coordination of benefits.
   (s) This section shall be implemented only to the extent that all
federal approvals and waivers are obtained and only if and to the
extent that federal financial participation is available.
   (t) Notwithstanding Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code, the
department may implement, interpret, or make specific this section
and any applicable federal waivers and state plan amendments by means
of all-county letters, plan letters, plan or provider bulletins, or
similar instructions, without taking regulatory action. Prior to
issuing any letter or similar instrument authorized pursuant to this
section, the department shall notify and consult with stakeholders,
including advocates, providers, and beneficiaries. The department
shall notify the appropriate policy and fiscal committees of the
Legislature of its intent to issue instructions under this section at
least five days in advance of the issuance.
   (u) A managed care health plan that contracts with the department
for the provision of services under this section shall ensure that
beneficiaries have access to the same categories of licensed
providers that are available under fee-for-service Medicare. Nothing
in this section shall prevent a managed care health plan from
contracting with selected providers within a category of licensure.
  SEC. 5.  Section 14182.17 is added to the Welfare and Institutions
Code, to read:
   14182.17.  (a) For the purposes of this section, the definitions
in subdivision (b) of Section 14182.16 shall apply.
   (b) The department shall ensure and improve the care coordination
and integration of health care services for Medi-Cal beneficiaries
residing in counties participating in the demonstration project
pursuant to Section 14132.275 who are either of the following:
   (1) Dual eligible beneficiaries, as defined in subdivision (b) of
Section 14182.16, who receive Medi-Cal benefits and services through
the demonstration project established pursuant to Section 14132.275
or through mandatory enrollment in managed care health plans pursuant
to Section 14182.16.
   (2) Medi-Cal beneficiaries who receive long-term services and
supports pursuant to Article 5.7 (commencing with Section 14186).
   (c) The department shall develop an enrollment process to be used
in counties participating in the demonstration project pursuant to
Section 14132.275 to do the following:
   (1) Except in a county that provides Medi-Cal services under a
county organized health system pursuant to Article 2.8 (commencing
with Section 14087.5), provide a choice of Medi-Cal managed care
plans to a dual eligible beneficiary who has opted for Medicare
fee-for-service, and establish an algorithm to assign beneficiaries
who do not make a choice.
   (2) Ensure that only beneficiaries required to make a choice or
affirmatively opt out are sent enrollment materials.
   (3) Establish enrollment timelines, developed in consultation with
health plans and stakeholders, and approved by CMS, for each
demonstration site. The timeline may provide for combining or phasing
in enrollment for Medicare and Medi-Cal benefits.
   (d) Before the department contracts with managed care health plans
or Medi-Cal providers to furnish Medi-Cal benefits and services
pursuant to subdivision (b), the department shall do all of the
following:
   (1) Ensure timely and appropriate communications with
beneficiaries as follows:
   (A) At least 90 days prior to enrollment, inform dual eligible
beneficiaries through a notice written at not more than a 6th-grade
reading level that includes, at a minimum, how the Medi-Cal system of
care will change, when the changes will occur, and who they can
contact for assistance with choosing a managed care health plan or
with problems they encounter.
   (B) Develop and implement an outreach and education program for
beneficiaries to inform them of their enrollment options and rights,
including specific steps to work with consumer and beneficiary
community groups.
   (C) Develop, in consultation with consumers, beneficiaries, and
other stakeholders, an overall communications plan that includes all
aspects of developing beneficiary notices.
   (D) Ensure that managed care health plans and their provider
networks are able to provide communication and services to dual
eligible beneficiaries in alternative formats that are culturally,
linguistically, and physically appropriate through means, including,
but not limited to, assistive listening systems, sign language
interpreters, captioning, written communication, plain language, and
written translations.
   (E) Ensure that managed care health plans have prepared materials
to inform beneficiaries of procedures for obtaining Medi-Cal
benefits, including grievance and appeals procedures, that are
offered by the plan or are available through the Medi-Cal program.
   (F) Ensure that managed care health plans have policies and
procedures in effect to address the effective transition of
beneficiaries from Medicare Part D plans not participating in the
demonstration project. These policies shall include, but not be
limited to, the transition of care requirements for Medicare Part D
benefits as described in Chapters 6 and 14 of the Medicare Managed
Care Manual, published by CMS, including a determination of which
beneficiaries require information about their transition supply, and,
within the first 90 days of coverage under a new plan, provide for a
temporary fill when the beneficiary requests a refill of a
nonformulary drug.
   (G) Contingent upon available private or public funds other than
moneys from the General Fund, contract with community-based,
nonprofit consumer, or health insurance assistance organizations with
expertise and experience in assisting dual eligible beneficiaries in
understanding their health care coverage options.
   (H) Develop, with stakeholder input, informing and enrollment
materials and an enrollment process in the demonstration site
counties. The department shall ensure all of the following prior to
implementing enrollment:
   (i) Enrollment materials shall be made public at least 60 days
prior to the first mailing of notices to dual eligible beneficiaries,
and the department shall work with stakeholders to incorporate
public comment into the materials.
   (ii) The materials shall be in a not more than sixth grade reading
level and shall be available in all the Medi-Cal threshold
languages, as well as in alternative formats that are culturally,
linguistically, and physically appropriate. For in-person enrollment
assistance, disability accommodation shall be provided, when
appropriate, through means including, but not limited to, assistive
listening systems, sign language interpreters, captioning, and
written communication.
   (iii) The materials shall plainly state that the beneficiary may
choose fee-for-service Medicare or Medicare Advantage, but must
return the form to indicate this choice, and that if the beneficiary
does not return the form, the state shall assign the beneficiary to a
plan and all Medicare and Medi-Cal benefits shall only be available
through that plan.
   (iv) The materials shall plainly state that the beneficiary shall
be enrolled in a Medi-Cal managed care health plan even if he or she
chooses to stay in fee-for-service Medicare.
   (v) The materials shall plainly explain all of the following:
   (I) The plan choices.
   (II) Continuity of care provisions.
   (III) How to determine which providers are enrolled in each plan.
   (IV) How to obtain assistance with the choice forms.
   (vi) The enrollment contractor recognizes, in compliance with
existing statutes and regulations, authorized representatives,
including, but not limited to, a caregiver, family member,
conservator, or a legal services advocate, who is recognized by any
of the services or programs that the person is already receiving or
participating in.
   (I) Make available to the public and to all Medi-Cal providers
copies of all beneficiary notices in advance of the date the notices
are sent to beneficiaries. These copies shall be available on the
department's Internet Web site.
   (2) Require that managed care health plans perform an assessment
process that, at a minimum, does all of the following:
   (A) Assesses each new enrollee's risk level and needs by
performing a risk assessment process using means such as telephonic,
Web-based, or in-person communication, or review of utilization and
claims processing data, or by other means as determined by the
department, with a particular focus on identifying those enrollees
who may need long-term services and supports. The risk assessment
process shall be performed in accordance with all applicable federal
and state laws.
   (B) Assesses the care needs of dual eligible beneficiaries and
coordinates their Medi-Cal benefits across all settings, including
coordination of necessary services within, and, when necessary,
outside of the managed care health plan's provider network.
   (C) Uses a mechanism or algorithm developed by the managed care
health plan pursuant to paragraph (7) of subdivision (b) of Section
14182 for risk stratification of members.
   (D) At the time of enrollment, applies the risk stratification
mechanism or algorithm approved by the department to determine the
health risk level of members.
   (E) Reviews historical Medi-Cal fee-for-service utilization data
and Medicare data, to the extent either is accessible to and provided
by the department, for dual eligible beneficiaries upon enrollment
in a managed care health plan so that the managed care health plans
are better able to assist dual eligible beneficiaries and
                                  prioritize assessment and care
planning.
   (F) Analyzes Medicare claims data for dual eligible beneficiaries
upon enrollment in a demonstration site pursuant to Section 14132.275
to provide an appropriate transition process for newly enrolled
beneficiaries who are prescribed Medicare Part D drugs that are not
on the demonstration site's formulary, as required under the
transition of care requirements for Medicare Part D benefits as
described in Chapters 6 and 14 of the Medicare Managed Care Manual,
published by CMS.
   (G) Assesses each new enrollee's behavioral health needs and
historical utilization, including mental health and substance use
disorder treatment services.
   (H) Follows timeframes for reassessment and, if necessary,
circumstances or conditions that require redetermination of risk
level, which shall be set by the department.
   (3) Ensure that the managed care health plans arrange for primary
care by doing all of the following:
   (A) Except for beneficiaries enrolled in the demonstration project
pursuant to Section 14132.275, forgo interference with a beneficiary'
s choice of primary care physician under Medicare, and not assign a
full-benefit dual eligible beneficiary to a primary care physician
unless it is determined through the risk stratification and
assessment process that assignment is necessary, in order to properly
coordinate the care of the beneficiary or upon the beneficiary's
request.
   (B) Assign a primary care physician to a partial-benefit dual
eligible beneficiary receiving primary or specialty care through the
Medi-Cal managed care plan.
   (C) Provide a mechanism for partial-benefit dual eligible
enrollees to request a specialist or clinic as a primary care
provider if these services are being provided through the Medi-Cal
managed care health plan. A specialist or clinic may serve as a
primary care provider if the specialist or clinic agrees to serve in
a primary care provider role and is qualified to treat the required
range of conditions of the enrollees.
   (4) Ensure that the managed care health plans perform, at a
minimum, and in addition to, other statutory and contractual
requirements, care coordination, and care management activities as
follows:
   (A) Reflect a member-centered, outcome-based approach to care
planning, consistent with the CMS model of care approach and with
federal Medicare requirements and guidance.
   (B) Adhere to a beneficiary's determination about the appropriate
involvement of his or her medical providers and caregivers, according
to the federal Health Insurance Portability and Accountability Act
of 1996 (Public Law 104-191).
   (C) Develop care management and care coordination for the
beneficiary across the medical and long-term services and supports
care system, including transitions among levels of care and between
service locations.
   (D) Develop individual care plans for higher risk beneficiaries
based on the results of the risk assessment process with a particular
focus on long-term services and supports.
   (E) Use nurses, social workers, the beneficiary's primary care
physician, if appropriate, and other medical professionals to provide
care management and enhanced care management, as applicable,
particularly for beneficiaries in need of or receiving long-term
services and supports.
   (F) Consider behavioral health needs of beneficiaries and
coordinate those services with the county mental health department as
part of the beneficiary's care management plan when appropriate.
   (G) Facilitate a beneficiary's ability to access appropriate
community resources and other agencies, including referrals as
necessary and appropriate for behavioral services, such as mental
health and substance use disorders treatment services.
   (H) Monitor skilled nursing facility utilization and develop care
transition plans and programs that move beneficiaries back into the
community to the extent possible. Plans shall monitor and support
beneficiaries in the community to avoid further institutionalization.

   (5) Ensure that the managed care health plans comply with, at a
minimum, and in addition to other statutory and contractual
requirements, network adequacy requirements as follows:
   (A) Provide access to providers that comply with applicable state
and federal law, including, but not limited to, physical
accessibility and the provision of health plan information in
alternative formats.
   (B) Meet provider network adequacy standards for long-term
services and supports that the department shall develop.
   (C) Maintain an updated, accurate, and accessible listing of a
provider's ability to accept new patients, which shall be made
available to beneficiaries, at a minimum, by phone, written material,
and the Internet, and in accessible formats, upon request.
   (D) Monitor an appropriate provider network that includes an
adequate number of accessible facilities within each service area.
   (E) Contract with and assign patients to safety net and
traditional providers as defined in subdivisions (hh) and (jj),
respectively, of Section 53810 of Title 22 of the California Code of
Regulations, including small and private practice providers who have
traditionally treated dual eligible patients, based on available
medical history to ensure access to care and services. A managed care
health plan shall establish participation standards to ensure
participation and broad representation of traditional and safety net
providers within a service area.
   (F) Maintain a liaison to coordinate with each regional center
operating within the plan's service area to assist dual eligible
beneficiaries with developmental disabilities in understanding and
accessing services and act as a central point of contact for
questions, access and care concerns, and problem resolution.
   (G) Maintain a liaison and provide access to out-of-network
providers, for up to 12 months, for new members enrolled under
Sections 14132.275 and 14182.16 who have an ongoing relationship with
a provider, if the provider will accept the health plan's rate for
the service offered, or for nursing facilities and Community-Based
Adult Services, or the applicable Medi-Cal fee-for-service rate,
whichever is higher, and the managed care health plan determines that
the provider meets applicable professional standards and has no
disqualifying quality of care issues in accordance with guidance from
the department, including all-plan letters. A partial-benefit dual
eligible beneficiary enrolled in Medicare Part A who only receives
primary and specialty care services through a Medi-Cal managed care
health plan shall be able to receive these Medi-Cal services from an
out-of-network Medi-Cal provider for 12 months after enrollment. This
subparagraph shall not apply to out-of-network providers that
furnish ancillary services.
   (H) Assign a primary care physician who is the primary clinician
for the beneficiary and who provides core clinical management
functions for partial-benefit dual eligible beneficiaries who are
receiving primary and specialty care through the Medi-Cal managed
care health plan.
   (I) Employ care managers directly or contract with nonprofit or
proprietary organizations in sufficient numbers to provide
coordinated care services for long-term services and supports as
needed for all members.
   (6) Ensure that the managed care health plans address medical and
social needs as follows:
   (A) Offer services beyond those required by Medicare and Medi-Cal
at the managed care health plan's discretion.
   (B) Refer beneficiaries to community resources or other agencies
for needed medical or social services or items outside the managed
care health plan's responsibilities.
   (C) Facilitate communication among a beneficiary's health care and
personal care providers, including long-term services and supports
and behavioral health providers when appropriate.
   (D) Engage in other activities or services needed to assist
beneficiaries in optimizing their health status, including assisting
with self-management skills or techniques, health education, and
other modalities to improve health status.
   (E) Facilitate timely access to primary care, specialty care,
medications, and other health services needed by the beneficiary,
including referrals to address any physical or cognitive barriers to
access.
   (F) Utilize the most recent common procedure terminology (CPT)
codes, modifiers, and correct coding initiative edits.
   (7) (A) Ensure that the managed care health plans provide, at a
minimum, and in addition to other statutory and contractual
requirements, a grievance and appeal process that does both of the
following:
   (i) Provides a clear, timely, and fair process for accepting and
acting upon complaints, grievances, and disenrollment requests,
including procedures for appealing decisions regarding coverage or
benefits, as specified by the department. Each managed care health
plan shall have a grievance process that complies with Section 14450,
and Sections 1368 and 1368.01 of the Health and Safety Code.
   (ii) Complies with a Medicare and Medi-Cal grievance and appeal
process, as applicable. The appeals process shall not diminish the
grievance and appeals rights of IHSS recipients pursuant to Section
10950.
   (B) In no circumstance shall the process for appeals be more
restrictive than what is required under the Medi-Cal program.
   (8) Monitor the managed care health plans' performance and
accountability for provision of services, in addition to all other
statutory and contractual monitoring and oversight requirements, by
doing all of the following:
   (A) Develop performance measures that are required as part of the
contract to provide quality indicators for the Medi-Cal population
enrolled in a managed care health plan and for the dual eligible
subset of enrollees. These performance measures may include measures
from the Healthcare Effectiveness Data and Information Set or
measures indicative of performance in serving special needs
populations, such as the National Committee for Quality Assurance
structure and process measures, or other performance measures
identified or developed by the department.
   (B) Implement performance measures that are required as part of
the contract to provide quality assurance indicators for long-term
services and supports in quality assurance plans required under the
plans' contracts. These indicators shall include factors such as
affirmative member choice, increased independence, avoidance of
institutional care, and positive health outcomes. The department
shall develop these quality assurance indicators in consultation with
stakeholder groups.
   (C) Effective January 10, 2014, and for each subsequent year of
the demonstration project authorized under Section 14132.275, provide
a report to the Legislature describing the degree to which Medi-Cal
managed care health plans in counties participating in the
demonstration project have fulfilled the quality requirements, as set
forth in the health plan contracts.
   (D) Effective June 1, 2014, and for each subsequent year of the
demonstration project authorized by Section 14132.275, provide a
joint report, from the department and from the Department of Managed
Health Care, to the Legislature summarizing information from both of
the following:
   (i) The independent audit report required to be submitted annually
to the Department of Managed Health Care by managed care health
plans participating in the demonstration project authorized by
Section 14132.275.
   (ii) Any routine financial examinations of managed care health
plans operating in the demonstration project authorized by Section
14132.275 that have been conducted and completed for the previous
calendar year by the Department of Managed Health Care and the
department.
   (E) Monitor on a quarterly basis the utilization of covered
services of beneficiaries enrolled in the demonstration project
pursuant to Section 14132.275 or receiving long-term services and
supports pursuant to Article 5.7 (commencing with Section 14186).
   (9) Develop requirements for managed care health plans to solicit
stakeholder and member participation in advisory groups for the
planning and development activities relating to the provision of
services for dual eligible beneficiaries.
   (10) Submit to the Legislature the following information:
   (A) Provide, to the fiscal and appropriate policy committees of
the Legislature, a copy of any report submitted to CMS pursuant to
the approved federal waiver described in Section 14180.
   (B) Together with the State Department of Social Services, the
California Department of Aging, and the Department of Managed Health
Care, in consultation with stakeholders, develop a programmatic
transition plan, and submit that plan to the Legislature within 90
days of the effective date of this section. The plan shall include,
but is not limited to, the following components:
   (i) A description of how access and quality of service shall be
maintained during and immediately after implementation of these
provisions, in order to prevent unnecessary disruption of services to
beneficiaries.
   (ii) Explanations of the operational steps, timelines, and key
milestones for determining when and how the components of paragraphs
(1) to (9), inclusive, shall be implemented.
   (iii) The process for addressing consumer complaints, including
the roles and responsibilities of the departments and health plans
and how those roles and responsibilities shall be coordinated. The
process shall outline required response times and the method for
tracking the disposition of complaint cases. The process shall
include the use of an ombudsman, liaison, and 24-hour hotline
dedicated to assisting Medi-Cal beneficiaries navigate among the
departments and health plans to help ensure timely resolution of
complaints.
   (iv) A description of how stakeholders were included in the
various phases of the planning process to formulate the transition
plan, and how their feedback shall be taken into consideration after
transition activities begin.
   (C) The department, together with the State Department of Social
Services, the California Department of Aging, and the Department of
Managed Health Care, convene and consult with stakeholders at least
twice during the period following production of a draft of the
implementation plan and before submission of the plan to the
Legislature. Continued consultation with stakeholders shall occur on
an ongoing basis for the implementation of the provisions of this
section.
   (D) No later than 90 days prior to the initial plan enrollment
date of the demonstration project pursuant to the provisions of
Sections 14132.275, 14182.16, and of Article 5.7 (commencing with
Section 14186), assess and report to the fiscal and appropriate
policy committees of the Legislature on the readiness of the managed
care health plans to address the unique needs of dual eligible
beneficiaries and Medi-Cal only seniors and persons with disabilities
pursuant to the applicable readiness evaluation criteria and
requirements set forth in paragraphs (1) to (8), inclusive, of
subdivision (b) of Section 14087.48. The report shall also include an
assessment of the readiness of the managed care health plans in each
county participating in the demonstration project to have met the
requirements set forth in paragraphs (1) to (9), inclusive.
   (E) The department shall submit two reports to the Legislature,
with the first report submitted five months prior to the commencement
date of enrollment and the second report submitted three months
prior to the commencement date of enrollment, that describe the
status of all of the following readiness criteria and activities that
the department shall complete:
   (i) Enter into contracts, either directly or by funding other
agencies or community-based, nonprofit, consumer, or health insurance
assistance organizations with expertise and experience in providing
health plan counseling or other direct health consumer assistance to
dual eligible beneficiaries, in order to assist these beneficiaries
in understanding their options to participate in the demonstration
project specified in Section 14132.275 and to exercise their rights
and address barriers regarding access to benefits and services.
   (ii) Develop a plan to ensure timely and appropriate
communications with beneficiaries as follows:
   (I) Develop a plan to inform beneficiaries of their enrollment
options and rights, including specific steps to work with consumer
and beneficiary community groups described in clause (i), consistent
with the provisions of paragraph (1).
   (II) Design, in consultation with consumers, beneficiaries, and
stakeholders, all enrollment-related notices, including, but not
limited to, summary of benefits, evidence of coverage, prescription
formulary, and provider directory notices, as well as all appeals and
grievance related procedures and notices produced in coordination
with existing federal Centers for Medicare and Medicaid Services
guidelines.
   (III) Design a comprehensive plan for beneficiary and provider
outreach, including specific materials for persons in nursing and
group homes, family members, conservators, and authorized
representatives of beneficiaries, as appropriate, and providers of
services and supports.
   (IV) Develop a description of the benefits package available to
beneficiaries in order to assist them in plan selection and how they
may select and access services in the demonstration project's
assessment and care planning process.
   (V) Design uniform and plain language materials and a process to
inform seniors and persons with disabilities of copays and covered
services so that beneficiaries can make informed choices.
   (VI) Develop a description of the process, except in those
demonstration counties that have a county operated health system, of
automatically assigning beneficiaries into managed care health plans
that shall include a requirement to consider Medicare service
utilization, provider data, and consideration of plan quality.
   (iii) Finalize rates and comprehensive contracts between the
department and participating health plans to facilitate effective
outreach, enroll network providers, and establish benefit packages.
The plan rates and contracts shall be provided to the appropriate
fiscal and policy committees of the Legislature and posted on the
department's Internet Web site so that they are readily available to
the public.
   (iv) Ensure that contracts have been entered into between plans
and providers including, but not limited to, agreements with county
agencies as necessary.
   (v) Develop network adequacy standards for medical care and
long-term supports and services that reflect the provisions of
paragraph (5).
   (vi) Identify dedicated department or contractor staff with
adequate training and availability during business hours to address
and resolve issues between health plans and beneficiaries, and
establish a requirement that health plans have similar points of
contact and are required to respond to state inquiries when
continuity of care issues arise.
   (vii) Develop a tracking mechanism for inquiries and complaints
for quality assessment purposes, and post publicly on the department'
s Internet Web site information on the types of issues that arise and
data on the resolution of complaints.
   (viii) Prepare scripts and training for the department and plan
customer service representatives on all aspects of the program,
including training for enrollment brokers and community-based
organizations on rules of enrollment and counseling of beneficiaries.

   (ix) Develop continuity of care procedures.
   (x) Adopt quality measures to be used to evaluate the
demonstration projects. Quality measures shall be detailed enough to
enable measurement of the impact of automatic plan assignment on
quality of care.
   (xi) Develop reporting requirements for the plans to report to the
department, including data on enrollments and disenrollments,
appeals and grievances, and information necessary to evaluate quality
measures and care coordination models. The department shall report
this information to the appropriate fiscal and policy committees of
the Legislature, and this information shall be posted on the
department's Internet Web site.
   (e) The Department of Managed Health Care shall, at minimum,
monitor the plans on a quarterly basis to determine whether
beneficiaries are able to receive timely access to primary and
specialty care services, pursuant to Section 1367.03 of the Health
and Safety Code.
   (f) This section shall be implemented only to the extent that all
federal approvals and waivers are obtained and only if and to the
extent that federal financial participation is available.
   (g) To implement this section, the department may contract with
public or private entities. Contracts or amendments entered into
under this section may be on an exclusive or nonexclusive basis and a
noncompetitive bid basis and shall be exempt from the following:
   (1) Part 2 (commencing with Section 10100) of Division 2 of the
Public Contract Code and any policies, procedures, or regulations
authorized by that part.
   (2) Article 4 (commencing with Section 19130) of Chapter 5 of Part
2 of Division 5 of Title 2 of the Government Code.
   (3) Review or approval of contracts by the Department of General
Services.
   (h) Notwithstanding Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code, the
department may implement, interpret, or make specific this section
and any applicable federal waivers and state plan amendments by means
of all-county letters, plan letters, plan or provider bulletins, or
similar instructions, without taking regulatory action. Prior to
issuing any letter or similar instrument authorized pursuant to this
section, the department shall notify and consult with stakeholders,
including advocates, providers, and beneficiaries. The department
shall notify the appropriate policy and fiscal committees of the
Legislature of its intent to issue instructions under this section at
least five days in advance of the issuance.
  SEC. 6.  Section 14183.6 of the Welfare and Institutions Code is
amended to read:
   14183.6.  The department shall enter into an interagency agreement
with the Department of Managed Health Care to have the Department of
Managed Health Care, on behalf of the department, conduct financial
audits, medical surveys, and a review of the provider networks of the
managed care health plans participating in the demonstration
project, and provide consumer assistance to beneficiaries affected by
the provisions of Sections 14182.16 and 14182.17. The interagency
agreement shall be updated, as necessary, on an annual basis in order
to maintain functional clarity regarding the roles and
responsibilities of these core activities. The department shall not
delegate its authority under this division as the single state
Medicaid agency to the Department of Managed Health Care.
  SEC. 7.  Article 5.7 (commencing with Section 14186) is added to
Chapter 7 of Part 3 of Division 9 of the Welfare and Institutions
Code, to read:

      Article 5.7.  Long-Term Services and Supports Integration


   14186.  (a) It is the intent of the Legislature that long-term
services and supports (LTSS) be covered through managed care health
plans in counties participating in the demonstration project
authorized under Section 14132.275.
   (b) It is further the intent of the Legislature that all of the
following occur:
   (1) Persons receiving health care services through Medi-Cal
receive these services through a coordinated health care system that
reduces the unnecessary use of emergency and hospital services.
   (2) Coordinated health care services, including medical, long-term
services and supports, and enhanced care management be covered
through Medi-Cal managed care health plans in order to eliminate
system inefficiencies and align incentives with positive health care
outcomes.
   (3) Managed care health plans shall, in coordination with LTSS
care management providers, develop and expand care coordination
practices in consultation with counties, nursing facilities, area
agencies on aging, and other home- and community-based providers, and
share best practices. Unless the consumer objects, managed care
health plans may establish care coordination teams as needed. If the
consumer is an IHSS recipient, his or her participation and the
participation of his or her provider shall be subject to the consumer'
s consent. These care coordination teams shall include the consumer,
and his or her authorized representative, health plan, county social
services agency, Community-Based Adult Services (CBAS) case manager
for CBAS clients, Multipurpose Senior Services Program (MSSP) case
manager for MSSP clients, and, if an IHSS recipient, may include
others.
   (4) To the extent possible, for Medi-Cal beneficiaries also
enrolled in the Medicare Program, that the department work with the
federal government to coordinate financing and incentives and permit
managed care health plans to coordinate health care provided under
both health care systems.
   (5) The health care choices made by Medi-Cal beneficiaries be
considered with regard to all of the following:
   (A) Receiving care in a home- and community-based setting to
maintain independence and quality of life.
   (B) Selecting their health care providers in the managed care plan
network.
   (C) Controlling care planning, decisionmaking, and coordination
with their health care providers.
   (D) Gaining access to services that are culturally,
linguistically, and operationally sensitive to meet their needs or
limitations and that improve their health outcomes, enhance
independence, and promote living in home- and community-based
settings.
   (E) Self-directing their care by being able to hire, fire, and
supervise their IHSS provider.
   (F) Being assured by the department and coordinating departments
of their oversight of the quality of these coordinated health care
services.
   (6) (A) Counties continue to perform functions necessary for the
administration of the IHSS program, including conducting assessments
and determining authorized hours for recipients, pursuant to Article
7 (commencing with Section 12300) of Chapter 3. County agency
assessments shall be shared with care coordination teams, when
applicable. The county agency thereafter may receive and consider
additional input from the care coordination team.
   (B) Managed care health plans may authorize personal care services
and related domestic services in addition to the hours authorized
under Article 7 (commencing with Section 12300) of Chapter 3, which
managed care health plans shall
            be responsible for paying at no share of cost to the
county. The department, in consultation with the State Department of
Social Services, shall develop policies and procedures for these
additional benefits, which managed care health plans may authorize.
The grievance process for these benefits shall be the same process as
used for other benefits authorized by managed care health plans, and
shall comply with Section 14450, and Sections 1368 and 1368.1 of the
Health and Safety Code.
   (7) Effective January 1, 2015, or 19 months after commencement of
beneficiary enrollment in the demonstration project authorized
pursuant to Section 14132.275, whichever is later, MSSP services
shall transition from a federal waiver pursuant to Section 1915(c)
under the federal Social Security Act (42 U.S.C. Sec. 1396n et seq.)
to a benefit administered and allocated by managed care health plans.

   It is also the intent of the Legislature that the provisions of
this article and the demonstration project pursuant to Section
14132.275 shall apply to dual eligible and Medi-Cal-only
beneficiaries enrolled in MSSP. It is the further intent of the
Legislature that managed care health plans shall work in
collaboration with MSSP providers to begin development of an
integrated, person-centered care management and care coordination
model that works within the context of managed care, and explore
which portions of the MSSP program model may be adapted to managed
care while maintaining the integrity and efficacy of the MSSP model.
   (8) In lieu of providing nursing facility services, managed care
health plans may authorize home- and community-based services plan
benefits, as defined in subdivision (c) of Section 14186.1, which
managed care health plans shall be responsible for paying at no share
of cost to the county.
   14186.1.  For purposes of this article, the following definitions
shall apply unless otherwise specified:
   (a) "Home- and community-based services" means services provided
pursuant to paragraphs (1), (2), and (3) of subdivision (b).
   (b) "Long-term services and supports" or "LTSS" means all of the
following:
   (1) In-home supportive services (IHSS) provided pursuant to
Article 7 (commencing with Section 12300) of Chapter 3, and Sections
14132.95, 14132.952, and 14132.956.
   (2) Community-Based Adult Services (CBAS).
   (3) Multipurpose Senior Services Program (MSSP) services include
those services approved under a federal home- and community-based
services waiver or, beginning January 1, 2015, equivalent services.
   (4) Skilled nursing facility services and subacute care services
established under subdivision (c) of Section 14132, including those
services described in Sections 51511 and 51511.5 of Title 22 of the
California Code of Regulations, regardless of whether the service is
included in the basic daily rate or billed separately, and any leave
of absence or bed hold provided consistent with Section 72520 of
Title 22 of the California Code of Regulations or the state plan.
   However, services provided by any category of intermediate care
facility for the developmentally disabled shall not be considered
long-term services and supports.
   (c) "Home- and community-based services (HCBS) plan benefits" may
include in-home and out-of-home respite, nutritional assessment,
counseling, and supplements, minor home or environmental adaptations,
habilitation, and other services that may be deemed necessary by the
managed care health plan, including its care coordination team. The
department, in consultation with stakeholders, may determine whether
health plans shall be required to include these benefits in their
scope of service, and may establish guidelines for the scope,
duration, and intensity of these benefits. The grievance process for
these benefits shall be the same process as used for other benefits
authorized by managed care health plans, and shall comply with
Section 14450, and Sections 1368 and 1368.1 of the Health and Safety
Code.
   (d) "Managed care health plan" means an individual, organization,
or entity that enters into a contract with the department pursuant to
Article 2.7 (commencing with Section 14087.3), Article 2.8
(commencing with Section 14087.5), Article 2.81 (commencing with
Section 14087.96), or Article 2.91 (commencing with Section 14089),
of this chapter, or Chapter 8 (commencing with Section 14200). For
the purposes of this article, "managed care health plan" shall not
include an individual, organization, or entity that enters into a
contract with the department to provide services pursuant to Chapter
8.75 (commencing with Section 14591) or the Senior Care Action
Network.
   (e) "Other health coverage" means health coverage providing the
same full or partial benefits as the Medi-Cal program, health
coverage under another state or federal medical care program except
for the Medicare Program (Title XVIII of the federal Social Security
Act (42 U.S.C. Sec. 1395 et seq.)), or health coverage under a
contractual or legal entitlement, including, but not limited to, a
private group or indemnification insurance program.
   (f) "Recipient" means a Medi-Cal beneficiary eligible for IHSS
provided pursuant to Article 7 (commencing with Section 12300) of
Chapter 3, and Sections 14132.95, 14132.952, and 14132.956.
   14186.2.  (a) (1) Not sooner than March 1, 2013, all Medi-Cal
long-term services and supports (LTSS) described in subdivision (b)
of Section 14186.1 shall be services that are covered under managed
care health plan contracts and shall be available only through
managed care health plans to beneficiaries residing in counties
participating in the demonstration project authorized under Section
14132.275, except for the exemptions provided for in subdivision (c).
The director shall consult with the Legislature, CMS, and
stakeholders when determining the implementation date for this
section. The department shall pay managed care health plans using a
capitation ratesetting methodology that pays for all Medi-Cal
benefits and services, including all LTSS, covered under the managed
care health plan contract. In order to receive any LTSS through
Medi-Cal, Medi-Cal beneficiaries shall mandatorily enroll in a
managed care health plan for the provision of Medi-Cal benefits.
   (2) HCBS plan benefits may be covered services that are provided
under managed care health plan contracts for beneficiaries residing
in counties participating in the demonstration authorized under
Section 14132.275, except for the exemptions provided for in
subdivision (c).
   (3) Beneficiaries who are not mandatorily enrolled in a managed
care health plan pursuant to Section 14182 or pursuant to the
exemptions provided for in subdivision (c) shall not be required to
receive LTSS, other than CBAS, through a managed care health plan.
   (4) The transition of the provision of LTSS through managed care
health plans shall occur after the department obtains any federal
approvals through necessary federal waivers or amendments, or state
plan amendments.
   (5) Counties where LTSS are not covered through managed care
health plans shall not be subject to this article.
   (6) Beneficiaries residing in counties not participating in the
dual eligible demonstration project pursuant to Section 14132.275
shall not be subject to this article.
   (b) (1) The provisions of this article shall be applicable to a
Medi-Cal beneficiary enrolled in a managed care health plan in a
county where this article is effective.
   (2) At the director's sole discretion, in consultation with
coordinating departments and stakeholders, the department may
determine and implement a phased-in enrollment approach that may
include the addition of Medi-Cal long-term services and supports in a
beneficiary's Medi-Cal managed care benefits immediately upon
implementation of this article in a specific county, over a 12-month
period, or other phased approach, but no sooner than March 1, 2013.
   (c) (1) The provisions of this article shall not apply to any of
the following individuals:
   (A) Medi-Cal beneficiaries who meet any of the following and
shall, therefore, continue to receive any medically necessary
Medi-Cal benefits, including LTSS, through fee-for-service Medi-Cal:
   (i) Except in counties with county organized health systems
operating pursuant to Article 2.8 (commencing with Section 14087.5),
have other health coverage.
   (ii) Receive services through any state foster care program
including the program described in Article 5 (commencing with Section
11400) Chapter 2, unless the beneficiary is already receiving
services through a managed care health plan.
   (iii) Are not eligible for enrollment in managed care health plans
for medically necessary reasons determined by the department.
   (iv) Reside in one of the Veterans' Homes of California, as
described in Chapter 1 (commencing with Section 1010) of Division 5
of the Military and Veterans Code.
   (B) Persons enrolled in the Program of All-Inclusive Care for the
Elderly (PACE) pursuant to Chapter 8.75 (commencing with Section
14591), or a managed care organization licensed under the Knox-Keene
Health Care Service Plan Act of 1975 (Chapter 2.2 (commencing with
Section 1340) of Division 2 of the Health and Safety Code) that has
previously contracted with the department as a primary care case
management plan pursuant to Article 2.9 (commencing with Section
14088) of Chapter 7 to provide services to beneficiaries who are HIV
positive or who have been diagnosed with AIDS.
   (C) Persons who are under 21 years of age.
   (D) Beneficiaries enrolled in a home- and community-based waiver
that is a Medi-Cal benefit under Section 1915(c) of the federal
Social Security Act (42 U.S.C. Sec. 1396n), except for persons
enrolled in Community-Based Adult Services, Multipurpose Senior
Services Program services, or a Section 1915(c) waiver for
developmentally disabled persons.
   (E) Other specific categories of beneficiaries specified by the
department based on extraordinary medical needs of specific patient
groups or to meet federal requirements, in consultation with
stakeholders.
   (2) Beneficiaries who have been diagnosed with HIV/AIDS are not
exempt from mandatory enrollment, but may opt out of managed care
enrollment at the beginning of any month.
   14186.3.  (a) (1) No sooner than July 1, 2012, Community-Based
Adult Services (CBAS) shall be a Medi-Cal benefit covered under every
managed care health plan contract and available only through managed
care health plans. Medi-Cal beneficiaries who are eligible for CBAS
shall enroll in a managed care health plan in order to receive those
services, except for beneficiaries exempt under subdivision (c) of
Section 14186.2 or in counties or geographic regions where Medi-Cal
benefits are not covered through managed care health plans.
Notwithstanding subdivision (a) of Section 14186.2 and pursuant to
the provisions of an approved federal waiver or plan amendment, the
provision of CBAS as a Medi-Cal benefit through a managed care health
plan shall not be limited to counties participating in the
demonstration project authorized under Section 14132.275.
   (2) Managed care health plans shall determine a member's medical
need for CBAS using the assessment tool and eligibility criteria
established pursuant to the provisions of an approved federal waiver
or amendments and shall approve the number of days of attendance and
monitor treatment plans of their members. Managed care health plans
shall reauthorize CBAS in compliance with criteria established
pursuant to the provisions of the approved federal waiver or
amendment requirements.
   (b) (1) Beginning in the 2012 calendar year, managed care health
plans shall collaborate with MSSP providers to begin development of
an integrated, person-centered care management and care coordination
model and explore how the MSSP program model may be adapted to
managed care while maintaining the efficacy of the MSSP model. The
California Department of Aging and the department shall work with the
MSSP site association and managed care health plans to develop a
template contract to be used by managed care health plans contracting
with MSSP sites in counties where the demonstration project pursuant
to Section 14132.275 is implemented.
   (2) Notwithstanding the implementation date authorized in
paragraph (1) of subdivision (a) of Section 14186.2, beginning no
sooner than June 1, 2013, or on the date that any necessary federal
approvals or waivers are obtained, whichever is later, and concluding
January 1, 2015, or 19 months after commencement of beneficiary
enrollment in the demonstration project authorized pursuant to
Section 14132.275, or on the date that any necessary federal
approvals or waivers are obtained, whichever is later:
   (A) Multipurpose Senior Services Program (MSSP) services shall be
a Medi-Cal benefit available only through managed care health plans,
except for beneficiaries exempt under subdivision (c) of Section
14186.2.
   (B) Managed care health plans shall contract with all county and
nonprofit organizations that are designated providers of MSSP
services for the provision of MSSP case management and waiver
services. These contracts shall provide for all of the following:
   (i) Managed care health plans shall allocate to the MSSP providers
the same level of funding they would have otherwise received under
their MSSP contract with the California Department of Aging.
   (ii) MSSP providers shall continue to meet all existing federal
waiver standards and program requirements, which include maintaining
the contracted service levels.
   (iii) Managed care plans and MSSP providers shall share
confidential beneficiary data with one another, as necessary to
implement the provisions of this section.
   (C) The California Department of Aging shall continue to contract
with all designated MSSP sites, including those in the counties
participating in the demonstration project, and perform MSSP waiver
oversight and monitoring.
   (D) The California Department of Aging and the department, in
consultation with MSSP providers, managed care health plans, and
stakeholders, shall develop service fee structures, services, and
person-centered care coordination models that shall be effective June
2013, for the provision of care coordination and home- and
community-based services to beneficiaries who are enrolled in managed
care health plans but not enrolled in MSSP, and who may have care
coordination and service needs that are similar to MSSP participants.
The service fees for MSSP providers and MSSP services for any
additional beneficiaries and additional services for existing MSSP
beneficiaries shall be based upon, and consistent with, the rates and
services delivered in MSSP.
   (3) In the 2014 calendar year, the provisions of paragraph (2)
shall continue. In addition, managed care health plans shall work in
collaboration with MSSP providers to begin development of an
integrated, person-centered care management and care coordination
model that works within the context of managed care and explore which
portions of the MSSP program model may be adapted to managed care
while maintaining the integrity and efficacy of the MSSP model.
   (4) (A) Effective January 1, 2015, or 19 months after the
commencement of beneficiary enrollment in the demonstration project
authorized pursuant to Section 14132.275, or on the date that any
necessary federal approvals or waivers are obtained, whichever is
later, MSSP services in counties where the demonstration project
authorized under Section 14132.275 is implemented shall transition
from a federal waiver pursuant to Section 1915(c) under the federal
Social Security Act (42 U.S.C. Sec. 1396n et seq.) to a benefit
administered and allocated by managed care health plans.
   (B) No later than January 1, 2014, the department, in consultation
with the California Department of Aging and the Department of
Managed Health Care, and with stakeholder input, shall submit a
transition plan to the Legislature to describe how subparagraph (A)
shall be implemented. The plan shall incorporate the principles of
the MSSP in the managed care benefit, and shall include provisions to
ensure seamless transitions and continuity of care. Managed care
health plans shall, in partnership with local MSSP providers, conduct
a local stakeholder process to develop recommendations that the
department shall consider when developing the transition plan.
   (C) No later than 90 days prior to implementation of subparagraph
(A), the department, in consultation with the California Department
of Aging and the Department of Managed Health Care, and with
stakeholder input, shall submit a transition plan to the Legislature
that includes steps to address concerns, if any, raised by
stakeholders subsequent to the plan developed pursuant to
subparagraph (B).
   (c) (1) Not sooner than March 1, 2013, or on the date that any
necessary federal approvals or waivers are obtained, whichever is
later, nursing facility services and subacute facility services shall
be Medi-Cal benefits available only through managed care health
plans.
   (2) Managed care health plans shall authorize utilization of
nursing facility services or subacute facility services for their
members when medically necessary. The managed care health plan shall
maintain the standards for determining levels of care and
authorization of services for both Medicare and Medi-Cal services
that are consistent with policies established by the federal Centers
for Medicare and Medicaid Services and consistent with the criteria
for authorization of Medi-Cal services specified in Section 51003 of
Title 22 of the California Code of Regulations, which includes
utilization of the "Manual of Criteria for Medi-Cal Authorization,"
published by the department in January 1982, last revised April 11,
2011.
   (3) The managed care health plan shall maintain continuity of care
for beneficiaries by recognizing any prior treatment authorization
made by the department for not less than six months following
enrollment of a beneficiary into the health plan.
   (4) When a managed care health plan has authorized services in a
facility and there is a change in the beneficiary's condition under
which the facility determines that the facility may no longer meet
the needs of the beneficiary, the beneficiary's health has improved
sufficiently so the resident no longer needs the services provided by
the facility, or the health or safety of individuals in the facility
is endangered by the beneficiary, the managed care health plan shall
arrange and coordinate a discharge of the beneficiary and continue
to pay the facility the applicable rate until the beneficiary is
successfully discharged and transitioned into an appropriate setting.

   (5) The managed care health plan shall pay providers, including
institutional providers, in accordance with the prompt payment
provisions contained in each health plan's contracts with the
department, including the ability to accept and pay electronic
claims.
   14186.4.  (a) This article shall be implemented only to the extent
that all necessary federal approvals and waivers have been obtained
and only if and to the extent that federal financial participation is
available.
   (b) Notwithstanding any other law, the director, after consulting
with the Director of Finance, stakeholders, and the Legislature,
retains the discretion to forgo the provision of services in the
manner specified in this article in its entirety, or partially, if
and to the extent that the director determines that the quality of
care for managed care beneficiaries, efficiency, or
cost-effectiveness of the program would be jeopardized. In the event
the director discontinues the provision of services in the manner
specified in this article, contracts implemented pursuant to this
article shall accordingly be modified or terminated, to suspend new
enrollment or disenroll beneficiaries in an orderly manner that
provides for continuity of care and the safety of beneficiaries.
   (c) To implement this article, the department may contract with
public or private entities. Contracts, or amendments to current
contracts, entered into under this article may be on a noncompetitive
bid basis and shall be exempt from all of the following:
   (1) Part 2 (commencing with Section 10100) of Division 2 of the
Public Contract Code and any policies, procedures, or regulations
authorized by that part.
   (2) Article 4 (commencing with Section 19130) of Chapter 5 of Part
2 of Division 5 of Title 2 of the Government Code.
   (3) Review or approval of contracts by the Department of General
Services.
   (4) Review or approval of feasibility study reports and the
requirements of Sections 4819.35 to 4819.37, inclusive, and Sections
4920 to 4928, inclusive, of the State Administrative Manual.
   (d) Notwithstanding Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code, the State
Department of Health Care Services and State Department of Social
Services may implement, interpret, or make specific this section by
means of all-county letters, plan letters, plan or provider
bulletins, or similar instructions, without taking regulatory action.
Prior to issuing any letter or similar instrument authorized
pursuant to this section, the departments shall notify and consult
with stakeholders, including beneficiaries, providers, and advocates.

   (e) Beginning July 1, 2012, the department shall provide the
fiscal and appropriate policy committees of the Legislature with a
copy of any report submitted to CMS that is required under an
approved federal waiver or waiver amendments or any state plan
amendment for any LTSS.
   (f) The department shall enter into an interagency agreement with
the Department of Managed Health Care to perform some or all of the
department's oversight and readiness review activities specified in
this article. These activities may include providing consumer
assistance to beneficiaries affected by this article, and conducting
financial audits, medical surveys, and a review of the provider
networks of the managed care health plans participating in this
article. The interagency agreement shall be updated, as necessary, on
an annual basis in order to maintain functional clarity regarding
the roles and responsibilities of the Department of Managed Health
Care and the department. The department shall not delegate its
authority as the single state Medicaid agency under this article to
the Department of Managed Health Care.
   (g) (1) Beginning with the May Revision to the 2013-14 Governor's
Budget, and annually thereafter, the department shall report to the
Legislature on the enrollment status, quality measures, and state
costs of the actions taken pursuant to this article.
   (2) (A) By January 1, 2013, or as soon thereafter as practicable,
the department shall develop, in consultation with CMS and
stakeholders, quality and fiscal measures for managed care health
plans to reflect the short- and long-term results of the
implementation of this article. The department shall also develop
quality thresholds and milestones for these measures. The department
shall update these measures periodically to reflect changes in this
program due to implementation factors and the structure and design of
the benefits and services being coordinated by the health plans.
   (B) The department shall require managed care health plans to
submit Medicare and Medi-Cal data to determine the results of these
measures. If the department finds that a health plan is not in
compliance with one or more of the measures set forth in this
section, the health plan shall, within 60 days, submit a corrective
action plan to the department for approval. The corrective action
plan shall, at a minimum, include steps that the health plan shall
take to improve its performance based on the standard or standards
with which the health plan is out of compliance. The corrective
action plan shall establish interim benchmarks for improvement that
shall be expected to be met by the health plan in order to avoid a
sanction pursuant to Section 14304. Nothing in this paragraph is
intended to limit the application of Section 14304.
   (C) The department shall publish the results of these measures,
including via posting on the department's Internet Web site, on a
quarterly basis.
  SEC. 8.  Section 14301.1 of the Welfare and Institutions Code is
amended to read:
   14301.1.  (a) For rates established on or after August 1, 2007,
the department shall pay capitation rates to health plans
participating in the Medi-Cal managed care program using actuarial
methods and may establish health-plan- and county-specific rates.
Notwithstanding any other law, this section shall apply to any
managed care organization, licensed under the Knox-Keene Health Care
Service Plan Act of 1975 (Chapter 2.2 (commencing with Section 1340)
of Division 2 of the Health and Safety Code), that has contracted
with the department as a primary care case management plan pursuant
to Article 2.9 (commencing with Section 14088) of Chapter 7 to
provide services to beneficiaries who are HIV positive or who have
been diagnosed with AIDS for rates established on or after July 1,
2012. The department shall utilize a county- and model-specific rate
methodology to develop Medi-Cal managed care capitation rates for
contracts entered into between the department and any entity pursuant
to Article 2.7 (commencing with Section 14087.3), Article 2.8
(commencing with Section 14087.5), and Article 2.91 (commencing with
Section 14089) of Chapter 7 that includes, but is not limited to, all
of the following:
   (1) Health-plan-specific encounter and claims data.
   (2) Supplemental utilization and cost data submitted by the health
plans.
   (3) Fee-for-service data for the underlying county of operation or
other appropriate counties as deemed necessary by the department.
   (4) Department of Managed Health Care financial statement data
specific to Medi-Cal operations.
   (5) Other demographic factors, such as age, gender, or
diagnostic-based risk adjustments, as the department deems
appropriate.
   (b) To the extent that the department is unable to obtain
sufficient actual plan data, it may substitute plan model, similar
plan, or county-specific fee-for-service data.
   (c) The department shall develop rates that include administrative
costs, and may apply different administrative costs with respect to
separate aid code groups.
   (d) The department shall develop rates that shall include, but are
not limited to, assumptions for underwriting, return on investment,
risk, contingencies, changes in policy, and a detailed review of
health plan financial statements to validate and reconcile costs for
use in developing rates.
                                                (e) The department
may develop rates that pay plans based on performance incentives,
including quality indicators, access to care, and data submission.
   (f) The department may develop and adopt condition-specific
payment rates for health conditions, including, but not limited to,
childbirth delivery.
   (g) (1) Prior to finalizing Medi-Cal managed care capitation
rates, the department shall provide health plans with information on
how the rates were developed, including rate sheets for that specific
health plan, and provide the plans with the opportunity to provide
additional supplemental information.
   (2) For contracts entered into between the department and any
entity pursuant to Article 2.8 (commencing with Section 14087.5) of
Chapter 7, the department, by June 30 of each year, or, if the budget
has not passed by that date, no later than five working days after
the budget is signed, shall provide preliminary rates for the
upcoming fiscal year.
   (h) For the purposes of developing capitation rates through
implementation of this ratesetting methodology, Medi-Cal managed care
health plans shall provide the department with financial and
utilization data in a form and substance as deemed necessary by the
department to establish rates. This data shall be considered
proprietary and shall be exempt from disclosure as official
information pursuant to subdivision (k) of Section 6254 of the
Government Code as contained in the California Public Records Act
(Division 7 (commencing with Section 6250) of Title 1 of the
Government Code).
   (i) Notwithstanding any other provision of law, on and after the
effective date of the act adding this subdivision, the department may
apply this section to the capitation rates it pays under any managed
care health plan contract.
   (j) Notwithstanding Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code, the
department may set and implement managed care capitation rates, and
interpret or make specific this section and any applicable federal
waivers and state plan amendments by means of plan letters, plan or
provider bulletins, or similar instructions, without taking
regulatory action.
   (k) The department shall report, upon request, to the fiscal and
policy committees of the respective houses of the Legislature
regarding implementation of this section.
   (l) Prior to October 1, 2011, the risk-adjusted countywide
capitation rate shall comprise no more than 20 percent of the total
capitation rate paid to each Medi-Cal managed care plan.
  SEC. 9.  Section 14301.2 is added to the Welfare and Institutions
Code, to read:
   14301.2.  The director may defer payments to Medi-Cal managed care
health plans contracting with the department pursuant to Article 2.7
(commencing with Section 14087.3), Article 2.8 (commencing with
Section 14087.5), Article 2.81 (commencing with Section 14087.96),
Article 2.9 (commencing with Section 14088), or Article 2.91
(commencing with Section 14089) of this chapter, or Chapter 8
(commencing with Section 14200) or Chapter 8.75 (commencing with
Section 14591), the Senior Care Action Network Health Plan, and
Medi-Cal managed care health plan providers, as applicable, which are
payable to the plans during the final month of the 2012-13 state
fiscal year. This section may be implemented only to the extent
consistent with federal law.
  SEC. 10.  (a) In the event the department has not received, by
February 1, 2013, federal approval, or notification indicating
pending approval, of a mutual ratesetting process, shared federal
savings, and a six-month enrollment period in the demonstration
project pursuant to paragraph (2) of subdivision (l) of Section
14132.275, effective March 1, 2013, Sections 14132.275, 14182.16, and
14182.17, and Article 5.7 (commencing with Section 14186) of Chapter
7 shall become inoperative. The director shall execute a declaration
of these facts and post it on the department's Internet Web site.
   (b) For purposes of this section, "shared federal savings" means a
methodology that meets the conditions of paragraphs (1) and (2), or
paragraph (3).
   (1) The state and CMS share in the combined savings for Medicare
and Medi-Cal, as estimated in the Budget Act of 2012 for the 2012-13,
2013-14, 2014-15, and 2015-16 fiscal years.
   (2) Federal approval for the provisions of paragraphs (2) and (3)
of subdivision (l) of Section 14132.275 regarding the requirement
that, upon enrollment in a demonstration site, specified
beneficiaries shall remain enrolled on a mandatory basis for six
months from the date of initial enrollment.
   (3) An alternate methodology that, in the determination of the
Director of Finance, in consultation with the Director of Health Care
Services and the Joint Legislative Budget Committee, will result in
the same level of ongoing savings, as estimated in the Budget Act of
2012 for the 2012-13, 2013-14, 2014-15, and 2015-16 fiscal years.
  SEC. 11.  It is the intent of the Legislature for the demonstration
project pursuant to Section 14132.275 of the Welfare and
Institutions Code to expand statewide within three years of the start
of the demonstration project. Expansion beyond the initial eight
counties shall be contingent upon statutory authorization and a
subsequent budget appropriation.
  SEC. 12.  The sum of one thousand dollars ($1,000) is hereby
appropriated from the General Fund to the State Department of Health
Care Services for administration.
  SEC. 13.  This act shall become operative only if Assembly Bill
1496 or Senate Bill 1036 of the 2011-12 Regular Session of the
Legislature is enacted and takes effect.
  SEC. 14.  This act is a bill providing for appropriations related
to the Budget Bill within the meaning of subdivision (e) of Section
12 of Article IV of the California Constitution, has been identified
as related to the budget in the Budget Bill, and shall take effect
immediately.