BILL ANALYSIS Ó
AB 1 X1
Page 1
ASSEMBLY THIRD READING
AB 1 X1 (John A. Pérez)
As Introduced January 28, 2013
Majority vote
HEALTH 13-6 APPROPRIATIONS 12-5
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|Ayes:|Pan, Ammiano, Atkins, |Ayes:|Gatto, Bocanegra, |
| |Bonilla, Bonta, Chesbro, | |Bradford, |
| |Gomez, | |Ian Calderon, Campos, |
| |Roger Hernández, | |Eggman, Gomez, Hall, |
| |Lowenthal, Mitchell, | |Holden, Pan, Quirk, Weber |
| |Nazarian, V. Manuel | | |
| |Pérez, Wieckowski | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Logue, Maienschein, |Nays:|Harkey, Bigelow, |
| |Mansoor, Nestande, | |Donnelly, Linder, Wagner |
| |Wagner, Wilk | | |
| | | | |
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SUMMARY : Enacts statutory changes necessary to implement the
coverage expansion, eligibility, simplified enrollment and
retention provisions of the Patient Protection and Affordable
Care Act of 2010 as amended by the Health Care and Education
Reconciliation Act of 2010 (collectively referred to as the
Affordable Care Act or ACA) related to the Medicaid Program
(Medi-Cal in California) and the California Children's Health
Insurance Program. Specifically, this bill :
1)Expands, effective January 1, 2014, Medi-Cal coverage as
follows:
a) Expands eligibility for Medi-Cal coverage to citizen and
qualified immigrant non-disabled adults who are under age
65, not pregnant and not otherwise currently eligible for
Medi-Cal coverage, with family incomes up 138% of the
Federal Poverty Level (FPL).
b) Establishes a benchmark benefits package that includes
all benefits provided to other adults, supplemented by
benefits, services, and coverage included in the essential
health benefits package adopted by the state for the
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population eligible for Covered California through the
Health Benefits Exchange (Exchange).
c) Transitions persons currently enrolled in a Low-Income
Health Program (LIHP) under California's Bridge to Reform
Section 1115(b) waiver to the new Medi-Cal expansion
program.
d) Extends coverage to any person under age 26, regardless
of income or assets who was in foster care in the state at
age 18 and who is not otherwise eligible. Provides, to the
extent federal financial participation is available, the
adolescent shall be deemed eligible without interruption
and without requiring a new application.
e) Provides that pregnant women with income up to 200% of
FPL who are currently eligible for pregnancy related and
postpartum services in the Medi-Cal program shall be
eligible for full-scope Medi-Cal services provided to other
eligible adults. Revises the period of coverage for
pregnant women in the Access for Infants and Mothers (AIM)
Program from 60 days after the end of the pregnancy to the
end of the month in which the 60th day occurs, effective
January 1, 2014, in order to align eligibility with open
enrollment in Covered California.
2)Simplifies and streamlines effective January 1, 2014, the
Medi-Cal application, eligibility and redetermination process
by enacting the following changes to existing law:
a) Requires the Department of Health Care Services (DHCS)
to convert the existing income eligibility standard to a
Modified Adjusted Gross Income (MAGI)-based income
equivalency level (as defined in the Internal Revenue Code)
as applied to families, children and non-disabled adults
under age 65. Eliminates the deprivation requirement and
any assets or resources limit for the MAGI population.
b) Establishes a minimum MAGI eligibility level at 133%
FPL, plus a standardized 5% income disregard in effect
setting the 133% FPL standard at 138%. Provides that the
maximum eligibility level shall be established at a level
that is not less than the equivalent amount in effect on
March 23, 2010, to ensure that any population eligible for
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Medi-Cal, AIM, or the Healthy Families Program does not
lose coverage.
c) Establishes procedures to be used for cases of
fluctuating income or family size to ensure that eligible
individuals do not lose or are denied eligibility.
d) Repeals the requirement that adults file mandatory
semiannual status reports regardless of whether there have
been any changes in income, family size, or other factors
that affect continued eligibility for the MAGI-based
categories.
e) Requires all state health subsidy programs, (Medi-Cal,
AIM, enrollment in a qualified health plan through the
Exchange and a Basic Health Plan, if there is one) to
accept self-attestation, instead of requiring production of
documentation for age, date of birth, family size,
household income, state residency, pregnancy, and any other
applicable criteria permitted under the ACA.
f) Revises provisions related to state residency as applied
to a person 21 years of age or older or if under 21 is
emancipated or married, by replacing the requirement of a
demonstrated intent to remain with the requirement that he
or she lives in the state and either intends to reside in
the state or has entered the state with a job commitment or
to seek employment. Specifies that the individual is not
required to have a fixed address or to be currently
employed.
g) Conforms the residency determinations to federal
requirements, for individuals under 21, not covered by c)
above, not in the foster care program or linked to another
public program, by providing that residency is established
if the child lives in the state (no fixed address is
required) or the child resides with a parent, parents, or
caretaker relative who meet the requirements of c) above
and provides that for an individual who is incapable of
stating intent or who is living in an institution the state
of residency is determined by applicable federal
regulations. Conforms provisions relating to the
reinstatement of a person who maintains a residence outside
the state.
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h) Specifies that a person applying for or renewing an
application may do so on his or her own behalf, on behalf
of the family, allows for authorized representatives as
specified and other designated entities or individuals to
be allowed to assist or represent the individual.
i) Repeals the requirement of an annual reaffirmation and
provides that the Medi-Cal eligibility is to be renewed
annually and no more frequently than once every 12 months
for individuals whose financial eligibility is determined
by use of the MAGI-based standard.
j) Revises the process for Medi-Cal eligibility
redetermination by adding requirements, as specified in
federal regulations, that information useful to verifying
financial eligibility, such as wages or enrollment or
eligibility in other similar income based programs, should
be obtained from other state and federal agencies or
electronically from federal and state databases prior to
contacting the individual.
aa) Revises procedures in the case of incomplete
applications to require additional attempts to contact the
individual and extends from 30 to 90 days the period for
rescission of a termination if the individual submits a
completed form.
bb) Requires, in the case of an individual establishing
eligibility on the basis of disability, the county to
consider blindness and disability to be continuing until a
determination otherwise as specified.
3)Makes other conforming and technical changes.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
State and local fiscal impacts of this bill are complex and
subject to substantial uncertainty. This stems from imprecision
inherent in projecting future-year costs based on numerous
assumptions about factors such as the number of people who will
be newly eligible for Medi-Cal and the number who will actually
enroll, as well as from uncertainty related to outstanding state
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and federal policy decisions.
The fiscal effects are divided into two categories:
1)The effect of optional Medi-Cal eligibility expansion to all
adults below 138% FPL; and,
2)The effect of other state options.
Effect of optional Medi-Cal eligibility expansion to adults
below 138% of federal poverty level
1)Health care services costs for newly eligible individuals are
funded 100% by the federal government for calendar years 2014,
2015, and 2016. Beginning in 2017, the state will have a 5%
share of total health care services costs, and the state's
share will increase gradually to 10% by 2020.
If 1.2 million newly eligible adults enroll by 2016, the
state's share would be in the range of $120 million, with the
federal government paying the remainder of the $4.7 billion
total for 2016-17, and $275 million in state General Fund (GF)
(out of $5.0 billion total funds) in 2017-18. This cost is
projected to increase to $600 million GF annually by 2020-21,
which is the state's 10% share of $6 billion total funds based
on enrollment growth, medical inflation, and the state's
increased share of total medical services costs.
2)Administrative costs for newly eligible individuals are shared
equally by the state and federal government. The addition of
the optional population is expected to result in half-year
administrative cost pressure in the range of $12 million GF
($24 million total funds) beginning in 2013-14, and full-year
cost pressure in the range of $30 million GF ($60 million
total funds) annually beginning in 2014-15. This estimate is
uncertain, as administrative funding is provided as a lump sum
to counties as part of the annual Medi-Cal budget and total
funding does not directly grow based on enrollment numbers.
In addition, per capita administrative costs for counties may
change significantly in future years as new systems and
processes are implemented.
3)Reduced costs for other state-funded programs, such as the
Genetically Handicapped Persons Program and the Breast and
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Cervical Cancer Treatment Program, to the extent some people
receiving services in these types of targeted medical programs
become eligible for Medi-Cal.
4)Potential reductions in inmate health care spending of up to
$60 million GF annually, beginning after January 1, 2014, to
the extent the state implements a process for identifying and
claiming enhanced federal funding for eligible inpatient
services provided to inmates newly eligible for Medi-Cal.
Effect of other state options
Several eligibility-related provisions in this bill appear to go
beyond what is minimally required to comply with federal rules,
and may have the effect of increasing Medi-Cal costs. In some
cases, additional federal guidance or approval would be required
in order to evaluate whether a provision goes beyond what is
required for strict compliance with federal rules.
Key provisions that may exceed what is minimally required for
federal compliance, and may have associated costs, include the
following:
1)Requiring adoption of the current Medi-Cal benefit package for
populations with income eligibility determined by MAGI.
2)Requiring DHCS to develop specific procedures that ensure
continued Medi-Cal eligibility for eligible foster youth.
3)Expanding the scope of benefits provided to pregnant women
with income between 138% and 200% of the federal poverty level
from pregnancy-only benefits to full-scope coverage, unless
federal approval for fewer services is granted after January
1, 2014.
4)Requiring DHCS to adopt specific income eligibility
verification procedures that take into account projected
future changes in income and family size, in order to deem
certain individuals Medi-Cal eligible who would not be found
eligible based on current monthly income.
5)Requiring the state to use self-attestation as verification
for any documentation for which self-attestation is allowable
under federal rules.
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6)Modifying the definition of residency for purposes of
establishing Medi-Cal eligibility.
Given the ambiguity about whether these provisions exceed what
is minimally required for federal compliance and how they
compare with alternative means of compliance that could also
meet federal standards, as well as uncertainty related to how
these provisions will impact enrollment and retention, specific
fiscal impacts of these provisions are unknown.
COMMENTS : On January 24, 2013, Governor Brown issued a
proclamation to convene the Legislature in Extraordinary Session
to consider and act upon legislation necessary to implement the
ACA in: 1) the areas of California's private health insurance
market, rules and regulations governing the individual and small
group market; 2) California's Medi-Cal program and changes
necessary to implement federal law; and, 3) options that allow
low-cost health coverage through Covered California,
California's Exchange, to be provided to individuals who have
income up to 200% of the FPL. This bill along with SB 1 X1 (Ed
Hernandez) addresses the second of the three areas identified in
the Governor's proclamation, that is to adopt the provisions of
the ACA related to changes in Medi-Cal. Specifically, the bill
adopts the state option of expanding Medi-Cal coverage to
non-disabled citizen and qualified resident childless adults,
between the ages of 19 and 65 who are not currently eligible for
other full-scope Medi-Cal programs and provides a full scope
benefit package, as allowable under federal law. This category
is limited to those with income under 138% of the FPL and the
person must meet other citizenship and immigration status
requirements. This bill also enacts the ACA requirement that
the state Medicaid program extend coverage to former foster
youth until age 26, without regard to income or assets. The ACA
establishes a new simplified income standard for families,
children and the new expansion population. It does not apply to
seniors or person with disabilities. This bill includes
provisions necessary to convert to the new MAGI methodology and
income standard. Finally the bill includes a number of
provisions that implement the goal of the ACA of reducing the
number of uninsured by creating a continuum of coverage options
for individuals with family incomes up to 400% FPL, streamlining
and simplifying eligibility determinations and increasing
reliance on electronically available data.
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According to a model of California insurance markets known as
the California Simulation of Insurance Markets, 5.6 million
Californians were without health insurance in 2012 or 16% of the
population under age 65. A recent study estimates that when
California implements the Medi-Cal provisions, more than 1.4
million of these individuals will be newly eligible, of which
between 750,000 and 910,000 are expected to be enrolled at any
point in time by 2019. This study, Medi-Cal Expansion under the
Affordable Care Act: Significant Increase in Coverage with
Minimal Cost to the State, published by UC Berkeley Center for
Labor Research and Education and UCLA Center for Health Policy
Research in January 2013, also finds that about 2.5 million
Californians are already eligible for Medi-Cal but not enrolled
and between 240,000 and 510,000 of them are expected to be
enrolled at any point in time by 2019 as a result of
implementing the ACA. According to this report, most of the
increase will happen regardless of the expansion due to the
other mandatory provisions such as the individual minimum
coverage requirements, simplified eligibility and enrollment
processes and improved awareness of coverage.
As written, the ACA included a provision that would have allowed
the federal government to withhold a state's Medicaid funding if
the state did not adopt the expansion. In National Federation
of Independent Business v. Sebelius, 132 S. Ct. 2566 (2012), the
United States Supreme Court determined this provision violated
the Constitution by threatening states with the loss of their
existing Medicaid funding if they decline to comply with the
expansion. However, because of the Severability Clause, the
constitutional violation was fully remedied by precluding the
federal Secretary of Health and Human Services (HHS) from
applying the provision to withdraw existing Medicaid funds for
failure to comply with the expansion requirements, but instead
allowing the expansion as a state option. The ACA provides that
for this population the federal share will be 100% for 2014,
2015, and 2016; decreasing to 95% in 2017; 94% in 2018; 93% in
2019; and 90% thereafter. Recent guidance from HHS clarified
that states will only receive the enhanced 100% matching rate in
2014 through 2016 if they expand eligibility all the way up to
138% of the FPL. HHS will consider partial expansions to a
lower income level, but states exercising this option would only
receive the regular federal matching rate which is 50% in
California.
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Currently Governors in 20 states have expressed their intent to
adopt this state option. The most recent, Florida was one of
the states that sued to block the law. In announcing his
position reversal, Governor Rick Scott said that the federal
government is committed to paying 100% of the cost; therefore he
could not in good conscience deny Floridians needed access to
health care. As he put it, the only other option is that
Floridians would be paying (through federal income tax) to fund
the program in other states while denying health care to its own
citizens. According to the Urban Institute, even when the
federal share drops below 100%, for every dollar it spends,
Florida would receive $12 in return from the federal government.
Governor Scott now joins the Republican governors of Arizona,
Michigan, Nevada, New Mexico, North Dakota and Ohio, who have
decided to join the Medicaid expansion. Some, like Governor Jan
Brewer of Arizona, were also staunch opponents of President
Obama's overall health care law.
With regard to California, the January 2013 UC Berkeley study
and others have pointed out numerous benefits of adopting the
expansion. For instance, there will be substantial savings to
counties and providers of last resort, such as hospitals and
clinics, due to the reduction in uncompensated care and
providers as a whole would receive more revenue. This in turn
has a positive impact on the economy by creating new jobs and
increasing tax revenue. Research has also shown that health
insurance coverage can improve educational outcomes and worker
productivity. California's Legislative Analyst Office (LAO) is
also in agreement. In a recent analysis Examining the State and
County Roles in the Medi-Cal Expansion, February 2013, the LAO
stated that in the short term, fiscal savings to the state would
far outweigh costs. The LAO also pointed out that even after a
decade, when the enhanced federal match is reduced from 100% to
90%, the overall savings to the state as a whole, including
local governments, would likely continue to outweigh costs. The
LAO concluded, in support of its recommendation to adopt the
expansion, that despite the significant uncertainty about
long-term costs and savings associated with the expansion, on
balance, the policy merits of the expansion and the fiscal
benefits that are likely to accrue to the state as a whole
outweigh the costs and potential fiscal risks.
Governor Brown's Budget as introduced for 2013-14 outlines two
alternatives to the optional expansion - a state-based approach
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or a county-based approach. The state-based option is described
as a standardized, statewide benefit package comparable to the
existing Medi-Cal benefit package but would exclude long-term
care. The county-based option is described as building on the
LIHPs with the counties acting as the fiscal and operational
entity responsible for the expansion. No additional details of
either proposal have been released. The Governor's Budget
Summary states that implementation will require a broader
discussion about the future of the state-county relationship
with the goal to strengthen local flexibility, fairly allocate
risk, and clearly delineate the respective responsibilities of
the state and the counties. The Brown Administration has
recently begun convening stakeholders to discuss possible
options and has requested that stakeholders offer suggestions on
implementation. The Director of the DHCS recently testified at
a Senate Budget and Fiscal Review Committee hearing that it was
their intent that this issue be considered as part of the budget
and not in the Special Session.
The LAO also made a recommendation with regard to the two
alternate proposals, finding that the state is in a better
position than the counties to effectively organize and
coordinate the delivery of health services to the newly eligible
population and to successfully implement the expansion by
January 1, 2014. Among the reasons stated were that a
consolidated state-administered program would decrease churning
among a multitude of programs and would reduce administrative
complexity and duplication. The LAO also pointed out that the
proposal suffered from program detail uncertainties such as how
a county-based expansion would be implemented state-wide if not
all the counties were willing or capable of participating and
that federal approval was problematic.
Effective January 1, 2014, the ACA envisions a streamlined,
simplified, and seamless enrollment system that employs minimal
use of paper documentation and relies on modern technology to
the greatest extent possible for all the state subsidy programs.
To promote coordination and avoid gaps or overlaps in coverage,
the new MAGI methodology is aligned with the one that will be
used to determine eligibility for the premium tax credits and
cost sharing reductions available to certain individuals
purchasing coverage on the Affordable Insurance Exchanges
starting in 2014 (Covered California). States must use a single
streamlined application that is either the application developed
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by the federal Secretary of HHS or an alternative that she
approves. States are required to have the application available
so that individuals and families may apply online, in-person, by
telephone, by mail, or by fax and it must be accessible to
persons with limited English proficiency and people with
disabilities. The Medicaid eligibility determination process
will start with a MAGI screen and state Medicaid agencies may
enter into agreements with the Exchange to coordinate
eligibility. The federal Centers for Medicare and Medicaid
Services (CMS) states in the Preamble to the March 23, 2012,
Rules and Regulations, as follows: whether conducted by a
public or private entity, it is anticipated that eligibility
determinations using MAGI-based standards will be highly
automated, utilizing business rules developed by the State
Medicaid agency. In the most simplified cases, which can be
determined without human intervention or discretion, we are
clarifying that automated systems can generate Medicaid
eligibility determinations, without suspending the case and
waiting for an eligibility worker to finalize the
determinations.
In an Informational Bulletin issued on February 21, 2013, CMS
further stated that individuals must not be required to provide
additional information or documentation unless information
cannot be obtained electronically or the information obtained
electronically is not reasonably compatible with self-attested
information. Documentation from individuals is permitted only
to the extent that establishing a data match would not be
effective, considering such factors as:
1)Administrative costs related to establishing and using the
data match compared to administrative costs related to relying
on paper documentation; and,
2)Impact on program integrity in terms of the potential for
ineligible individuals to be approved as well as for eligible
individuals to be denied coverage.
For example, if the state does not accept self-attestation of
residency, before requiring the individual to provide
documentation, the state would need to consider the
effectiveness of conducting a match with a state database such
as the Department of Motor Vehicles, Temporary Assistance for
Needy Families, or Supplemental Nutrition Assistance Program.
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States have the option to first request and accept an
explanation from the individual as to why the information might
not be reasonably compatible, such as a reduction in the number
of hours worked, before requesting paper documentation.
Analysis Prepared by : Marjorie Swartz / HEALTH / (916)
319-2097
FN: 0000017