Amended in Senate September 6, 2013

Amended in Senate September 3, 2013

Amended in Senate June 19, 2013

Amended in Assembly May 24, 2013

Amended in Assembly April 4, 2013

California Legislature—2013–14 Regular Session

Assembly Bill No. 361

Introduced by Assembly Member Mitchell

(Principal coauthor: Assembly Member Atkins)

(Coauthors: Assembly Members Ammiano and Maienschein)

(Coauthors: Senators Beall and Monning)

February 14, 2013

An act to add Article 3.9 (commencing with Section 14127) to Chapter 7 of Part 3 of Division 9 of the Welfare and Institutions Code, relating to Medi-Cal.

LEGISLATIVE COUNSEL’S DIGEST

AB 361, as amended, Mitchell. Medi-Cal: Health Homes for Medi-Cal Enrollees and Section 1115 Waiver Demonstration Populations with Chronic and Complex Conditions.

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. Existing federal law authorizes a state, subject to federal approval of a state plan amendment, to offer health home services, as defined, to eligible individuals with chronic conditions.

This bill would authorize the department, subject to federal approval, to create a health home program for enrollees with chronic conditions, as prescribed, as authorized under federal law. This bill would provide that those provisions shall not be implemented unless federal financial participation is available and additional General Fund moneys are not used to fund the administration and service costs, except as specified. This bill would require the department to ensure that an evaluation of the program is completed, if created by the department, and would require that the department submit a report to the appropriate policy and fiscal committees of the Legislature within 2 years after implementation of the program.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

The Legislature finds and declares all of the
following:

(a) The Health Homes for Enrollees with Chronic Conditions
option (Health Homes option) under Section 2703 of the federal
Patient Protection and Affordable Care Act (Affordable Care Act)
(42 U.S.C. Sec. 1396w-4) offers an opportunity for California to
address chronic and complex health conditions through a “whole
person” approach, while achieving the “Triple Aim” goals of
improved patient care, improved health, and reduced per capita
total costs. It is an opportunity to reverse determinants that lead
to poor health outcomes and high costs among Medi-Cal
beneficiaries.

(b) For example, people who frequently use hospitals for reasons
that could have been avoided with more appropriate care incur
high Medi-Cal costs and suffer high rates of early mortality due
to the complexity and severity of their conditions and, often, their
negative social determinants of health. Frequent users have
difficulties accessing regular or preventive care and complying
with treatment protocols, and the significant number who are
homeless have no place to store medications, cannot adhere to a
healthy diet or maintain appropriate hygiene, face frequent
victimization, and lack rest when recovering from illness. Frequent
hospital users who are not homeless survive on extremely low
incomes and live in communities with limited resources and
services.

(c) Increasingly, health providers are partnering with community
behavioral health and social services providers to offer a
person-centered interdisciplinary system of care that effectively
addresses the needs of enrollees with multiple chronic or complex
conditions, including frequent hospital users and people
experiencing chronic homelessness, in settings where enrollees
live. These health homes help people with chronic and complex
conditions to access better care and better health, while decreasing
costs.

(d) Federal guidelines allow the state to access enhanced federal
financial participation for health home services under the Health
Homes option for multiple target populations to achieve more than
one policy goal.

SEC. 2.  

Article 3.9 (commencing with Section 14127) is added
to Chapter 7 of Part 3 of Division 9 of the Welfare and Institutions
Code, to read:

 

Article 3.9.  Health Homes for Medi-Cal Enrollees and Section
1115 Waiver Demonstration Populations with Chronic and
Complex Conditions

 

14127.  

For purposes of this article, the following definitions
shall apply:

(a) “Department” means the State Department of Health Care
Services.

(b) “Federal guidelines” means all federal statutes, and all
regulatory and policy guidelines issued by the federal Centers for
Medicare and Medicaid Services regarding the Health Homes for
Enrollees with Chronic Conditions option under Section 2703 of
the federal Patient Protection and Affordable Care Act (Affordable
Care Act) (42 U.S.C. Sec. 1396w-4), including the State Medicaid
Director Letter issued on November 16, 2010.

(c) (1) “Health home” means a provider or team of providers
designated by the department that satisfies all of the following:

(A) Meets the criteria described in federal guidelines.

(B) Offers a whole person approach, including, but not limited
to, coordinating other available services that address needs affecting
a participating individual’s health.

(C) Offers services in a range of settings, as appropriate, to meet
the needs of an individual eligible for health home services.

(2) A lead provider may contract with Medi-Cal providers,
including, but not limited to, a managed care health plan, a
community clinic, a mental health plan, a hospital, physicians, a
clinical practice or clinical group practice, a rural health clinic, a
community health center, a community mental health center,
substance use disorder treatment professionals, school-based health
centers, community health workers, community-based service
organizations, a home health agency, nurse practitioners,
physician’s assistants, social workers, and other paraprofessionals,
to the extent that contracting with these providers is allowed under
federal Medicaid law. Health home providers shall also establish
noncontractual relationships with, and provide linkages to, housing
providers.

(3) For purposes of serving the population identified in
subdivision (c) of Section 14127.3, the department may require a
lead provider to be a physician, a community clinic, a mental health
plan, a community-based organization, a county health system, or
a hospital.

(4) The department may determine the model of health home
it intends to create, including any entity, provider, or group of
providers operating as a health team, as a team of health care
professionals, or as a designated provider, as those terms are
defined in Sections 256a-1 and 1396w-4(h)(5) and (h)(6) of Title
42 of the United States Code, respectively.

(d) “Health Home Program” means all of the state plan
amendments and relevant waivers the department seeks and the
federal Centers for begin delete Medicine end delete begin insert Medicare end insert and Medicaid Services
approves.

(e) “Homeless” has the same meaning as that term is defined
in Section 91.5 of Title 24 of the Code of Federal Regulations. A
“chronically homeless individual” means a homeless individual
with a condition limiting his or her activities of daily living who
has been continuously homeless for a year or more, or had at least
four episodes of homelessness in the past three years. For purposes
of this article, an individual who is currently residing in transitional
housing, as defined in Section 50675.2 of the Health and Safety
Code, or who has been residing in permanent supportive housing,
as defined in Section 50675.14 of the Health and Safety Code, for
less than two years shall be considered a chronically homeless
individual if the individual was chronically homeless prior to his
or her residence.

14127.1.  

Subject to federal approval, the department may do
all of the following to create a California Health Home Program
(Health Home Program), as authorized under Section 2703 of the
Affordable Care Act:

(a) Design, with opportunity for public comment, a program to
provide health home services to Medi-Cal beneficiaries and Section
1115 waiver demonstration populations with chronic conditions.

(b) Contract with new providers, existing Medi-Cal providers,
Medi-Cal managed care plans, or counties, or one or more of these
entities, to provide health home services, as provided in Section
14128.

(c) Submit any necessary applications to the federal Centers for
Medicare and Medicaid Services for one or more state plan
amendments and any necessary Section 1115 waiver amendments
to provide health home services to Medi-Cal beneficiaries, to newly
eligible Medi-Cal beneficiaries upon Medicaid expansion under
the Affordable Care Act, and, if applicable, to Low Income Health
Program (LIHP) enrollees in counties with LIHPs willing to match
federal funds.

(d) Define the populations of eligible individuals.

(e) Develop a payment methodology, including, but not limited
to, fee-for-service or per member, per month payment structures
that may include tiered payment rates that take into account the
intensity of services necessary to outreach to, engage, and serve
the populations the department identifies.

(f) Identify the specific health home services needed for each
population targeted in the Health Home Program, consistent with
subdivision (b) of Section 14127.2.

(g) Submit applications and operate, to the extent permitted by
federal law and to the extent federal approval is obtained, more
than one health home state plan amendment and any necessary
Section 1115 waiver amendments for distinct populations, different
providers or contractors, or specific geographic areas.

(h) Limit the availability of health home services geographically.

14127.2.  

(a) The department may design one or more state
plan amendments and any necessary Section 1115 waiver
amendments to provide health home services to children or adults,
or both, pursuant to Section 14127.1, and, considering consultation
with stakeholders, shall develop the geographic criteria, beneficiary
eligibility criteria, and provider eligibility criteria for each state
plan amendment.

(b) Subject to federal approval for receipt of the enhanced
federal reimbursement, services provided under the Health Home
Program established pursuant to this article shall include all of the
following:

(1) Comprehensive and individualized care management.

(2) Care coordination and health promotion, including
connection to medical, mental health, and substance use disorder
care.

(3) Comprehensive transitional care from inpatient to other
settings, including appropriate followup.

(4) Individual and family support, including authorized
representatives.

(5) Referral to relevant community and social services supports,
including, but not limited to, connection to housing for participants
who are homeless or unstably housed, transportation to
appointments needed to manage health needs, healthy lifestyle
supports, child care when appropriate, and peer recovery support.

(6) Health information technology to identify eligible individuals
and link services, if feasible and appropriate.

14127.3.  

(a) If the department creates a Health Home Program
pursuant to this article, the department shall determine whether a
health home state plan amendment that targets adults is
operationally viable.

(b) (1) In determining whether a health home state plan
amendment that targets adults is operationally viable, the
department shall consider whether a state plan amendment and
any necessary Section 1115 waiver amendments could be designed
in a manner that minimizes the impact on the General Fund,
whether the department has the capacity to administer the health
home state plan amendment through the state, a contracting entity,
a county, or regional approach, and whether a sufficient provider
network exists for providing health home services to populations
the department intends to target, including the populations
described in subdivision (c).

(2) If the department determines that a health home state plan
amendment that targets adults is operationally viable pursuant to
paragraph (1), then the department shall design a state plan
amendment and any necessary Section 1115 waiver amendments
to target and provide health home services to beneficiaries who
meet the criteria specified in subdivision (c).

(3) (A) If the department determines a health home state plan
amendment that targets adults is not operationally viable, then the
department shall inform the appropriate policy and fiscal
committees of the Legislature, within 120 days of that
determination, begin insert of the reasons the program is not operationally
viable as described in paragraph (1), and end insert about current efforts
underway by the department that help to address health care issues
experienced by homeless Medi-Cal beneficiaries.

(B) The requirement for informing the appropriate policy and
fiscal committees of the Legislature under subparagraph (A) is
inoperative four years after the date the report is due, pursuant to
Section 10231.5 of the Government Code.

(c) A state plan amendment and any necessary Section 1115
waiver amendments submitted pursuant to this section shall target
adult beneficiaries who meet both of the following criteria:

(1) Have current diagnoses of chronic, physical health, mental
health, or substance use disorders prevalent among frequent
hospital users.

(2) Have a level of severity in conditions established by the
department, based on one or more of the following factors:

(A) Frequent inpatient hospital admissions, including
hospitalization for medical, psychiatric, or substance use related
conditions.

(B) Excessive use of crisis or emergency services.

(C) Chronic homelessness.

(d) (1) For the purposes of providing health home services to
the population identified in subdivision (c), the department shall
select health home providers or providers who plan to subcontract
with health home team members with all of the following:

(A) Demonstrated experience working with frequent hospital
or emergency department users.

(B) Demonstrated experience working with people who are
chronically homeless.

(C) The capacity and administrative infrastructure to participate
in the Health Home Program, including the ability to meet
requirements of federal guidelines.

(D) A viable plan, with roles identified among providers of the
health home, to do all of the following:

(i) Reach out to and engage frequent hospital or emergency
department users and chronically homeless eligible individuals.

(ii) Link eligible individuals who are homeless or experiencing
housing instability to permanent housing, such as supportive
housing.

(iii) Ensure coordination and linkages to services needed to
access and maintain health stability, including medical, mental
health, and substance use care, as well as social services and
supports to address social determinants of health.

(2) The department may design additional provider criteria to
those identified in paragraph (1) after consultation with stakeholder
groups who have expertise in engagement and services for the
population identified in subdivision (c).

(3) The department may authorize health home providers eligible
under this subdivision to serve Medi-Cal enrollees through a
fee-for-service or managed care delivery system that may include
supplemental payments, and may allow for county-operated and
other public and private providers to participate in this program.

(4) If the department designs a state plan amendment designed
to serve the population identified in subdivision (c), the department
shall design strategies to outreach to, engage, and provide health
home services to the population identified in subdivision (c), based
on consultation with stakeholders who have expertise in engaging,
providing services to, and designing programs addressing the needs
of, the population.

(5) If the department creates a health home program that targets
adults described in subdivision (c), the department may also submit
state plan amendments and any necessary waiver amendments
targeting other adult populations.

14127.4.  

(a) The department shall administer this article in a
manner that attempts to maximize federal financial participation,
consistent with federal law.

(b) Except as provided in Section 14127.6, the nonfederal share
shall be provided by funds from local governments, private
foundations, or any other source permitted under state and federal
law, including Section 1903(a) of the federal Social Security Act
(42 U.S.C. Sec. 1396b(a)) and Section 433.51 of Title 42 of the
Code of Federal Regulations, and may be used for administration,
service delivery, evaluation, and design of the Health Home
Program. The department, or counties contracting with the
department, may also enter into risk-sharing and social impact
bond program agreements to fund services under this article.

14127.5.  

(a) If the department creates a Health Home Program,
the department shall ensure that an evaluation of the program is
completed and shall, within two years after implementation, submit
a report to the appropriate policy and fiscal committees of the
Legislature. Stakeholders, including philanthropy, nonprofit
organizations, and patient advocates, may participate in the
department’s evaluation design.

(b) The requirement for submitting the report under subdivision
(a) is inoperative four years after the date the report is due, pursuant
to Section 10231.5 of the Government Code.

14127.6.  

(a) The Health Home Program shall be implemented
only if and to the extent federal financial participation is available
and the federal Centers for Medicare and Medicaid Services
approves any state plan amendments and any necessary waivers
sought pursuant to this article.

(b) Except as provided in subdivision (c), this article shall be
implemented only if no additional General Fund moneys are used
to fund the administration and costs of services.

(c) Notwithstanding subdivision (b), if the department projects,
based on analysis of current and projected expenditures for health
home services prior to, during, or after the first eight quarters of
implementation, that this article can be implemented in a manner
that does not or will not result in a net increase in ongoing General
Fund costs for the Medi-Cal program, the department may use
state funds to fund any Health Home Program costs.

(d) The department may use new funding in the form of
enhanced federal financial participation for health home services
that are currently provided to fund additional costs for new Health
Home Program services.

(e) The department shall seek to fund the creation,
implementation, and administration of the program with funding
other than state general funds.

(f) The department may revise or terminate the Health Home
Program any time after the first eight quarters of implementation
if the department finds that the program fails to result in reduced
inpatient stays, hospital admission rates, and emergency department
visits, or results in substantial General Fund expense without
commensurate decreases in Medi-Cal costs among program
participants.

14128.  

(a) In the event of a judicial challenge of the provisions
of this article, this article shall not be construed to create an
obligation on the part of the state to fund any payment from state
funds due to the absence or shortfall of federal funding.

(b) For the purposes of implementing this article, the department
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 under this article. Contracts may
be statewide or on a more limited geographic basis. Contracts
entered into or amended under 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 the
Government Code, and shall be exempt from the review or
approval of any division of the Department of General Services.

(c) (1) 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 the
process set forth in this article by means of all-county letters, plan
letters, plan or provider bulletins, or similar instructions, without
taking regulatory action, until such time as regulations are adopted.
It is the intent of the Legislature that the department be provided
temporary authority as necessary to implement program changes
until completion of the regulatory process.

(2) The department shall adopt emergency regulations no later
than two years after implementation of this article. The department
may readopt, up to two times, any emergency regulation authorized
by this section that is the same as or substantially equivalent to an
emergency regulation previously adopted pursuant to this section.

(3) The initial adoption of emergency regulations implementing
this article and the readoptions of emergency regulations authorized
by this section shall be deemed an emergency and necessary for
the immediate preservation of the public peace, health, safety, or
general welfare. Initial emergency regulations and readoptions
authorized by this section shall be exempt from review by the
Office of Administrative Law. The initial emergency regulations
and readoptions authorized by this section shall be submitted to
the Office of Administrative Law for filing with the Secretary of
State and shall remain in effect for no more than 180 days, by
which time final regulations may be adopted.