BILL ANALYSIS �
SENATE COMMITTEE ON HEALTH
Senator Ed Hernandez, O.D., Chair
BILL NO: AB 361
AUTHOR: Mitchell
AMENDED: June 19, 2013
HEARING DATE: July 3, 2013
CONSULTANT: Marchand
SUBJECT : Medi-Cal: Health Homes for Medi-Cal Enrollees and
Section 1115 Waiver Demonstration Populations with Chronic and
Complex Conditions.
SUMMARY : Permits the Department of Health Care Services to
establish a California Health Home Program to provide health
home services to Medi-Cal beneficiaries and Section 1115 waiver
demonstration populations with chronic conditions. Implements
this bill only if federal financial participation is available
and the federal Centers for Medicare and Medicaid Services
approves the state plan amendment to implement this bill.
Existing law:
1.Establishes the Medi-Cal program, administered by the
Department of Health Care Services (DHCS), under which
qualified low-income individuals receive health care services.
2.Authorizes, under the federal Patient Protection and
Affordable Care Act (ACA) (Public Law 111-148), as amended by
the Health Care Education and Reconciliation Act of 2010
(Public Law 111-152), states to offer health home services, as
defined, to eligible individuals with chronic conditions who
select a designated provider, a team of health care
professionals operating with such a provider, or a health team
as the individual's health home for purpose of providing the
individual with health home services.
3.Provides, under the ACA, 90 percent federal matching funds for
the first 8 quarters the health home option is in effect.
Thereafter, the state's regular federal matching rate would be
in effect (typically 50 percent in California).
This bill:
1.Permits DHCS, subject to federal approval, to do all of the
following to create a California Health Home Program (Health
Continued---
AB 361 | Page 2
Home Program), as authorized under the federal ACA:
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. Requires DHCS, in designing the Health
Home Program, to give consideration to ensuring continuity
of care and avoiding disruption of care among a
beneficiary's existing providers;
b. Contract with new providers, existing Medi-Cal
providers, existing managed care plans, or counties, to
provide health home services;
c. Submit any necessary applications to the federal Centers
for Medicare and Medicaid Services (CMS) for one or more
state plan amendments (SPAs) to provide health home
services to Medi-Cal beneficiaries, to newly eligible
Medi-Cal beneficiaries upon Medicaid expansion under the
ACA, and, if applicable, 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 DHCS
identifies;
f. Identify the specific health home services needed for
each population targeted in the Health Home Program,
consistent with the provisions of this bill;
g. Submit applications and operate, to the extent permitted
and approved by federal law, more than one health home SPA
and any necessary Section 1115 waiver amendments for
distinct populations, different providers or contractors,
or specific geographic areas; and,
h. Limit the availability of health home services
geographically.
2.Permits DHCS to design one or more SPAs and any necessary
Section 1115 waiver amendments to provide health home services
to children or adults, or both, and, based on consultation
with stakeholders, develop the geographic criteria,
beneficiary eligibility criteria, and provider eligibility
criteria for each SPA.
3.Requires services provided under the Health Home Program,
AB 361 | Page
3
subject to federal approval of the enhanced federal match to
include all of the following:
a. Comprehensive and individualized case management;
b. Care coordination and health promotion, including
connection to medical, mental health, and substance use
disorder care;
c. Comprehensive transitional care from inpatient to other
settings, including appropriate follow-up;
d. Individual and family support, including authorized
representatives;
e. Referral to relevant community and social services
supports, including connection to housing for participants
who are homeless or unstably housed, transportation to
appointments needed to manage health needs, healthy
lifestyle supports, quality child care when appropriate,
and peer and recovery support; and,
f. Health information technology to identify eligible
individuals and link services, if feasible and appropriate.
4.Defines "health home," for purposes of this bill, as a
provider or team of providers designed by DHCS that meets
federal guidelines, offers a whole person approach, including
coordinating other available services, and offers services in
a range of settings, as appropriate, to meet the needs of an
individual eligible for health home services.
5.Permits health home team members to include a health plan,
community clinic, a mental health plan, a hospital,
physicians, a clinical practice or clinical group practice,
rural health clinic, community health center, community mental
health center, substance use disorder treatment professionals,
school-based health centers, community health workers,
community-based service organizations, promotores, home health
agencies, nurse practitioners, physician's assistants, social
workers, and other paraprofessionals.
6.Requires health home teams to partner with, and provide
linkages to, housing navigators and housing providers.
7.Permits DHCS to require a lead provider to be a physician, a
community clinic, a mental health plan, a community-based
nonprofit organization, a county health system, a substance
use disorder treatment professional or facility, or a
AB 361 | Page 4
hospital.
8.Permits DHCS to 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 federal law.
9.Defines "chronically homeless individual" as an unaccompanied
homeless individual with a condition limiting his or her
activities of daily living who has been continuously homeless
for a year or more, or has had at least four episodes of
homelessness in the past three years. Specifies that an
individual who is currently residing in transitional housing
or who has been residing in permanent supportive housing for
less than two years is considered a chronically homeless
individual if the individual was chronically homeless prior to
his or her residence.
10. Requires DHCS, if it creates a Health Home Program,
to determine whether a health home SPA that targets adults is
operationally viable. In making this determination, requires
DHCS to consider whether a SPA and any necessary Section 1115
waiver amendments could be designed in a manner that minimizes
the impact on the General Fund, whether DHCS has the capacity
to administer the home health SPA through the state, a
contracting entity, a county, or a regional approach, and
whether a sufficient provider network exists for providing
health home services to populations DHCS intends to target.
11. Requires DHCS, if it determines that a health home
SPA that targets adults is operationally viable, to design an
SPA and any necessary Section 1115 waiver amendments to target
and provide health home services to beneficiaries who meet the
criteria specified in this bill.
12. Requires DHCS if it determines that a health home
SPA that targets adults is not operationally viable to report
to the appropriate policy and fiscal committees of the
Legislature the basis for this determination, as well as the
service delivery changes needed to improve care among
chronically homeless beneficiaries and frequent hospital
users.
13. Requires an SPA and any necessary Section 1115
waiver amendments submitted pursuant to this bill to target
AB 361 | Page
5
adult beneficiaries who meet both of the following criteria:
a. Have current diagnoses of chronic, physical health,
mental health, or substance use disorders prevalent among
frequent hospital users; and,
b. Have a level of severity in conditions established by
DHCS, based on one or more of the following factors:
frequent inpatient hospital admissions, excessive use of
crisis or emergency services, or chronic homelessness.
14. Requires DHCS, for the purposes of providing health
home services to the targeted population, to 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; and,
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;
15. Permits DHCS to design additional provider criteria
after consultation with stakeholder groups who have expertise
in engagement and services for the targeted population.
16. Permits DHCS to authorize health home providers
eligible under the provisions of this bill to serve Medi-Cal
enrollees through a fee-for-service or managed care delivery
system, and to allow for county-operated and other public and
AB 361 | Page 6
private providers to participate in this program.
17. Requires DHCS, if it designs an SPA designed to
serve the targeted population, to design strategies to
outreach, engage, and provide health home services to the
targeted population, based on consultation with stakeholders
who have expertise in engaging, providing services to, and
designing programs addressing the needs of, the population.
18. Permits DHCS, if it creates a health home program
that targets the adults specified in this bill, to also submit
SPAs and any necessary waiver amendments targeting other adult
populations.
19. Requires DHCS to administer the provisions of this
bill in a manner that attempts to maximize federal financial
participation, consistent with federal law.
20. Requires, except as specified in 16) below, the
non-federal share to be provided by funds from local
governments, private foundations or any other source permitted
under federal law. Permits DHCS, or counties contracting with
DHCS, to also enter into risk-sharing and social impact bond
program agreements to fund services under this bill.
21. Requires DHCS to fund health home services only if
and to the extent federal financial participation is available
and CMS approves any SPAs sought under this bill.
22. Specifies that the provisions of this bill shall be
implemented only if no additional General Fund monies are used
to fund the administration and costs of services. However, if
DHCS projects, based on analysis of current and projected
expenditures prior to, during, or after the first eight
quarters of implementation, that this bill can be implemented
in a manner that will not result in a net increase in ongoing
General Fund costs for the Medi-Cal program, state funds may
be used to fund any Health Home Program costs.
23. Permits DHCS to use new funding in the form of
enhanced federal financial participation for health home
services that are currently funded to fund additional costs
for new Health Home Program services.
24. Requires DHCS to seek to fund the creation,
implementation, and administration of the program with funding
AB 361 | Page
7
other than state General Funds.
25. Requires DHCS, if it creates a Health Home Program,
to ensure that an evaluation of the program is completed, and
within two years after implementation, to submit a report to
the appropriate policy and fiscal committees of the
Legislature.
26. Permits DHCS to revise or terminate the Health Home
Program any time after the first eight quarters of
implementation if DHCS 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.
27. Prohibits this bill, in the event of a judicial
challenge, from being 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.
28. Permits DHCS, for purposes of this bill, to enter
into exclusive or nonexclusive contracts on a bid or
negotiated basis, and to amend existing managed care contracts
to provide or arrange for services under this bill. Exempts
contracts entered into under this bill from specified
provisions of the Public Contract Code and the Government
Code, and exempts these contracts from the review or approval
of the Department of General Services.
29. Permits DHCS to implement the provisions of this
bill by means of all-county letters, plan letters, plan or
provider bulletins, or similar instructions, without taking
regulatory action until regulations are adopted.
30. Requires DHCS to adopt emergency regulations no
later than two years after implementation of the provisions of
this bill, and to readopt, up to two times, these emergency
regulations.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1.One-time administrative costs likely in the hundreds of
thousands of dollars to plan and develop the program and
AB 361 | Page 8
submit the required applications. Ongoing costs likely in the
hundreds of thousands to millions of dollars to oversee and
administer the program. One-time costs in the low millions of
dollars to perform the required evaluation.
2.With enhanced (90 percent) federal match, the state's share
would be 10 percent. Grant money is expected to cover the
state share. Long-term program costs are unknown, but likely
to be cost-neutral to the state.
PRIOR VOTES :
Assembly Health: 15- 3
Assembly Appropriations:12- 1
Assembly Floor: 54- 23
COMMENTS :
1.Author's statement. This bill will bring federal resources to
California to address the high costs of frequent hospital
users, those who suffer from a combination of chronic medical
conditions, behavioral health care challenges, and, whom are
often homeless. Because these individuals use hospitals to
address their complex health care needs, they cost Medi-Cal
disproportionately more than other Medi-Cal beneficiaries.
This bill will tap into an option within the Affordable Care
Act that would provide 90 percent federal funding for "health
home" services. Health home services include comprehensive
case management to target the carious determinants of their
poor health. It is imperative that we take advantage of
federal opportunities to improve Californians care, changes
lives and save the state money.
2.Federal law and guidance on State Option to Provide Health
Homes for Enrollees with Chronic Conditions. The ACA contained
several provisions to support and advance the medical home
model of care. One of these was entitled "State Option to
Provide Health Homes for Enrollees with Chronic Conditions,"
which established a waiver program to give states the option
of enrolling Medicaid beneficiaries with chronic conditions
into a health home. States electing the Health Home option in
their Medicaid program would receive a 90 percent federal
matching rate for 2 years for these services. Federal law
defines the individuals eligible for health home services as
individuals meeting one of the following:
a. Having at least two chronic conditions;
b. Having one chronic condition and are at risk of having a
AB 361 | Page
9
second chronic condition; or,
c. Having one serious and persistent mental health
condition.
Federal law defines "health home services" as services
provided by a designated provider, a team of health care
professionals operating with such a provider, or a health team
that provides:
a. Comprehensive care management;
b. Care coordination and health promotion;
c. Comprehensive transitional care, including
appropriate follow-up, from inpatient to other
settings;
d. Patient and family support (including authorized
representatives);
e. Referral to community and social support services, if
relevant; and,
f. Use of health information technology to link services,
as feasible and appropriate.
The term "designated provider" is defined in the ACA as a
physician, clinical practice or clinical group practice, rural
clinic, community health center, community mental health
center, home health agency, or any other entity or provider
(including pediatricians, gynecologists, and obstetricians)
that is determined by the State and approved by the Secretary
to be qualified to be a health home for eligible individuals
with chronic conditions."
In preliminary guidance provided to State Medicaid Directors
in November 2010, CMS stated that this ACA provision is an
important opportunity for states to address and receive
additional federal support for the enhanced integration and
coordination of primary, acute, behavioral health (mental
health and substance use), and long-term services and supports
for persons across the lifespan with chronic illness. CMS
stated that the health home provision provides an opportunity
to build a person-centered system of care that achieves
improved outcomes for beneficiaries and better services and
value for Medicaid programs. CMS indicated it expects that use
of the health home service delivery model will result in lower
rates of ED use, reduction in hospital admissions and
re-admissions, reduction in health care costs, less reliance
on long-term care facilities, and improved experience of care
and quality of care outcomes for the individual.
AB 361 | Page 10
1.Background on the medical home model. According to a September
2012 brief prepared by the National Conference of State
Legislatures (NCSL), the medical home model of care offers one
method of transforming the health care delivery system.
Medical homes can reduce costs while improving quality and
efficiency through an innovative approach to delivering
comprehensive patient-centered preventive and primary care.
Also known as the PCMH, this model is designed around patient
needs and aims to improve access to care (e.g. through
extended office hours and increased communication between
providers and patients via email and telephone), increase care
coordination and enhance overall quality, while simultaneously
reducing costs. The medical home relies on a team of
providers-such as physicians, nurses, nutritionists,
pharmacists, and social workers-to meet a patient's health
care needs. Studies have shown that the medical home model's
attention to the whole-person and integration of all aspects
of health care offer potential to improve physical health,
behavioral health, access to community-based social services
and management of chronic conditions.
NCSL notes that although general agreement exists about the
basic tenets of the medical home, the model is still evolving.
Not all medical homes look alike or use the same strategies
to reduce costs, improve quality and coordinate care.
Accreditation offers formal recognition and a stamp of
approval to those that successfully meet specific standards
and requirements, facilitating payment from both public and
private payers. Medical home accreditation is available from
national accreditation organizations, as well as a few states
that have developed their own standards. Although certain
health care providers already embody many elements of the
PCMH, many are seeking formal recognition, due in part to the
fact that medical practices that participate in medical home
pilot programs often qualify for enhanced reimbursement rates,
or receive other financial incentives for coordinating care.
According to NCSL, as of January 2012, 41 states had policies
promoting the medical home model for certain Medicaid or
Children's Health Insurance Program beneficiaries. States have
created pilot projects, reformed payment structures, invested
in health information technology, restructured Medicaid
provider systems, and included the medical home model in
service delivery.
AB 361 | Page
11
2.Related legislation. AB 1208 (Pan) establishes the Patient
Centered Medical Home Act of 2013, which defines "medical
home" and "patient centered medical home" as a health care
delivery model in which a patient establishes a relationship
with a licensed health care provider in a physician-led
practice team to provide comprehensive, accessible, and
continuous primary and preventive care, and to coordinate the
patient's health care needs across the health care system.
3.Prior legislation. AB 2266 (Mitchell) of 2012, was similar to
this bill, and would have required DHCS to establish a program
to provide specified health home services, with the intent of
reducing avoidable hospitalization or use of emergency medical
services. AB 2266 died on the Senate Inactive File.
SB 393 (Hernandez) would have enacted the PCMH Act of 2012 and
established a definition for a medical home based upon
specified standards. SB 393 was vetoed by the Governor. In
his veto message, the Governor stated that he commended the
author for trying to improve the delivery of health care by
encouraging the greater use of "patient-centered medical
homes," but because the concept is still evolving, he thought
more work was needed before the definition was codified.
AB 1542 (Jones) of 2010, would have defined a PCMH to mean, in
part, a health care delivery model in which a patient
establishes an ongoing relationship with a physician or other
licensed health care provider, working in a physician-directed
practice team to provide comprehensive, accessible, and
continuous evidence-based primary care and coordinate the
patient's health care needs across the health care system. AB
1542 died on the Assembly Floor.
SB 1738 (Steinberg) of 2008, would have required DHCS to
establish a three-year pilot program to provide intensive
multidisciplinary services to 2,500 Medi-Cal beneficiaries
identified as frequent users of health care. SB 1738 was
vetoed by Governor Schwarzenegger.
AB 1542 (Jones) of 2009 would have defined a PCMH to mean, in
part, a health care delivery model in which a patient
establishes an ongoing relationship with a physician or other
licensed health care provider, working in a physician-directed
practice team to provide comprehensive, accessible and
continuous evidence-based primary care and coordinate the
AB 361 | Page 12
patient's health care needs across the health care system. AB
1542 failed passage on the Assembly Floor on concurrence.
SB 1738 (Steinberg) of 2008 would have required DHCS to
establish a three-year pilot program to provide intensive
multidisciplinary services to Medi-Cal beneficiaries
identified as frequent users of health care. SB 1738 was
vetoed by Governor Schwarzenegger who stated in his veto
message that he could not support the bill because of the
state's ongoing fiscal challenges and asked the author and
stakeholders to work with his Administration to identify
strategies to ensure these beneficiaries receive the right
care, at the right time, in the right setting.
4.Support. This bill is co-sponsored by the Western Center on
Law and Poverty (WCLP) and the Corporation for Supportive
Housing (CSH). WCLP states that this bill is a valuable
opportunity for California to address the needs of people who
frequently use emergency departments for reasons that could
have been avoided with earlier or primary care. Not only are
frequent users a high-cost population for the state to care
for, but a group that has unique needs in their treatment and
recovery. WCLP states that this bill will give California the
opportunity to draw down a 90 percent federal matching rate,
and the remaining 10 percent will be covered through private
philanthropic contributions. CSH states that it administered
the Frequent Users of Health Services Initiative, a
foundation-funded five-year program supporting six projects
throughout California that offered community-based
multidisciplinary services to people who frequently incur
inpatient stays or emergency room visits for avoidable
reasons. CSH states that Medi-Cal beneficiaries participating
in these programs experienced a 60 percent decrease in
emergency room visits and a 69 percent decrease in inpatient
days. CSH states that data from similar programs across the
country, several using randomized, control-group studies, show
these services save between $7,500 and $29,000 per year, per
beneficiary in Medicaid costs.
AARP states in support that the number of older people with
chronic diseases is large and growing, and that more than half
of older adults have two or more chronic conditions and 11
million live with five or more chronic conditions. The
California Mental Health Directors Association states that
many of the individuals who frequently use hospital services
for avoidable reasons and the overlapping population of
AB 361 | Page
13
individuals experiencing chronic homelessness face multiple
barriers to accessing appropriate health care. Research
demonstrates that programs that provide outreach and intensive
case management, and connect individuals to appropriate care
and social services using "health homes" are proven to improve
health outcomes, decrease hospital and nursing home stays, and
reduce emergency room visits, all of which result in cost
savings. The California Pan-Ethnic Health Network states that
this bill encourages partnerships between health providers and
community behavioral health and social service providers to
offer a person-centered interdisciplinary system of care that
effectively addresses the needs of enrollees with multiple
chronic or complex conditions. The California State
Association of Counties (CSAC) states in support that
currently, a dozen counties fund or manage health home
integrated programs for frequent hospital users, and have
realized medical cost savings as a result. CSAC believes
counties and the state can achieve significant cost savings
for the sickest and most expensive users of hospital care, all
without incurring state costs for erecting a health home
program.
5.Support if amended. The California Academy of Family
Physicians (CAFP) writes that they support this bill if it is
amended to ensure the health home model adheres to the proven
primary-care-based standard of successful health home models.
CAFP states that it is concerned that this bill is missing the
key role the primary care provider plays as the lead provider
in the health home model. According to CAFP, the primary care
provider is the unifying factor in all of the successful
medical home/health home pilots - they are the key in
improving quality and reducing costs. Specifically, CAFP is
requesting amendments to specify that health home teams must
include a physician and require a lead provider to be a
"primary care provider"
6.Opposition. The California Right to Life Committee, Inc.
(CRLC), states in opposition that one of the purposes of this
bill is to access better care and better health, while
decreasing costs. CRLC states this is a worthwhile purpose,
but the practical factor of decreasing costs must be
considered. CRLC questions whether this factor will encourage
the use of the Physician's Orders for Life Sustaining
Treatment for the very ill and homeless veterans or drug
addicts, and wonders how end of life care protocol will be
AB 361 | Page 14
followed.
SUPPORT AND OPPOSITION :
Support: Western Center on Law and Poverty (sponsor)
Corporation for Supportive Housing (co-sponsor)
AARP
Alameda County Board of Supervisors
American Federation of State, County and Municipal
Employees, AFL-CIO
A Community of Friends
California Association of Addiction Recovery Resources
California Association of Alcoholism and Drug Abuse
Counselors
California Black Health Network
California Communities United Institute
California Council of Community Mental Health Agencies
California Coverage and Health Initiatives
California Immigrant Policy Center
California Mental Health Directors Association
California Opioid Maintenance Providers
California Pan-Ethnic Health Network
California Primary Care Association
California State Association of Counties
Century Housing
Children Now
Children's Defense Fund - California
Children's Partnership
Community Clinic Association of Los Angeles County
Community Resource Center
Department of Human Services for the City of Oakland
Disability Rights California
Downtown Women's Center
First Place for Youth
Health Access California
Hitzke Development Corporation
Housing California
LeadingAge California
Los Angeles Business Leaders Task Force
Los Angeles Homeless Services Authority
Los Angeles Regional Reentry Partnership
National Association of Social Workers, California
Chapter
Non-Profit Housing Association of Northern California
Pacific Clinics
PICO California
San Diego Housing Commission
AB 361 | Page
15
San Diego Housing Federation
Santa Clara County Board of Supervisors
Senior Community Centers
St. Anthony Foundation
United Homeless Healthcare Partners
United Ways of California
100% Campaign
Oppose: California Right to Life Committee, Inc.
-- END --