BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
AB 361 (Mitchell) - Medi-Cal: Health Homes for Medi-Cal
Enrollees and Section 1115 Waiver Demonstration Populations with
Chronic and Complex Conditions.
Amended: June 19, 2013 Policy Vote: 7-2
Urgency: No Mandate: No
Hearing Date: August 12, 2013
Consultant: Brendan McCarthy
This bill meets the criteria for referral to the Suspense File.
Bill Summary: AB 361 would authorize the Department of Health
Care Services to establish a program to provide specified health
home services for certain Medi-Cal enrollees, with the intent of
reducing avoidable hospitalization or use of emergency medical
services.
Fiscal Impact:
One-time administrative costs likely in the hundreds of
thousands of dollars to develop program guidelines,
determine eligibility standards, adopt a Medicaid State Plan
Amendment, and select providers. The Department has about
$650,000 in available federal planning grant funding that
may be used some or all of these costs.
Ongoing costs likely in the hundreds of thousands to
millions of dollars to oversee and administer the program.
The bill requires that all costs to implement the program be
funded with non-state public funds or private funds for the
first eight quarters of implementation. After the first
eight quarters, should the Department elect to continue
implementation of the program, administrative costs would be
funded at the standard federal financial participation rate
(50% General Fund, 50% federal funds).
One-time costs in the low millions of dollars to perform an
evaluation of program outcomes during the first eight
quarters. The Department indicates that prior program
evaluations similar in scope have cost between $1 million
and $5 million. The sponsors indicate that the most likely
source of funding for the evaluation and any other
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administrative costs is foundation funding. Based on the
requirement in the bill that the program only be implemented
if no additional General Fund money is used, this is a
reasonable assumption.
The long-term program costs are unknown, but likely to be
cost-neutral to the state. Under the health home option in
federal law, enhanced federal financial participation at 90%
is available for the first eight quarters of program
implementation - increasing state funding that can be used
for the program. On the other hand, federal law and guidance
requires health home programs to provide more intensive
services than are typically provided by Medi-Cal. The intent
of the bill is to both improve health outcomes for
participants and to reduce overall costs, by providing more
intensive primary care and support services while reducing
costly hospitalization and emergency medical services. Based
on other programs similar in nature, including the Frequent
Users of Health Services Initiative, this is a reasonable
assumption. In addition, the bill requires the Department to
continue implementation of the program after the initial
eight quarters only if it finds that the avoided costs are
sufficient to fully fund the ongoing costs of
implementation.
Background: Under the federal Patient Protection and Affordable
Care Act (Affordable Care Act), states are authorized to
implement health home programs. Under federal law, health home
programs are required to provide specified services to target
populations that have serious chronic conditions (including
mental health conditions). The services provided under health
homes are more intensive than typical for state Medicaid
programs, and include intensive case management, transitional
care, patient and family support, and referral to social
services. In return for providing more intensive services,
states are eligible for enhanced federal financial participation
at 90% of costs for the first eight quarters of program
implementation.
The Department has been exploring the potential to implement a
health home program in the state. Work done by a consultant to
the Department identified several options for providing health
home services - for example through California Children's
Services Special Care Centers, county mental health plans,
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managed care systems, and others.
Proposed Law: AB 361 would authorize the Department of Health
Care Services to implement a health home program for specific
Medi-Cal enrollees.
Specific provision of the bill would:
Authorize the Department to design a health home program
and designate eligible providers;
Authorize the Department to submit a state plan amendment
to the federal government;
Define the population eligible for health homes, based on
specified diagnoses (including mental health disorders,
substance abuse, chronic or life-threatening conditions, and
cognitive impairments) and indications of severity
(including frequent hospitalization, excessing use of
emergency services, chronic homelessness, and others);
Authorize the Department to limit the program to certain
geographic areas and to use both managed care and
fee-for-service models;
List the types of services that must be provided;
Authorize the Department to require that the lead provider
be a community clinic, a provider of mental health services,
or a hospital;
Require that if the Department creates a Health Home
Program under the bill, the Department shall determine
whether such a program that targets adults is operationally
viable;
Require the Department to prepare a program evaluation;
Require that the bill only be implemented to the extent
federal matching funds are available;
Require that the program only be implemented if no
additional General Fund monies are used to fund
administrative costs or services, unless the Department
determines that the ongoing operation of the program will
not result in additional General Fund spending. (In other
words, if the Department determines that ongoing operation
of the program will reduce overall General Fund spending on
the participating population, General Fund monies may be
used for the program.);
Authorize the Department to terminate implementation of the
program after the initial eight quarters if it finds that
the program does not result in avoided costs to Medi-Cal
sufficient to offset program costs;
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Authorize the Department to implement the bill through
emergency regulations.
Related Legislation: AB 2266 (Mitchell, 2012) would have
required the Department of Health Care Services to establish a
program to provide specified health home services, with the
intent of reducing avoidable hospitalization or use of emergency
medical services. That bill died on the Senate Inactive File.
Staff Comments: As noted above, the bill generally requires
implementation to occur without the expenditure of additional
General Fund monies. There are indications that existing federal
grant funds and potential foundation funding will be available
to pay for the additional administrative costs of setting up the
program.