BILL ANALYSIS �
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THIRD READING
Bill No: AB 361
Author: Mitchell (D), et al.
Amended: 9/3/13 in Senate
Vote: 21
SENATE HEALTH COMMITTEE : 7-2, 7/3/13
AYES: Hernandez, Beall, De Le�n, DeSaulnier, Monning, Pavley,
Wolk
NOES: Anderson, Nielsen
SENATE APPROPRIATIONS COMMITTEE : 5-2, 8/30/13
AYES: De Le�n, Hill, Lara, Padilla, Steinberg
NOES: Walters, Gaines
ASSEMBLY FLOOR : 54-23, 5/30/13 - See last page for vote
SUBJECT : Medi-Cal: Health Homes for Medi-Cal Enrollees and
Section 1115
waiver demonstration populations with chronic and
complex
conditions
SOURCE : Corporation for Supportive Housing
Western Center on Law and Poverty
DIGEST : This bill permits the Department of Health Care
Services (DHCS) to establish a California Health Home Program
(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
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if federal financial participation is available and the federal
Centers for Medicare and Medicaid Services (CMS) approve the
state plan amendment.
ANALYSIS :
Existing law:
1. Establishes the Medi-Cal program, administered by DHCS, under
which qualified low-income individuals receive health care
services.
2. Authorizes, under the federal Patient Protection and
Affordable Care Act (ACA), 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% federal matching funds for the
first eight quarters the health home option is in effect.
Thereafter, the state's regular federal matching rate would
be in effect (typically 50% in California).
This bill:
1. Makes a number of legislative findings and declarations
including:
A. The Health Homes Program 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. 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
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determinants of health.
2. Permits DHCS, subject to federal approval, to do all of the
following to create a Health Home Program, as authorized
under the 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;
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 CMS for one
or more state plan amendments (SPAs) 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
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
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geographically.
3. Permits DHCS to design one or more SPA and any necessary
Section 1115 waiver amendments to provide health home
services to children or adults, or both, and, considering
consultation with stakeholders, develop the geographic
criteria, beneficiary eligibility criteria, and provider
eligibility criteria for each SPA.
4. Requires services provided under the Health Home Program,
subject to federal approval of the enhanced federal
reimbursement 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, 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.
5. Defines "health home," for purposes of this bill, as a
provider or team of providers designated by DHCS that meets
federal guidelines, offers a whole person approach, including
but not limited to, 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.
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6. Defines "Health Home Program" as all of the SPAs and relevant
waivers DHCS seeks and CMS approves.
7. 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, home health
agencies, nurse practitioners, physician's assistants, social
workers, and other paraprofessionals.
8. Requires health home teams to partner with, and provide
linkages to, housing navigators and housing providers.
9. Permits DHCS to 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.
10.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.
11.Defines "chronically homeless individual" as an unaccompanied
homeless individual with a condition limiting his/her
activities of daily living that 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/her residence.
12.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
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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.
13.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.
14.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,
within 120 days of that determination about current efforts
underway by DHCS that help to address health care issues
experienced by homeless Medi-cal beneficiaries.
15.Requires an SPA and any necessary Section 1115 waiver
amendments submitted pursuant to this bill to target 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.
16.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
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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:
(1) Reach out to and engage frequent hospital or
emergency department users and chronically
homeless eligible individuals;
(2) Link eligible individuals who are homeless
or experiencing housing instability to permanent
housing, such as supportive housing; and
(3) 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.
17.Permits DHCS to design additional provider criteria after
consultation with stakeholder groups who have expertise in
engagement and services for the targeted population.
18.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 private
providers to participate in this program.
19.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.
20.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.
21.Requires DHCS to administer the provisions of this bill in a
manner that attempts to maximize federal financial
participation, consistent with federal law.
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22.Requires, except as specified, 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.
23.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.
24.Specifies that the provisions of this bill 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.
25.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.
26.Requires DHCS to seek and to fund the creation,
implementation, and administration of the program with
funding other than state General Funds.
27.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.
28.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.
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29.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.
30.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.
31.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.
32.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.
Background
Federal law and guidance on State Option to Provide Health Homes
for Enrollees with Chronic Conditions . The ACA contains several
provisions to support and advance the medical home model of
care. One of these is entitled "State Option to Provide Health
Homes for Enrollees with Chronic Conditions," which establishes
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
will receive a 90% federal matching rate for two years for these
services. Federal law defines the individuals eligible for
health home services as individuals meeting one of the
following:
Having at least two chronic conditions;
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Having one chronic condition and are at risk of having a
second chronic condition; or
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:
Comprehensive care management;
Care coordination and health promotion;
Comprehensive transitional care, including appropriate
follow-up, from inpatient to other settings;
Patient and family support (including authorized
representatives);
Referral to community and social support services, if
relevant; and
Use of health information technology to link services, as
feasible and appropriate.
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 emergency
department use, reduction in hospital admissions and
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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.
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
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created pilot projects, reformed payment structures, invested in
health information technology, restructured Medicaid provider
systems, and included the medical home model in service
delivery.
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 Governor Brown. 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
patient's health care needs across the health care system. AB
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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.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
One-time administrative costs likely in the hundreds of
thousands of dollars to develop program guidelines, determine
eligibility standards, adopt a Medicaid SPA, and select
providers. DHCS 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. This 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 DHCS 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. DHCS 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 administrative costs is
foundation funding. Based on the requirement in this bill
that the program only be implemented if no additional General
Fund money is used, this is a reasonable assumption.
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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 this 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, this bill requires DHCS 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.
SUPPORT : (Verified 9/3/13)
Corporation for Supportive Housing (co-sponsor)
Western Center on Law & Poverty (co-sponsor)
AARP
AFSCME
A Community of Friends
Alameda County Board of Supervisors
ALS Association of Great Sacramento, Greater Orange County and
Greater San Diego
California Association of Addiction Recovery Resources
California Association of Alcohol and Drug Program Executives
California Association of Alcoholism and Drug Abuse Counselors
California Black Health Network
California Communities United Institute
California Council of Community Mental Health Agencies
California Immigrant Policy Center
California Mental Health Directors Association
California Opioid Maintenance Providers
California Pan Ethnic Health Network
California State Association of Counties
Century
Children Now
Children's Defense Fund - California
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City of San Diego
Community Clinic Association of Los Angeles County
Community Resource Center
County of Santa Clara, Board of Supervisors
Department of Human Services, City of Oakland
Disability Rights California
Downtown Women's Center
First Place for Youth
Health Access California
Hitzke Development Corporation
Home For Good
Housing California
Leading Age California
Los Angeles Homeless Services Authority
Los Angeles Regional Reentry Partnership
Mental Health America of California
National Association of Social Workers - California Chapter
Non Profit Housing Association of Northern California
Pacific Clinics
San Diego Housing Commission
San Diego Housing Federation
Senior Community Centers
St. Anthony Foundation
United Homeless Healthcare Partners
United Ways of California
ARGUMENTS IN 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% federal matching rate, and the
remaining 10% will be covered through private philanthropic
contributions. CSH states that Medi-Cal beneficiaries
participating in these programs experienced a 60% decrease in
emergency room visits and a 69% 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
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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 individuals
experiencing chronic homelessness face multiple barriers to
accessing appropriate health care. 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.
ASSEMBLY FLOOR : 54-23, 5/30/13
AYES: Alejo, Ammiano, Atkins, Bloom, Blumenfield, Bocanegra,
Bonilla, Bonta, Bradford, Brown, Buchanan, Ian Calderon,
Campos, Chau, Chesbro, Cooley, Daly, Dickinson, Fong, Fox,
Frazier, Garcia, Gatto, Gomez, Gonzalez, Gordon, Gray, Hall,
Roger Hern�ndez, Jones-Sawyer, Levine, Lowenthal, Maienschein,
Medina, Mitchell, Mullin, Muratsuchi, Nazarian, Nestande, Pan,
Perea, V. Manuel P�rez, Quirk, Quirk-Silva, Rendon, Salas,
Skinner, Stone, Ting, Weber, Wieckowski, Williams, Yamada,
John A. P�rez
NOES: Achadjian, Allen, Bigelow, Ch�vez, Conway, Dahle,
Donnelly, Beth Gaines, Gorell, Grove, Hagman, Harkey, Jones,
Linder, Logue, Mansoor, Melendez, Morrell, Olsen, Patterson,
Wagner, Waldron, Wilk
NO VOTE RECORDED: Eggman, Holden, Vacancy
JL:d:n 9/3/13 Senate Floor Analyses
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SUPPORT/OPPOSITION: SEE ABOVE
**** END ****
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