BILL ANALYSIS Ó AB 361 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 361 (Mitchell) As Amended September 6, 2013 Majority vote ----------------------------------------------------------------- |ASSEMBLY: |54-23|(May 30, 2013) |SENATE: |28-8 |(September 10, | | | | | | |2013) | ----------------------------------------------------------------- Original Committee Reference: HEALTH SUMMARY : Authorizes the Department of Health Care Services (DHCS) to submit State Plan Amendments (SPAs) or Section 1115 waiver amendment to the federal Centers for Medicare and Medicaid Services for approval to implement a health home program for adults, children, or both, with chronic conditions pursuant to the federal Patient Protection and Affordable Care Act (ACA); Specifically, this bill : 1)Authorizes DHCS to determine the model of health home, 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. 2)Requires, subject to federal approval for receipt of enhanced federal matching funds, the services provided under the program 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 abuse care; c) Comprehensive transitional care from inpatient to other settings; d) Individual and family support, including with authorized representatives; e) 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 AB 361 Page 2 health needs, health 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. 3)Requires DHCS, if it creates a health home program, to determine if a SPA that targets adults and that meets the following criteria is operationally viable: a) Current diagnoses of chronic, physical health, mental health, or substance use disorders prevalent among frequent hospital users; and, b) A level of severity in conditions, as established by DHCS based on one or more of the specified factors. 4)Requires the determination of viability in 3) above to include consideration of whether it could be designed in a manner that minimizes General Fund (GF) impact, whether DHCS has the capacity to administer, and whether a sufficient provider network exists to provide services to the target population. 5)Establishes requirements for the home health providers or providers who plan to subcontract with health home team members that are to be selected by DHCS for the target population. 6)Permits health home providers eligible to serve targeted adults 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. 7)Requires DHCS to ensure that an evaluation is completed within two years after implementation. 8)Requires, if DHCS determines the SPA is not operationally viable, to notify the appropriate policy and fiscal committees of the Legislature within 120 days of that determination, of the reasons the program is not operationally viable and about current efforts underway by DHCS that help to address health care issues experienced by homeless Medi-Cal beneficiaries. 9)Authorizes DHCS to submit a SPA or waiver to target other AB 361 Page 3 adults as long as it creates a health home program for the identified target adults. 10)Conditions implementation on the availability of federal matching funds; requires the nonfederal share to be provided from other than state GF, such as local or private foundation funds unless DHCS projects that it can be implemented in a way that results in no net increase in GF costs. The Senate amendments : 1)Change the designation by DHCS of a lead provider from mandatory to discretionary. 2)Add 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, and other paraprofessionals, to the extent that contracting with these providers is allowed under federal Medicaid law, to the list that a lead provider may enter into contracts with. 3)Require health home providers to also establish noncontractual relationships with, and provide linkages to, housing providers. 4)Clarify that DHCS may seek Section 1115 waiver amendments, as well as SPAs for any health home program. 5)Clarify the determination of program viability as including whether DHCS has the capacity to administer the home health SPA through the state, a contracting entity, a county, or regional approach. 6)Delete the requirement that the design of other health home elements, including provider rates specific to the target population be in consultation with stakeholder groups. 7)Allow DHCS to revise or terminate the program if it fails to result in reduced inpatient stays, hospital admission rates, and emergency room visits. 8)Make other technical and clarifying changes. FISCAL EFFECT : According to the Senate Appropriations AB 361 Page 4 Committee, 1)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 for some or all of these costs. 2)Ongoing costs likely in the hundreds of thousands to millions of dollars to oversee and administer the program. 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% GF, 50% federal funds). 3)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 costs 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 GF money is used, this is a reasonable assumption. 4)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, (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 AB 361 Page 5 sufficient to fully fund the ongoing costs of implementation. COMMENTS : According to the author, this bill will allow the state to access federal funding for "Health Home Services" for Medi-Cal beneficiaries, while ensuring the state targets beneficiaries with chronic medical, mental health, or substance abuse conditions who are chronically homeless or frequent hospital users. This bill takes advantage of the "Health Home" option offering states 90% federal money for two years for services such as intensive case management and care coordination and provides options for ongoing funding should these health homes demonstrate decreased costs. The author points out that the Health Home option is an ideal vehicle for providing appropriate health-related services and social service supports to overlapping populations of people who are chronically homeless and to people who are frequent hospital users. The author states that many among this group experience a combination of chronic medical, mental health, and substance abuse conditions, as well as social issues that negatively impact their ability to access care. The sponsor, Corporation for Supportive Housing (CSH), states that California spends significant Medi-Cal resources on a small group of beneficiaries. According to data CSH reviewed, about 1,000 Medi-Cal beneficiaries who frequently used hospitals for reasons that could be avoided with better access to care (frequent users) incurred over $100,000 in Medi-Cal costs in 2007 alone. CSH states that in administering the Initiative, a foundation-funded five-year program, supporting six projects offering community-based multidisciplinary services to frequent users, evidence showed medical home services alone are ineffective in addressing the needs of this population. CSH cites a Lewin Group evaluation of the Initiative showing that frequent users experience psychosocial complexities, like chronic disease, mental disability, substance addiction, social isolation, and homelessness. According to the sponsor, intensive face-to-face services that coordinate and help frequent users manage their care not only improved health outcomes among these individuals, but significantly decreased hospital costs. Medi-Cal beneficiaries participating in the Initiative programs experienced a 60% decrease in emergency room visits and a 69% decrease in inpatient days. 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. These evaluations and studies also demonstrated significantly improved AB 361 Page 6 health outcomes, decreased nursing home stays, and longer life spans among participants. The author further states that chronically homeless people and frequent users who are homeless have such poor health outcomes that they die, on average, 30 years younger than life expectancy in this country. For these reasons, medical home services alone cannot sufficiently address the myriad of barriers these populations face in accessing appropriate care. The author points out that with the addition of comprehensive case management, hospital discharge planning, and connection to social services, including housing, enhanced medical home programs have proved to reduce high-cost care among the most vulnerable Californians. Social services interventions, like connecting participants to housing, are a critical step to reducing the costs and improving the care of homeless frequent users. According to the author, programs offering health home services to frequent users integrate primary and behavioral health care, foster a "whole person" approach, and reduce health disparities. The ACA allows states to elect the health home option in their Medicaid program and 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: 1) having at least two chronic conditions; 2) having one chronic condition and are at risk of having a second chronic condition; or, 3) having one serious and persistent mental health condition. The Federal guidance 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. Analysis Prepared by : Marjorie Swartz / HEALTH / (916) 319-2097 FN: 0002655 AB 361 Page 7