BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 361
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          CONCURRENCE IN SENATE AMENDMENTS
          AB 361 (Mitchell)
          As Amended September 6, 2013
          Majority vote
           
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          |ASSEMBLY:  |54-23|(May 30, 2013)  |SENATE: |28-8 |(September 10, |
          |           |     |                |        |     |2013)          |
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           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  








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               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  








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            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  








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          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  








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            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  








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          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 











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