BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 471
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          Date of Hearing:  April 16, 2013

                            ASSEMBLY COMMITTEE ON HEALTH
                                 Richard Pan, Chair
                 AB 471 (Atkins) - As Introduced:  February 19, 2013
           
          SUBJECT  :  Medi-Cal: Program of All-Inclusive Care for the  
          Elderly.

           SUMMARY  :  Deletes the current limitation for the Department of  
          Health Care Services (DHCS) to enter into up to 15 contracts for  
          implementation of the Program of All-Inclusive Care for the  
          Elderly (PACE), in so doing, authorizes an unlimited number of  
          contracts.  

           EXISTING LAW  :  

          1)Creates, under federal law, PACE as a provider category  
            regulated by the Centers for Medicare and Medicaid Services  
            (CMS), and reimbursed under the Medicare and Medicaid  
            (Medi-Cal in California) programs.

          2)Establishes the Medi-Cal program, administered by DHCS, to  
            provide comprehensive health care and long-term services and  
            supports (LTSS) to pregnant women, children, and to seniors,  
            and people with disabilities (SPDs).

          3)Establishes Medicare as a federal health insurance program to  
            provide coverage to eligible individuals who are disabled or  
            over age 65.  

          4)Authorizes DHCS to contract with up to 15 public or private  
            nonprofit PACE organizations for implementation of the PACE  
            program to implement its responsibilities as the Medicaid  
            single state agency. 

          5)Establishes the PACE program as a Medi-Cal benefit, subject to  
            utilization controls and eligibility criteria that require  
            that the beneficiary be certified as eligible for nursing  
            facility services based on Medi-Cal criteria.

          6)Requires DHCS to establish Medi-Cal capitation rates to be  
            paid to each PACE organization that are no less than 90% of  
            the fee-for-service (FFS) equivalent cost.









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          7)Requires DHCS to seek federal approval to establish a pilot  
            program in up to eight  counties for Medi-Cal beneficiaries  
            who are dually eligible for Medicare and Medi-Cal (dual  
            eligibles), under which DHCS can require that dual eligibles  
            are assigned as mandatory enrollees into Medi-Cal managed care  
            (MCMC) plans. 

           FISCAL EFFECT  :  This bill has not been analyzed by a fiscal  
          committee.

           COMMENTS  :

           1)PURPOSE OF THIS BILL  .  According to CalPACE, the sponsor, this  
            bill is needed to remove the cap on the number of PACE  
            programs DHCS can contract with and will allow PACE to scale  
            up to meet the growing demand for PACE services by frail  
            seniors, and is consistent with the state's goal of expanding  
            models of integrated care for SPDs.  Current state law sets a  
            limit of 15 PACE programs in the state.  The number of PACE  
            programs is rapidly approaching the 15-program limit.   
            Currently, six PACE programs operate in seven counties.  Two  
            additional programs are expected to start operation in 2013.  
            There are an additional four programs that are in the  
            application stage and several other organizations are actively  
            exploring developing PACE programs.  

           2)BACKGROUND  .  PACE programs are comprehensive community-based  
            care models for frail, chronically ill older adults whose  
            significant functional and cognitive impairments make them  
            nursing home eligible.  The first PACE program, On Lok,  
            started in the Chinatown section of San Francisco in 1971.   
            Begun as an alternative to nursing home care in the Chinese  
            community, where institutionalization was a culturally  
            unacceptable option, it was a day health center where older  
            adults could receive health care supervision, social services,  
            and hot meals, then return to their own homes in the evening.   
            In 1979, On Lok launched a Medicare-funded demonstration of  
            the consolidated model of long-term care.  In this model, the  
            program's interdisciplinary team develops, coordinates, and  
            provides all medical and social services for participants.  In  
            1997, PACE became a permanent provider type under both  
            Medicare and Medicaid.  

          The dual recognition by Medicare and Medi-Cal allows integration  
            of comprehensive services, including acute and LTSS.  PACE  








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            offers and manages all the medical, social and rehabilitative  
            service needs of enrollees to preserve or restore  
            independence, to allow them to remain in their homes and  
            communities, and to maintain their quality of life.  The PACE  
            service package must include all Medicare and Medicaid  
            services provided by the state.  In addition, PACE  
            organizations provide any service determined necessary by an  
            interdisciplinary team.  Minimum services that must be  
            provided in PACE centers include primary care services, social  
            services, restorative therapies, personal care and supportive  
            services, nutritional counseling, recreational therapy, and  
            meals.  Services are available 24 hours a day, 7 days a week,  
            and 365 days a year.  Generally, these services are provided  
            in an adult day health center setting, but may also include  
            in-home and other referral services that enrollees may need.   
            This includes such services as medical specialists, laboratory  
            and other diagnostic services, and nursing home care.  
            Participants must be at least 55 years old, live in the PACE  
            service area, and be certified as eligible for nursing home  
            care.  Enrollment in PACE is voluntary.  PACE receives a fixed  
            monthly payment per enrollee from Medicare and Medicaid for  
            those who are dually eligible.  The amounts are the same  
            during the contract year, regardless of the services an  
            enrollee may need.  Persons enrolled in PACE may also have to  
            pay a monthly premium, depending on their eligibility for  
            Medicare and Medicaid.  The Coordinated Care Initiative (CCI  
            or now renamed MediConnect) will follow a similar model,  
            although under CCI, plans will not initially be at full risk  
            for all LTSS.  Also unlike any other MCMC plan, PACE plans are  
            authorized to accept full-risk capitation without obtaining a  
            Knox-Keene Health Care Service Plan Act of 1975 license from  
            the Department of Managed Health Care.  

           3)CCI  .  The 2012-13 Budget, as passed by the Legislature and  
            signed by the Governor included a modified version of the  
            Administration's 2012-13 Budget CCI proposal to expand the  
            dual demonstration projects, originally authorized in SB 208  
            (Steinberg) , Chapter 714, Statutes of 2010, in up to four  
            counties.  The provisions, as modified by the Legislature, are  
            contained in SB 1008 (Budget and Fiscal Review Committee),  
            Chapter 33, Statutes of 2012, and SB 1036 (Budget and Fiscal  
            Review Committee), Chapter 45, Statutes of 2012, both of which  
            passed the Legislature and were signed by the Governor on June  
            27, 2012.  SB 1008 included:
             a)   Authorization of the demonstration project in up to  








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               eight counties, to begin no sooner than March 1, 2013, and  
               requires DHCS to consult with the Legislature, federal  
               government, and stakeholders when determining the  
               implementation date;

             b)   Legislative intent for the demonstration project to  
               expand statewide within three years of the start of the  
               demonstration project and that expansion beyond the initial  
               eight counties be contingent upon statutory authorization  
               and a subsequent budget appropriation;

             c)   A requirement that dual beneficiaries be enrolled into a  
               demonstration site unless the beneficiary makes an  
               affirmative choice to opt out of enrollment or is enrolled  
               in the PACE Program or an AIDS Healthcare Foundation plan  
               as specified, or is otherwise exempt;

             d)   Provisions to allow dual beneficiaries who opt out of  
               enrollment in a demonstration site to choose to remain in  
               FFS Medicare or a Medicare Advantage (MA) plan for their  
               Medicare benefits, but shall be mandatorily enrolled into a  
               MCMC health plan for Medi-Cal benefits, with specified  
               exceptions;

             e)   A requirement, conditioned on federal approval, that a  
               beneficiary must remain enrolled in the Medicare portion of  
               the demonstration project on a mandatory basis for six  
               months from the date of initial enrollment and requirement  
               for continuity of care provisions;

             f)   A requirement that in the 2013 calendar year,  
               beneficiaries in MA and MA Special Needs Plans be exempt  
               from mandatory enrollment in the demonstration project, but  
               may voluntarily choose to enroll in the demonstration  
               project;

             g)   A requirement that dual eligibles be assigned as  
               mandatory enrollees into new or existing MCMC health plans  
               for their Medi-Cal benefits in counties participating in  
               the dual demonstration projects only, with specified  
               exemptions; and,

             h)   A requirement that, no sooner than March 1, 2013, all  
               Medi-Cal LTSS services, as defined, shall be services that  
               are covered under managed care plan contracts and shall be  








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               available only through managed care plans to beneficiaries  
               residing in counties participating in the dual  
               demonstration counties only.

           4)Cal MEDIConnect  .  Federal approval for the California  
            Demonstration to Integrate Care for Dual Eligible  
            beneficiaries was received on March 27, 2013 in the form of a  
            Memorandum of Understanding (MOU), to test a capitated  
            financial alignment model and coordinate and integrate LTSS,  
            including IHSS.  This component is the framework for the  
            demonstration allowing the combination of all Medicare and  
            Medi-Cal benefits into one plan.  The MOU contains several  
            changes from the state's original proposal.  Enrollment will  
            begin no earlier than October 2013.  Beneficiaries would begin  
            receiving notices about their choices and upcoming changes no  
            earlier than July 2013.  Beneficiaries who enroll in a Cal  
            MediConnect health plan can opt out at any time.  California  
            originally proposed an initial six-month period, during which  
            eligible beneficiaries would have been required to remain in  
            the same health plan.  The MOU allows for 456,000 total  
            beneficiaries to be eligible for enrollment into the Cal  
            MediConnect program.  This is almost half the size called for  
            in the Governor's 2012-13 Budget Proposal of January 2012.   
            The number of enrollees in Los Angeles County will be capped  
            at 200,000 and enrollment will occur over a 15 month period.   
            There are also specified exempt populations, such as persons  
            with developmental disabilities receiving services through a  
            regional center, persons enrolled in specified waiver  
            programs, and except in San Mateo and Orange counties, persons  
            with end stage renal disease.  In San Mateo enrollment will be  
            completed by January 1, 2014 and in the other six counties,  
            enrollment will be over a 12 month period.  

          Enrollment will be passive, meaning that an eligible individuals  
            will be notified of their right to select a plan no fewer than  
            60 days prior to the effective date of enrollment, and will  
            have the opportunity to opt out up until the last day of the  
            month prior to the effective date of enrollment.  When no  
            active choice has been made, enrollment into a plan may be  
            conducted using a seamless, passive enrollment process that  
            provides the opportunity for beneficiaries to make a voluntary  
            choice to enroll or disenroll from the plan at any time.   
            Prior to the effective date of their enrollment, individuals  
            who would be passively enrolled will have the opportunity to  
            opt out and will receive sufficient notice and information  








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            with which to do so.  The MOU further provides that  
            individuals enrolled in PACE are exempt from passive  
            enrollment, but may enroll in the Demonstration after they  
            have disenrolled from PACE. 

          In August of 2012, DHCS informed CMS of its intent to expand  
            PACE from the five contracts at 24 operational centers in  
            seven counties to additional counties and communities.  DHCS  
            further stated that based on PACE's long track record with  
            proven results and the necessary strengths to improve outcome,  
            DHCS had taken steps to implement an expedited PACE enrollment  
            process proposed by the sponsors of this bill.  This includes  
            phasing out enrollment caps and streamlined application review  
            timeframes.  

           5)SUPPORT  .  According to the sponsor, CalPACE, and other  
            supporters such as On Lok Senior Health Services, Sutter  
            SeniorCare PACE, St. Pauls Homes and Services for the Aging,  
            and AltaMed Health Services, the PACE model is centered on the  
            belief that it is better for the well-being of seniors with  
            chronic care needs and their families to be served in the  
            community whenever possible.  According to these supporters,  
            PACE serves individuals who are age 55 or older who are  
            certified by the state to need nursing home care and who are  
            able to live safely in the community at the time of  
            enrollment.  These supporters point out that although all PACE  
            enrollees must be certified to need nursing home care to  
            enroll in PACE, only 5-7% of PACE enrollees reside in a  
            nursing home at any given time.  If a PACE enrollee does need  
            nursing home care, the PACE program pays for it and continues  
            to coordinate the enrollee's care.  The supporters point out  
            that removing the cap on the number of programs will allow  
            PACE to scale up to meet the growing demand for PACE services  
            by frail seniors, and is consistent with the state's goal of  
            expanding models of integrated care for SPDs.

           6)RELATED LEGISLATION  .  AB 518 (Yamada) establishes  
            Community-Based Adult Services (CBAS) as a benefit in the  
            Medi-Cal program.  Specifies the criteria for eligibility,  
            requires that CBAS be provided at licensed Adult Day Health  
            Centers certified by the DHCS as CBAS providers as specified.   
            Requires CBAS providers to meet specified standards and,  
            beginning July 1, 2015, have a non-profit status.  AB 518 is  
            pending in the Assembly Health Committee. 









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           7)PREVIOUS LEGISLATION  . 
             a)   AB 574 (Bonnie Lowenthal),Chapter 367, Statues of 2011,  
               increases the maximum number of allowable contracts between  
               the DHCS and PACE from 10 to 15 programs and updates the  
               statutes to reflect PACE's status change from a  
               demonstration project to a Medi-Cal optional benefit.
             b)   AB 2206 (Atkins) of 2011 would have authorized  
               disenrollment, regardless of any lock-in, of a person who  
               in any demonstration project established by DHCS for dually  
               eligibles, becomes eligible for PACE while enrolled in a  
               managed care plan participating in the demonstration  
               project and would have allowed the person to enroll in a  
               PACE plan and would have required managed care plans to  
               identify, through required assessments, enrollees who are  
               55 years of age and older who are at risk of being placed  
               in a nursing home and required the plan to notify the  
               person of their potential eligibility for PACE.  AB 2206  
               was vetoed by the Governor who stated that PACE provides  
               fully integrated care to people age 55 and older who need  
               skilled nursing home type care, but can live in a community  
               setting; that California was the pioneer for PACE programs  
               in the nation, having started the first one of its kind in  
               the early 1970's.  He further stated that he had signed AB  
               574 to expand PACE, so that more providers could use this  
               model and gives aging Californians the benefits of fully  
               integrated care.  Since that time, his administration has  
               embarked on a large scale effort to coordinate care for  
               people who qualify for both the Medi-Cal and Medicare  
               programs.  The CCI will similarly build on the integrated  
               care concept, using managed care plans to break down the  
               silos that currently exist between medical and long-term  
               care.  Within this effort, there will be ample opportunity  
               for PACE to continue its mission and thrive as a model of  
               care.  The Governor wrote that he will direct his  
               Administration to involve PACE providers as the initiative  
               rolls out.  Enacting special provisions for PACE  
               eligibility and referral is not necessary at this time. 
             c)   SB 1008 and SB 1036 authorize the CCI as an eight-county  
               pilot project to: i) integrate Medi-Cal and Medicare  
               benefits under managed care for dual eligibles; and, ii)  
               integrate LTSS under managed care for dual eligibles and  
               Medi-Cal-only SPDs.
             d)   SB 208 (Steinberg) implements the Section 1115(b)  
               Medicaid Demonstration Waiver from CMS entitled "A Bridge  
               to Reform Waiver."  Among the provisions, this waiver  








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               authorized mandatory enrollment into MCPs of over 600,000  
               low-income SPDs who are eligible for Medi-Cal only (not  
               Medicare) in 16 counties.

           REGISTERED SUPPORT / OPPOSITION  :  

           Support 

           CalPACE (sponsor)
          AltaMed Health Services
          Brandman Centers for Senior Care
          California Advocates for Nursing Home Reform
          California Hospital Association
          On Lok Senior Health
          St. Pauls Homes and Services for the Aging
          Sutter SeniorCare PACE

           Opposition 
           
          None on file.
           
          Analysis Prepared by  :    Marjorie Swartz / HEALTH / (916)  
          319-2097