BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 18
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          Date of Hearing:   July 2, 2014

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                  Mike Gatto, Chair

                   SB 18 (Hernandez) - As Amended:  June 18, 2014 

          Policy Committee:                             HealthVote:13-5

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:              No

           SUMMARY  

          This bill requires the Department of Health Care Services (DHCS)  
          to accept private foundation money as the nonfederal share of  
          costs for activities related to outreach for Medi-Cal renewals,  
          and appropriates funding for this purpose.  Specifically, this  
          bill:

          1)Requires DHCS to accept private contributions of at least $6  
            million for Medi-Cal renewal assistance starting January 1,  
            2015, and requires these funds to be deposited in the  
            Healthcare Outreach and Medi-Cal Enrollment Account.

          2)Appropriates $6 million for the specified purposes to DHCS, to  
            be available for encumbrance or expenditure until December 31,  
            2016.

          3)Allows DHCS to expend a portion of funds previously authorized  
            pursuant to subdivision (d) of Section 5 of Chapter 361 of the  
            Statutes of 2013 on administration of the bill's requirements.  
             

          4)Requires renewal assistance payments to be distributed to  
            community-based organizations providing renewal assistance to  
            Medi-Cal beneficiaries, requires payments to be made to  
            counties for distribution of funds to community-based  
            organizations, and allows counties to retain funding for  
            administrative costs.

          5)Specifies the funds allocated are for the specified purposes  
            only and may supplement, but shall not supplant, existing  
            local, state, and foundation funding for these purposes. 









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          6)Requires DHCS to seek federal matching funds and, to the  
            extent federal funding is received, requires reimbursements be  
            made in compliance with federal law.

           FISCAL EFFECT  

          1)Expected expenditures of up to $12 million beginning in  
            January 2015 (assuming costs are shared 50% private foundation  
            funding, 50% federal funds) on grants to community-based  
            organizations to assist with Medi-Cal renewal.  This bill  
            appropriates $6 million from the specified special fund (the  
            Healthcare Outreach and Medi-Cal Enrollment Account, which was  
            created through an uncodified trailer bill section, Section 5  
            of SB 101 (Committee on Budget), Chapter 361, Statutes of  
            2013).  It does not, however, appropriate potentially  
            available federal matching funds.

          2)Costs for Medi-Cal benefits in 2015 likely in the tens of  
            millions of dollars (GF/federal).  This estimate assumes the  
            renewal assistance effort results in significant numbers of  
            enrollees who otherwise would not have renewed their Medi-Cal  
            eligibility. The GF share of costs could be in excess of $10  
            million to the low tens of millions in the first year for  
            additional Medi-Cal benefits.  Actual GF costs would depend on  
            how many new renewals are generated for individual who  
            otherwise may not have renewed, and the corresponding federal  
            share of cost.  The one-time renewal assistance will likely  
            result in higher ongoing costs as well, since a greater number  
            of beneficiaries will likely maintain enrollment in the  
            program in future years.     
           
          3)To the extent greater continuous Medi-Cal enrollment results  
            in more beneficiaries receiving regular care for chronic  
            conditions, increased up-front benefits costs could  
            potentially be offset somewhat by fewer expensive  
            complications from uncontrolled chronic conditions.  Such  
            costs offsets would be nebulous, but could be reflected in  
            lower managed care payments in future years. 

           COMMENTS  

           1)Purpose  . According to the author, this bill provides the  
            mechanism necessary to obtain federal matching dollars for $6  
            million the California Endowment, a private foundation, is  
            willing to contribute to help individuals renew their Medi-Cal  








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            coverage.  The author states California has developed an  
            outreach and enrollment infrastructure of community-based  
            organizations and county employees who have assisted millions  
            of Californians to enroll in Covered California and Medi-Cal.   
            The author adds that these Californians will need to renew  
            their coverage in order to keep it for the year 2015. 

           2)Previous private contributions for Medi-Cal outreach and  
            enrollment.   In 2013, the California Endowment committed $26.5  
            million to the state in an effort to help increase and enhance  
            outreach and enrollment efforts in Medi-Cal.  Funding  
            supported enrollment assistance payments to individuals who  
            were certified by Covered California to assist people in  
            signing up for Medi-Cal, and to counties for new Medi-Cal  
            outreach and enrollment activities for targeted groups.  This  
            funding is intended to build on that outreach and enrollment  
            infrastructure.
                
            3)Medi-Cal Renewal  .  Medi-Cal is projected to expand from 7.9  
            million beneficiaries prior to implementation of the ACA, to  
            11.5 million by the end of fiscal year 2014-15.  Individuals  
            who are newly eligible are being determined so based on the  
            new Modified Adjusted Gross Income (MAGI) methodology required  
            by federal law.  The individuals already eligible, and whose  
            eligibility will be renewed in calendar year 2014, however,  
            were subjected to different eligibility methodology that is no  
            longer used in many cases. Therefore, most will be required to  
            provide different information than was previously required  
            because they will be assessed for renewal using the MAGI  
            methodology for the first time. Staff notes dollars will not  
            be available for renewal assistance in 2014 pursuant to the  
            January 1, 2015 date specified in this bill.

            There have been recent administrative delays in processing  
            renewals.  A February 2014 letter from DHCS instructs county  
            eligibility workers to put renewals on hold while processes  
            and forms are developed that can appropriately account for the  
            transition of previously eligible beneficiaries to the new  
            MAGI methodology.  Over the next several months, counties will  
            process the January through June 2014 renewals in addition to  
            the usual volume of renewals. The renewal forms developed for  
            this purpose have been criticized by beneficiary advocates as  
            confusing, long, and cumbersome.  
           
            4)Related Budget Actions  . The Assembly Subcommittee #1 on Health  








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            and Human Services heard the issue, "Medi-Cal Renewal  
            Assistance Grant from The California Endowment" and adopted  
            placeholder trailer bill language similar to this bill on May  
            5, 2014. The placeholder language required DHCS to accept the  
            $6 million contribution and seek matching federal funds.  The  
            Senate Subcommittee #3 on Health and Human Services took a  
            similar action at their May 8, 2014 hearing.  This language  
            was not, however, part of the enacted health trailer bills and  
            funding was not included in the DHCS budget for these  
            activities.  The language in this bill differs slightly from  
            the placeholder language adopted by the budget subcommittees.   
            The most substantive change from a state fiscal perspective is  
            the timing-beneficiaries renewing coverage in 2014 would all  
            have been previously eligible, and therefore benefits for  
            those renewing would be paid for on a 50% state, 50% federal  
            ratio.  This bill specifies funding must be accepted after  
            January 1, 2015.  A portion of beneficiaries renewing in 2015  
            will be the "optional expansion" population that is 100%  
            federally funded. 
                
            5)Support  . Advocates for low-income Medi-Cal beneficiaries argue  
            that Californians who used counselors for initial enrollment  
            in Covered California and Medi-Cal are likely to return to  
            these trusted sources when faced with renewing their coverage.  
            They believe Medi-Cal renewal forms currently in use are  
            particularly confusing and may take additional support. 

           6)Prior Legislation  . AB 82 (Committee on Budget), Chapter 23,  
            Statutes of 2013, the health budget trailer bill, authorizes  
            DHCS to accept contributions by private foundations in the  
            amount of at least $26.5 million, and to seek matching federal  
            funds, for the purposes of funding in-person enrollment  
            assistance payments and Medi-Cal outreach and enrollment  
            plans.

            SB 101 (Committee on Budget), Chapter 361, Statutes of 2013  
            appropriates funding for activities described in AB 82 and  
            establishes the Healthcare Outreach and Medi-Cal Enrollment  
            Account in the Special Deposit Fund.
          
           Analysis Prepared by  :    Lisa Murawski / APPR. / (916) 319-2081 












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