BILL ANALYSIS Ó SB 18 Page 1 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. SB 18 Page 2 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 SB 18 Page 3 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 SB 18 Page 4 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 SB 18 Page 5