BILL ANALYSIS                                                                                                                                                                                                    Ó






                             SENATE COMMITTEE ON HEALTH
                          Senator Ed Hernandez, O.D., Chair

          BILL NO:       SB 18
          AUTHOR:        Leno and Hernandez 
          AMENDED:       August 18, 2014
          HEARING DATE:  August 27, 2014
          CONSULTANT:    Bain

          PURSUANT TO SENATE RULE 29.10.

           SUBJECT  :  Medi-Cal renewal.
           
          SUMMARY  : Requires the Department of Health Care Services to  
          accept contributions by private foundations in the amount of at  
          least $6 million for the purpose of providing Medi-Cal renewal  
          assistance payments starting January 1, 2015. Requires  
          authorized payments to be made to counties by DHCS for  
          distribution of funds to community-based organizations providing  
          renewal assistance to Medi-Cal beneficiaries.

          Existing law:
          1.Establishes the Medi-Cal program, which is administered by the  
            Department of Health Care Services (DHCS), under which  
            qualified low-income individuals receive health care services.  


          2.Requires, pursuant to AB 82 (Committee on Budget), Chapter 23,  
            Statutes of 2013, DHCS to accept funding from private  
            foundations in the amount of at least $12.5 million to provide  
            allocations for the management and funding of Medi-Cal  
            outreach and enrollment plans.

          3.Establishes the Healthcare Outreach and Medi-Cal Enrollment  
            Account (Account) to collect and allocate non-General Fund  
            (GF) public or private grant funds for expenditure, upon  
            appropriation of the Legislature, for outreach to and  
            enrollment of target Medi-Cal populations and to compensate  
            Medi-Cal in-person assisters. Sunsets this provision January  
            30, 2018.

          4.Requires counties, except where the county has facts clearly  
            demonstrating that a Medi-Cal beneficiary cannot be eligible  
            for Medi-Cal due to an event, such as death or change of state  
            residency, to perform redeterminations of eligibility for  
            Medi-Cal beneficiaries every 12 months, and to promptly  
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          SB 18 | Page 2




            redetermine eligibility whenever the county receives  
            information about changes in a beneficiary's circumstances  
            that may affect eligibility for Medi-Cal benefits.
          
          5.Required DHCS to seek federal approval to extend the annual  
            redetermination date for a three-month period for those  
            Medi-Cal beneficiaries whose annual redeterminations were  
            scheduled to occur between January 1, 2014, and March 31,  
            2014.

          This bill:
          1.Requires DHCS to accept contributions by private foundations  
            in the amount of at least $6 million for the purpose of  
            providing Medi-Cal renewal assistance payments starting  
            January 1, 2015. 

          2.Requires these contributions to be deposited in the Account  
            that has been created in the Special Deposit Fund within the  
            State Treasury for the purposes specified in this bill.

          3.Appropriates to DHCS the following sums for the purposes  
            specified in this bill:

                  a.        $6 million from the Healthcare Outreach and  
                    Medi-Cal Enrollment Account, to be available for  
                    encumbrance or expenditure until December 31, 2016;  
                    and,
                  b.        $6 million from the Federal Trust Fund, to be  
                    available for encumbrance or expenditure until  
                    December 31, 2016.

          4.Permits DHCS to expend a portion of the $500,000 authorized  
            for expenditure by SB 101 (Committee on Budget and Fiscal  
            Review, Chapter 361, Statutes of 2013) to administer the  
            activities described in this bill. Requires private foundation  
            funding expended by DHCS to administer the activities  
            described in this bill to be expended only for filled  
            positions and administrative expenses directly related to this  
            bill.

          5.Permits DHCS to make allocations to fund Medi-Cal renewal  
            assistance activities as described in this bill in a manner  
            that the DHCS director provides. Permits DHCS to determine the  
            number of allocations and the application process, and permits  
            the DHCS director to consult or obtain technical assistance  
            from private foundations in implementation of the application  




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            and allocation process.

          6.Permits the DHCS director, at his or her discretion, to give  
            consideration to distributing funds to community-based  
            organizations (CBOs) in an area or region of the state if a  
            county or counties, acting jointly, do not seek an allocation  
            or if funds are made available.

          7.Requires renewal assistance payments to be distributed to CBOs  
            providing renewal assistance to Medi-Cal beneficiaries.  
            Requires authorized payments to be made to counties by DHCS  
            for distribution of funds to CBOs. Permits counties to retain  
            an amount for administrative costs that have been approved by  
            DHCS.

          8.Requires DHCS, in collaboration with the County Welfare  
            Directors Association and legal services organizations, to  
            develop renewal assistance training for employees of CBOs that  
            are consistent with the counties' human services agencies  
            Medi-Cal redetermination timeframes and process. Requires CBO  
            employees providing assistance to have completed the renewal  
            assistance training in order to be eligible for renewal  
            assistance payments under this bill.

          9.Requires the funds allocated under this bill to be used only  
            for the Medi-Cal renewal assistance activities and may  
            supplement, but not supplant, existing local, state, and  
            foundation funding of county renewal assistance activities.

          10.Permits DHCS to recoup or withhold all or part of an  
            allocation for failure to comply with any requirements or  
            standards set forth by DHCS for the purposes of this bill.

          11.Requires DHCS to require progress reports, in a manner as  
            determined by DHCS, from those receiving allocations under  
            this bill.

          12.Requires DHCS to seek federal matching funds for the  
            contributions to the extent permissible for training, testing,  
            certifying, supporting, and compensating persons and entities  
            providing renewal assistance and for any other permissible  
            renewal assistance related activities and to seek all  
            necessary federal approvals for purposes of obtaining federal  
            funding for activities conducted under this bill.





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          13.Requires, to the extent federal funding is received for the  
            services specified in this bill, reimbursements for costs  
            incurred under the approved allocations to be made in  
            compliance with federal law.

          14.Permits DHCS to implement, interpret, or make specific this  
            section by means of all-county letters, provider bulletins, or  
            similar instructions without adopting regulations pursuant to  
            the Administrative Procedures Act.

          15.Requires this bill to cease to be implemented when all of the  
            private contributions and any federal matching funds have been  
            exhausted.

          FISCAL EFFECT  :  According to the Assembly Appropriations  
          Committee:

          1.Expenditures of $12 million beginning in January 2015  
            (assuming costs are shared 50 percent private foundation  
            funding, 50 percent federal funds) on grants to CBOs 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) and $6  
            million in 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 individuals 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  




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            costs offsets would be nebulous, but could be reflected in  
            lower managed care payments in future years.

           COMMENTS  :  
           1.Author's statement. According to the author, as part of its  
            work in leading the nation on the implementation of the  
            Affordable Care Act, California has developed an outreach and  
            enrollment infrastructure of CBOs and county employees. These  
            organizations and county employees have assisted millions of  
            Californians enroll in Covered California and Medi-Cal.  These  
            Californians will need to renew their coverage in order to  
            keep it for 2015.  Renewal assistance will be particularly  
            important in 2014 and 2015 as existing Medi-Cal families move  
            from welfare-based income and household rules to tax-based  
            rules. Additional support will be needed to help families  
            complete these forms and continue Medi-Cal enrollment. Keeping  
            eligible beneficiaries enrolled in coverage assures ongoing  
            access to medically necessary care and reduces administrative  
            overhead due to avoidable churning of enrollment. 


          2.Medi-Cal Expansion. On March 23, 2010, President Obama signed  
            the Affordable Care Act (ACA) into law (Public Law 111-148),  
            as amended by the Health Care and Education Reconciliation Act  
            of 2010 (Public Law 111-152). The ACA greatly expands health  
            insurance coverage in California, resulting in millions of  
            low- and middle-income Californians gaining access to coverage  
            under the expansion of Medi-Cal, through easier enrollment  
            requirements established for Medi-Cal, and through premium and  
            cost-sharing subsidies offered through the California Health  
            Benefit Exchange (known as Covered California). The new  
            requirements for California's Medi-Cal program established by  
            the ACA include:


             a.   Requiring Medicaid coverage of adults under age 65 who  
               are not currently eligible with incomes up to 138 percent  
               of the Federal Poverty Level (FPL) or below $15,856 in 2013  
               for an individual (the Supreme Court ruling in National  
               Federation of Independent Business v. Sebelius in June 2012  
               effectively allowed states to opt-out of the expansion);
             b.   Requiring primary care rates to be equal to Medicare  
               rates for 2013 and 2014;
             c.   Extending Medi-Cal coverage to former foster youth up to  
               age 26; 




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             d.   Allowing individuals to apply for Medi-Cal in person,  
               via phone, by mail, and through the Internet or facsimile; 
             e.   Eliminating the asset test for certain groups of  
               applicants to Medi-Cal; and, 
             f.   Establishing a new methodology for counting income in  
               Medi-Cal, known as modified adjusted gross income (MAGI). 

            AB X1 1 (Pérez), Chapter 3, Statutes of 2013, implemented the  
            Medi-Cal expansion to adults without minor children who are  
            under age 65. In the 2014 May Budget Revise, DHCS estimated  
            1.4 million newly eligible beneficiaries will enroll in  
            Medi-Cal by June 2014, growing to 1.6 million by June 2015  
            (DHCS refers to this population as the "optional expansion"  
            population, and benefit costs for this population is 100  
            percent federally funded for the first three years of the  
            expansion, declining to 90 percent in 2020). 

            In addition, DHCS expects the eligibility simplification and  
            outreach efforts to result in a significant number of  
            currently eligible but not enrolled Medi-Cal beneficiaries  
            becoming certified eligibles (DHCS refers to this population  
            as the "mandatory expansion" population). DHCS estimates an  
            additional 630,798 eligibles will have enrolled in Medi-Cal by  
            June 2014, growing to 826,950 by June 2015.  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.  

            Despite the increase in Medi-Cal enrollment, the enrollment  
            process has been lengthy for many individuals and has been a  
            subject of concern from Medi-Cal applicants, legal services  
            entities, health care providers and advocates, and the federal  
            Centers for Medicare and Medicaid Services. The number of  
            pending Medi-Cal applications was 900,000 in March 2014,  
            600,000 at the end of June, and there was 401,000 people with  
            pending applications as of August 4, 2004.


          1.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. The 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. AB 82  




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            (Committee on Budget), Chapter 23, Statutes of 2013, the  
            health budget trailer bill, authorized 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.


          2.Support.  The Western Center on Law and Poverty (WCLP), a  
            co-sponsor of this bill, states that the role of CBOs in  
            assisting consumers with enrollment into Medi-Cal has been  
            critical to the progress California has made in expanding the  
            program and streamlining eligibility rules. WCLP states it is  
            similarly important to have CBOs assist beneficiaries in  
            renewing their Medi-Cal coverage, particularly given the shift  
            under the ACA to MAGI eligibility rules. WCLP states that  
            there are different eligibility rules for children and adults  
            that could result in families having parents enrolled in a  
            Covered California plan and children enrolled in Medi-Cal. As  
            such, renewal assistance is vital to ensure eligible children  
            keep their Medi-Cal coverage. WCLP asserts that the new  
            Medi-Cal renewal application is confusing, and that while  
            there should be many improvements to the renewal process in  
            2015, due to the implementation of ex parte review and the use  
            of prepopulated forms, this will be a different type of  
            renewal process for which beneficiaries must adapt. WCLP also  
            states that this bill provides resources to CBOs to assist  
            consumers with renewals, thereby allowing state and county  
            workers to rightfully focus on reducing the state's  
            significant backlog of Medi-Cal applications.


          Health Access California, also a co-sponsor of this bill, states  
            that the California Endowment has generously offered $6  
            million to assist consumers who are enrolled in Medi-Cal to  
            renew their coverage, and that this bill would allow a federal  
            match for those dollars. Health Access states that keeping  
            eligible beneficiaries enrolled in coverage assures ongoing  
            access to medically necessary care and reduces administrative  
            overhead due to avoidable churning of enrollment. Further,  
            Health Access California states that this bill uses the same  




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            mechanism in place today to grant money to CBOs that assist  
            consumers in signing up for Medi-Cal, thereby building upon an  
            existing infrastructure of enrollment assistance at no cost to  
            the GF. 
          
          3.Opposition. The Department of Finance (DOF) writes in  
            opposition to this bill, arguing this bill results in  
            additional GF costs of approximately $8.7 million, imposes  
            additional workload on DHCS, and is unnecessary because  
            counties currently provide assistance to Medi-Cal  
            beneficiaries who are renewing their eligibility and because  
            federal health care reform has made simplifications to  
            Medi-Cal renewals. DOF concludes that it is unclear that that  
            MAGI rules have created confusion for beneficiaries since the  
            rules were implemented in January 2014.

                
          SUPPORT AND OPPOSITION  :
          Support:  Western Center on Law & Poverty (co-sponsor)
                    Health Access California (co-sponsor)
                    AARP
                    Alliance for Boys and Men of Color
                    American Cancer Society - Cancer Action Network
                    Asian Americans Advancing Justice - Los Angeles
                    Asian Law Alliance
                    California Black Health Network
                    California Children's Health Coverage Coalition
                    California Coverage and Health Initiatives 
                    California Immigrant Policy Center 
                    California Optometric Association 
                    California Pan Ethnic Health Network
                    California Primary Care Association
                    Children's Defense Fund California 
                    Children Now
                    Congress of California Seniors
                    Korean Community Center of the East Bay 
                    National Health Law Program
                    PICO California
                    Project Inform
                    San Francisco Community Clinic Consortium
                    SEIU United Healthcare Workers - West 
                    SIREN - Services, Immigrant Rights, and Education  
                    Network
                    The Children's Partnership
                    United Ways of California
                    Vision y Compromiso




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          Oppose:   Department of Finance





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