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 Continued--- 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 SB 18 | Page 3 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. SB 18 | Page 4 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 SB 18 | Page 5 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; SB 18 | Page 6 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 SB 18 | Page 7 (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 SB 18 | Page 8 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 SB 18 | Page 9 Oppose: Department of Finance -- END --