BILL ANALYSIS Ó
SB 28
Page 1
Date of Hearing: August 13, 2013
ASSEMBLY COMMITTEE ON HEALTH
Richard Pan, Chair
SB 28 (Ed Hernandez and Steinberg) - As Amended: August 07,
2013
SENATE VOTE : 32-0
SUBJECT : California Health Benefit Exchange.
SUMMARY : Requires the Managed Risk Medical Insurance Board
(MRMIB) to provide the California Health Benefit Exchange
(Exchange), now known as Covered California, with the name,
contact information, and spoken language of Major Risk Medical
Insurance Program (MRMIP) subscribers and applicants in order to
assist Covered California in conducting outreach. Requires
Covered California to use the information from MRMIB to provide
a notice to these individuals informing them of their potential
eligibility for coverage through Covered California or Medi-Cal.
Requires the Department of Health Care Services (DHCS) to
designate Covered California and county human services
departments as qualified entities for determining eligibility
for accelerated enrollment (AE) under Medi-Cal for children.
EXISTING LAW :
1)Requires DHCS to exercise the federal Medicaid (Medi-Cal in
California) option to implement a program for AE of children
that provides temporary coverage while a final eligibility
determination is being made. Requires DHCS to designate a
single point of entry (SPE) as the qualified entity for
determining Medi-Cal eligibility. Defines SPE as the
centralized processing entity that accepts and screens
applications for benefits under the Medi-Cal Program for the
purpose of forwarding them to the appropriate counties.
2)Establishes MRMIP administered by MRMIB to provide major risk
medical coverage to California residents who have been
rejected for coverage by at least one private health plan, or
if the only private health coverage that the applicant can
secure would impose substantial waivers or provide limited
coverage or afford coverage only at an excessive price.
3)Requires, under the federal Patient Protection and Affordable
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Care Act (ACA), effective January 1, 2014, health plans
offering coverage in the individual or group market to accept
every employer and individual that applies for coverage.
Permits a health plan to restrict enrollment to open or
special enrollment periods. Permits health plans to deny
coverage to individuals if the health plan has demonstrated,
if required, to the applicable state authority, that it will
not have the capacity to deliver services adequately to any
additional individuals because of its obligations to existing
group contract holders and enrollees, and it is applying this
provision to all individuals without regard to the claims
experience of those individuals, employers, and their
employees (and their dependents) or any health-status related
factor.
4)Requires, under the ACA, the Secretary of the federal
Secretary of the Department of Health and Human Services to
develop procedures to provide for the transition of eligible
individuals enrolled in health insurance coverage offered
through a high-risk pool into qualified health plans offered
through Covered California.
5)Establishes, under regulations implementing the federal Health
Insurance Portability and Accountability Act of 1996 (HIPAA),
requirements relating to the protection and privacy of
protected health information. Permits a HIPAA covered entity
to use or disclose protected health information to the extent
that such use or disclosure is required by law and the use or
disclosure complies with and is limited to the relevant
requirements of such law.
6)Establishes Covered California in state government, and
specifies the duties and authority of Covered California.
Requires the Covered California Board, in the course of
selectively contracting for health care coverage offered to
individuals and small employers through Covered California, to
seek to contract with health plans and insurers so as to
provide health care coverage choices.
7)Requires under the ACA, effective January 1, 2014, development
of a single, accessible standardized application for insurance
affordability programs, such as Medicaid and advanceable
premium tax credits (APTCs) and cost-sharing subsidies credits
to be used by all eligibility entities.
8)Requires under the ACA, effective in 2014, individuals
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maintain health insurance or pay a penalty, with exceptions
for financial hardship, religion, incarceration, and
immigration status.
9)Establishes, under state and federal law, the Medicaid program
(Medi-Cal in California) as a joint federal and state program
offering a variety of health and long-term services to
low-income women and children, low-income residents of
long-term care facilities, seniors, and people with
disabilities. Effective January 1, 2014, adopts the ACA state
option to expand Medi-Cal to provide coverage to childless
adults, between ages 19 and 65 who are not otherwise eligible
for Medi-Cal, expands coverage for parents and caretaker
relatives with family income up to 138% of the federal poverty
level (FPL) and eliminates assets and resources limits.
FISCAL EFFECT : According to the Senate Appropriations
Committee, minor staff costs for MRMIB to provide subscriber
contact information to the Exchange and for the Exchange to
notify subscribers about coverage options (various funds). No
additional costs to perform Medi-Cal accelerated enrollment
determinations (General Fund and federal funds).
COMMENTS :
1)PURPOSE OF THIS BILL . This bill makes two separate changes to
prepare for implementation of the ACA in 2014. The first
change would update the state's AE in Medi-Cal to conform to
the new eligibility and enrollment systems being established.
Specifically, this bill would broaden the entities authorized
to grant AE to include counties and Covered California so that
children applying through either entity can receive AE. In
addition, continuing AE will ensure the state will meet the
federal ACA maintenance of effort (MOE) requirement for
children's coverage that prevents states (until September 30,
2019) from having eligibility standards, methodologies, or
procedures that are more restrictive than the eligibility
standards, methodologies, or procedures, in effect on the date
of its enactment.
The second change made by this bill would direct MRMIB to
transfer information about individuals enrolled in the MRMIP
to Covered California so that Covered California can conduct
outreach to these individuals. Under federal privacy
regulations, a state law is needed to require MRMIB to
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transfer this information. There are approximately 6,400
individuals enrolled in MRMIP. The Governor's 2013-14 Budget
Summary proposed to phase out MRMIB, but the Legislature
declined to adopt this proposal. Regardless of whether MRMIP
remains operational, some subscribers could receive better
coverage and potentially pay lower premiums in Covered
California. With the exception of calendar years 2013 and
2014, individuals in MRMIP pay premiums that are 25% above the
rate for a comparable product in the private market. [AB 1526
(Monning), Chapter 855, Statutes of 2012, authorized MRMIB to
lower premiums to 100% and MRMIB has exercised this option for
2013 and 2014.] Despite the high cost, MRMIP products all
have a low annual and lifetime limit. In addition, depending
on income, many MRMIP enrollees will likely be able to obtain
more affordable coverage with better benefits in Covered
California (where premium and cost-sharing subsidies are
available). This bill would require Covered California to use
the information from MRMIB to provide a notice informing the
individual that he or she may be eligible for reduced-cost
coverage through Covered California, or no-cost coverage
through Medi-Cal.
2)BACKGROUND . A principal component of the ACA is the
establishment of an eligibility, enrollment, and retention
system across all insurance affordability programs that is
streamlined, simplified, and coordinated. Regardless of which
portal an applicant enters; online, by phone, in person, at
the county, or through the Exchange, the goal is that
ultimately the individual is enrolled in the appropriate
program - a no "wrong door" approach. A precursor to this
approach was the SPE concept implemented for children. AB 430
(Cardenas), Chapter 171, Statutes of 2001, and AB 442
(Committee on Budget), Chapter 1161, Statutes of 2002,
established the SPE and AE for children in Medi-Cal. The SPE
and AE were established, at the time, in part because the
state was providing two separate children's health insurance
programs [the Healthy Families Program (HFP) and Medi-Cal]
with different entities making eligibility determinations for
each program.
AB 1494 (Committee on Budget), Chapter 28, Statutes of 2012,
enacted a transition of the approximately 860,000 HFP
subscribers into the Medi-Cal program to begin no sooner than
January 1, 2013, in four Phases throughout 2013. Children in
HFP will transition into Medi-Cal's new optional Targeted Low
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Income Children's Program covering children whose family
income is up to and including 250% of FPL. As of January 1,
2013, all newly eligible children are being enrolled in
Medi-Cal. Although there are no longer two separate programs,
DHCS retained the SPE as required by the MOE and assumed the
contract from MRMIB with the vendor. Applications are
received through the mail and on-line (via Health-e-App). The
vendor (MAXIMUS) checks for current or prior Medi-Cal and
public program enrollment, reviews the application to see if
it is complete, screens the application for AE, and forwards
the application to the counties for a full Medi-Cal
eligibility determination. The purpose of AE is to accelerate
temporary, fee-for-service, and full-scope, Medi-Cal coverage
for children under the age of 19 who are new to Medi-Cal, who
applied for Medi-Cal through the SPE and are likely eligible
for Medi-Cal based on screening by the SPE. AE is temporary
coverage while the county human services department makes a
final determination of Medi-Cal eligibility. Coverage under
AE begins the first day of the month of the date the SPE
receives the application. Once the county makes an
eligibility determination, the county sends a notice of action
either approving or denying the application. However if the
application comes in directly to the county human services
department without going through the SPE, the child is not
eligible for AE. As of January 1, 2014, the Exchange will
assume the responsibilities of the SPE.
3)FEDERAL HEALTH REFORM . On March 23, 2010, the federal
government enacted the ACA. Beginning in 2014, the ACA give
states the option to expand Medicaid eligibility to a new
"adult group". It also collapses and simplifies most existing
eligibility categories into three broad groups: parents,
pregnant women, and children under age 19. The "adult group"
includes all non-pregnant individuals ages 19 to 65 with
household incomes at or below 133% FPL. (The law includes a
five percentage point of FPL disregard making the effective
limit 138% FPL). The income calculation for all these
categories is based on Modified Adjusted Gross Income (MAGI),
as defined in the Internal Revenue Code. Regarding the
private health insurance market, the ACA primarily
restructures the individual and small group markets, setting
minimum standards for health coverage, providing financial
assistance to individuals with income below 400% of FPL
through APTCs, tax credits for small employers, the
establishment Exchanges and an essential health benefits
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package required to be offered by qualified health plans
(QHPs). Beginning in 2014, QHPs will be required to offer
coverage at one of four levels: bronze, silver, gold, or
platinum.
Eligibility for the insurance affordability programs at the
Exchange will begin with a Medicaid screen. If an individual
is not found eligible for Medicaid, the state must collect
necessary information and determine potential eligibility for
APTC in an Exchange. States are also required, to the maximum
extent possible, to rely on electronic data matches with
trusted third party sources to verify information provided by
applicants. State Medicaid agencies are to enter into one or
more agreements with an Exchange and other insurance
affordability programs to coordinate eligibility
determinations and enrollment. The state Medicaid agency must
ensure that any individual who is determined ineligible for
Medicaid is screened for potential eligibility for benefits
available through an Exchange and promptly transfer the
electronic account of individuals screened as potentially
eligible to the Exchange. With regard to Exchange
determinations of Medicaid eligibility, states can enter into
agreements to either have the Exchange make final Medicaid
eligibility determinations or have the Exchange make
assessments of potential Medicaid eligibility and transfer
accounts to the Medicaid agency for final determination.
4)HIPAA . Under federal HIPAA privacy regulations, a HIPAA
covered entity is prohibited from using or disclosing
protected health information without an authorization that is
valid, with specified exceptions. One exception to this HIPAA
prohibition against the disclosure of protected health
information is if a HIPAA covered entity is required to use or
disclose protected health information by law, and the use or
disclosure complies with and is limited to the relevant
requirements of such law. This bill would place such a
requirement on MRMIB to transfer information about MRMIP
subscribers and applicants to Covered California for purposes
of having Covered California conduct outreach to these
individuals.
5)SUPPORT . California Children's Health Coverage Coalition -
comprised of the 100% Campaign (a collaborative effort of The
Children's Partnership, Children Now, and Children's Defense
Fund-California), California Coverage and Health Initiatives,
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PICO California, and United Ways of California support this
bill to update the state's AE program for children applying
for coverage to conform to the new eligibility and enrollment
systems being established to implement federal health care
reform. Supporters argue this bill preserves a critical
access point for children entering Medi-Cal by broadening the
entities authorized to grant AE and by requiring the state to
make necessary changes in order to offer more affordable
coverage through Covered California. The California Primary
Care Association supports this bill that would further the
goals of the ACA by providing an orderly transition of
individuals from MRMIB to coverage under the Exchange or
through Medi-Cal and would expedite temporary Medi-Cal
coverage for children under 19 years of age. The American
Academy of Pediatrics also supports this bill because it
preserves a critical access point for children entering
Medi-Cal by broadening the entities authorized to grant AE.
The American Cancer Society Cancer Action Network (ACS CAN)
writes in support that under the ACA health insurers and plans
can no longer deny individuals coverage because of preexisting
conditions. This support further states Covered California
will provide protections similar to the existing MRMIP, except
that the new program has no annual cap on benefits and lower
subscriber premium, making the new program more attractive in
general. ACS CAN further states in support that MRMIP has
served a vital role in the safety net for Californians with
preexisting conditions, including cancer. Covered California
will allow these individuals to join a larger pool of
Californians by applying for health insurance without fear of
denial.
6)RELATED LEGISLATION .
a) AB 1 X1 (John A. Pérez), Chapter 3, Statutes of 2013
First Extraordinary Session and SB 1 X1 (Ed Hernandez and
Steinberg), Chapter 4, Statutes of 2013 First Extraordinary
Session, implement various provisions of the ACA regarding
Medi-Cal eligibility and program simplification including
the use of MAGI and expansion of eligibility in the
Medi-Cal program. AB 1 X1, implements most of the
eligibility provisions and includes a provision that
requires DHCS, or any other government agency that is
determining eligibility for, or enrollment in, the Medi-Cal
program, any other program administered by DHCS or
collecting protected health information for those purposes,
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and the Exchange to share information with each other as
necessary to enable them to perform their respective
statutory and regulatory duties under state and federal
law. Requires this information to include, but not be
limited to, personal information and protected health
information regarding individual beneficiaries and
applicants.
b) SB 249 (Leno) permits the Department of Public Health
(DPH) to share health records involving the diagnosis,
care, and treatment of a beneficiary enrolled in federal
Ryan White Act-funded programs that may be eligible for
services under the ACA, with "qualified entities," as
defined. Permits qualified entities to share health
records relating to persons diagnosed with HIV/AIDS with
DPH for the purpose of enrollment without disruption in
Medi-Cal, the bridge program, Medicaid expansion programs,
and any insurance plan certified by Covered California.
c) SB 800 (Lara) requires, in order to assist the Exchange
to conduct outreach to individuals potentially eligible for
insurance affordability programs, DHCS provide the
Exchange, or its designee, with the names, addresses, email
addresses, telephone numbers or other contact information,
and written and spoken languages of individuals who are not
enrolled in Medi-Cal but are the parents or caretakers of
children enrolled in HFP or have been transitioned from HFP
to the targeted low-income Medi-Cal program.
7)PREVIOUS LEGISLATION .
a) AB 714 (Atkins) of the 2011-12 session would have
required notices of health care eligibility be sent to
individuals who are enrolled in, or who cease to be
enrolled in, publicly-funded state health care programs.
AB 714 was held on the Senate Appropriations Committee
suspense file.
b) AB 792 (Bonilla), Chapter 851, Statutes of 2012,
establishes notification requirements about the
availability of reduced-cost coverage available in the
Covered California and no-cost coverage available in
Medi-Cal to an individual filing a dissolution or nullity
of marriage, divorce or separation, or petitioning for
adoption, and for an individual who ceases to be enrolled
in health coverage through a health plan or health insurer.
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c) AB 1468 (Assembly Budget Committee), Chapter 438,
Statues of 2012 allows DHCS to have exemptions from
contracting competitive bidding rules for the purposes of
implementing and maintaining the necessary systems and
activities for providing health care coverage to optional
targeted low-income children in the Medi-Cal Program for
purposes of AE application processing by SPE,
non-eligibility-related case maintenance and premium
collection, maintenance of the Health-E-App web portal,
call center staffing and operations, Certified Application
Assistant services, and reporting capabilities; permits
DHCS to enter into a contract with the Health Care Options
Broker of DHCS for purposes of managed care enrollment
activities. These specified contracts may be initially
completed on a noncompetitive bid basis and are exempt from
the Public Contract Code. Subsequent contracts for these
purposes shall use a competitive bid basis and shall be
subject to the Public Contract Code.
REGISTERED SUPPORT / OPPOSITION :
Support
100% Campaign
AARP
American Academy of Pediatrics - California
American Cancer Society Cancer Action Network
California Chiropractic Association
California Coverage and Health Initiatives
California Optometric Association
California Primary Care Association
Children Now
Children's Defense Fund-California
Children's Partnership
March of Dimes California Chapter
National Association of Social Workers
PICO California
United Ways of California
Western Center on Law & Poverty
Opposition
None on file.
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Analysis Prepared by : Marjorie Swartz / HEALTH / (916)
319-2097