BILL ANALYSIS Ó SB 28 Page 1 SENATE THIRD READING SB 28 (Ed Hernandez and Steinberg) As Amended September 6, 2013 Majority vote SENATE VOTE :32-0 HEALTH 13-5 APPROPRIATIONS 12-5 ----------------------------------------------------------------- |Ayes:|Pan, Ammiano, Atkins, |Ayes:|Gatto, Bocanegra, | | |Bonilla, Bonta, Chesbro, | |Bradford, | | |Gomez, | |Ian Calderon, Campos, | | |Roger Hernández, | |Eggman, Gomez, Hall, | | |Lowenthal, Mitchell, | |Holden, Pan, Quirk, Weber | | |Nazarian, V. Manuel | | | | |Pérez, Wieckowski | | | | | | | | |-----+--------------------------+-----+--------------------------| |Nays:|Maienschein, Mansoor, |Nays:|Harkey, Bigelow, | | |Nestande, Wagner, Wilk | |Donnelly, Linder, Wagner | | | | | | ----------------------------------------------------------------- SUMMARY : Requires the Managed Risk Medical Insurance Board (MRMIB) to provide the California Health Benefit 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. Permits the Department of Health Care Services (DHCS) to implement provisions of 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, by means of all-county letters, plan letters, plan or provider bulletins, or similar instructions until the time any necessary regulations are adopted. Requires DHCS to adopt regulations by July 1, 2017, in accordance with the requirements of the rulemaking requirements of the Administrative Procedure Act. Requires DHCS to provide a status report to the Legislature on a semiannual basis until regulations have been adopted. Makes technical and clarifying changes to provisions relating to a new budgeting methodology for Medi-Cal county SB 28 Page 2 administrative costs. FISCAL EFFECT : According to the Assembly Appropriations Committee, based on a prior version: 1)Potential cost pressure in the hundreds of thousands of dollars on Medi-Cal county administrative costs for training approximately 15,000 county eligibility workers on accelerated enrollment (AE). In practical terms, this would likely not have a significant budgetary impact, as administrative funding is currently provided as a lump sum to counties as part of the annual Medi-Cal budget and this bill's requirements are not likely to increase the sum provided. Additionally, workers will be retrained and the administrative funding methodology will likely be reassessed over the next two years in light of considerable simplification and changes in eligibility processing for Medi-Cal. 2)Potential minor Medi-Cal benefits costs associated with some children gaining coverage through AE sooner than would otherwise be the case. AE allows children to receive program benefits pending final determination of their eligibility. Costs are not expected to be significant, as most eligibility determinations are expected to be completed in real-time. In addition, Medi-Cal already grants retroactive coverage, meaning the program pays claims incurred for 90 days prior to granting of eligibility. The only potential benefit costs would be associated with children who were granted AE then lost to follow-up. For example, if a parent did not bring in needed documentation to establish residency, the state would incur costs for AE on behalf of that child that would otherwise not have been occurred, and the child would not have their application completed. This would likely occur only in a very small minority of cases. COMMENTS : 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 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 SB 28 Page 3 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, authorizes 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. Beginning in 2014, the Patient Protection and Affordable Care Act (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% of the federal poverty level (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, 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 advanceable premium tax credits, tax credits for small employers, the establishment American Health Benefit Exchanges and an essential health benefits 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. Under the federal Health Insurance Portability and Accountability Act of 1996 (HIPAA) privacy regulations, a HIPAA covered entity is prohibited from using or disclosing protected health information without valid authorization, 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 SB 28 Page 4 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. This bill also includes technical and clarifying amendments to AB 1 X1 and SB 1 X1 that were in AB 50 (Pan) of the current legislative session and are being deleted from that bill, such as adding authorization for DHCS to implement specified provisions by means of all-county letters, plan letters, plan or provider bulletins, or similar instructions until the time any necessary regulations are adopted and requires DHCS to adopt regulations by July 1, 2017. These provisions had been inadvertently omitted from the Special Session bills. A second provision permits, rather than requires under existing law, the budgeting methodology for county Medi-Cal eligibility determination to include specified costs. Requires the new budgeting methodology to be implemented no sooner than the 2015-16 fiscal year, to reflect the impact of ACA implementation on county administrative work, and to be provided to the legislative fiscal committees by March 1 of the fiscal year immediately preceding the first fiscal year of implementation. 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. Analysis Prepared by : Marjorie Swartz / HEALTH / (916) 319-2097 FN: 0002451 SB 28 Page 5