BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  SB 28
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          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        
           
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          |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  








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          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  








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          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  








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          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               


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