BILL ANALYSIS                                                                                                                                                                                                    Ó

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

          BILL NO:       SB X1 1
          AUTHOR:        Hernandez and Steinberg                     
          INTRODUCED:    January 28, 2013
          HEARING DATE:  February 27, 2013
          CONSULTANT:    Bain

           SUBJECT  :  Medi-Cal: eligibility.
          SUMMARY  :  Implements the expansion of federal Medicaid coverage  
          in California (Medicaid is known as Medi-Cal in California) to  
          low-income adults with incomes between 0 and 138 percent of the  
          federal poverty level (FPL), establishes the Medi-Cal benefit  
          package for this expansion population, and requires the existing  
          Medi-Cal program to cover the essential health benefits (EHB)  
          contained in the Patient Protection and Affordable Care Act  
          (ACA). Implements a number of the Medicaid ACA provisions to  
          simplify the eligibility, enrollment and renewal processes for  

          On March 23, 2010, President Obama signed the 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.  
          Beginning in 2014, millions of low- and middle-income  
          Californians will gain 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 (the Exchange,  
          which is now known as Covered California). As a result of the  
          coverage expansions under the ACA, between 89 and 91 percent of  
          non-elderly Californians are predicted to have health coverage  
          under the ACA, and the number of uninsured is projected to  
          decrease by between 1.8 and 2.7 million by 2019. 

          The ACA establishes new requirements for California's Medi-Cal  
          program, including:
           Requiring Medicaid coverage of adults under age 65 who are not  
            currently eligible with incomes up to 138 percent of the FPL  
            (at or below $15,856 in 2013 for an individual);
           Requiring primary care rates to be equal to Medicare rates for  
            2013 and 2014;
           Extending Medi-Cal coverage to former foster youth up to age  


          SB X1 1 | Page 2

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

          In addition to these ACA requirements, California has a number  
          of policy options in implementing the Medicaid provisions.  
          Options include whether to implement the Medi-Cal expansion (the  
          Supreme Court ruling in National Federation of Independent  
          Business v. Sebelius in June 2012 effectively allowed states to  
          opt-out of the expansion), the type of benefits and services the  
          expansion population will receive in Medi-Cal, and whether to  
          adopt options contained in the ACA to make it easier for  
          individuals to enroll in coverage and remain enrolled in  
          coverage through the use electronic verification of  
          eligibility-related information. 

          This analysis is broken down by each major policy area affected  
          by this bill, describes existing federal law and state law, the  
          proposed change to state law, gives background on existing law  
          (if necessary), and provides the rationale for the proposed  

           Medi-Cal Expansion to Low-Income Adults

           Under existing federal law, prior to the enactment of the ACA,  
          adults were generally not eligible for Medi-Cal coverage unless  
          they met categorical eligibility requirements, such as being  
          low-income and having minor children living at home, having a  
          disability, being over the age of 65, or being pregnant.  
          Currently, Medicaid requires financial need and a categorical  
          relationship (family with children, aged, persons with  
          disability). For example, adults who are not disabled, pregnant  
          or who do not have minor children are not categorically eligible  
          for Medi-Cal. The 2014 Medicaid expansion's largest enrollment  
          impact will be from the expansion to non-disabled childless  
          adults with incomes at or below 138 percent of the FPL (for a  
          single adult, 138 percent of the FPL is $1,321 per month or  
          $15,856 per year in 2013).
          Counties draw down federal Medicaid matching funds to cover  
          low-income adults under California's "Bridge to Reform" Section  
          1115 Medicaid waiver as a transition to implementation of the  
          ACA Medicaid expansion through the Low Income Health Program  


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          (LIHP). Over 500,000 individuals are covered under the LIHPs,  
          but not all counties have LIHPs (three counties have elected not  
          to implement a LIHP [Fresno, Merced and San Luis Obispo]. The  
          benefits in the LIHPs are more limited than in Medi-Cal, and  
          eligibility varies county by county. For example, eligibility  
          for San Francisco's LIHP is 25 percent of the FPL and Santa  
          Clara is 75 percent of the FPL. Coverage under the LIHPs ends  
          December 31, 2013. Statute establishing the LIHP requires the  
          state, on and after January 1, 2014, to implement comprehensive  
          health care reform for the populations targeted by the LIHP in  
          compliance with the federal ACA and subsequent amendments. 

          Under the ACA, starting January 1, 2014, Medi-Cal will expand  
          coverage to most adults who are at or below 138 percent of the  
          FPL. This coverage expansion applies to non-elderly,  
          non-pregnant adults under the age of 65. The Supreme Court  
          ruling in June 2012 effectively allowed states to opt-out of the  
          expansion by prohibiting the federal government from withholding  
          federal Medicaid funds for a state's entire Medicaid program if  
          the state failed to implement the expansion.

          SB X1 1 would implement the Medicaid expansion in California. In  
          addition, SB X1 1 would require that individuals who qualify for  
          the Medicaid expansion who are currently enrolled in a LIHP be  
          transitioned to the Medi-Cal program in accordance with the  
          transition plan as approved by the federal Centers for Medicare  
          and Medicaid Services (CMS). SB X1 1 would require LIHP  
          enrollees be:
           Notified which Medi-Cal health plan or plans contain his or  
            her existing medical home provider.
           Notified that he or she can select a health plan that contains  
            his or her existing medical home provider.
           Provided the opportunity to choose a different health plan if  
            there is more than one plan available in the county where he  
            or she resides.
           Informed that if he or she does not affirmatively choose a  
            plan or there is only one plan in the county where he or she  
            resides, he or she shall be enrolled into the Medi-Cal managed  
            care plan that contains his or her LIHP medical home provider,  
            if the medical home provider contracts with a Medi-Cal managed  
            care plan. 

          In order to ensure that no persons lose health care coverage in  
          the course of the transition, notices of the January 1, 2014,  
          change must be sent to LIHP enrollees upon their LIHP  


          SB X1 1 | Page 4

          redetermination in 2013 and again at least 90 days prior to the  

           Medi-Cal benefits for the current population and expansion  
           Under existing federal law (since 2006), state Medicaid programs  
          have had the option to provide certain groups of enrollees with  
          an alternative benefit package known as "benchmark" or  
          "benchmark-equivalent" coverage. The four benchmarks are: 
          (1) The Standard Blue Cross/Blue Shield Preferred Provider  
          Option offered through the Federal Employees Health Benefit  
          (2) State employee coverage that is offered and generally  
          available to state employees; 
          (3) The commercial HMO with the largest insured commercial,  
          non-Medicaid enrollment in the state; and 
          (4) Secretary-approved coverage, which can include the Medicaid  
          state plan benefit package offered in that state. 

          "Benchmark-equivalent" means that the benefits include certain  
          specified services, and the overall benefits are at least  
          actuarially equivalent to one of the statutorily specified  
          benchmark coverage packages. California has not implemented this  
          federal option. The ACA requires states to select a benefit  
          package for the Medi-Cal expansion population using "benchmark"  
          or "benchmark-equivalent" coverage. 

          The ACA requires any Medicaid benchmark benefit package to  
          additionally provide coverage for the EHB. The ten EHB are  
          ambulatory patient services, emergency services,  
          hospitalization, maternity and newborn care, mental health and  
          substance use disorder services, including behavioral health  
          treatment, prescription drugs, rehabilitative and habilitative  
          services and devices, laboratory services, preventive and  
          wellness services and chronic disease management, and pediatric  
          services, including oral and vision care. CMS indicates a state  
          is not required to select the same EHB benchmark reference plan  
          it selects for the individual and small group market (California  
          designated the Kaiser Small Group product as the state's EHB  
          benchmark plan in legislation last session), and it could have  
          more than one EHB benchmark reference plan for Medicaid.

          Under the ACA, the Medicaid benefits provided to the expansion  
          population of adults must be consistent with the federal law  
          benchmark authority. If the EHB benchmark reference plan  
          selected for Medicaid were to lack coverage within one or more  


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          of the ten required categories of benefits, it would need to be  
          supplemented to ensure that it provides coverage in each of the  
          ten EHB categories. This would be in addition to any other  
          requirements for benchmark or benchmark-equivalent plans,  
          including federal mental parity (known as the Mental Health  
          Parity and Addition Equity Act) compliance.

          SB X1 1 would require the Department of Health Care Services  
          (DHCS) to seek federal approval to establish a benchmark benefit  
          package that includes the same benefits, services, and coverage  
          that are provided to all other full-scope Medi-Cal enrollees. In  
          addition, these benefits would be supplemented by any benefits,  
          services, and coverage included in the EHB package adopted by  
          the state and approved by the federal Secretary of the  
          Department of Health and Human Services (DHHS). In addition, SB  
          X1 1 would require the existing Medi-Cal benefit package for the  
          non-expansion population to include any benefits, services, and  
          coverage not otherwise described in existing law that are  
          included in the approved EHB package. 

           Medi-Cal coverage for former foster youth until age 26
           Federal regulations require states to provide Medicaid to  
          children for whom adoption assistance or foster care maintenance  
          payments are made. In addition, California has adopted the  
          federal option that allows states to provide Medicaid coverage  
          for former foster children between the ages of 18 and 21. The  
          state does not require an income, asset test or share-of-cost  
          for former foster youth. In 2010, there were slightly more than  
          7,000 former foster youth ages 18 through 20 enrolled in  

          The ACA requires states cover former foster care children who:
           Are under 26 years of age;
           Are not eligible or enrolled under existing Medicaid mandatory  
            eligibility groups (or who are described in any of the  
            existing Medicaid mandatory eligibility groups but have income  
            that exceeds the upper income eligibility limit);
           Were in foster care under the responsibility of the state at  
            18 years of age (or such higher age as the state has elected);  
           Were enrolled in the Medicaid state plan or under a waiver  
            while in foster care. 

          The ACA also allows states to make "presumptive eligibility"  
          determinations for these individuals. Medicaid services rendered  


          SB X1 1 | Page 6

          to individuals in this new mandatory eligibility group will be  
          matched at the state's regular federal funds matching rate,  
          which in California is usually 50 percent federal funds and 50  
          percent state funds.

          This provision takes effect January 1, 2014, and mirrors a  
          similar provision in the ACA that allows dependents to stay on  
          their parents' private insurance coverage until age 26.

          SB X1 1 would require, to the extent federal financial  
          participation (FFP) is available, DHCS to extend Medi-Cal  
          benefits to a foster care youth until age 26. A foster care  
          youth would be deemed eligible for the benefits, and would be  
          enrolled to receive these benefits until his or her 26th  
          birthday without any interruption in coverage and without  
          requiring a new application so long as he/she was in foster care  
          on his/her 18th birthday. These changes are required by the ACA.  
          SB X1 1 does not implement the presumptive eligibility option.

          In addition to the federally required changes, DHCS would also  
          be required by SB X1 1 to identify and track all former  
          independent foster care youth who lost Medi-Cal coverage as a  
          result of turning age 21 in the 2013 calendar year. DHCS would  
          be required to develop and implement a simplified  
          redetermination form for these youth. A former foster youth  
          qualifying for the benefits would be required to fill out and  
          return this form only if information previously reported to DHCS  
          is no longer accurate, and failure to return the form alone  
          would not constitute a basis for termination of Medi-Cal. If the  
          form is returned as undeliverable and the county is otherwise  
          unable to establish contact, the former foster youth would  
          remain eligible for fee-for-service Medi-Cal until such time as  
          contact is reestablished or ineligibility is established, to the  
          extent FFP is available. These changes would take effect January  
          1, 2014. 

          The requirement in SB X1 1 that DHCS track independent foster  
          care adolescent who lost Medi-Cal coverage as a result of  
          turning age 21 in the 2013 calendar year is because these  
          individuals will lose Medi-Cal coverage upon the date of their  
          21st birthday, only to be eligible again effective January 1,  
          2014 under the ACA. The provisions regarding the return of  
          undelivered forms ensure that former foster youth are not  
          disenrolled because they have moved and their mail is returned  
          as undeliverable. Former foster youth retain their right to  
          Medi-Cal coverage if they move within the state, obtain a job  


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          and have an increase in income or obtain health insurance (in  
          which case Medi-Cal coverage would be the secondary payor), so  
          removing them from coverage to which they are entitled does not  
          make sense. This provision would also ensure these individuals  
          retain access to health care services and decrease the amount of  
          "churning," which occurs when a beneficiary loses coverage and  
          must reapply for coverage. If the redetermination form is  
          returned as undeliverable and the county is unable to establish  
          contact with the individual, SB X1 1 would shift the former  
          foster youth's Medi-Cal coverage to fee-for-service (if he or  
          she is in Medi-Cal managed care) until contact is re-established  
          or the person is found ineligible so the state is not making  
          monthly capitation payments to Medi-Cal managed care plans for  
          individuals who have moved out of state or are deceased. 
          Implementation of ACA option for attestation of  
          application-related information 
           Existing state law required DHCS, by July 1, 2007, to implement  
          a process that allows applicants and beneficiaries of certain  
          Medi-Cal programs to self-certify the amount and nature of  
          assets and income without the need to submit documentation. This  
          process is required to apply to applicants and beneficiaries in  
          the 1931(b) program, the FPL programs for infants, children and  
          pregnant women, the Medically-Indigent and Medically-Needy  
          Programs for children and families, and other similar programs  
          designated by DHCS. This process was to be implemented in two  
          phases. However, these provisions have not been implemented.

          Federal regulations implementing the ACA allow the agency  
          determining eligibility (counties in California) to accept  
          attestation of information needed to determine the eligibility  
          of an individual for Medicaid (either self-attestation or  
          attestation by an adult who is in the applicant's household)  
          without requiring further information (including documentation).  
          Self-attestation is not permitted for citizenship status and  
          immigration. Federal regulations require the agency to accept  
          self-attestation for pregnancy unless the state has information  
          that is not reasonably compatible with the attestation. The  
          county is authorized to verify state residency, date of birth,  
          and household size and composition.

          To determine financial eligibility, federal regulations require  
          the county to request specified information from other agencies  
          in the state, other states, and federal programs to the extent  
          such information is useful in verifying the financial  


          SB X1 1 | Page 8

          eligibility of an individual. In addition, federal ACA  
          regulations require the Secretary of DHHS to establish an  
          electronic service through which states can verify information  
          with or obtain information from federal agencies and other data  
          sources (referred to as the "federal data hub"). Counties must  
          promptly evaluate information received or obtained to determine  
          whether such information may affect the eligibility of an  
          individual or the benefits to which he or she is entitled. If  
          information provided by an individual is reasonably compatible  
          with information obtained by the county, it must determine or  
          renew eligibility based on that information. CMS guidance  
          indicates that, if a state accepts self-attestation of income,  
          it must conduct post-enrollment verification with the electronic  
          data sources it determines useful.

          Current state law authorizes state health subsidy programs to  
          accept self-attestation with respect to all information needed  
          to determine eligibility, to the extent permitted by law state  
          and federal law.

          SB X1 1 would require state health subsidy programs (Medi-Cal,  
          coverage through Covered California and the Basic Health  
          Program, if enacted), to accept an individual's attestation,  
          without further documentation, for age, date of birth, family  
          size, household income, state residency, pregnancy, and any  
          other applicable eligibility criteria for which attestation is  
          permitted by federal law. 

          The purpose of this provision is to implement the ACA option, to  
          reduce program administrative costs, and to move the state  
          toward electronic verification and away from the existing  
          burdensome paper-based application process. The preamble of  
          federal regulations indicates the purpose of the proposed  
          federal changes was to make verification processes more  
          efficient, modern, and coordinated by relying on trusted  
          third-party electronic data sources and shifting certain  
          verification responsibilities to the federal government, rather  
          than using paperwork submitted by Medi-Cal applicants and  

           Prohibition on asset test for MAGI individuals, required 5  
          percent income disregard, and equivalent income standard  
          Existing state law requires each Medi-Cal applicant who is not a  
          recipient of aid under the California Work Opportunity and  
          Responsibility to Kids Act (CalWORKS) or Supplemental Security  
          Income/State Supplementary Payment (SSI/SSP) to file an  


                                                            SB X1 1 | Page  


          affirmation setting forth such facts about his or her annual  
          income and other resources and qualifications for eligibility,  
          as may be required by DHCS. 

          Prior to the ACA, federal rules allowed income and asset  
          eligibility standards to vary across states, and different  
          standards to apply to different groups within states. For  
          example, children and pregnant women in California are eligible  
          for Medi-Cal without an asset test, while families under the  
          1931(b) coverage category have an asset test. Assets include  
          cash, savings, stocks, bonds, mutual funds, property, and life  
          insurance policies with a face value of less than $1,500.  
          Certain property is exempt, including a home, clothing, and the  
          first $4,650 value of a car. Property limits vary with family  
          size. For a family of two persons, the property limit is $3,000.

          Effective January 1, 2014, the ACA requires states to change the  
          way they calculate income for purposes of determining Medi-Cal  
          eligibility. Under the ACA, state income disregards and asset or  
          resource tests would no longer apply when calculating income  
          eligibility (except for specified groups, such as seniors and  
          individuals eligible for Medicaid on a basis that does not  
          require determination of income by the Medicaid state agency).  
          In addition, the ACA prohibits the use of an asset or resource  
          test, except for: 
           Individuals eligible for Medicaid on a basis that does not  
            require a determination of income by the Medicaid state agency  
            (for example, foster care children, or individuals receiving  
           Individuals who have attained age 65; 
           Individuals who qualify for Medicaid on the basis of being  
            blind or disabled regardless of whether the individual is  
            eligible for SSI;
           Medically needy individuals; 
           Individuals dually eligible for Medicare and Medicaid; and
           Individuals whose eligibility is being determined for purposes  
            of receiving nursing facility services, a level of care in any  
            institution equivalent to a nursing facility, home or  
            community-based services furnished under a Medicaid waiver or  
            state plan amendment.

          Instead, the income eligibility for an individual or a family  
          would be measured based on MAGI. MAGI is defined as the Internal  
          Revenue Code's Adjusted Gross Income, which allows a number of  
          income deductions, including trade and business deductions,  


          SB X1 1 | Page 10

          losses from the sale of property, and alimony payments. MAGI is  
          increased by tax-exempt interest and income earned by U.S.  
          citizens or residents living abroad.  

          SB X1 1 would conform state law to the ACA by prohibiting the  
          use of an asset or resource test for individuals whose financial  
          eligibility for Medi-Cal is determined based on MAGI. In  
          addition, SB X1 1 would implement the ACA requirement that a  
                                                          five percent income disregard applies to individuals whose  
          income eligibility is determined based on MAGI. 

          Finally, SB X1 1 would require DHCS, effective January 1, 2014,  
          to implement an equivalent income level for each eligibility  
          group whose income level will be converted to MAGI. The  
          equivalent income level shall not be less than the dollar amount  
          of all income exemptions, exclusions, deductions, and disregards  
          in effect on March 23, 2010, plus the existing income level  
          expressed as a percent of the federal poverty level for each  
          eligibility group so as to ensure that the use of MAGI income  
          methodology does not result in populations, who would have been  
          eligible for either the Medi-Cal Program or the Healthy Families  
          Program, losing coverage. The state is awaiting further guidance  
          from the federal government on implementation of the equivalent  
          income level.

           Changes to Pregnancy-Related Coverage in California
          Access for Infants and Mothers Program
           State law establishes the Access for Infants and Mothers (AIM)  
          Program, which provides prenatal care, labor and delivery and  
          coverage for pregnant women with family income between 200  
          percent and 300 percent of FPL, and for children less than 2  
          years of age who were born under AIM.  AIM coverage continues  
          for 60 days postpartum. If the 60th day falls in the middle of  
          the month, coverage terminates as of that date. 

          Federal regulations for Exchanges (Covered California) require  
          individuals enrolling between the 1st and the 15th of a month to  
          have coverage the first day of the following month. For  
          individuals enrolling between the 16th and the last day of the  
          month, the Exchange must ensure a coverage effective date on the  
          first day of the second following month. 

          SB X1 1 would require, at a minimum, AIM coverage to be provided  
          to pregnant women during pregnancy, and until the end of the  
          month in which the 60th day thereafter occurs. This change would  
          take effect January 1, 2014. 


                                                            SB X1 1 | Page  


          The purpose of this change is so that coverage does not end in  
          the middle of the month, to avoid a gap in coverage between when  
          AIM coverage ends and coverage through the Exchange begins, and  
          to conform to the existing Medi-Cal requirement to provide  
          coverage until the end of the month in which the 60th day  
          Full scope coverage for pregnant women in Medi-Cal
           State law requires Medi-Cal to cover pregnant women without a  
          share of cost with incomes below 200 percent of the FPL.  
          However, the type of coverage a woman receives (full scope  
          Medi-Cal coverage versus Medi-Cal coverage for pregnancy-only  
          services) depends upon her income, immigration status, assets,  
          and whether she meets other criteria (a pregnant woman can only  
          receive full scope coverage if she has "linkage" to Medi-Cal  
          because she has a "deprived" child in the home, is in her third  
          trimester, or is disabled or blind). For example, a low-income  
          pregnant woman in her first or second trimester with income  
          below 100 percent of the FPL does not qualify for full-scope  
          Medi-Cal unless she is otherwise linked to Medi-Cal (such as  
          being on CalWORKS or disabled) until she reaches her third  

          If a low-income pregnant woman is not eligible for full-scope  
          benefits, she is eligible for pregnancy-only services without a  
          share of cost if her income is at or below 200 percent of the  
          FPL. There is no asset test for pregnancy only coverage.  
          Pregnancy-only coverage covers prenatal care, labor and  
          delivery, and care through the end of the month in which the  
          60th post-partum day occurs.

          Draft federal regulations released in January 2013 revise the  
          Medicaid exemption for pregnancy-related services so that all  
          services provided to pregnant women must be considered  
          pregnancy-related unless specifically identified in the state  
          plan as not pregnancy-related. In addition, the most recent  
          proposed Internal Revenue Service regulations that define  
          minimum essential coverage for purposes of meeting the  
          requirement that individual maintain such coverage (known as the  
          "individual mandate") states that pregnancy-related services  
          under Medicaid do not provide minimum essential coverage.

          SB X1 1 would require that pregnant women enrolled in Medi-Cal  
          be provided with all medically necessary services, and not just  


          SB X1 1 | Page 12

          pregnancy-only coverage, unless federal approval is granted to  
          provide fewer benefits during pregnancy. SB X1 1 would define  
          "pregnancy-related services" to mean, at a minimum, all services  
          required under the Medi-Cal program unless federal approval is  
          granted to provide fewer benefits during pregnancy. This  
          requirement would take effect January 1, 2014. 

          The purpose of providing full scope coverage to pregnant women  
          is to help prevent premature delivery and low birth weight  
          infants, and to promote women's overall health, well-being, and  
          financial security and that of their families.

           Repeal of semi-annual status reports
           Existing state law requires adult Medi-Cal beneficiaries to file  
          a semi-annual status report in order to remain eligible for  
          Medi-Cal. Existing state law also requires information about the  
          semi-annual status report to be included in a notice used by  
          counties for Medi-Cal beneficiaries.

          Regulations implementing the Medicaid ACA changes require  
          individuals' whose income is determined using MAGI to be renewed  
          once every 12 months but not more frequently than once every 12  
          months, thus prohibiting the semi-annual status report  

          SB X1 1 would conform state law to the federal regulation by  
          repealing the semi-annual status report requirement.

           Authorized representative to assist in application and renewal  
          Regulations implementing the ACA Medicaid changes require  
          agencies to allow individual(s) of the applicant or  
          beneficiary's choice to assist in the application process or  
          during a renewal of eligibility. 

          DHCS indicates it does not have statute or regulation that  
          defines authorized representatives. 

          SB X1 1 would require a person who wishes to apply for a state  
          health subsidy program to be allowed to file an application on  
          his or her own behalf or on behalf of his or her family. The  
          individual also would have the right to be accompanied,  
          assisted, and represented in the application and renewal process  
          by an individual or organization of his or her choosing. If the  
          individual for any reason is unable to apply or renew on his or  
          her own behalf, any of the following persons may file the  


                                                            SB X1 1 | Page  


          application for the applicant:
                     The individual's guardian, conservator, or executor;
                     A public agency representative; or
                     The individual's legal counsel, relative, friend, or  
                 other spokesperson of his or her choice.

          SB X1 1 would give a person, who wishes to challenge a decision  
          concerning his or her eligibility for or receipt of benefits  
          from a state health subsidy program, the right to represent  
          himself or herself or use legal counsel, a relative, a friend,  
          or other spokesperson of his or her choice. 

          The purpose of this provision of the bill is to meet the ACA  
          requirement, and to address an issue raised during the Medi-Cal  
          managed care stakeholder workgroup process regarding individuals  
          who are authorized representatives in the federal Social  
          Security System are not recognized as authorized representatives  
          by the state Medi-Cal computer system (known as MEDS).

           Repeal of deprivation requirement
           Under existing state law, the Medi-Cal 1931(b) program covers  
          children up through age 18 (and up to age 19 if they are  
          expected to graduate) and parents and caretaker relatives who  
          are "deprived" of full parental support. Deprivation means at  
          least one parent in the family must be absent, deceased or  
          disabled, or the principal wage earner must be unemployed or  

          The ACA allows states to eliminate the deprivation requirement. 

          SB X1 1 adopts the ACA option to repeal the deprivation  

          The purpose of eliminating the deprivation requirement is there  
          is no longer a need for an administratively burdensome and  
          outdated welfare-based rule when individuals are subject to an  
          individual mandate and are eligible for coverage.

           Requirements prior to terminating Medi-Cal coverage
           Existing state law establishes requirements for counties prior  
          to terminating eligibility for Medi-Cal under legislation known  
          as SB 87 (Escutia), Chapter 1088, Statutes of 2000. Under SB 87,  
          counties must make "every reasonable effort" to gather  
          information available to the county that is relevant to the  
          beneficiary's Medi-Cal eligibility prior to contacting the  


          SB X1 1 | Page 14

          beneficiary. This includes Medi-Cal, CalWORKS, and CalFresh case  
          files of the beneficiary or any of his or her immediate family  

          Federal regulations require the county to make a redetermination  
          of eligibility without requiring information from the individual  
          if able to do so based on reliable information contained in the  
          individual's account, or other more current information  
          available to the county. If the county is able to renew  
          eligibility based on such information, the county must notify  
          the individual of the eligibility determination, basis, and that  
          the individual must inform the county, through any of the modes  
          permitted for submission of applications (by telephone, in  
          person, mail, or through other commonly available electronic  
          means) if any of the information contained in such notice is  
          inaccurate. The individual is not required to sign and return  
          such notice if all information is accurate. If the county cannot  
          renew eligibility, the county must provide the individual with a  
          renewal form containing specified information.

          SB X1 1 would eliminate the provision that limits the  
          requirement that counties "make every reasonable effort" to  
          gather information, thereby requiring counties to gather the  
          information. It would also require counties to check federal and  
          state databases to verify financial and non-financial  

          SB X1 1 would require the county, if it is able to renew  
          eligibility based on information in the databases, to notify the  
          individual of the eligibility determination and basis, and that  
          the individual is required to inform the county if any  
          information contained in the notice is inaccurate. Under SB X1  
          1, the individual would not be required to sign and return the  
          notice if all information provided on the notice is accurate so  
          as to conform to federal regulations. Counties would be required  
          to make all reasonable efforts not to send multiple notices  
          during the same time period about eligibility, and the notice of  
          eligibility renewal must contain other related information, such  
          as if the individual is in a new Medi-Cal program.

          Under existing state law, if a county cannot obtain information  
          necessary to redetermine eligibility, counties have to attempt  
          to reach the beneficiary by telephone. SB X1 1 would also  
          require the county to attempt to reach the beneficiary through  
          other commonly available electronic means (for example, email or  
          text) in counties where such electronic means are available.


                                                            SB X1 1 | Page  


          Under existing state law, if a county's efforts to obtain the  
          information necessary to redetermine eligibility have failed,  
          the county is required to send to the beneficiary a form which  
          highlights the information needed to complete the eligibility  
          determination. SB X1 1 would repeal this requirement and instead  
          require the county to send a form containing information  
          available to the county needed to renew eligibility, and would  
          require the form to advise the individual to provide any  
          necessary information to the county via internet, telephone,  
          mail, in person or through other commonly available electronic  
          means, and to sign the renewal form. This bill would prohibit a  
          county from requesting information from non-applicants necessary  
          to make an eligibility determination. 

          Under existing state law, if a beneficiary submits an incomplete  
          form, counties must attempt to contact the beneficiary by  

          SB X1 1 would require counties to attempt to contact the  
          beneficiary in writing and other commonly available electronic  
          means in counties where such electronic communication is  

          Federal regulations implementing the Medicaid ACA-related  
          changes extend this 30-day timeframe. These regulations require,  
          for individuals whose income is determined based on MAGI, annual  
          eligibility redeterminations to be reconsidered if an individual  
          whose eligibility has been terminated for failure to submit the  
          renewal form or necessary information submits the required  
          information within  90 days  , or a longer period elected by the  
          state, without requiring a new application.

          Under existing state law, if a Medi-Cal beneficiary is  
          terminated from coverage, but that former beneficiary submits a  
          completed form within  30 days  of termination, the county is  
          required to determine eligibility as though the form was  
          submitted in a timely manner. If the beneficiary is found  
          eligible, existing law requires the termination to be rescinded.

          SB X1 1 would conform state law to the federal regulation by  
          codifying the 90-day federal requirement, but would not extend  
          it beyond 90 days. 

          SB X1 1 would also require the county, if it has enough  


          SB X1 1 | Page 16

          information available to it to renew eligibility with respect to  
          all eligibility criteria, to begin a new 12-month eligibility  
          period. For individuals determined ineligible for Medi-Cal, SB  
          X1 1 would require the county to determine eligibility for other  
          state health subsidy programs, and comply with specified  
          procedures in existing law. SB X1 1 would also require any  
          renewal form or notice to accessible to persons who are limited  
          English proficient and persons with disabilities consistent with  
          all federal and state requirements.

           Blindness and disability
           Federal regulations allow counties determining eligibility to  
          consider blindness as continuing until the reviewing physician  
          determines that a beneficiary's vision has improved beyond the  
          definition of blindness contained in the state's Medicaid State  
          Plan. In addition, the Medicaid ACA-related changes allow the  
          county to consider disability as continuing until the review  
          team determines that a beneficiary's disability no longer meets  
          the definition of disability contained in the plan.

          SB X1 1 would adopt the two federal options outlined above. DHCS  
          indicates this provision adopts its current policy.

           Redetermination of Medi-Cal eligibility
           Existing state law requires Medi-Cal redetermination to be filed  
          annually. Existing law permits redetermination to be required at  
          other times in accordance with general standards established by  

          Federal regulations implementing the Medicaid ACA changes  
          prohibit an individual whose income is determined using the MAGI  
          methodology to be renewed once every 12 months but not more  
          frequently than once every 12 months, thus prohibiting the  
          semi-annual status report requirement. 

          SB X1 1 eliminates the semi-annual status report requirement to  
          conform to federal requirements.

           Implementation of Income Option
           Federal regulations implementing the ACA require, for applicants  
          and new enrollees, financial eligibility to be based on current  
          monthly  household income and family size. For current  
          beneficiaries, individuals who have been determined financially  
          eligible for Medicaid using the MAGI-based methods, a state may  
          elect to base financial eligibility either on current monthly  
          household income and family size or income based on projected  


                                                            SB X1 1 | Page  


          annual household income and family size for the remainder of the  
          current calendar year.

          SB X1 1 would require DHCS to adopt procedures to take into  
          account projected future changes in income and family size, for  
          individuals whose Medi-Cal income eligibility is determined  
          using MAGI-based methods, in order to grant or maintain  
          eligibility for those individuals who may be ineligible or  
          become ineligible if only the current monthly income and family  
          size are considered.

          For current beneficiaries, SB X1 1 would require DHCS to base  
          financial eligibility on projected annual household income for  
          the remainder of the current calendar year if the current  
          monthly income would render the beneficiary ineligible due to  
          fluctuating income. For applicants, DHCS would be required to  
          base an initial determination of eligibility on the projected  
          annual household income and family size for the upcoming year if  
          considering the current monthly income and family size in  
          isolation would render an applicant ineligible.

          SB X1 1 would require DHCS to implement a reasonable method to  
          account for a reasonably predictable decrease in income and  
          increase in family size, as evidenced by a history of  
          predictable fluctuations in income or other clear indicia of a  
          future decrease in income and increase in family size. SB X1 1  
          would prohibit DHCS from assuming potential future increases in  
          income or decreases in family size to make an applicant or  
          beneficiary ineligible in the current month. 

          The MC 210 application for Medi-Cal instructs individuals to  
          list how much income they receive. The MC 210 instructs  
          individuals, who know that their family's income will fluctuate  
          in the next few months, to explain this on a separate sheet of  
          paper. The  provision in allowing the use of projected annual  
          income SB X1 1 provides individuals the option to still enroll  
          in Medi-Cal by using their annual income if they have knowledge  
          their annual income is likely to be lower than their current  
          income in the month they apply for Medi-Cal. 

           FISCAL EFFECT  :  This bill has not been analyzed by a fiscal  

           COMMENTS  :  
           1.Author's statement.  According to the author, SB X1 1 expands  


          SB X1 1 | Page 18

            Medi-Cal eligibility up to 138 percent of the FPL to adults who  
            are not currently Medi-Cal eligible. This expansion is estimated  
            to result in more than 1.4 million Californians being newly  
            eligible for Medi-Cal, of whom between 750,000 and 910,000 are  
            expected to be enrolled at any point in time by 2019. There are  
            multiple policy and fiscal reasons for implementing the expansion,  
                 Reducing the number of uninsured in California;
                 Improving the health status of the newly eligible Medi-Cal  
                 Providing significantly enhanced federal funding for  
                 Providing enhanced funding for safety-net health care  
               providers to serve the 3.1 to 4 million remaining uninsured;
                 Reducing health care providers' uncompensated care costs;  
                 Preventing lower income individuals from being without  
               access to affordable health care coverage when higher income  
               individuals have access to tax credits that reduce premium and  
               cost-sharing costs in Covered California.
             The policy and fiscal reasons for using the Medi-Cal benefit  
            package for the expansion population and the current eligible  
            population are to:
                 Provide a consistent benefit package across both existing  
               and expansion Medi-Cal population; 
                 Make the program easier to administer for health plans,  
               providers, counties and the state; 
                 Eliminate the incentive to shift from benchmark coverage to  
               the existing Medi-Cal benefit package for enhanced benefits not  
               available to expansion population at higher state cost; 
                 Provide an economic stimulus benefit from enhanced federal  
               funding from a broader benefit package; and
                 Avoid having to oversee costly and administratively  
               difficult exemptions from the benchmark benefit packages. 
            Finally, SB X1 1 implements a number of the Medicaid ACA  
            provisions to simplify the eligibility, enrollment, and  
            renewal processes for Medi-Cal coverage.
          1.Should the state adopt the Medicaid expansion? The policy and  
            fiscal reasons for implementing the federal Medicaid expansion  

                  The Medicaid expansion would reduce the number of  
               uninsured in California  . According to a California  


                                                            SB X1 1 | Page  


               HealthCare Foundation's December 2012 publication on  
               California's uninsured, California had the largest total  
               number of people under 65 years of age without health  
               insurance - 7.1 million - of any state in the nation.  
               Implementing the Medi-Cal expansion would allow hundreds of  
               thousands of currently uninsured adults to obtain medically  
               needed services through the Medi-Cal program. 

                  Medicaid reduces mortality, improves access to health  
               care, improves financial security and improves  
               self-reported health status  . According to data from UC  
               Berkeley-UCLA CalSIM model, Version 1.8, 31 to 36 percent  
               of individuals projected to enroll in Medi-Cal who are in  
               the expansion population rate their health status as "fair"  
               or "poor." A UCLA Center for Health Policy Research 2012  
               Fact Sheet reported that 68.5 percent of uninsured adults  
               with mental health needs, who were between the ages of 18  
               to 65, received no treatment. The UCLA Fact Sheet indicated  
               that 254,000 individuals or 47 percent of the 541,000  
               uninsured individuals with mental health needs would be  
               eligible for the Medi-Cal expansion.

             A study published in the September 2012 edition of the New  
               England Journal of Medicine (NEJM) compared three states  
               that have substantially expanded adult Medicaid eligibility  
               since the year 2000 (New York, Maine, and Arizona) with  
               neighboring states without expansions. The study reported  
               that Medicaid expansions were associated with a significant  
               reduction in mortality, decreased rates of uninsurance,  
               decreased rates of delayed care due to costs, and increased  
               rates of self-reported health status of "excellent" or  
                                                                          "very good." The NEJM study concluded that "[S]tate  
               Medicaid expansions to cover low-income adults were  
               significantly associated with reduced mortality as well as  
               improved coverage, access to care, and self-reported  

             Another study published in the August 2011 edition of the  
               NEJM examined Oregon's use of a lottery in 2008 to allocate  
               a limited number of Medicaid spots for low-income adults  
               (19 to 64 years of age) to people on a waiting list for  
               Medicaid. The study found people with Medicaid had improved  
               access to medically needed health care, including being 70  


          SB X1 1 | Page 20

               percent more likely to have a regular place of care and 55  
               percent more likely to report having a usual doctor.  
               Medicaid coverage also increased the use of preventive care  
               such as mammograms (by 60 percent) and cholesterol  
               monitoring (by 20 percent). Medicaid coverage also provided  
               improved financial protection, reducing by 40 percent the  
               probability that people report having to borrow money or  
               skip payment on other bills because of medical expenses and  
               decreasing by 25 percent the probability that they will  
               have unpaid medical bills that are sent to a collection  
               agency. Finally, the study found Medicaid coverage improves  
               self-reported health as compared with being uninsured.  
               Medicaid enrollees were 25 percent more likely to indicate  
               they are in good, very good or excellent health, and 25  
               percent less likely to screen positive for depression.
                  The Medicaid expansion provides significantly enhanced  
               federal funding for California  . Under the ACA, the cost of  
               Medicaid benefits for the expansion population are 100  
               percent federally funded for the first three years  
               (2014-2016), 95 percent federally funded in 2017, 94  
               percent federally funded in 2018, 93 percent federally  
               funded in 2019 and 90 percent federally funded in 2020 and  
               thereafter. States will be able to offer a significant  
               benefit to some of their residents while bearing only a  
               small fraction of the costs. The UC Berkeley Labor  
               Institute and the UCLA Center for Health Policy Research  
               estimate the Medi-Cal expansion and enrollment growth among  
               those already eligible is predicted to bring between $2.1  
               and $3.5 billion in new federal Medi-Cal dollars to  
               California in 2014, growing to between $3.4 and $4.5  
               billion in 2019.

                  Increased funding for health care safety net  . The  
               Medi-Cal expansion will provide more funding for safety net  
               health care providers that currently care for Medi-Cal  
               beneficiaries, the uninsured and low-income populations,  
               and will reduce health care providers' uncompensated care  
               costs. While the ACA will make a significant reduction in  
               the number of uninsured in California, an estimated 3.1 to  
               4 million individuals will remain uninsured in 2019  
               following implementation of the ACA. These "residual  
               uninsured" will continue to access safety net providers for  
               their care, and the Medi-Cal expansion will assist these  
               providers by providing additional revenue through Medi-Cal  
               and by reducing the amount of uncompensated care from  


                                                            SB X1 1 | Page  


               expansion-eligible individuals who were previously  

                  Failure to expand Medi-Cal is inequitable to the  
               lowest-income adults  . The ACA provides refundable and  
               advanceable tax credits that reduce premium costs for  
               individuals with incomes between 100 and 400 percent of the  
               FPL, and legal immigrants who are ineligible for Medicaid  
               with incomes below 100 percent of the FPL up to 400 percent  
               of the FPL who purchase coverage through Covered  
               California. In addition, individuals with incomes up to 250  
               percent of the FPL purchasing coverage in the silver tier  
               through Covered California and legal immigrants below 100  
               percent of FPL who are ineligible for Medicaid are eligible  
               for reduced cost-sharing (e.g., coverage with lower  
               deductibles and co-payments). 

             If California fails to enact the Medicaid expansion, premium  
               and cost-sharing subsidies will be provided to Californians  
               with incomes between 100 and 400 percent of the FPL but  
               California adults who are not immigrants without children  
               with incomes below 100 percent of the FPL will not be  
               eligible for any public program or premium subsidies.
                  States costs of covering increased enrollment of people  
               who are already Medi-Cal eligible will occur whether or not  
               the state expands Medi-Cal  . According to the UC Labor  
               Institute and the UCLA Center for Health Policy Research,  
               about 2.5 million Californians are already eligible for  
               Medi-Cal but not enrolled. Between 240,000 and 510,000 of  
               these eligible but not yet enrolled Californians are  
               expected to be enrolled in Medi-Cal coverage at any point  
               in time by 2019. 

             A state will have to incur certain costs under the ACA even  
               if it does not expand Medicaid.  The ACA's requirement to  
               purchase insurance (known as the individual mandate), its  
               required simplification of Medicaid eligibility procedures,  
               and the significant outreach and education that will be  
               aimed at encouraging individuals to apply for subsidized  
               coverage in the Exchanges will increase Medicaid  
               participation among individuals who are currently eligible  
               but are not enrolled, even if a state rejects the Medicaid  


          SB X1 1 | Page 22

               expansion. A state will incur some additional costs for  
               covering some of these individuals regardless of whether it  
               expands Medicaid, and such costs cannot be attributed to  
               the Medicaid expansion.

                  Failure to provide Medicaid expansion is projected to  
               increase private insurance rates  . According to a Decision  
               Brief by the American Academy of Actuaries, states'  
               decisions to expand Medicaid eligibility will affect not  
               only access to coverage and costs to the federal government  
               and the states, but also the premiums for private insurance  
               coverage. For example, the ACA provides premium subsidies  
               to individuals purchasing coverage in the Exchange if they  
               have income between 100 percent and 400 percent of FPL and  
               who are not eligible for Medicaid or are not offered  
               employer-sponsored coverage that meets minimum value and  
               affordability requirements. Individuals below 100 percent  
               of FPL who are not eligible for Medicaid are not eligible  
               for subsidies in the Exchange. 

               If a state opts not to extend Medicaid eligibility to 138  
               percent of FPL, then individuals 100 percent to 138 percent  
               of FPL who otherwise would have been eligible for Medicaid  
               will have access to premium subsidies in the Exchange. This  
               population can be expected to have higher health care needs  
               than higher-income Exchange enrollees. The Congressional  
               Budget Office (CBO) estimates that, due to the likely  
               higher health spending among lower-income enrollees,  
               average individual market premiums will be 2 percent higher  
               than projections made under the assumption that all states  
               expand Medicaid to 138 percent of FPL. This CBO estimate  
               reflects the increase in average premiums overall,  
               including not only states that opt out of the Medicaid  
               expansion but also those that expand Medicaid. Therefore,  
               premium increases would be even higher among those states  
               that do not expand Medicaid. Premium increases would be  
               borne by nonsubsidized purchasers and by the federal  
               government for subsidized enrollees.

                  States cannot enact partial expansions and receive  
               enhanced federal funding  . In December 2012, the federal CMS  
               indicated that states cannot enact partial Medicaid  
               expansions and still receive the enhanced federal funding  
               available under the ACA. Congress directed that the  
               enhanced Medicaid matching rate be used to expand coverage  


                                                            SB X1 1 | Page  


               to 138 percent of the FPL, and the law does not provide for  
               a phased-in or partial expansion. As such, CMS indicated it  
               will not consider partial expansions for populations  
               eligible for the 100 percent matching rate in 2014 through  
               2016. CMS indicates that if a state that declines to expand  
               coverage to 138 percent of FPL, and would like to propose a  
               demonstration project that includes a partial expansion,  
               CMS would consider such a proposal to the extent that it  
               furthers the purposes of the program, subject to the  
               regular federal matching rate (which in California is  
               usually 50 percent state funds, 50 percent federal funds).  
               In 2017, when the 100 percent federal funding is slightly  
               reduced, further demonstration opportunities will become  
               available to states under State Innovation Waivers with  
               respect to the Exchanges, and the law contemplates that  
               such demonstrations may be coupled with section 1115  
               Medicaid demonstration projects. This demonstration  
               authority offers states significant flexibility while  
               ensuring the same level of coverage, affordability, and  
               comprehensive coverage at no additional costs for the  
               federal government. CMS indicated it will consider section  
               1115 Medicaid demonstrations, with the enhanced federal  
               matching rates, in the context of these overall system  

                  Hospitals in states that do not enact Medicaid expansion  
               will still receive reduced "disproportionate share"  
               hospital payments  . Federal disproportionate share hospital  
               (DSH) payments provide additional federal funds to those  
               hospitals that serve a significantly disproportionate  
               number of low-income and Medi-Cal patients. The annual DSH  
               allotment is calculated by federal law.

             Beginning in federal fiscal year 2014, the ACA dramatically  
               decreases the amount of funding that will be provided under  
               both DSH programs, based on the premise that the ACA  
               coverage expansions will result in fewer individuals  
               receiving uncompensated care. Under the ACA, the federal  
               Secretary of DHHS is required to develop a methodology that  
               will reduce the DSH payments by $14.1 billion during the  
               period 2014 to 2019, pursuant to a schedule set out in the  
               ACA. These reductions increase over time, and by 2019  
               represent an approximate 50 percent reduction over baseline  


          SB X1 1 | Page 24

               projections. These reductions will occur even if states do  
               not expand Medicaid. 

             California's DSH allotment for 2013-14 is estimated to be  
               $1.132 billion. The DHCS' 2013-14 budget assumes a  
               reduction of 4.4 percent will be applied in 2013-14. This  
               will result in reductions in DSH payments to private  
               hospitals (known as "virtual DSH") of $31.9 million ($15.9  
               million state funds/$15.9 million federal funds) and $69.4  
               million to public DSH hospitals ($24 million non-federal  
               funds/$45.4 million federal funds). 

             If California does not expand Medi-Cal up to 138 percent of  
               FPL, the need for funding to address uncompensated care  
               will continue, while the amount of DSH funds that were  
               previously used to subsidize some of the costs of that care  
               will decrease substantially. This may lead some hospitals  
               to provide less uncompensated care or pursue higher  
               payments from health plans or other third-party payors to  
               offset additional uncompensated care costs.
          1.Arguments for Medi-Cal having the same benefit package. The  
            policy and fiscal reasons for using the Medi-Cal benefit  
            package for the expansion population and the EHB for the  
            currently eligible population are as follows:

                  Consistent benefit package across both existing and  
               expansion Medi-Cal population  . Requiring the expansion  
               population and the current Medi-Cal population to receive  
               the same benefit package will ensure coverage is available  
               and affordable for this population which has virtually no  
               ability to afford private individual coverage at these  
               income levels. Aligning benefits received by the existing  
               Medi-Cal population will provide a consistent benefit  
               package to both the currently eligible and the expansion  
               population, and will ensure continuity of care by  
               eliminating the need to shift benefit packages if Medi-Cal  
               beneficiaries move into a different eligibility category  
               because of a change in eligibility. 

                  Ease of administration for providers and state  . One  
               uniform benefit package for both the newly eligible  
               expansion population and current Medi-Cal program will be  
               administratively simpler for the state, counties, health  
               plans, and health care providers to administer. 

                  Eliminates incentive to shift from benchmark coverage to  


                                                            SB X1 1 | Page  


               the existing Medi-Cal benefit package for enhanced benefits  
               not available to expansion population at higher state cost  .  
               Aligning benefits would simplify the eligibility and  
               enrollment processes for the counties by eliminating the  
               need for additional levels of eligibility determination if  
               a person is in need of services covered under the existing  
               Medi-Cal benefit package, but not under the benchmark  
               benefit package provided to the expansion population if the  
               current Medi-Cal benefit package is not chosen for the  
               expansion population. For example, if an individual is  
               eligible under the Medi-Cal expansion, but also eligible  
               for the current Medi-Cal program because he or she is  
               disabled or in need of long-term services and support  
               services (such as In-Home Supportive Services) that are not  
               covered by the more narrow benchmark benefit packages, such  
               an individual will seek coverage under the existing  
               Medi-Cal program to obtain these additional services. Such  
               an individual would have to go through an additional  
               eligibility determination, and the state may only receive  
               the regular 50 percent federal matching rate (instead of  
               the enhanced matching rate in the ACA). 

                  Economic stimulus benefit of enhanced federal funding  
               from broader benefit package  . States have an economic  
               incentive to provide an enhanced benefit package for the  
               expansion population because the broader benefit package  
               will draw additional federal Medicaid funds into the  
               California economy because the expansion population is  
               eligible for 100 percent federal financing for the first  
               three years of the expansion. As noted previously, the  
               enhanced federal funding reduces to 95 percent in 2017, 94  
               percent in 2018, 93 percent in 2019 and 90 percent in 2020  
               and thereafter.

                  Exemptions from benchmark benefit packages would be  
               costly to administer  . Federal Medicaid law prevents certain  
               groups from being required to enroll in benchmark or  
               benchmark equivalent benefits. For example, pregnant women,  
               individuals who are blind or disabled, individuals dually  
               eligible for Medicare and Medicaid, terminally ill  
               individuals receiving hospice care under Medi-Cal,  
               medically frail individuals and other groups (known as  
               "exempt individuals" in federal regulation) can be offered  
               benchmark or benchmark-equivalent coverage, but are not  
               required to enroll. Federal regulations require states to  


          SB X1 1 | Page 26

               offer exempt individuals the option to enroll in benchmark  
               or benchmark equivalent coverage but require states to  
               inform individuals that enrollment is voluntary, and that  
               they may disenroll at any time. Federal regulations also  
               require states to inform individuals of the difference in  
               the benefit packages prior to enrollment, and to document  
               that the individual was informed prior to enrollment in the  
               individual's eligibility file.

          1.Legislative Analyst's Office (LAO) Report. In February 2013,  
            the LAO released a report entitled "Examining the State and  
            County Roles in the Medi-Cal Expansion." The LAO states the  
            expansion would likely have significant policy benefits,  
            including improved health outcomes for the newly eligible  
            Medi-Cal population. In the short term, fiscal savings to the  
            state as a whole would far outweigh the nonfederal costs  
            associated with providing health care to the expansion  
            population. After a decade, when the enhanced federal matching  
            rate is reduced from 100 percent to 90 percent, the LAO  
            estimates that overall savings to the state as a whole (state  
            and local governments) would likely continue to outweigh  
            costs. Despite the significant uncertainty about the long-term  
            costs and savings associated with the expansion, on balance,  
            the LAO believes the policy merits of the expansion and the  
            fiscal benefits that are likely to accrue to the state as a  
            whole outweigh the costs and potential fiscal risks. The LAO  
            recommends the state adopt the optional expansion. 

          The LAO also states that it finds that the state is in a better  
            position than the counties to effectively organize and  
            coordinate the delivery of health services to the newly  
            eligible population-potentially resulting in improved health  
            outcomes and administrative efficiencies. As a practical  
            matter, the LAO also believes the state is better positioned  
            than the counties to successfully implement an expansion by  
            January 1, 2014. The LAO recommends the Legislature adopt a  
            state-based expansion, shifting the fiscal and programmatic  
            responsibility of providing health care to the expansion  
            population from counties to the state. Given this shift of  
            responsibility, the LAO further finds that implementation of a  
            state-based approach results in the need for a reexamination  
            of state-county funding arrangements for indigent health care.  
            Accordingly, the LAO recommends the Legislature redirect a  
            portion of funding currently allocated to counties under 1991  
            realignment for indigent health.


                                                            SB X1 1 | Page  


          2.Related legislation
          AB X1 1 (John A. Pérez) is identical to this measure. ABX1 1 was  
          heard in the Assembly Health Committee on February 19, 2013, and  
          passed on a 13-6 vote.
          SB X1 3 (Hernandez) establishes legislative intent to create a  
          bridge option that allows low-cost health coverage to be  
          provided to individuals within Covered California. SBX1 3 is  
          pending referral in the Senate Rules Committee.

          SB 28 (Hernandez and Steinberg) implements various provisions of  
          the ACA regarding Medi-Cal eligibility and program  
          simplification including the use of the MAGI and expansion of  
          eligibility in the Medi-Cal program and is substantially similar  
          to SB X1 1.  SB 28 is currently in the Senate Health Committee.

          AB 50 (Pan) implements various provisions of the ACA related to  
          allowing hospitals to make a preliminary determination of  
          Medi-Cal eligibility, allows forms for renewal to be  
          prepopulated with existing available information and requires  
          the process for Medi-Cal enrollees to choose a plan to be  
          coordinated with the Exchange.  AB 50 is currently in the  
          Assembly Health Committee.
          3.Prior legislation
          AB 43 (Monning) and SB 677 (Hernandez) of the 2011-2012 session  
          were substantially similar to SB 28 of this session. SB 677 died  
          on the Assembly Inactive File and AB 43 died on the Senate  
          Inactive File.

          SB 1487 (Hernandez) also from the 2011-2012 session would have  
          required DHCS to extend Medi-Cal eligibility to youth who were  
          formerly in foster care and who are under 26 years of age,  
          subject to FFP being available and to the extent required by  
          federal law. SB 1487 would have also made legislative findings  
          and declarations regarding the ACA, stated legislative intent to  
          ensure full implementation of the ACA, and to enact into state  
          law any provision of the ACA that may be struck down by the  
          United States Supreme Court. SB 1487 was held on the Senate  
          Appropriations Committee suspense file.

          4.Support. This bill is supported by Consumers Union, Health  
            Access California, Western Center on Law & Poverty, the  
            Congress of California Seniors, the California Labor  


          SB X1 1 | Page 28

            Federation, the California Primary Care Association, the  
            California Academy of Family Physicians, the American Cancer  
            Society Cancer Action Network, and the American Heart  
            Association, among others. Generally, proponents argue this  
            bill is the largest expansion of Medi-Cal since 1966, will  
            make 1.4 million Californians eligible for coverage and draw  
            down an estimated $2.1 to $3.5 billion in federal funds in  
            2014 alone. This will help create jobs in the health care  
            workforce, improve worker productivity, and increase local and  
            state tax revenues. Proponents argue expanding Medi-Cal will  
            extend lifesaving health coverage to millions, provide  
            preventive care and improve health outcomes for those who  
            receive coverage. Proponents cite specific provisions of the  
            bill and federal law that they support, including the enhanced  
            federal matching rate for the expansion population, the  
            Medi-Cal coverage expansion to former foster youth and  
            low-income adults, the extension of full scope benefits to  
            pregnant women, the addition of the EHB to Medi-Cal coverage,  
            the elimination of the deprivation and asset tests, and the  
            program simplification provisions. Los Angeles County writes  
            in support that there are 2.2 million uninsured people in Los  
            Angeles County, and half of these individuals will be eligible  
            for Medi-Cal benefits, including many of the 240,000  
            participants in its LIHP.

          5.Support in concept. The California State Council of the  
            Service Employees International Union (SEIU) supports this  
                                                                           bill in concept as it supports full implementation of the ACA.  
            SEIU states it would like to continue discussions aimed at  
            ensuring there will be increased access to high quality  
            affordable health care and raise provider rates, which are  
            presently inadequate. SEIU supports finding new revenue  
            sources to ensure adequate long term financing for expanded  
            access to high quality health care and ensuring the state  
            maintains funding for the public and private safety-net health  
            care systems. SEIU states it will continue working with the  
            Legislature and Governor on developing clear protocols and  
            coordination between county Medi-Cal eligibility operations  
            and Covered California that supports all Californians seeking  

          6.Support and request amendments.  Organizations including the  
            California Pan-Ethnic Health Network, the Latino Health  
            Alliance, the California Immigrant Policy Collaborative, PICO  
            California, California School Health Centers, Latino Coalition  
            for a Healthy California, the Alliance for Boys and Men of  


                                                            SB X1 1 | Page  


            Color Health Policy Work Group, the Children's Defense Fund,  
            PolicyLink, the California Health Advocates, and the  
            California Primary Care Association write in support but ask  
            that this bill be amended to include within the Medi-Cal  
            expansion all legal permanent resident adults with incomes  
            less than 138 percent of the FPL. These groups argue refusing  
            to act will result in many low-income immigrants being denied  
            access to affordable coverage in 2014, and immigrants earning  
            less than $15,856 a year will be required to pay monthly  
            premiums and out-of-pocket expenses that are unaffordable.

          Children Now writes in support and requests amendments to  
            specify that DHCS work with community-based organizations and  
            other stakeholders to design an effective outreach plan and  
            that the former foster youth expansion be implemented  
            immediately for people aging out of Medi-Cal so as to achieve  
            parity with young adults who have not been in foster care. 

          The California Association of Public Hospitals writes in support  
            of this bill and also suggests amendments to help maintain  
            continuity of care, minimize confusion for enrollees, and  
            conform to with the Administration's LIHP transition plan.

          The California Opioid Maintenance Providers (COMP) write in  
            support but also requests that language in this bill  
            specifically states that all current Medi-Cal benefits,  
            including the optional benefits delivered through Drug  
            Medi-Cal must be covered. COMP states ensuring coverage of  
            those services provided through the Drug Medi-Cal Program will  
            yield significant outcomes and savings.

          Support:  Alliance for Boys and Men of Color
                    American Cancer Society Cancer Action Network
                    American Federation of State, County, and Municipal  
                    American Heart Association
                    California Academy of Family Physicians
                    California Association of Public Hospitals and Health  
                    California Coverage and Health Initiatives
                    California Health Advocates
                    California Hospital Association
                    California Immigrant Policy Center
                    California Labor Federation


          SB X1 1 | Page 30

                    California Mental Health Directors Association
                    California Nurses Association
                    California Opioid Maintenance Providers
                    California Pan-Ethnic Health Network
                    California Primary Care Association
                    California School Employees Association, AFL-CIO
                    California School Health Centers Association
                    California State Association of Counties
                    Californians for Patient Care
                    Children Now
                    Children's Defense Fund California
                    Congress of California Seniors
                    Consumers Union
                    County Welfare Directors Association of California
                    Epilepsy California
                    Health Access California
                    Latino Health Alliance
                    Los Angeles County Board of Supervisors
                    March of Dimes Foundation - California Chapter
                    National Association of Social Workers - California  
                    National Health Law Program
                    PICO California
                    Planned Parenthood
                    San Mateo County Central Labor Council
                    Service Employees International Union
                    The Children's Partnership
                    The Greenlining Institute
                    Transgender Law Center
                    United Ways of California
                    Western Center on Law and Poverty
                    100% Campaign

          Oppose:   None received

                                      -- END --