BILL ANALYSIS Ó SB 508 Page 1 Date of Hearing: July 2, 2014 ASSEMBLY COMMITTEE ON APPROPRIATIONS Mike Gatto, Chair SB 508 (Hernandez) - As Amended: June 5, 2014 Policy Committee: HealthVote:13-6 Urgency: No State Mandated Local Program: Yes Reimbursable: Yes SUMMARY This bill codifies numerous Medi-Cal eligibility requirements related to implementation of the federal Patient Protection and Affordable Care Act (ACA). Specifically, this bill: 1)Specifies in statute the Medi-Cal income eligibility thresholds (as a percentage of poverty) currently in use for various eligibility groups including children, whose income is determined based on modified adjusted gross income (MAGI). 2)Specifies, for children, the income thresholds subject to premium payments. 3)Clarifies the state's eligibility rules for former foster youth (FFY) to allow specified FFY Medi-Cal eligibility up to age 26. 4)Eliminates the deprivation requirement, which requires certain socioeconomic circumstances such as a missing or unemployed parent, from the eligibility criteria for the "medically needy" eligibility category. 5)Requires Medi-Cal income eligibility for coverage of tuberculosis-related services to be determined pursuant to MAGI-based financial methods effective January 1, 2014. FISCAL EFFECT 1)This bill has four main components. The first component, the specification in statute of income thresholds, codifies current administrative practice under existing authority. Therefore, placing these income thresholds in law is not SB 508 Page 2 expected to increase costs. Similarly, the component related to tuberculosis services conforms the income eligibility methodology for these services to that used for most other Medi-Cal categories, and should have a negligible cost impact. Two other components, namely, the elimination of the deprivation requirement in the medically needy program and the changes related to former foster youth eligibility, may have a minor fiscal impact. Both changes will potentially increase state costs by expanding the number of people eligible for Medi-Cal. Assuming average per-person costs in the medically needy program are $10,000 annually, average per-person costs for former foster youth are $2,000 annually, and 50 individuals enroll due to the deprivation changes and 10 new former foster youth enroll due to the foster youth program changes, costs would be $520,000 (50% GF, 50% federal). The former foster youth provisions appear to be necessary pursuant to federal maintenance of effort requirements in the ACA, under which states must maintain Medi-Cal eligibility rules in place for children until 2019. The deprivation change also appears to be required to maintain compliance with federal rules, but based on how the state has chosen to structure related programs. Since the state chose to eliminate the deprivation requirement for a separate eligibility category, the federal government has, according to the author, stated the deprivation requirement must be eliminated in the medically needy program as well. Written verification that these specific changes are federally required was unavailable at the time of this analysis. 2)This bill is tagged as a potential state-reimbursable mandate because county eligibility workers conduct eligibility screenings on behalf of the state. But no increased administrative costs to counties are expected as a direct result of this bill, since changes should not significantly impact county workload and have already been incorporated into county eligibility operations. COMMENTS 1)Purpose . This bill is a follow-up to SB X1 1 and AB X1 1 of 2013, which implemented the state's expansion and simplification of Medi-Cal eligibility pursuant to the federal Patient Protection and Affordable Care Act (ACA). This bill largely aligns state law with current practice and federal SB 508 Page 3 requirements related to the new Medi-Cal requirements and options the state adopted in these two bills. 2)Prior Legislation . a) AB 1 X1 (John Perez), Chapter 3, Statutes of 2013 implemented specified Medicaid provisions of the ACA, including the expansion of federal Medicaid coverage to low-income adults with incomes up to 138% of the federal poverty level. AB 1 X1 also implemented a number of the Medicaid ACA provisions to simplify the eligibility, enrollment and renewal processes for Medi-Cal. b) SB 1 X1 (Hernández), Chapter 4, Statutes of 2013 established the existing Medi-Cal benefit package as the benefit package for the expansion population eligible under the ACA and expanded the Medi-Cal benefit package for the existing population and newly eligible under the ACA to include mental health services and substance use disorder services required under the essential health benefit legislation adopted in 2012 that were not currently covered by Medi-Cal. SB 1 X1 also implemented a number of the Medicaid ACA-related provisions to simplify the eligibility, enrollment and renewal processes for Medi-Cal. Analysis Prepared by : Lisa Murawski / APPR. / (916) 319-2081