BILL ANALYSIS Ó SB 800 Page 1 Date of Hearing: August 13, 2013 ASSEMBLY COMMITTEE ON HEALTH Richard Pan, Chair SB 800 (Lara) - As Amended: August 6, 2013 SENATE VOTE : 39-0 SUBJECT : Health care coverage programs: transition. SUMMARY : Transfers specified employees of the Managed Risk Medical Insurance Board (MRMIB) to the Department of Health Care Services (DHCS) or the California Health Benefit Exchange (Exchange) if any statute dissolves or terminates MRMIB. Requires DHCS to provide the Exchange, or its designee, information about parents or caretakers of children enrolled in the Healthy Families Program (HFP) or the targeted low-income Medi-Cal program in order to conduct outreach to potentially eligible individuals. Contains an urgency clause to make this bill's provisions take immediate effect upon enactment. 1)Requires, in order to assist the Exchange, to conduct outreach to individuals potentially eligible for insurance affordability programs, DHCS to provide the Exchange, or its designee, with the names, addresses, email addresses, telephone numbers, or other contact information, and written and spoken languages of individuals who are not enrolled in Medi-Cal but are the parents or caretakers of children enrolled in HFP or have been transitioned from HFP to its replacement, the targeted low-income Medi-Cal program. 2)Makes any permanent or probationary civil service employee who is employed by MRMIB and assigned to the Federal Temporary High Risk Pool whose function ceases to immediately be transferred to the Exchange and to retain his or her status, position, and rights pursuant to existing law and the State Civil Service Act (SCSA). 3)Requires, if any statute dissolves or terminates MRMIB, any employee of MRMIB who immediately prior to the effective date of the dissolution or termination of MRMIB was assigned to HFP, the Access for Infants and Mothers Program (AIM), the County Health Initiative Matching (CHIM) Fund, or the Major Risk Medical Insurance Program (MRMIP) to be transferred to DHCS and to retain his or her status, position, and rights SB 800 Page 2 pursuant to existing law and the SCSA. 4)Requires if any statute dissolves or terminates MRMIB, any employee of MRMIB who, immediately prior to the effective date of the dissolution or termination of MRMIB was assigned to the Federal Temporary High Risk Pool to be transferred to the Exchange and to retain his or her status, position, and rights pursuant to existing law and the SCSA. 5)Requires, if any statute dissolves or terminates MRMIB, an employee's applicable reinstatement rights that would have applied to MRMIB, to instead apply to DHCS. EXISTING LAW : 1)Establishes MRMIP administered by MRMIB to provide major risk medical coverage to California residents who have been rejected for coverage by at least one private health plan, or if the only private health coverage that the applicant can secure would impose substantial waivers or provide limited coverage or afford coverage only at an excessive price. 2)Requires MRMIB to cease to provide coverage through the Federal Temporary High Risk Pool on July 1, 2013, except as required by the contract between MRMIB and the United States Department of Health and Human Services, and at that time to cease to operate the program except as required to complete payments to, or payment reconciliations with, participating health plans or other contractors, process appeals, or conduct other necessary termination activities. 3)Requires under the federal Patient Protection and Affordable Care Act (ACA), effective January 1, 2014, that an individual have the option to apply for insurance affordability programs, which includes the state Medicaid program, the state Children's Health Insurance Program, enrollment in a qualified health plan (QHP) through the Exchange (known as Covered California) and a Basic Health Plan, if there is one, in person, by mail, online, by telephone, or other commonly available electronic means. 4)Requires under the ACA, effective January 1, 2014, development of a single, accessible standardized application for insurance affordability programs to be used by all eligibility entities and establishes a process for developing and testing the SB 800 Page 3 application. 5)Requires under the ACA, effective in 2014, individuals to maintain health insurance or pay a penalty, with exceptions for financial hardship (if the cost of health insurance premiums exceeds 8% of household adjusted gross income), religion, incarceration, and immigration status. 6)Creates the Exchange, as an independent state entity governed by a five-member board, to be a marketplace for Californians to purchase affordable, quality health care coverage, claim advanceable premium tax credits (APTCs) and cost-sharing subsidies, and as a way to meet the personal responsibility requirements of the ACA. 7)Requires under California law, the Exchange Board to undertake activities necessary to market and publicize the availability of health care coverage and federal subsidies through the Exchange. Requires the Exchange Board to also undertake outreach and enrollment activities that seek to assist enrollees and potential enrollees with enrolling and reenrolling in coverage through the Exchange in the least burdensome manner, including populations that may experience barriers to enrollment, such as the disabled and those with limited English language proficiency. 8)Establishes, under state and federal law, the Medicaid program (Medi-Cal in California) as a joint federal and state program offering a variety of health and long-term services to low-income women and children, low-income residents of long-term care facilities, seniors, and people with disabilities. 9)Effective January 1, 2014, adopts the ACA state option to expand Medi-Cal to provide coverage to childless adults, between ages 19 and 65 who are not otherwise eligible for Medi-Cal, expands coverage for parents and caretaker relatives with family income up to 138% of the federal poverty level (FPL) and eliminates assets and resources limits. 10)Authorizes DHCS to seek necessary federal waivers to automatically enroll parents into the Medi-Cal program, if they apply, who have one or more children who are eligible based on a determined income level at or below 138% FPL. SB 800 Page 4 11)Requires the DHCS, or any other government agency that is determining eligibility for, or enrollment in, the Medi-Cal program or any other program administered by DHCS, or collecting protected health information for those purposes, and the Exchange to share information with each other as necessary to enable them to perform their respective statutory and regulatory duties under state and federal law. Requires this information to include, but not be limited to, personal information, as defined in state law, and protected health information, as defined in federal Health Insurance Portability and Accountability Act of 1996 (HIPAA), regarding individual beneficiaries and applicants. 12)Establishes under federal law, HIPAA, which among various provisions, requires the protection and confidential handling of protected health information. 13)Defines "personal information" under state law, as any information that is maintained by an agency that identifies or describes an individual, including, but not limited to, his or her name, social security number, physical description, home address, home telephone number, education, financial matters, and medical or employment history and includes statements made by, or attributed to, the individual. 14)Establishes the SCSA which prescribes rules and requirements governing California's personnel system. 15)Requires whenever a function or the administration of a law is transferred from one state agency to another state agency, all persons serving in the state civil service and engaged in performance of the function or the administration of the law to be transferred to that agency. Requires the status, positions, and rights of those persons to be retained. Provides that a state agency is not required to retain any unnecessary officers or employees. FISCAL EFFECT : According to the Senate Appropriations Committee, minor administrative costs to DHCS and/or the Major Risk Medical Insurance Board to provide contact information (General Fund). Likely costs in the low hundreds of thousands for the Exchange to contact parents and caretakers (federal funds). Potential increased costs in the Medi-Cal program in the millions to low tens of millions (federal funds) for one year. The August 6, 2013 amendments related to transferring SB 800 Page 5 MRMIB staff to DHCS and the Exchange have not yet been analyzed by a fiscal committee. COMMENTS : 1)PURPOSE OF THIS BILL . According to the author, this bill ensures access to affordable care for California families, by ensuring the successful and efficient implementation of the ACA in two ways. First, this bill helps to promote health care access for as many people as possible by facilitating effective outreach. This bill also expedites the transfer of experienced staff with relevant program knowledge who can provide the necessary expertise to Covered California. This bill facilitates the transfer of information about parents of the children enrolled in HFP or being transitioned into Medi-Cal, to Covered California so that Covered California can conduct outreach to these individuals. Outreach for this population is essential because, by definition of their children's participation in HFP, they are extremely likely to be able to access federal subsidies making health care coverage possible. This bill further ensures the successful implementation of the ACA by ensuring that Covered California can obtain knowledgeable and experienced staff. This bill provides for the transfer of a similarly aligned workforce at MRMIB that will readily transition to Covered California should MRMIB be dissolved. As a result of the expanded ACA coverage options, many of MRMIB's participants will obtain coverage elsewhere and many of MRMIB's programs and enrollment functions will have transitioned to other departments. This bill ensures Covered California will have staff with the skills and expertise necessary to successfully launch enrollment and outreach while simultaneously providing employment security and certainty to a valuable resource of knowledgeable and experienced staff. 2)FEDERAL HEALTH REFORM . On March 23, 2010, the federal government enacted the ACA. Beginning in 2014, the ACA give states the option to expand Medicaid eligibility to a new "adult group." It also collapses and simplifies most existing eligibility categories into three broad groups: parents, pregnant women, and children under age 19. The "adult group" includes all non-pregnant individuals ages 19 to 65 with household incomes at or below 133% FPL. (The law includes a five percentage point of FPL disregard making the effective limit 138% FPL). The income calculation is based on Modified SB 800 Page 6 Adjusted Gross Income (MAGI), as defined in the Internal Revenue Code. Regarding the private health insurance market, the ACA primarily restructures the individual and small group markets, setting minimum standards for health coverage, providing financial assistance to individuals with income below 400% of FPL through APTCs, tax credits for small employers, the establishment of Exchanges, and an essential health benefits package required to be offered by QHPs. Beginning in 2014, QHPs will be required to offer coverage at one of four levels: bronze, silver, gold, or platinum. As mentioned, some individuals with income under 400% FPL will receive APTCs toward the purchase of a QHP. The payment will go directly to the insurer and will reduce the premium liability for that individual. Those who qualify for premium credits and are enrolled in a QHP at the silver tier beginning in 2014 will also be eligible for assistance in paying any required cost-sharing for their health services. Limitations on Exchange plans related to out-of-pocket costs will be based upon high deductible health plans that qualify individuals for health savings accounts. Cost sharing subsidies will further reduce those out-of-pocket maximums by two-thirds for qualifying individuals between 100% and 200% FPL, by one-half for qualifying individuals between 201% and 300% FPL, and by one-third for qualifying individuals between 301% and 400% FPL. Eligibility for the insurance affordability programs at the Exchange will begin with a Medicaid screen. If an individual is not found eligible for Medicaid, the state must collect necessary information and determine potential eligibility for APTC in an Exchange. States are also required, to the maximum extent possible; to rely on electronic data matches with trusted third party sources to verify information provided by applicants. State Medicaid agencies are to enter into one or more agreements with an Exchange and other insurance affordability programs to coordinate eligibility determinations and enrollment. The state Medicaid agency must ensure that any individual who is determined ineligible for Medicaid is screened for potential eligibility for benefits available through an Exchange and promptly transfer the electronic account of individuals screened as potentially eligible to the Exchange. States also have the option to enter into an SB 800 Page 7 agreement with an Exchange to make final determinations of eligibility for APTCs for Exchange coverage. With regard to Exchange determinations of Medicaid eligibility, states can enter into agreements to either have the Exchange make final Medicaid eligibility determinations or have the Exchange make assessments of potential Medicaid eligibility and transfer accounts to the Medicaid agency for final determination. 3)CALIFORNIA IMPLEMENTATION . California Healthcare Eligibility, Enrollment, and Retention System (CalHEERS) is a procurement conducted jointly by the Exchange, DHCS, and MRMIB to build the Information Technology system to support the consumer application and enrollment process at the Exchange. Following extensive review and stakeholder comment and input, Accenture was hired through a solicitation process for the design, development, and deployment of CalHEERs. The portal will offer eligibility determinations for both Medi-Cal and federally subsidized Covered California coverage through the Exchange. It will allow enrollment through multiple access points including mail, phone, and in-person applications. It is guided by a "no wrong door" policy that is intended to ensure the maximum number of Californians obtain coverage appropriate to their needs. Eligibility and enrollment functions will be released in September of 2013 in order to begin enrollment by October 2013, effective January 1, 2014. The CalHEERS business functions include interfacing with the Medi-Cal eligibility data system. It will also have the capacity to be a secure interface with federal and state databases in order to obtain and verify information necessary to determine eligibility. Covered California has undertaken a comprehensive outreach campaign and in March of 2012, awarded Ogilvy PR Worldwide $900,000 to develop the campaign. The Exchange reported in July of 2013 that as part of this effort Covered California has teamed up with 50 grantees and more than 200 subcontractors to help educate consumers about the state's health insurance exchange. The grants are aimed at reaching diverse, underserved communities about the Covered California health insurance plans available online, over the phone, or via in-person enrollment under the new health care reform law. Covered California awarded $34 million to organizations targeting consumers and another $3 million to organizations that reach out to small businesses qualified to provide coverage to employees through the Small Business Health SB 800 Page 8 Options Program. The Outreach and Education Grant Program establishes partnerships with key organizations, including universities, faith-based organizations, and unions that have trusted relationships with uninsured individuals. The grant recipients are expected to reach approximately 9 million individuals and more than 200,000 small businesses across all 58 counties to raise public awareness about the competitively priced health insurance companies available through Covered California. The grant recipients represent a mix of culturally and linguistically diverse groups targeting Californians where they live, shop, work, and play. Covered California will train and certify staff of these funded organizations to provide outreach and education to eligible consumers throughout the state. These staff will be referred to as Covered California Certified Educators. The selected organizations will reach consumers in the following 13 languages: Arabic, Armenian, Chinese, English, Farsi, Hmong, Khmer, Korean, Laotian, Russian, Spanish, Tagalog and Vietnamese. 4)MRMIB . MRMIB, an independent agency in state government has a long history administering health insurance programs in California such as HFP, AIM, MRMIP and the Federal Temporary High Risk Pool established under the ACA. The Federal Temporary High Risk Pool is being phased out by the federal and state government in anticipation of the ACA. Actions initiated by Governor Brown's administration have raised questions about the future of MRMIB. AB 1494 (Committee on Budget), Chapter 28, Statutes of 2012, enacted a transition of the approximately 860,000 HFP subscribers into the Medi-Cal program to begin no sooner than January 1, 2013, in four Phases throughout 2013. Children in HFP will transition into Medi-Cal's new optional Targeted Low Income Children's Program covering children whose family income is up to and including 250% of FPL. As of January 1, 2013, all newly eligible children are being enrolled in Medi-Cal. The Governor's 2013-14 Budget Summary proposed to phase out MRMIB, but the Legislature declined to adopt this proposal. Enrollment in some MRMIB programs may decline because of the ACA. For example, some MRMIP subscribers could receive better coverage and potentially pay lower premiums in Covered California. With the exception of calendar years 2013 and 2014, individuals in MRMIP pay premiums that are 25% above the rate for a comparable product in the private market. [AB 1526 SB 800 Page 9 (Monning), Chapter 855, Statutes of 2012, authorized MRMIB to lower premiums to 100% and MRMIB has exercised this option for 2013 and 2014.] Despite the high cost, MRMIP products all have a low annual and lifetime limit. In addition, depending on income, many MRMIP enrollees will likely be able to obtain more affordable coverage with better benefits in Covered California (where premium and cost-sharing subsidies are available). However, not all MRMIP enrollees will be eligible to participate in Covered California. Other MRMIB programs such as AIM and CHIM will need to remain based on federal requirements to maintain existing programs. 5)SUPPORT . Proponents argue that this bill will allow the state to target outreach efforts for enrollment in subsidized coverage and help ensure more of California's uninsured become aware of the coverage options available to them under the ACA starting next year. Proponents state that it is more important than ever to educate people about expanding subsidized health coverage programs and take steps to enroll them in coverage. This is a win-win-win. Tax subsidies are 100% federally funded and coverage for the Medi-Cal expansion population is also 100% federally funded through 2017, with the federal share gradually reducing to 90% in 2020. The state, the health care economy, and Californians will benefit immeasurably from these federally funded health benefits. 6)RELATED LEGISLATION . a) AB 2 X1 (Pan) Chapter 1, Statutes of 2013 First Extraordinary Session and SB 2 X1 (Ed Hernandez) Chapter 2, Statutes of 2013 First Extraordinary Session enact substantially similar provisions to implement the ACA insurance provisions related to health insurance regulated under the Insurance Code and the Health and Safety Code, respectively. b) AB 1 X1 (John A. Pérez), Chapter 3, Statutes of 2013 First Extraordinary Session and SB 1 X1 (Ed Hernandez and Steinberg), Chapter 4, Statutes of 2013 First Extraordinary Session, implement various provisions of the ACA regarding Medi-Cal eligibility and program simplification including the use of MAGI and expansion of eligibility in the Medi-Cal program. AB 1 X1, implements most of the eligibility provisions and includes a provision that requires DHCS, or any other government agency that is SB 800 Page 10 determining eligibility for, or enrollment in, the Medi-Cal program, any other program administered by DHCS or collecting protected health information for those purposes, and the Exchange to share information with each other as necessary to enable them to perform their respective statutory and regulatory duties under state and federal law. Requires this information to include, but not be limited to, personal information and protected health information regarding individual beneficiaries and applicants. c) SB 3 X1 (Ed Hernandez), Chapter 5, Statutes of 2013 First Extraordinary Session requires Covered California to establish a "bridge" plan product by contracting with Medi-Cal managed care plans for individuals losing Medi-Cal coverage (for example, because of an increase in income), the parents of Medi-Cal children, and individuals with incomes below 200% FPL. d) SB 28 (Ed 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, including a provision that permits the Exchange Board to use information from the MRMIP and the California Preexisting Condition Insurance Program (also known as the Federal Temporary High Risk Pool) to provide an individual a notice that he or she may be eligible for reduced-cost coverage through the Exchange or no-cost coverage through Medi-Cal. The notice shall include information on obtaining coverage pursuant to those programs. e) AB 50 (Pan) requires DHCS to establish a process to implement the ACA provision that allows hospitals to make a preliminary determination of a person's eligibility for Medi-Cal, requires DHCS to revise the existing process used for Medi-Cal enrollees to choose a managed care plan, requires DHCS, in consultation with the Exchange, and stakeholders, establish a new more coordinated process that is consistent with the ACA and allows applications for renewal of a person's Medi-Cal eligibility to be streamlined by prepopulating the form with existing available information. 7)PREVIOUS LEGISLATION . SB 800 Page 11 a) AB 1494 (Committee on Budget), Chapter 28, Statutes of 2012, among many other provisions, implements provisions of the Budget Act of 2012 which transferred the HFP to Medi-Cal (starting no sooner than January 1, 2013). b) AB 792 (Bonilla), Chapter 851, Statutes of 2012, establishes notification requirements about the availability of reduced-cost coverage available in the Exchange and no-cost coverage available in Medi-Cal to an individual filing a dissolution or nullity of marriage, divorce or separation, or petitioning for adoption or for an individual who ceases to be enrolled in health coverage through a health plan or health insurer. c) AB 714 (Atkins) of 2011 would have established health care eligibility notification requirements for individuals who are enrolled in, or who cease to be enrolled in, publicly funded state health care programs, and would have required an application for coverage to be made on their behalf through the Exchange and would have allowed individuals to decline health care coverage in a manner to be prescribed by the Exchange. AB 714 was held under submission in the Senate Appropriations Committee. d) AB 43 (Monning) of 2012 would have expanded Medi-Cal coverage to persons with income that does not exceed 133% FPL, effective January 1, 2014, and would have required a transition plan for persons enrolled in a Low Income Health Program. AB 43 died on the Senate Inactive File. e) SB 677 (Ed Hernandez) of 2012 would have required DHCS to implement the provisions of the ACA relating to eligibility and benefits in the Medi-Cal program. SB 677 died on the Assembly Inactive File. f) AB 1296 (Bonilla), Chapter 641, Statutes of 2011, the Health Care Eligibility, Enrollment, and Retention Act, requires the California Health and Human Services Agency, in consultation with other state departments and stakeholders, to undertake a planning process to develop plans and procedures regarding these provisions relating to enrollment in state health programs, as required by federal law. AB 1296 also requires that an individual would have the option to apply for state health programs through a SB 800 Page 12 variety of means. g) AB 1602 (John A. Pérez), Chapter 655, Statutes of 2010, and SB 900 (Alquist), Chapter 659, Statutes of 2010, establishes the Exchange as an independent public entity to purchase health insurance on behalf of Californians with incomes of between 100% and 400% FPL and employees of small businesses. Clarifies the powers and duties of the board governing the Exchange relative to the administration of the Exchange, determining eligibility and enrollment in the Exchange, and arranging for coverage under qualified carriers. 8)TECHNICAL AMENDMENTS . a) Conflicting statutes. AB 82 (Committee on Budget), Chapter 23, Statutes of 2013, a Health Budget Trailer Bill added the same statute number as this bill. A technical amendment is needed to change the number. b) Revised terminology. AB 1 X1 replaced the term "state health subsidy program" with "insurance affordability program." A technical amendment is need to this bill to conform. REGISTERED SUPPORT / OPPOSITION : Support 100% Campaign American Federation of State, County and Municipal Employees, AFL-CIO California Pan-Ethnic Health Network California School Employees Association Children Now Children's Defense Fund-California Children's Partnership County Welfare Directors Association of California Health Access California PICO California SEIU Local 1000 SEIU-California Western Center on Law and Poverty Opposition None on file. Analysis Prepared by : Teri Boughton / HEALTH / (916) 319-2097 SB 800 Page 13