BILL ANALYSIS                                                                                                                                                                                                    Ó




                   Senate Appropriations Committee Fiscal Summary
                            Senator Kevin de León, Chair


          SB 964 (Hernandez) - Health care service plans: timeliness  
          standards: medical surveys.
          
          Amended: April 9, 2014          Policy Vote: Health 5-1
          Urgency: No                     Mandate: Yes
          Hearing Date: May 19, 2014      Consultant: Brendan McCarthy
          
          This bill meets the criteria for referral to the Suspense File.
          
          
          Bill Summary: SB 964 would expand the requirements on managed  
          care plans for surveying and reporting on access to care. The  
          bill would require Medi-Cal managed care plans to generally  
          comply with existing reporting requirements imposed on other  
          commercial health plans.

          Fiscal Impact: 
              Annual costs of about $4.5 million per year to develop  
              regulations, respond to complaints, and enforce requirements  
              of the bill by the Department of Managed Health Care  
              (Managed Care Fund).

              No significant impacts to the Medi-Cal program are  
              anticipated. The Department of Health Care Services does not  
              expect that the additional survey and reporting requirements  
              in the bill will significantly increase costs to Medi-Cal  
              managed care plans.

          Background: Under state and federal law, the Department of  
          Health Care Services operates the Medi-Cal program, which  
          provides health care coverage to pregnant women, children and  
          their parents with low incomes, as well as blind, disabled, and  
          certain other populations. Generally, the federal government  
          provides a 50 percent federal match for state expenditures.  
          Pursuant to the federal Affordable Care Act, California has  
          opted to expand eligibility for Medi-Cal up to 138 percent of  
          the federal poverty level and to include childless adults.  

          With the exception of certain populations (for example,  
          individuals eligible for limited scope Medi-Cal benefits or  
          individuals dually eligible for Medi-Cal and Medicare in most  
          counties), managed care is the primary system for providing  








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          Medi-Cal benefits. The Department estimates that in 2014-15, 7.5  
          million Medi-Cal beneficiaries (73 percent of total enrollment)  
          will receive care through the managed care system. 

          Under current law, health plans are regulated by the Department  
          of Managed Health Care. Existing law and regulation imposes a  
          variety of requirement on health plans to ensure that they  
          maintain adequate networks of providers (such as primary care  
          providers, specialty care providers, hospitals, etc.). Existing  
          standards require health plan enrollees to have access to care  
          based on geographical proximity and timely access to providers.  
          In order to verify compliance with these requirements, health  
          plans are subject to a variety of reporting requirements on the  
          adequacy of their provider networks. 

          Commercial Medi-Cal managed care plans are generally subject to  
          regulation by the Department of Managed Health Care. However,  
          county organized health systems, which provide Medi-Cal managed  
          care services are not. Current law exempts Medi-Cal managed care  
          plans from many of the existing network adequacy requirements in  
          law, provided that the plans meet similar requirements through  
          the contracting process with the Department of Health Care  
          Services.

          Proposed Law: SB 964 would expand the requirements on managed  
          care plans for surveying and reporting on access to care. The  
          bill would require Medi-Cal managed care plans to generally  
          comply with existing reporting requirements imposed on other  
          commercial health plans.

          Specific provisions of the bill would:
              Require health plans to use specified survey methodologies,  
              if specified by the Department of Managed Health Care;
              Require the Department of Managed Health Care to review and  
              post information on its website (beginning in 2016) on its  
              findings;
              Repeal the exemption from medical survey requirements by  
              Medi-Cal managed care plans;
              Require a health plan that provides Medi-Cal managed care  
              services to conduct medical surveys on its Medi-Cal managed  
              care plan product line, distinct from surveys of its other  
              product lines;
              Require annual review of Medi-Cal managed care plan medical  
              surveys for compliance with existing standards;








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              Require a health plan that provides coverage through  
              Covered California to conduct distinct surveys between  
              product lines sold inside and outside of Covered California;
              Require additional medical surveys for Medi-Cal managed  
              care plans that have enrolled additional members due to  
              several recent transitions of populations from  
              fee-for-service Medi-Cal to managed care;
              Allow the Department of Managed Health Care and the  
              Department of Health Care Services to coordinate surveys and  
              plan reviews;
              Require a county organized health system to be treated as a  
              licensed health plan with respect to timely access  
              requirements.

          Staff Comments: County organized health systems are local  
          government entities. By increasing responsibilities on those  
          plans, it is possible that the bill would increase their costs.  
          The costs to operate a county organized health plan, including  
          administrative costs, are paid through the state Medi-Cal  
          program. Thus, any additional costs to counties under the bill  
          would need to be negotiated with the Department of Health Care  
          services through that process, rather than through he mandate  
          claims process.