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 SB 964 (Hernandez) Page 1 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; SB 964 (Hernandez) Page 2 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.