BILL ANALYSIS Ó
SB 1341
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Date of Hearing: August 6, 2014
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
SB 1341 (Mitchell) - As Amended: May 6, 2014
Policy Committee: HealthVote:17-0
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill specifies requirements related to functionality in two
information technology systems used to process Medi-Cal
eligibility, the Statewide Automated Welfare System (SAWS) used
by counties and the California Healthcare Eligibility,
Enrollment, and Retention System (CalHEERS) used by the
California Health Benefits Exchange. Specifically, this bill:
1)Requires SAWS to be the system of record for Medi-Cal, and to
contain all Medi-Cal eligibility rules and case management
functionality, with specified exceptions.
2)Effective January 1, 2016, specifies that SAWS shall be used
to generate all consumer notifications called Notices of
Action (NOAs) related to Medi-Cal, and that CalHEERS may be
used to generate notices to consumers related to the premium
tax credit program, as specified.
FISCAL EFFECT
1)Information technology costs, likely in the range of several
million dollars (50% GF/50% federal or 10% GF/90% federal if
federal approval is granted for enhanced matching funds) to
program functionality related to NOAs into the relevant
computer systems.
2)Significant reduced administrative cost pressure, potentially
exceeding $10 million GF ongoing, for county eligibility work.
County eligibility workers conduct eligibility screenings and
interface with beneficiaries on behalf of the state. Counties
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are funded by DHCS to process Medi-Cal eligibility, and are
currently reimbursed on a historical and negotiated basis, not
on a time basis or per-case basis. Thus, county
administrative costs and state GF costs are highly correlated,
but do not correspond exactly.
According to county eligibility workers, the current system of
issuing NOAs using the CalHEERS system has resulted in a high
degree of confusion and has led to unnecessary increased
administrative workload. The County Welfare Director's
Association (CWDA), the sponsor of this bill, estimates the
status quo is resulting in additional workload of $260 million
in 2014-15 and $155 million ongoing (likely 25% GF).
Relieving this workload pressure would translate into a
significant reduction in state cost pressure. Inaccurate and
vague notices appear to be generating significant additional
workload because workers have to spend additional time
researching cases, responding to questions, and handling
appeals. The CWDA estimate may be slightly overstated because
county workers would incur additional costs to verify the
accuracy and appropriately annotate NOAs to avoid beneficiary
confusion, which would offset some of the projected savings.
However, CWDA also asserts various assumptions were fairly
conservative, and the unnecessary increased administrative
workload imposed by the status quo costs may actually be
higher than they calculated. On balance, the estimates appear
reasonable in magnitude, even if they are not completely
accurate due to the data quality of several assumptions used
to make the estimate.
Practically speaking, the actual costs incurred statewide on
eligibility functions in a given time period are constrained
by the capacity of county workforce. Thus, the effect of this
additional time spent on cases is not an immediate direct cost
to the state, but results in cost pressure to increase
administrative funding to counties and prevents the state from
conducting eligibility and enrollment functions in a timely
way. If the state does not correct the notices and counties
continue to incur this higher level of costs on an ongoing
basis, there will be significant cost pressure to increase
funding for eligibility work in future years.
COMMENTS
1)Purpose . According to the author, this bill will clarify the
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respective roles of SAWS and CalHEERS in order to minimize
confusion and errors related to Medi-Cal eligibility under the
ACA. This bill will also ensure that NOAs are able to be
tailored in an accurate manner and consistent with legal
requirements.
2)Background . The federal Patient Protection and Affordable Care
Act (ACA) changed the income eligibility rules for most
Medicaid enrollees to a tax-based system for counting income,
called Modified Adjusted Gross Income (MAGI). These MAGI
eligibility rules are also used to calculate eligibility for
advance premium tax credits (APTCs) and cost-sharing subsidies
in Covered California.
CalHEERS contains the business rules for MAGI eligibility
determinations and is used by both Covered California and
counties in determining eligibility for APTC and MAGI
Medi-Cal. CalHEERS is a web-based application portal where
individuals and small businesses can research, compare, check
their eligibility for, apply, and purchase health coverage.
CalHEERS was designed to interface with various federal,
state, and local information technology systems to perform the
administrative functions necessary for the purchase of health
insurance, including the three SAWS consortia system, which
have their own eligibility determination functionality for
Medi-Cal. The interface between SAWS and CalHEERS went live in
January 2014, but it continues to needed significant upgrades
and fixes.
3)Notices of Action . Existing law requires county social
service departments to notify beneficiaries in writing of
their Medi-Cal-only eligibility or ineligibility, and of any
changes made in their eligibility status or share of cost.
These notifications are called NOAs.
As currently designed, CalHEERS does not allow counties to
create, edit, and send NOAs for MAGI Medi-Cal. The NOAs are
instead automatically generated and sent by CalHEERS. This
bill specifies that NOAs related to Medi-Cal must be generated
by the county SAWS systems, which county staff indicate will
allow them to verify NOAs are accurate and sufficiently clear
and detailed, which will avoid significant follow-up work.
4)Staff Comments . This bill appears to offer a viable solution
for reducing administrative costs that are inflated by
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confusing, incorrect, or vague notices, in a cost-effective
manner. Staff notes there may also be other viable options
for addressing this issue, including modifying the CalHEERS
system to improve the notices or allowing CalHEERS to send
some notices while allowing counties the option to modify and
send others. Given there are often multiple solutions for
what appears to be an IT and system process problem, the
administrative process, as opposed to the legislative process,
appears to be an appropriate way to consider potential
solutions. For example, if a system was able to effectively
automate eligibility and notification processes, it could have
long-term administrative cost savings. On balance, however,
given the apparent scale of the problem at this time, the
costs to implement this bill, and the projected administrative
workload savings, it appears the approach taken by this bill
will result in significant cost savings to the state by
allowing county eligibility workers to improve the accuracy of
communication with beneficiaries.
Analysis Prepared by : Lisa Murawski / APPR. / (916) 319-2081