BILL ANALYSIS Ó
AB 72
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Date of Hearing: April 7, 2015
ASSEMBLY COMMITTEE ON HEALTH
Rob Bonta, Chair
AB 72
(Bonta and Atkins) - As Introduced December 18, 2014
SUBJECT: Medi-Cal: demonstration project.
SUMMARY: Requires the Department of Health Care Services (DHCS)
to submit an application to the federal Centers for Medicare and
Medicaid Services (CMS) for a waiver to implement a
demonstration project. Specifically, this bill:
1)Requires that the demonstration project to do all of the
following:
a) Further the delivery of high-quality and cost-efficient
care for Medi-Cal beneficiaries;
b) Ensure the long-term viability of the delivery system
following the expansion of Medi-Cal eligibility under the
federal Patient Protection and Affordable Care Act (ACA);
and,
c) Continue California's momentum and successes in
innovation achieved under the 2010 "Bridge to Reform"
Waiver.
2)Requires DHCS to consult with interested stakeholders and the
Legislature in developing the waiver application.
3)Allows DHCS to implement the waiver only upon submittal of an
implementation plan to the appropriate policy and fiscal
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committees of the Legislature 60 days before any appropriation
is made.
EXISTING STATE LAW:
1)Establishes the Medi-Cal program to provide comprehensive health
benefits to low-income persons.
2)Establishes a demonstration project under the Medi-Cal program
until October 31, 2015, to implement specified objectives,
including better care coordination for Seniors and Persons
with Disabilities (SPDs) and maximization of opportunities to
reduce the number of uninsured individuals.
EXISTING FEDERAL LAW:
1)Establishes that the federal government will provide a match for
the Medicaid program, termed the federal medical assistance
percentage, which varies by state and territory according to a
specified formula.
2)Allows states to be granted waivers of federal law to implement
demonstration projects in their Medicaid programs.
FISCAL EFFECT: This bill has not been analyzed by a fiscal
committee.
COMMENTS:
1)PURPOSE OF THIS BILL. According to the author, this bill is
one of two legislative vehicles to make the necessary
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statutory changes to implement a new Section 1115 Medicaid
waiver as the 2010 California Bridge to Reform Waiver expires
on October 31, 2015. The Waiver renewal is critical to the
long-term fiscal sustainability of the Medi-Cal program and to
California's ability to continue to provide high quality
health care to Medi-Cal beneficiaries. The goals of the Waiver
are to continue to support ACA implementation, improve the
health care quality and outcomes of the over 12 million
individuals enrolled in Medi-Cal, and provide for the
long-term fiscal stability of the Medi-Cal program through
delivery system transformation. Specific strategies
anticipated to be included in the waiver renewal include a
federal-state shared savings initiative; housing and
supportive services for vulnerable populations; various health
plan and provider delivery system transformation and alignment
incentive programs, including a new Delivery System Reform
Incentive Payment Program (DSRIP) at designated public
hospitals and non-designated public hospitals; workforce
development strategies to expand provider access and capacity;
and, safety net payment and delivery system transformation.
2)BACKGROUND.
a) Federal Section 1115 Waiver and Expenditure Authority.
Medicaid (known as Medi-Cal in California) is a joint
federal-state program to provide health coverage to
low-income individuals. Section 1115 of the federal Social
Security Act gives the Secretary of the Department of
Health and Human Services (HHS) authority to waive
provisions of major health and welfare programs. This
includes certain federal Medicaid requirements in any
experimental pilot or demonstration project which, in the
judgment of the Secretary, is likely to assist in promoting
the objectives of Medicaid. In addition, Section 1115 also
allows states to use federal Medicaid funds to reimburse
for costs in ways that are not otherwise allowed under
federal Medicaid law. This is referred to as expenditure
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authority for costs not otherwise matchable.
Section 1115 waivers are approved at the discretion of the
Secretary of HHS through negotiations between a state and
CMS. Section 1115 waivers are generally approved for a
five-year period and then must be renewed. Although not
required by statute or regulation, longstanding federal
administrative policy has required waivers to be budget
neutral for the federal government, meaning that federal
spending under a waiver must not be more than projected
federal spending in the state without the waiver.
b) Bridge to Reform Waiver. California's existing Section
1115 "California Bridge to Reform Demonstration" Waiver is
a five-year demonstration of health care reform initiatives
that was projected to provide an additional $10 billion in
federal funds over the lifetime of the waiver. The waiver
prepared the state for successful implementation of health
care reform through an early expansion of Medicaid, and
tested innovations in health care support for safety net
providers. California is currently in the fourth year of
this waiver, which began November 1, 2010 and expires
October 31, 2015. Under the current waiver, California is
required to submit an extension request no later than six
months prior to the expiration date of the current
demonstration. California also operates its Medi-Cal
managed care delivery system under this federal waiver.
The current Bridge to Reform Waiver enabled California to:
i) Implement an early expansion of Medicaid to
low-income adults without minor children under the ACA
through the Low Income Health Program (LIHP), which
enrolled 650,000 individuals;
ii) Require the mandatory enrollment of SPDs into
Medi-Cal managed care plans in specified counties;
iii) Provide federal funding for delivery system reform
and uncompensated care in designated public hospital
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systems (21 county and University of California
hospitals) through DSRIP and Safety Net Care Pool
Uncompensated Care (SNCP);
iv) Provide federal funding for designated state health
care programs and workforce development programs related
to medically disadvantaged service areas; and,
v) Operate its Medi-Cal managed care program,
Community-Based Adult Services (CBAS) program, and seven
county Coordinated Care Initiative (under the CCI,
individuals dually eligible for Medicare and Medi-Cal
receive their Medi-Cal and Medicare benefits through one
health plan).
c) What Provisions of federal law are "Waived" in the
Current Waiver? In the current Bridge to Reform waiver,
the federal government waived specified federal Medicaid
provisions. Major provisions waived include the following:
i) The "Freedom of Choice" requirement to enable
California to require participants to receive benefits
through certain providers and to permit the state to
require that Medi-Cal beneficiaries receive benefits
through managed care plans, who could not otherwise be
required to enroll in managed care;
ii) The "Statewideness" requirement to enable California
to operate the demonstration and implement coverage for
new Medi-Cal eligibles on a county-by-county basis, and
to provide managed care plans only in certain geographic
areas; and,
iii) The "Amount, Duration, and Scope of Services and
Comparability" requirement to enable California to offer
a different benefit package to Medi-Cal beneficiaries in
the SPD program that includes benefits that are not
available to all categorically needy individuals.
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d) DHCS Waiver Submission. On March 27, 2014, following
several months of waiver-related stakeholder meetings, DHCS
submitted an application to renew the state's Section 1115
Waiver Demonstration entitled "Medi-Cal 2020: Key Concepts
for Renewal." DHCS identified five core goals in that
document, as follows:
i) Improve health care quality and outcomes for the
Medi-Cal population;
ii) Strengthen primary care delivery and access;
iii) Build a foundation for an integrated health care
delivery system that incentivizes quality and efficiency;
and,
iv) Address social determinants of health and improve
health care equity;
e) Use California's sophisticated Medicaid program as an
incubator to test innovative approaches to whole-person
care.
DHCS indicates the focus of the Waiver Renewal will be on
continuing to drive the transformation of its Medi-Cal
program, ensuring ongoing support for the safety net in
California, and ensuring the long-term viability of the
program and the Medicaid expansion. Existing 1115 Waiver
authorities and programs that would continue under the next
Waiver include the CCI, the CBAS waiver, managed care
program, Indian Health Services uncompensated care,
Designated State Health Programs, the pending Drug Medi-Cal
Organized Delivery System program, and the provision of
full scope benefits for pregnant women with incomes between
109% to 138% of the federal poverty level (FPL).
In addition to the continuation of existing waiver programs,
DHCS will pursue a set of six, cross-cutting approaches
that together will advance delivery system transformation
in California as part of Medi-Cal waiver renewal:
i) Managed Care Systems Transformation & Improvement
Program - (Joint incentive pools for Medi-Cal plans,
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behavioral health systems and providers to align
incentives, improve health outcomes, and reduce overall
costs.)
ii) Fee-for-service (FFS) Transformation & Improvement
Program - (FFS incentives in dental and maternity care to
expand access to dental services through targeted
incentives to increase provider participation and
incenting delivery of preventative services in lieu of
more invasive and costly procedures.)
iii) Public Safety Net System Transformation &
Improvement Program - (Funding for quality improvement
for public hospitals, and expanding eligibility for this
funding to the 40+ non-designated public hospitals.)
iv) Workforce Development Program - (Waiver funding to
provide financial incentives to: (1) health professionals
who have not previously cared for Medi-Cal members, and
to existing Medi-Cal providers who treat additional
Medi-Cal beneficiaries, targeted to health professionals
in geographic areas with the greatest need for Medi-Cal
participating providers and to professions and
specialties where recruiting is most challenging; (2)
voluntary training opportunities to improve quality for
non-clinical members of the care team to help those new
to coverage navigate the health system through health
education and other outreach efforts; and (3) incentives
and programs to expand cross-training of providers in
primary care, mental health, substance use disorder
services, and long-term services and supports, and to
support integration of multi-disciplinary teams across
care settings.)
v) Increased Access to Housing and Supportive Services
Program - (The Waiver will provide tools to better
coordinate care for the most vulnerable Medi-Cal members
through policies, data analysis and measurement that
facilitate access to supportive services that are also
proven to reduce costs, including improved access to
affordable housing.)
vi) Whole Person Care Pilots - (An option for enhanced
model of regional partnerships requiring proposals for a
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geographic region, such as a county or group of counties,
jointly pursued by the county and applicable Medi-Cal
plans for that region whereby managed care plans,
counties, and local partners would provide Whole-Person
Care for target high need patients through collaborative
leadership and systematic coordination with other public
and private entities identified by the county. The pilot
design would encourage innovation in delivery and
financing strategies to improve health outcomes of target
populations.)
vii) Public Safety Net System Global Payment for the
Remaining Uninsured - (Moving disproportionate share
hospital (DSH) and SNCP funding into a global budget
structure where care for the remaining uninsured would be
provided within a global budget for all uninsured
services, thus giving public hospital systems the
incentive to provide more coordinated upstream care for
the uninsured and reduce inappropriate utilization.)
In support of California's efforts to achieve the goals
outlined above, DHCS seeks to test a new investment
strategy in partnership with the federal government by
initiating a federal-state shared savings model.
California's shared savings initiative would involve a
reinvestment of Federal funding in recognition of the
savings that California's Section 1115 demonstration
initiatives generate to the benefit of both the state and
the federal government. This reinvestment would provide
the state with a portion of the federal savings that are
generated through the demonstration to facilitate and
augment continued Medi-Cal delivery system transformation.
Under this initiative, California would be required to
demonstrate that the federal savings generated under the
waiver are substantial enough to permit California to
retain a portion or percentage of that savings. The state
would need to demonstrate that, even after reinvestment in
the waiver strategies, the federal government will continue
to realize savings. If the waiver strategies implemented
through Medi-Cal 2020 do not result in the level of federal
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savings that is projected, California would be required to
limit the spending on waiver reinvestment initiatives to
ensure overall savings and budget neutrality.
3)SUPPORT. Supporters look forward to continue working to
develop and implement a new 1115 waiver. They are hopeful
that the new waiver will contain the innovative idea that will
promote the increased use of primary and preventative care to
restrain costs and help improve outcomes. Supporters also
note the Medi-Cal 2020 waiver renewal document reflects the
thorough and energetic work of DHCS, stakeholders and others
in the stakeholder workgroups. They note the new "Medi-Cal
2020" waiver seeks approximately $17 billion in federal
investment to further the achievements California has made in
health care reform that a set of payment and delivery system
transformation strategies. Supporters conclude they continue
to support and participate in the waiver renewal stakeholder
process.
4)RELATED LEGISLATION. SB 36 (Ed Hernandez) is identical to
this bill. SB 36 is pending in the Senate Health Committee on
April 8, 2015.
5)PRIOR LEGISLATION.
a) AB 342 (John A. Pérez), Chapter 723, Statutes of 2010,
enacts the LIHP to provide health care benefits to
uninsured adults up to 200% of the FPL, at county option
through a Medi-Cal waiver demonstration project.
b) SB 208 (Steinberg), Chapter 714, Statutes of 2010,
implements provisions of the 2010 Section 1115 waiver
including establishing the Public Hospital Investment,
Improvement and Incentive Fund (known as DRSIP) consisting
of Intergovernmental Transfers from counties or other
specified governmental entities, to be matched with federal
funds and to be used for investment, improvement and
incentive payments for designated public hospitals (DPHs)
and the affiliated governmental entities (counties and UC);
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authorized DHCS to require the mandatory enrollment of SPDs
in a Medi-Cal managed care plan commencing on the later of
either June 1, 2011, or obtaining federal approval; and
requires DHCS to implement pilot projects to provide
coordinated care to children in the California Children's
Service and to persons who are eligible for Medi-Cal and
Medicare.
c) AB 1066 (John A. Pérez), Chapter 86, Statutes of 2011,
enacts statutory changes to implement the Section 1115
Medi-Cal Demonstration Project Waiver approved on November
2, 2010, for funding DPHs. AB 1066 continues under the new
waiver the FFS cost-based reimbursement for DPHs, with
those hospitals providing the required federal match using
their own funds through certified public expenditures. AB
1066 also establishes under the waiver a new distribution
methodology for DSH and SNCP funds to DPHs, as specified.
REGISTERED SUPPORT / OPPOSITION:
Support
American Federation of State, County and Municipal Employees,
AFL-CIO
California Association of Physician Groups
California Commission on Aging
California PACE Association
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California Primary Care Association
California State Association of Counties
Planned Parenthood Affiliates of California
Opposition
None on file
Analysis Prepared by:Roger Dunstan / HEALTH / (916) 319-2097