BILL ANALYSIS                                                                                                                                                                                                    Ó

                                                                      AB 72

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          Date of Hearing:  April 15, 2015


                                 Jimmy Gomez, Chair

          72 (Bonta) - As Introduced December 18, 2014

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          Urgency:  Yes State Mandated Local Program:  NoReimbursable:  No

          This bill 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 specified  
          demonstration project related to the Medi-Cal program.  

          The bill is vague as to the requirements of the waiver, but  


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          specifies the department shall implement the waiver or  
          demonstration project only upon submittal of an implementation  
          plan to the appropriate policy and fiscal committees of the  
          Legislature at least 60 days prior to any appropriation.  It  
          also requires DHCS to consult with stakeholders.

          FISCAL EFFECT:

          This bill in its current form does not result in additional  
          state costs.  

          DHCS is currently incurring staff and in-kind costs for  
          development of a "Section 1115 Waiver," so called for the  
          section of federal law that provides CMS broad authority to  
          waive provisions of federal Medicaid law to seek improved  
          outcomes.  Private foundations have committed about $650,000,  
          and about $250,000 in federal matching funds are likely  
          available for these purposes.  Foundations are also funding  
          additional consulting work related to waiver development.   

          If the bill is amended to include specific waiver provisions,  
          such provisions are likely to have significant fiscal effects.  




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          1)Purpose.  According to the author, this bill is one of two  
            legislative vehicles to make statutory changes necessary to  
            implement a new Section 1115 Medicaid waiver, and contains  
            important Legislative notification and stakeholder  
            consultation requirements.  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.  Specific  
            strategies anticipated for inclusion are: a federal-state  
            shared savings initiative; housing and supportive services for  
            vulnerable populations; 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. Section 1115 of the Social Security Act gives the  
            federal Secretary of Health and Human Services authority to  
            waive certain federal rules in order to allow states to expand  
            eligibility, improve services, enhance delivery systems, and  
            receive federal reimbursement for activities that are normally  
            not eligible for reimbursement.  Authority for the current  
            1115 waiver, titled "A Bridge to Reform," expires October 31,  
            2015. This waiver included a number of initiatives to prepare  
            the state for implementation of the federal Affordable Care  
            Act, including mandatory enrollment of additional Medi-Cal  
            populations into managed care, early expansion of Medi-Cal at  
            local option called the Low-Income Health Program (LIHP), a  
            DSRIP program that provided over $3 billion in federal  
            matching funds for quality improvement at public hospitals,  
            and federal matching funds for certain state health programs  
            that were otherwise ineligible for matching funds.  The new  
            waiver, titled "Medi-Cal 2020" is currently under development.  
             After months of stakeholder input, DHCS submitted a concept  
            paper to CMS on March 27, 2015.


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          1)Related Legislation. SB 36 (Ed Hernandez) is nearly identical  
            to this bill.  SB 36 is pending in the Senate Appropriations  

            AB 1432 (Bonta), also being heard today in this committee, is  
            similar to this bill, but requires DHCS to submit a waiver  
            application specific to substance use and co-occurring  

          2)Prior Legislation. Prior legislation has implemented  
            components of the 2010 Bridge to Reform Waiver, including the  

             c)   AB 342 (John A. Pérez), Chapter 723, Statutes of 2010  
               enacted the LIHP.

             d)   SB 208 (Steinberg), Chapter 714, Statutes of 2010,  
               implemented provisions related to the DSRIP for public  
               hospital quality improvement, mandatory enrollment in  
               managed care, and authorized pilot projects to test new  
               approaches to the California Childrens' Services (CCS)  

             e)   AB 1066 (John A. Pérez), Chapter 86, Statutes of 2011,  
               enacts funding provisions for public hospitals.  


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          Analysis Prepared by:Lisa Murawski / APPR. / (916)