BILL ANALYSIS Ó
SENATE COMMITTEE ON HEALTH
Senator Ed Hernandez, O.D., Chair
BILL NO: AB 72
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|AUTHOR: |Bonta and Atkins |
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|VERSION: |December 18, 2014 |
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|HEARING DATE: |July 15, 2015 | | |
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|CONSULTANT: |Scott Bain |
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SUBJECT : Medi-Cal: demonstration project.
SUMMARY : Requires the Department of Health Care Services to submit an
application to the federal Centers for Medicare and Medicaid
Services for a waiver to implement a demonstration project that
furthers the delivery of high-quality and cost-efficient care
for Medi-Cal beneficiaries, ensures the long-term viability of
the delivery system following the expansion of Medi-Cal
eligibility under the federal Patient Protection and Affordable
Care Act, and continues California's momentum and successes in
innovation achieved under the 2010 "Bridge to Reform" Waiver.
Existing law:
1)Establishes the Medi-Cal program, which is administered by the
Department of Health Care Services (DHCS) and under which
qualified low-income persons receive health care benefits.
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.
This bill:
1)Requires DHCS to submit an application to the federal Centers
for Medicare and Medicaid Services (CMS) for a waiver to
implement a demonstration project that does all of the
following:
a) Furthers the delivery of high-quality and
cost-efficient care for Medi-Cal beneficiaries;
b) Ensures the long-term viability of the
delivery system following the expansion of Medi-Cal
AB 72 (Bonta) Page 2 of ?
eligibility under the federal Patient Protection and
Affordable Care Act (ACA); and,
c) Continues 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)Contains an urgency clause that will make this bill effective
upon enactment.
FISCAL EFFECT : According to the Assembly Appropriations
Committee analysis, 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.
PRIOR
VOTES :
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|Assembly Floor: |78 - 0 |
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|Assembly Appropriations Committee: |16 - 0 |
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|Assembly Health Committee: |18 - 0 |
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COMMENTS :
1)Author's statement. According to the author, this bill is one
of two legislative vehicles to make the necessary statutory
changes to implement a new Section 1115 Medicaid waiver as the
2010 California Bridge to Reform Waiver (Waiver) expires on
October 31, 2015. The Waiver renewal is critical to the
long-term fiscal sustainability of the Medi-Cal program and to
AB 72 (Bonta) Page 3 of ?
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 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)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
(Act) gives the Secretary of the Department of Health and
Human Services (HHS) authority to waive provisions of major
health and welfare programs authorized under the Act. 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 authority for
"costs not otherwise matchable" or CNOM.
Section 1115 waivers are approved at the discretion of the
Secretary of HHS through negotiations between a state and CMS
for projects that the Secretary determines promote Medicaid
program objectives. 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.
3)Bridge to Reform Waiver. California's existing Section 1115
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"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 Bridge to Reform Waiver enabled California to:
a. 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;
b. Require the mandatory enrollment of SPDs into
Medi-Cal managed care plans in specified counties;
c. Provide federal funding for delivery system reform
and uncompensated care in designated public hospital
systems (21 county and University of California
hospitals) through the DSRIP and Safety Net Care Pool
Uncompensated Care (SNCP);
d. Provided federal funding for designated state health
care programs and workforce development programs related
to medically disadvantaged service areas; and,
e. 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).
1)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:
a) 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
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through managed care plans, who could not otherwise be
required to enroll in managed care;
b) 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,
c) 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.
1)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" (Medi-Cal 2020). DHCS identified five core goals in
that document, as follows:
a) Improve health care quality and outcomes for the
Medi-Cal population;
b) Strengthen primary care delivery and access;
c) Build a foundation for an integrated health care
delivery system that incentivizes quality and efficiency;
d) Address social determinants of health and improve
health care equity; and,
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 (IHS) uncompensated care, Designated
State Health Programs (DSHPs), the pending Drug Medi-Cal
Organized Delivery System program, and the provision of full
scope benefits for pregnant women with incomes between 109
percent to 138 percent of the federal poverty level.
In addition to the continuation of existing waiver programs,
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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:
a) Managed Care Systems Transformation & Improvement
Program - Joint incentive pools for Medi-Cal plans,
behavioral health systems and providers to align
incentives, improve health outcomes and reduce overall
costs;
b) 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;
c) 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;
d) Workforce Development Program - Waiver funding to
provide financial incentives to (a) 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; (b)
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 (c) 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;
e) 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;
f) 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; and,
g) 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 savings
that is projected, California would be required to limit the
spending on waiver reinvestment initiatives to ensure overall
savings and budget neutrality.
The state's waiver request in Medi-Cal 2020 is for $17.1
billion in federal funds over the five years of the waiver.
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1)Related legislation. SB 36 (Hernandez and De Leon), is
identical to this bill. SB 36 is scheduled to be heard in the
Assembly Health Committee on July 14, 2015.
2)Prior legislation. AB 342 (John A. Pérez, Chapter 723,
Statutes of 2010), enacted the Low-Income Health Program to
provide health care benefits to uninsured adults up to 200
percent of the federal poverty level, at county option through
a Medi-Cal waiver demonstration project.
SB 208 (Steinberg, Chapter 714, Statutes of 2010), implemented
provisions of the 2010 Section 1115 waiver including
establishing the Public Hospital Investment, Improvement and
Incentive Fund (known as DRSIP) consisting of IGTs from
counties or other specified governmental entities, to be
matched with federal funds and to be used for investment,
improvement and incentive payments for DPHs and the affiliated
governmental entities (counties and UC); 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 required 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.
AB 1066 (John A. Pérez, Chapter 86, Statutes of 2011), enacted
statutory changes to implement the Section 1115 Medi-Cal
Demonstration Project Waiver approved on November 2, 2010, for
funding designated public hospitals (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.
3)Support. The California Association of Physician Groups (CAPG)
writes that it supports policy measures that encourage the
implementation of the Triple Aim which include decreased cost,
improved patient experience and development of population
health management. CAPG writes 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. CAPH states it continues to support
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and participate in the waiver renewal stakeholder process.
The California State Association of Counties (CSAC) writes in
support that DHCS' Medi-Cal 2020 waiver renewal addresses the
counties' priorities, and introduces a new concept
transforming California's public safety net for the remaining
uninsured by creating a global payment system. CSAC states the
global payments offer a unique opportunity for California to
serve as an incubator in testing new payment methods for
delivering care to the uninsured and in transforming care away
from high-cost settings (such as emergency rooms) towards
primary care. CSAC argues these individual payments would
allow each hospital system more certainty about its budget and
how much in federal funds will be available.
SUPPORT AND OPPOSITION :
Support: American Federation of State, County and Municipal
Employees
Association of California Health Care Districts
California Association of Physician Groups
California Association of Public Hospitals and Health
Systems
California State Association of Counties
California State Council of the Service Employees
International Union
Community Clinic Association of Los Angeles County
District Hospital Leadership Forum
Planned Parenthood Affiliates of California
University of California
Oppose: None received
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