BILL ANALYSIS                                                                                                                                                                                                    



          SENATE COMMITTEE ON APPROPRIATIONS
                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          AB 72 (Bonta) - Medi-Cal:  demonstration project
          
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          |Version: December 18, 2014      |Policy Vote: HEALTH 9 - 0       |
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          |Urgency: Yes                    |Mandate: No                     |
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          |Hearing Date: August 17, 2015   |Consultant: Brendan McCarthy    |
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          This bill does not meet the criteria for referral to the  
          Suspense File.


          Bill  
          Summary:  AB 72 would require the Department of Health Care  
          Services to submit an application to the federal government for  
          a Section 1115 waiver of federal law, to allow the state to make  
          changes to the operation of the Medi-Cal program for the period  
          of 2015 to 2020.


          Fiscal  
          Impact:  No new administrative costs to the Department of Health  
          Care Services are anticipated due to this bill. The Department  
          is currently in the process of developing a waiver application  
          and has been engaged in planning and stakeholder discussions  
          which will continue in 2015-16. Because the Department is  
          already undertaking these efforts this bill will not impose new  
          administrative duties on the Department.


          Background:  Under state and federal law, the Department of Health Care  
          Services operates the Medi-Cal program, which provides health  







          AB 72 (Bonta)                                          Page 1 of  
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          care coverage to low income individuals, families, and children.  
          The federal government provides matching funds that vary from 50  
          percent to 90 percent of expenditures depending on the category  
          of beneficiary.

          Current federal law allows states to apply for "Section 1115  
          waivers" of requirements of the federal Social Security Act.  
          This process allows states, on a case by case basis, to make  
          changes to their Medicaid program with the approval of the  
          federal Centers for Medicare and Medicaid Services. In general,  
          for the federal government to approve a waiver, the state must  
          demonstrate that will assist in promoting the objectives of  
          Medicaid and that total federal costs will not exceed  
          fee-for-service equivalent costs to the federal government over  
          the period of the waiver, typically five years.

          California's existing Section 1115 wavier, referred to as the  
          "Bridge to Reform Waiver" will expire in October 2015. The  
          existing wavier was designed to provide about $10 billion in  
          addition federal funding to the state to fund an early  
          implementation of the coverage expansion under the Affordable  
          Care Act and to invest in safety net health care programs. (The  
          additional federal funds were available due to cost savings  
          created through the use of Medi-Cal managed care to reduce per  
          beneficiary expenditures below what they would have been through  
          fee-for-service health care.)

          The Department of Health Care Services has been engaged in the  
          process for developing a new Section 1115 waiver and has  
          submitted a preliminary proposal to the federal government.  
          Under that proposal, the state would be eligible for about $17  
          billion in additional federal funding to invest in innovative  
          programs, such as more comprehensive care for the uninsured  
          population, workforce development, and programs to transform  
          health care delivery systems.


          Proposed Law:  
            AB 72 would require the Department of Health Care Services to  
          submit an application to the federal government for a Section  
          1115 waiver of federal law, to allow the state to make changes  
          to the operation of the Medi-Cal program for the period of 2015  
          to 2020.
          The bill is an urgency measure.








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          Related  
          Legislation:  SB 36 (Hernandez and de Leon) is almost identical  
          to this bill. That bill is pending in the Assembly  
          Appropriations Committee.


          Staff  
          Comments:  The intention in developing the new Section 1115  
          wavier is to allow the state to generate cost savings (chiefly  
          by using managed care to provide appropriate primary care and  
          preventative care to avoid costly hospitalizations) and to use a  
          portion of the projected cost savings to fund other state  
          programs, such as safety net programs for the uninsured  
          population. Based on preliminary analyses by the Department, the  
          state has indicated to the federal government that it will be  
          requesting about $17 billion in shared savings over the five  
          year waiver period from the federal government to support  
          additional waiver programs.
          While this bill requires the Department to submit a waiver  
          application to the federal government, it does not specify the  
          programmatic requirements of such a waiver.




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