BILL ANALYSIS                                                                                                                                                                                                    

                                                                     AB 187

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          Date of Hearing:  April 7, 2015

                            ASSEMBLY COMMITTEE ON HEALTH

                                  Rob Bonta, Chair

          AB 187  
          (Bonta) - As Amended March 4, 2015

          SUBJECT:  Medi-Cal:  managed care:  California Children's  
          Services program.

          SUMMARY:  Extends the sunset date on the prohibition on  
          incorporating California Children's Services (CCS) covered  
          services in a Medi-Cal managed care (MCMC) contract until the  
          Department of Health Care Services (DHCS) has completed  
          evaluations of CCS pilot programs.   

          EXISTING LAW:  

          1)Establishes the Medi-Cal Program, administered by DHCS, which  
            provides comprehensive health benefits to low-income children,  
            their parents or caretaker relatives, pregnant women, elderly,  
            blind or disabled persons, nursing home residents, and  
            refugees who meet specified eligibility criteria.

          2)Establishes the CCS Program to provide specified medical care  
            and therapy services to children with eligible conditions.

          3)Authorizes the state to contract for comprehensive managed  
            health care services for Medi-Cal beneficiaries and requires  
            mandatory enrollment of beneficiaries in specified eligibility  


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          4)Prohibits, until January 1, 2016, CCS covered services from  
            being incorporated into MCMC contracts, except in county  
            organized health systems (COHS) plans originally established. 

          5)Requires DHCS to seek proposals to establish models of  
            organized health care delivery for Medi-Cal eligible children  
            with CCS-eligible conditions and conduct an evaluation.

          FISCAL EFFECT:  This bill has not yet been analyzed by a fiscal  


          1)PURPOSE OF THIS BILL.  According to the author, CCS is a vital  
            program that our most medically vulnerable children rely on to  
            provide them with timely and adequate access to specialty  
            health care services.  The author states that the most recent  
            CCS carve-out is expiring in January of 2016, and the  
            Legislature has a responsibility to ensure that future  
            administration of the CCS program maintains high standards of  
            care, continues to allow providers to make fiscally  
            disinterested decisions and strengthens care coordination for  
            families.  This bill continues excluding the CCS program from  
            MCMC until DHCS has completed an evaluation of two CCS pilots  
            that were authorized in 2010.  The author concludes that after  
            the evaluations are completed, stakeholders, the Legislature  
            and administration will have more information which will allow  
            an adequate evaluation of the future of CCS.

          2)BACKGROUND.  Originally established in 1927, the CCS Program  
            provides diagnostic and treatment services, medical case  
            management, and physical and occupational therapy services to  
            children under age 21 with CCS-eligible medical conditions.   
            Some examples of CCS-eligible conditions include chronic  
            medical conditions such as cystic fibrosis, hemophilia,  


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            cerebral palsy, heart disease, cancer, traumatic injuries, and  
            certain infectious diseases.  CCS also provides medical  
            therapy services that are delivered at public schools.

          The CCS program is administered as a partnership between county  
            health departments and DHCS.  As of January, 2010, there were  
            178,530 children enrolled in CCS.  According to DHCS, 90% of  
            CCS enrollees are also eligible for Medi-Cal and 10% were  
            CCS-only or were covered by other insurance.  The Medi-Cal  
            Program reimburses providers for Medi-Cal eligible  

          CCS is a statewide program.  In counties with populations  
            greater than 200,000 (independent counties), county staff  
            perform all case management activities for eligible children  
            residing within their county.  This includes determining all  
            phases of program eligibility, evaluating needs for specific  
            services, determining the appropriate provider(s), and  
            authorizing for medically necessary care.  For counties with  
            populations under 200,000 (dependent counties), the Children's  
            Medical Services Branch of DHCS provides medical case  
            management and eligibility and benefits determination through  
            its regional offices located in Sacramento, San Francisco, and  
            Los Angeles.  CCS authorizes and pays for specific medical  
            services and equipment provided by CCS-approved specialists.

          3)MCMC.  MCMC contracts for health care services through  
            established networks of organized systems of care, which  
            emphasize primary and preventive care.  Managed care plans are  
            a cost-effective use of health care resources that improve  
            health care access and assure quality of care.  Approximately  
            8.8 million Medi-Cal beneficiaries in all 58 California  
            counties receive their health care through six different  
            models of managed care. 

          Mandatory enrollment of families and children into a MCMC full  
            risk plan was authorized as part of the state budget of 1992.   
            In implementing this mandatory enrollment, the former  
            Department of Health Services (now DHCS) released a strategic  


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            plan in 1993.  With regard to CCS, the Strategic Plan stated  
            that the department desired Medi-Cal children participating in  
            managed care to continue to have direct access to the level of  
            highly specialized services provided under the CCS Program.   
            In order to assure that CCS-eligible children received the  
            benefit of fully-coordinated care, it would be the  
            responsibility of the managed care plan to identify children  
            with CCS-eligible conditions, arrange for referral to the  
            local CCS office and coordinate the provision of care.  CCS  
            services would continue to be provided through the CCS program  
            while children would be mandatorily enrolled in a health plan  
            in the counties covered by the managed care expansion for  
            purposes of receiving primary care and other services  
            unrelated to the conditions being treated by the CCS Program.

          4)CCS "CARVE OUT."  Consistent with the Strategic Plan, SB 1371  
            (Bergeson), Chapter 917, Statutes of 1994, was enacted to  
            provide that CCS-covered services, for CCS-eligible children,  
            would not be incorporated into managed care, termed a "carve  
            out" and would be provided and paid for on a fee-for service  
            basis through the CCS Program for three years.  Also in line  
            with the Strategic Plan, SB 1371 authorized pilot projects to  
            test alternative managed care models tailored to the special  
            health care needs of CCS program, including using different  
            payment and incentive models.  No pilot projects were ever  

          The carve out has been extended repeatedly since then, usually  
            for three or four year periods.  The first extension allowed  
            the COHS in the counties of San Mateo, Santa Barbara, Solano,  
            and Napa to include CCS services. Later extensions also  
            allowed Yolo and Marin counties to include CCS services

            a stakeholder process to investigate potential improvements or  
            changes to the CCS program, in partnership with the University  
            of California, Los Angeles Center for Health Policy Research.  
            A CCS Redesign Stakeholder Advisory Board (RSAB) composed of  
            individuals from various organizations and backgrounds with  


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            expertise in both the CCS program and care for children and  
            youth with special health care needs, was assembled in  
            September of 2014 to lead this process.  RSAB meets on a  
            bi-monthly bases and the last convening will be in July of  

          According to DHCS, the CCS RSAB goals are to: 

             a)   Implement Patient and Family Centered Approach:  provide  
               comprehensive treatment, and focus on the whole-child  
               rather than only their CCS eligible conditions. 

             b)   Improve Care Coordination through an Organized Delivery  
               System:  provide enhanced care coordination among primary,  
               specialty, inpatient, outpatient, mental health, and  
               behavioral health services through an organized delivery  
               system that improves the care experience of the patient and  

             c)   Maintain Quality:  ensure providers and organized  
               delivery systems meet quality standards and outcome  
               measures specific to the CCS population. 

             d)   Streamline Care Delivery:  improve the efficiency and  
               effectiveness of the CCS health care delivery system. 

             e)   Build on Lessons Learned:  consider lessons learned from  
               current pilots and prior reform efforts, as well as  
               delivery system changes for other Medi-Cal populations. 

             f)   Cost-Effective:  ensure costs are no more than the  
               projected cost that would otherwise occur for CCS children,  
               including all state-funded delivery systems.  Consider  
               simplification of the funding structure and value-based  
               payments, to support a coordinated service delivery  

          6)SECTION 1115 WAIVERS.  Section 1115 of the Social Security Act  
            authorizes the federal Secretary of Health and Human Services  


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            to allow states to receive federal Medicaid matching funds  
            without complying with all of the federal Medicaid rules.  On  
            November 1, 2010, California received federal approval for a  
            five year Section 1115 Medi-Cal Demonstration Project Waiver,  
            entitled "A Bridge to Reform."  Authorization for the Bridge  
            to Reform Waiver expires on October 2, 2015.  Traditionally  
            designed as research and demonstration programs to test  
            innovative program improvements and to facilitate coverage  
            expansions to populations not otherwise eligible, they are  
            also used to modify benefits structures and financing  

          The 2010 Bridge to Reform Waiver included authorization for CCS  
            pilot programs aimed at improving health outcomes, improving  
            cost-effectiveness, creating clearer accountability, improving  
            satisfaction with care, and promoting timely access to care  
            and family-centered care. 

          Four potential models for CCS pilot projects emerged from the  
            CCS Technical Working Group and the Stakeholder Advisory  

             a)   Existing Medi-Cal Managed Care Organization Plans  
             b)   Specialty Health Care Plan;
             c)   Enhanced Primary Care Case Management, and
             d)   Provider-based Accountable Care Organization.

            Five counties were awarded grants to carry out the four pilots  
            on October 12, 2011. 

            On March 27, 2015, DHCS submitted a request to renew the  
            state's section 1115 Medicaid Waiver for a new five-year term.  
            The new Waiver, "Medi-Cal 2020," seeks approximately $17  
            billion in federal investment to further the achievements  
            California has made in health care reform through a set of  
            payment and delivery system transformation strategies.  The  
            Medi-Cal 2020 Waiver program includes extended authorization  
            for the CCS pilot programs authorized in 2010. 


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          7)CCS PILOTS.  SB 208 (Steinberg), Chapter 714, Statutes of  
            2010, requires DHCS to seek proposals to test these models  
            either statewide or on a more limited geographic basis and not  
            limited to the provision of CCS services.  SB 208 requires the  
            models to be established by January 1, 2012 and requires they  
            be selected from among the models developed by the Children  
            with Special Health Care Needs Technical Workgroup.  There was  
            no specified number of pilots and no ending date.

            Five CCS pilots were ultimately authorized under the 2010 1115  
            Waiver, focused on exploring new service delivery models that  
            would improve the CCS Program and meet both stakeholder and  
            the state's needs.  The proposed pilots varied by types of  
            providers participating, enrollment criteria, and eligibility  
            criteria. Only two pilot projects were undertaken, the San  
            Mateo Health Plan MCO pilot and the Rady Children's Hospital  
            Provider Based MCO pilot.

             a)   Rady Children's Hospital San Diego.  The County CCS  
               program determines if CCS children met the criteria to be  
               in the accountable care organization demonstration project  
               based on three qualifying health conditions. They estimated  
               625 members would be eligible. Beneficiaries are placed in  
               a delivery system designed to meet his/her needs.

             b)   Health Plan of San Mateo.  All 2,000 CCS children in San  
               Mateo would be eligible for the MCO plan.  They will  
               provide holistic care including primary care, specialty  
               care, social and psychological care, as well as whatever  
               services are necessary to address the child and family's  
               well-being.  The pilot launched in April of 2013.   


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            These models were required to meet specified standards  
            including establishing a network that includes CCS-approved  
            providers and maintain the current system of regionalized  
            pediatric specialty and subspecialty services.  SB 208 also  
            requires DHCS to conduct a simultaneous evaluation, to assess  
            the effectiveness of each model in improving the delivery of  
            health care services for these children and specifies the  
            measures for the evaluation.  These measures included, at  
            minimum, the following: 

             a)   The types of services and expenditures for services;
             b)   Improvement in the coordination of care for children;

             c)   Improvement in the quality of care;

             d)   Improvement in the value of care provided;

             e)   The rate of growth of expenditures; and,

             f)   Parent/Provider satisfaction.

          8) SUPPORT.  According to the Children's Specialty Care  
            Coalition, CCS carve-out has been extended repeatedly to  
            protect access to the specialty care for this vulnerable  
            population. Recently, DHCS, in its effort to strengthen the  
            program, assembled the CCS RSAB.  The RSAB is composed of  
            stakeholders including the Children's Specialty Care Coalition  
            to assess the CCS program in its current state and develop a  
            framework for a new model of care going forward.  The  
            development and implementation of any new model will take  
            time, and must be phased in slowly.  The Children's Specialty  


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            Care Coalition believes that this bill is necessary to ensure  
            the care that children receive through CCS is not disrupted,  
            while efforts are underway by DHCS and RSAB to explore new  
            ways to enhance delivery of care.

          9)RELATED LEGISLATION.  SB 586 (Ed Hernandez), removes the CCS  
            carve-out sunset date and creates a new health plan, the Kids  
            Integrated Delivery System (KIDS) plan. The KIDS plan is  
            required to coordinate, integrate, and provide or arrange for  
            the full range of Medi-Cal and CCS services. This bill is  
            scheduled to be heard on April 22, 2014 in the Senate Health  

          10) PREVIOUS  

             a)   AB 301 (Pan), Chapter 460, Statutes of 2011, extends the  
               sunset date from January 1, 2012, to January 1, 2016 on the  
               CCS carve-out. 

             b)   SB 208 (Steinberg), Chapter 714, Statutes of 2010,  
               implements the new 2010 Medi-Cal Section 1115 Waiver, and  
               requires DHCS to establish a pilot project and seek  
               proposals to test four models exploring potential options  
               to redesign the CCS Program.

             c)   AB 2379 (Chan), Chapter 333, Statutes of 2007, extends  
               the sunset date from August 1, 2008, to January 1, 2012 on  
               the CCS carve-out.

             d)    SB 1103 (Committee on Budget and Fiscal Review),  
               Chapter 228, Statutes of 2004, extends the sunset on the  
               carve-out from August 1, 2005 to September 1, 2008. 


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             e)   AB 3049 (Committee on Health), Chapter 536, Statutes of  
               2002, extends the sunset on the carve-out from August 1,  
               2003 to August 1, 2005 and added COHS in Yolo and Marin  
               counties to the list of exceptions to the carve-out.  

             f)   AB 1107 (Cedillo), Chapter 146, Statutes of 1999,  
               extends the sunset on the carve-out until August 1, 2003.  

             g)   AB 469 (Papan) of 1999 would have allowed Medi-Cal  
               beneficiaries in the CCS Program to disenroll from  
               mandatory managed care if certain conditions are met.  AB  
               469 was vetoed by then Governor Davis.

             h)   SB 391 (Solis), Chapter 294, Statutes of 1997, extended  
               the CCS carve-out until August 1, 2000, except for  
               contracts entered into for COHS in the counties of San  
               Mateo, Santa Barbara, Solano, and Napa.  

             i)   SB 1371 (Bergeson), Chapter 917, Statutes of 1994,  
               required that CCS-eligible services be carved out of any  
               MCMC contract until three years after the effective date of  
               the contract.  



          American Academy of Pediatrics, California

          Children's Specialty Care Coalition


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          None on file.

          Analysis Prepared by:Paula Villescaz / HEALTH / (916) 319-2097