BILL ANALYSIS                                                                                                                                                                                                    ”

                                                                     AB 187

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          Date of Hearing:  April 22, 2015


                                 Jimmy Gomez, Chair

          187 (Bonta) - As Amended March 4, 2015

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          Urgency:  No  State Mandated Local Program:  NoReimbursable:  No


          This bill prohibits services covered through the California  
          Children's Services (CCS) program from being incorporated into  
          Medi-Cal managed care contracts, until the Department of Health  
          Care Services (DHCS) completes an evaluation of specified CCS  


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          pilot programs. 

          FISCAL EFFECT:

          There is no direct increase in state costs, as this continues  
          the current practice of "carving out" CCS services.  However,  
          this bill prohibits the incorporation of CCS services into  
          managed care contracts for an open-ended period of time, and  
          could result in foregone cost savings, potentially in the  
          millions of dollars (GF/federal funds) if it hampers the state's  
          ability to make program improvements.  Cost savings could  
          potentially come from administrative streamlining, better care  
          coordination, reduced utilization or duplication, or other  
          program improvements.


          1)Purpose.  The author states extending the sunset on  
            prohibiting the integration of CCS services into managed care  
            contracts maintains CCS as a separate, organized system that  
            meets the needs of eligible children.  They contend without  
            extending the January 1, 2016, sunset on this prohibition,  
            CCS-eligible children with catastrophic and chronic medical  
            conditions will not be protected from potential disruption of  
            services. This measure is sponsored by the Children's  
            Specialty Care Coalition, a coalition of providers of  
            pediatric specialty medical care.

          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.   


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            Examples of CCS-eligible conditions include, but are not  
            limited to, serious and chronic medical conditions such as  
            cystic fibrosis, hemophilia, cerebral palsy, heart disease,  
            cancer, traumatic injuries, and certain infectious diseases. 
          3)CCS Carve-out.  During the 1990s, as California began  
            enrolling increasing numbers of Medi-Cal beneficiaries  
            (including children) into managed care plans, providers and  
            children's advocates became concerned that CCS-eligible  
            children would fail to receive the same quality of care as  
            they did through CCS.  As a result, in 1994, a "carve-out" for  
            CCS-eligible children, who are enrolled in Medi-Cal managed  
            care, became law, requiring these children to continue  
            receiving highly specialized care for their CCS-eligible  
            condition through CCS, while receiving preventive and general  
            care through a managed care plan.  The law contained a sunset  
            that has since been extended several times. Most recently, AB  
            301 (Pan), Chapter 460, Statutes of 2011, extended this sunset  
            until January 1, 2016. 
          4)CCS Redesign. While the CCS carve-out has been effective in  
            providing access to high-quality pediatric specialty care for  
            eligible children, it has also been identified by stakeholders  
            as a barrier to effective care coordination because children  
            are forced to seek care through two separate systems.  
            Furthermore, independent reviews have identified a broad array  
            of other program challenges, including significant program  
            variation across counties, a complex and burdensome financial  
            structure, various access problems, and an inefficient  
            authorization process for services.   The 2010 "Bridge to  
            Reform" Medi-Cal waiver authorized pilot programs to test new  
            models of care in CCS.  Due to myriad challenges, only two  
            pilots have gone forward: those proposed by San Mateo Health  
            Plan and Rady Children's Hospital.  This bill would continue  
            the carve-out until these pilots have been evaluated.  

            Meanwhile, DHCS, with support from UCLA, convened stakeholders  
            in 2014, to further discuss ways to improve the CCS program.   
            At a December 2, 2014 stakeholder meeting, DHCS stated,  


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            "without regard to sunset of the CCS "carve-out," DHCS is not  
            predisposed to mandatorily enroll CCS eligible children into  
            managed care for CCS services." 

          1)Related Legislation. SB 586 (Ed HernŠndez), scheduled to be  
            heard today in the Senate Health Committee, 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. 

          5)Prior Legislation. In addition to AB 301, discussed above, AB  
            2379 (Chan), Chapter 333, Statutes of 2007, extended the  
            sunset date from August 1, 2008, to January 1, 2012,          
            on the CCS carve-out.  Several other bills prior to AB 2379  
            have also extended the sunset.
            SB 208 (Steinberg), Chapter 714, Statutes of 2010, required  
            DHCS to seek proposals for the CCS pilots whose evaluations  
            are the trigger of this bill. 

          2)Staff Comments. This bill raises three issues.  First, it is  
            unclear when the evaluations will be completed, making it  
            difficult to ascertain the true effect of the bill.  Second,  
            it may hamper the state's ability to pursue improvements to  
            the program until such evaluations have been completed.  For  
            example, the current stakeholder process may identify program  
            improvements that necessitate incorporating some CCS services  
            into managed care contracts. If this bill became law, however,  
            this would be prohibited.  Third, it is unclear that waiting  
            until the pilots are evaluated is an appropriate trigger for  
            removing the prohibition.  As there are only two pilot  
            programs going forward, it is unclear whether even the  
            evaluation will be sufficiently robust to offer meaningful  
            conclusions that can inform the potential design of the  


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            program statewide.  For example, there may be local factors  
            that influence the success or failure of aspects of the pilot  
            in the two specific areas.  Instead of tying the prohibition  
            to evaluation of the pilots, the author may wish to consider  
            an alternate way to balance the intent to preserve the current  
            protections offered by the carve-out with flexibility to  
            pursue improvements that may otherwise be prohibited for  

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