BILL ANALYSIS                                                                                                                                                                                                    

                          Senator Ed Hernandez, O.D., Chair

          BILL NO:                    AB 187    
          |AUTHOR:        |Bonta                                          |
          |VERSION:       |May 28, 2015                                   |
          |HEARING DATE:  |July 8, 2015   |               |               |
          |CONSULTANT:    |Scott Bain                                     |
           SUBJECT  : Medi-Cal: managed care: California Children's Services  

          SUMMARY  : Extends the sunset date on the California Children's Services  
          (CCS) "carve out" by an additional one year, under which  
          CCS-covered services are prohibited from being incorporated in a  
          Medi-Cal managed care plan.
          Existing law:
          1)Establishes the Medi-Cal Program, administered by DHCS, which  
            provides comprehensive health benefits to low-income children  
            up to 266% of the federal poverty level (FPL), parents and  
            adults up to 138% of the FPL, pregnant women, and elderly,  
            blind or disabled persons, who meet specified eligibility  

          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 to  
            require mandatory enrollment of Medi-Cal beneficiaries in  
            specified eligibility categories into managed care plans.

          4)Prohibits CCS covered services from being be incorporated into  
            any Medi-Cal managed care (MCMC) plan contract entered into  
            after August 1, 1994 until January 1, 2016, except for  
            contracts entered into for county organized health systems or  
            Regional Health Authority in the Counties of San Mateo, Santa  
            Barbara, Solano, Yolo, Marin, and Napa. This is known as the  
            CCS "carve out."

          5)Requires the Director of DHCS to establish, by January 1,  
            2012, organized health care delivery models for CCS-eligible  


          AB 187 (Bonta)                                      Page 2 of ?
            children. Requires these models to be chosen from the  

               a)     An enhanced primary care case management program;
               b)     A provider-based accountable care organization;
               c)     A specialty health care plan; or,
               d)     A Medi-Cal managed care plan that includes payment  
                 and coverage for CCS-eligible conditions.

          This bill: Extends the sunset date on the CCS "carve out" by an  
          additional one year, until January 1, 2017. Under the CCS carve  
          out, CCS-covered services are prohibited from being incorporated  
          in a MCMC plan.
          EFFECT  : According to the Assembly Appropriations Committee,  
          there is no direct increase in state costs, as this continues  
          the current practice of "carving out" CCS services.   This bill  
          prohibits the incorporation of CCS services into managed care  
          contracts for one year.  It is unlikely to have a fiscal impact  
          as compared to the status quo, as a current stakeholder process  
          is underway to redesign the CCS delivery system and it is  
          unlikely that children would enroll in managed care before  
          January 1, 2017.

          VOTES  :  
          |Assembly Floor:                     |78 - 0                      |
          |Assembly Appropriations Committee:  |17 - 0                      |
          |Assembly Health Committee:          |16 - 0                      |
          |                                    |                            |
          COMMENTS  :
          1)Author's statement.  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 most recent CCS carve-out is  
            expiring in January of 2016, and this bill extends the CCS  
            carve-out from Medi-Cal Managed Care until 2017.  DHCS is  
            currently convening workgroups with stakeholders to determine  


          AB 187 (Bonta)                                      Page 3 of ?
            the future of the CCS program, however, any large change in  
            the program will need adequate time for implementation.  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  
          2)CCS. The CCS program provides diagnostic and treatment  
            services, medical case management, and physical and  
            occupational therapy health care services to children under 21  
            years of age with CCS-eligible conditions (e.g., severe  
            genetic diseases, chronic medical conditions, infectious  
            diseases producing major sequelae, and traumatic injuries)  
            from families unable to afford catastrophic health care costs.  
            A child eligible for CCS must be a resident of California,  
            have a CCS-eligible condition, and be in a family with an  
            adjusted gross income of $40,000 or less in the most recent  
            tax year. Children in families with higher incomes may still  
            be eligible for CCS if the estimated cost of care to the  
            family in one year is expected to exceed 20% of the family's  
            adjusted gross income. 

          The CCS program is administered as a partnership between county  
            health departments and DHCS. 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. CCS authorizes and pays for specific  
            medical services and equipment provided by CCS-approved  
            specialists. CCS rates for physician services provided under  
            CCS are reimbursed at rates which are 39.7% greater than  
            applicable Medi-Cal rate. CCS hospital inpatient rates are the  
            same as those in Medi-Cal.

          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  


          AB 187 (Bonta)                                      Page 4 of ?

          3)Medi-Cal managed care and the CCS carve out. Most Medi-Cal  
            beneficiaries, including children, are required to enroll in  
            Medi-Cal managed care plans. However, for children who are  
            enrolled in both Medi-Cal and CCS, CCS services were carved  
            out of Medi-Cal managed care pursuant to SB 1371 (Bergeson,  
            Chapter 917), Statutes of 1994. Under the carve out,  
            CCS-covered services for CCS-eligible children are not  
            incorporated into Medi-Cal managed care, and are instead  
            provided and paid for on a FFS basis through the CCS Program.  
            The initial carve out under SB 1371 was for three years. The  
            CCS 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. DHCS  
            indicates the division of payment and care between CCS and the  
            primary Medi-Cal managed care plan has posed challenges,  
            including delays in care for children, fragmentation and a  
            lack of coordination, and increased cost to the state.

          4)Medi-Cal Waiver and CCS pilots. SB 208 (Steinberg, Chapter  
            714), Statutes of 2010, was one of two bills in 2010  
            implementing the 2010 Medi-Cal waiver renewal. One provision  
            of SB 208 was a requirement that the DHCS director establish,  
            by January 1, 2012, organized health care delivery models for  
            CCS-eligible children, from four specified models. Five  
            demonstration applicants (San Mateo Health Plan, Alameda  
            County, LA Care, Children's Hospital Orange County, and Rady  
            Children's Hospital in San Diego) were approved in 2011, but  
            only the San Mateo Health Plan pilot has been implemented. The  
            Rady Children's Hospital in San Diego is for a subset of  
            CCS-eligible children with specified conditions but it has not  
            been implemented. 

          5)DHCS CCS proposal. DHCS has implemented a stakeholder process  
            to investigate potential improvements or changes to the CCS  
            program in partnership with the UCLA Center for Health Policy  
            Research. A CCS Redesign Stakeholder Advisory Board (RSAB)  
            composed of individuals from various organizations and  
            backgrounds with expertise in both the CCS program and care  
            for children and youth with special health care needs, was  


          AB 187 (Bonta)                                      Page 5 of ?
            assembled in September of 2014 to lead this process. 

          In June 2015, DHCS released is proposal for the CCS program  
            based on a "whole-child model" that would be implemented in  
            specified counties no sooner than January 2017. The first  
            phase would incorporate CCS services into Medi-Cal managed  
            care plans into three COHS plans in 15 additional counties.  
            Those counties are Del Norte, Humboldt, Lake, Lassen,  
            Mendocino, Merced, Modoc, Monterey, Orange, Santa Cruz, San  
            Luis Obispo, Shasta, Siskiyou, Sonoma, and Trinity.

          Under the whole-child model, health plans would be at full  
            financial risk. Medi-Cal managed care plans would be required  
            to demonstrate support from stakeholders and be subject to a  
            readiness review by DHCS. The readiness review would include  
            evidence of adequate network of CCS-paneled providers,  
            evidence of policies and procedures regarding access to  
            specialty care outside of designated catchment area, a CCSM  
            family advisory committee in each county, and an integrated  
            electronic health records system. Under the "whole-child  
            model," care coordination and service authorization will shift  
            from counties to health plans. Counties and health plans will  
            jointly develop Memorandums of Understanding (MOU) to document  
            transition plans for these activities. Counties (or the state,  
            for dependent counties) will continue to perform initial and  
            periodic financial, residential, and medical eligibility  
            determinations. Counties will maintain responsibility for  
            medical therapy programs, and MOUs will be required with  
            health plans and counties. To improve continuity of care and  
            access to specialty providers for youth aging out of CCS and  
            transitioning to Medi-Cal managed care, DHCS is requiring all  
            Medi-Cal managed care plans, on a phased-in basis, to contract  
            with CCS providers or providers who meet the CCS panel  

          In addition to the COHS counties, the whole-child model could  
            also be implemented in up to four counties in the two-plan  
            Medi-Cal managed care model. The determination of these  
            counties will be based on an application of interest to DHCS  
            from at least one plan in the county, a demonstration of  
            support from stakeholders and a readiness review by DHCS.  
            Based on the application and subject to federal approval, DHCS  
            may propose that CCS be incorporated into only one Medi-Cal  
            managed care plan in a two plan model county. Implementation  
            in the two-plan model counties would begin no earlier than  


          AB 187 (Bonta)                                      Page 6 of ?
            July 2017. 

          Under the DHCS proposal, children enrolled in existing fully  
            integrated models (such as Kaiser) would provide whole-child  
            care. In the remaining 33 counties where the whole-child model  
            is not offered, DHCS is proposing to extend the carve-out for  
            three additional years, until January 1, 2019. 

          6)Related legislation. SB 586 (Hernandez), would require DHCS to  
            enter into contracts with one or more Kids Integrated Delivery  
            System (KIDS) networks authorized by this bill to provide the  
            full range of CCS and Medi-Cal services to children eligible  
            for the CCS and Medi-Cal. This bill allows an individual on  
            Medi-Cal who is up to 26 years of age who was previously  
            treated for a CCS-eligible condition in the twelve months  
            prior to his or her         21st birthday to remain in a KIDS  
            network that accepts individuals up to age 26 under its  
            contract with DHCS. SB 586 would also make permanent, the CCS  
            "carve out" of CCS services from Medi-Cal managed care, except  
            for existing counties and for the newly created KIDS  
            established by this bill. SB 586 is awaiting hearing in the  
            Assembly Health Committee.

          7)Prior legislation. AB 301 (Pan, Chapter 460, Statutes of  
            2011), extended the CCS carve out sunset date from January 1,  
            2012, to January 1, 2016. 

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

            AB 2379 (Chan, Chapter 333, Statutes of 2007), extended the  
            CCS carve out sunset date from August 1, 2008, to January 1,  

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

            AB 3049 (Committee on Health, Chapter 536, Statutes of 2002),  
            extended the CCS carve out 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.  


          AB 187 (Bonta)                                      Page 7 of ?

            AB 1107 (Cedillo, Chapter 146, Statutes of 1999), extended the  
            CCS carve out sunset date until August 1, 2003.  

            AB 469 (Papan, 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.

            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.  

            SB 1371 (Bergeson, Chapter 917, Statutes of 1994), required  
            that CCS-eligible services be carved out of any Medi-Cal  
            managed care contract until three years after the effective  
            date of the contract.  
          8)Support.  The Children's Specialty Care Coalition (CSCC)  
            writes in support that the CCS carve-out has been extended  
            repeatedly to protect access to the specialty care for this  
            vulnerable population. CSCC 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. The CSCC  
            writes that, while it appreciates the DHCS stakeholder  
            process, it has significant concerns with the DHCS proposal  
            regarding network adequacy, monitoring of CCS standards of  
            care, and the lack of experience that some of the plans have  
            in dealing with children with chronic and serious health  
            conditions. CSCC states the DHCS bill language has not been  
            released, and it believes that with nearly two months left in  
            the legislative session, the CCS transition must be done  
            thoroughly and correctly and passing legislation in haste  
            could have serious unintended consequences. 
          Support:  American Federation of State, County and Municipal  
                    California Association of Health Plans
                    California Children's Hospital Association
                    Children's Specialty Care Coalition
                    Disability Rights California
                    March of Dimes California Chapter


          AB 187 (Bonta)                                      Page 8 of ?
                    UCSF Benioff Children's Hospital
                    University of California
          Oppose:   None received

                                      -- END --