BILL NUMBER: AB 366 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MAY 28, 2015
AMENDED IN ASSEMBLY MAY 14, 2015
AMENDED IN ASSEMBLY APRIL 7, 2015
INTRODUCED BY Assembly Member Bonta
(Principal coauthor: Assembly Member Gomez)
(Principal coauthor: Senator Hernandez)
(Coauthors: Assembly Members Achadjian, Bigelow, Bonilla, Burke,
Campos, Chiu, Chu, Cooley, Cooper, Dababneh, Dodd, Frazier, Gatto,
Gonzalez, Gray, Roger Hernández, Jones-Sawyer, Lackey, Levine, Lopez,
Low, Maienschein, McCarty, Medina, Nazarian, O'Donnell, Perea,
Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth,
Mark Stone, Thurmond, Ting, Waldron, Wilk, and Wood)
(Coauthors: Senators Block, Cannella, Galgiani, Hall, Hertzberg,
Hill, Jackson, Pan, Pavley, Roth, Stone, Wieckowski, and Wolk)
FEBRUARY 17, 2015
An act to amend Section 14105.28 of, and to add Sections
14105.194 and 14105.196 to, the Welfare and Institutions Code,
relating to Medi-Cal, and declaring the urgency thereof, to take
effect immediately. add Section 14105.2 to the Welfare
and Institutions Code, relating to Medi-Cal.
LEGISLATIVE COUNSEL'S DIGEST
AB 366, as amended, Bonta. Medi-Cal: reimbursement:
provider rates. annual access monitoring report.
Existing law establishes the Medi-Cal program, administered by the
State Department of Health Care Services, under which health care
services are provided to qualified, low-income persons. The Medi-Cal
program is, in part, governed and funded by federal Medicaid Program
provisions. Under the federal Patient Protection and Affordable Care
Act, existing state law extends Medi-Cal eligibility to childless
adults under 65 years of age.
This bill would require the State Department of Health Care
Services, by March 15, 2016, and annually thereafter by February 1,
to submit to the Legislature, and post on the department's Internet
Web site, a Medi-Cal access monitoring report providing an assessment
of access to care in Medi-Cal and identifying a basis to evaluate
the adequacy of Medi-Cal reimbursement rates and the existence of
other barriers to access to care, as specified. The bill would
require the department to hold a public meeting to present and
discuss the access monitoring report at least once annually, and
would require the department to accept public comment from
stakeholders at the public meeting. The bill would authorize the
department to enter into an interagency agreement with the University
of California to perform an ongoing assessment of access to care and
the adequacy of provider payments in Medi-Cal. The bill would
require, to the extent funding is provided in the annual Budget Act
and federal financial participation is available, rate increases to
be implemented for services, provider types, or geographic areas for
which rates are identified in the annual report as inadequate.
(1) Existing law establishes the Medi-Cal program, administered by
the State Department of Health Care Services, under which health
care services are provided to qualified, low-income persons. The
Medi-Cal program is, in part, governed and funded by federal Medicaid
provisions. Existing law requires the department to develop and
implement a Medi-Cal inpatient hospital reimbursement payment
methodology based on diagnosis-related groups, subject to federal
approval, that reflects the costs and staffing levels associated with
quality of care for patients in all general acute care hospitals, as
specified. Existing law generally requires the diagnosis-related
group-based payments to apply to all claims.
This bill would require claims for payments pursuant to the
inpatient hospital reimbursement methodology described above to be
increased by 16% for the 2015-16 fiscal year, and would require,
commencing July 1, 2016, and annually thereafter, the department to
increase each diagnosis-related group payment claim amount based, at
a minimum, on increases in the medical component of the California
Consumer Price Index. Commencing with the 2015-16 fiscal year, and
annually thereafter, the bill would require managed care rates for
Medi-Cal managed care health plans to be increased by a
proportionately equal amount for increased payments for hospital
services.
(2) Existing law requires, except as otherwise provided, Medi-Cal
provider payments to be reduced by 1% or 5%, and provider payments
for specified non-Medi-Cal programs to be reduced by 1%, for dates of
service on and after March 1, 2009, and until June 1, 2011. Existing
law requires, except as otherwise provided, Medi-Cal provider
payments and payments for specified non-Medi-Cal programs to be
reduced by 10% for dates of service on and after June 1, 2011.
This bill would, instead, prohibit the application of those
reductions for payments to providers for dates of service on or after
June 1, 2011. The bill would also require payments for managed care
health plans for dates of service following the effective date of the
bill to be determined without application of some of those
reductions. The bill would require the Director of Health Care
Services to implement this provision to the maximum extent permitted
by federal law and for the maximum time period for which the director
obtains federal approval for federal financial participation for
those payments.
(3) Prior law required, beginning January 1, 2013, through and
including December 31, 2014, that payments for primary care services
provided by specified physicians be no less than 100% of the payment
rate that applies to those services and physicians as established by
the Medicare program, for both fee-for-service and managed care
plans.
This bill, commencing January 1, 2016, would require, only to the
extent permitted by federal law and that federal financial
participation is available, payments for specified medical care
services to not be less than 100% of the payment rate that applies to
those services as established by the Medicare program for services
rendered by fee-for-service providers, and would require rates paid
to Medi-Cal managed care plans to be actuarially equivalent to
payment rates established by the Medicare program. The bill would
authorize the department to implement those provisions through
provider bulletins without taking regulatory action until regulations
are adopted, and would require the department to adopt those
regulations by July 1, 2018. The bill would require, commencing July
1, 2016, the department to provide a status report to the Legislature
on a semiannual basis until regulations have been adopted.
(4) This bill would declare that it is to take effect immediately
as an urgency statute.
Vote: 2/3 majority . Appropriation:
no. Fiscal committee: yes. State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 14105.2 is added to the
Welfare and Institutions Code , to read:
14105.2. (a) The Legislature finds and declares all of the
following:
(1) California has significantly reduced the number of uninsured
persons by expanding the Medi-Cal program under the federal Patient
Protection and Affordable Care Act (Public Law 111-148).
(2) It is important to ensure adequate access to care in the
Medi-Cal program as new enrollees seek appropriate care.
(3) The state needs to assess the gaps in access to care and act
swiftly to address those gaps.
(4) One area of anticipated need is the availability of more
Medi-Cal providers.
(5) California's Medi-Cal provider reimbursement rates have
historically been among the lowest in the nation.
(6) During recent years, the state has reduced reimbursement rates
to Medi-Cal providers due to budget constraints.
(7) An assessment of gaps in access should include a determination
of whether current provider rates are sufficient to ensure access to
care.
(b) Therefore, it is the intent of the Legislature that an annual
access monitoring report provide a valid, clear, and public
assessment of access to care in Medi-Cal, and provide a basis to
evaluate the adequacy of Medi-Cal rates and the existence of other
barriers to access to care.
(c) Notwithstanding Section 10231.5 of the Government Code, by
March 15, 2016, and annually thereafter by February 1, the department
shall submit to the Legislature, and post on the department's
Internet Web site, a Medi-Cal access monitoring report. The report
shall be submitted in compliance with Section 9795 of the Government
Code. The annual report shall:
(1) Present results of the department's ongoing access monitoring
efforts in fee-for-service and managed care. For managed care, the
report shall include results from the Department of Managed Health
Care's oversight of provider networks and timely access in Medi-Cal
managed care.
(2) Compare the level of access to care and services available
through Medi-Cal, to the level of access to care and services
available to the general population in different geographic areas of
California.
(3) Include access measurements of sufficient granularity to
reflect patient experience of access to particular services or
provider types, or in particular geographic areas.
(4) Identify particular services, provider types, or geographic
areas for which the level of access is less than the level of access
to care and services available to the general population in the
geographic area. For those services, provider types, or geographic
areas, the annual report shall assess and report on the adequacy of
provider payment rates and identify any other factors that impede
access.
(5) Use language clearly understandable to the public.
(6) Use more than one valid, generally accepted method to assess
access to care.
(d) At least once annually, the department shall hold a public
meeting to present and discuss the access monitoring report. The
department shall accept public comment from stakeholders at the
public meeting.
(e) The department may enter into an interagency agreement with
the University of California to perform an ongoing assessment of
access to care and the adequacy of provider payment rates in
Medi-Cal.
(f) For services, provider types, or geographic areas for which
rates are identified in the annual report as inadequate, rate
increases shall be implemented to the extent funding is provided in
the annual Budget Act and federal financial participation is
available.
SECTION 1. Section 14105.28 of the Welfare and
Institutions Code is amended to read:
14105.28. (a) It is the intent of the Legislature to design a new
Medi-Cal inpatient hospital reimbursement methodology based on
diagnosis-related groups that more effectively ensures all of the
following:
(1) Encouragement of access by setting higher payments for
patients with more serious conditions.
(2) Rewards for efficiency by allowing hospitals to retain savings
from decreased length of stays and decreased costs per day.
(3) Improvement of transparency and understanding by defining the
"product" of a hospital in a way that is understandable to both
clinical and financial managers.
(4) Improvement of fairness so that different hospitals receive
similar payment for similar care and payments to hospitals are
adjusted for significant cost factors that are outside the hospital's
control.
(5) Encouragement of administrative efficiency and minimizing
administrative burdens on hospitals and the Medi-Cal program.
(6) That payments depend on data that has high consistency and
credibility.
(7) Simplification of the process for determining and making
payments to the hospitals.
(8) Facilitation of improvement of quality and outcomes.
(9) Facilitation of implementation of state and federal provisions
related to hospital acquired conditions.
(10) Support of provider compliance with all applicable state and
federal requirements.
(b) (1) (A) (i) The department shall develop and implement a
payment methodology based on diagnosis-related groups, subject to
federal approval, that reflects the costs and staffing levels
associated with quality of care for patients in all general acute
care hospitals in state and out of state, including Medicare critical
access hospitals, but excluding public hospitals, psychiatric
hospitals, and rehabilitation hospitals, which include alcohol and
drug rehabilitation hospitals.
(ii) The payment methodology developed pursuant to this section
shall be implemented on July 1, 2012, or on the date upon which the
director executes a declaration certifying that all necessary federal
approvals have been obtained and the methodology is sufficient for
formal implementation, whichever is later.
(iii) Claims for payments pursuant to the payment methodology
based on diagnosis-related groups established under this section
shall be increased by 16 percent for the 2015-16 fiscal year. Managed
care rates to Medi-Cal managed care health plans shall be increased
by a proportionately equal amount for increased payments for hospital
services for the 2015-16 fiscal year.
(iv) Commencing July 1, 2016, and annually thereafter, the
department shall increase each diagnosis-related group payment claim
amount based, at a minimum, on increases in the medical component of
the California Consumer Price Index. Commencing July 1, 2016, and
annually thereafter, managed care rates to Medi-Cal managed care
health plans shall be increased by a proportionately equal amount for
increased payments for hospital services.
(B) The diagnosis-related group-based payments shall apply to all
claims, except claims for psychiatric inpatient days, rehabilitation
inpatient days, managed care inpatient days, and swing bed stays for
long-term care services, provided, however, that psychiatric and
rehabilitation inpatient days shall be excluded regardless of whether
the stay was in a distinct-part unit. The department may exclude or
include other claims and services as may be determined during the
development of the payment methodology.
(C) Implementation of the new payment methodology shall be
coordinated with the development and implementation of the
replacement Medicaid Management Information System pursuant to the
contract entered into pursuant to Section 14104.3, effective on May
3, 2010.
(2) The department shall evaluate alternative diagnosis-related
group algorithms for the new Medi-Cal reimbursement system for the
hospitals to which paragraph (1) applies. The evaluation shall
include, but not be limited to, consideration of all of the following
factors:
(A) The basis for determining diagnosis-related group base price,
and whether different base prices should be used taking into account
factors such as geographic location, hospital size, teaching status,
the local hospital wage area index, and any other variables that may
be relevant.
(B) Classification of patients based on appropriate acuity
classification systems.
(C) Hospital case mix factors.
(D) Geographic or regional differences in the cost of operating
facilities and providing care.
(E) Payment models based on diagnosis-related groups used in other
states.
(F) Frequency of group updates for the diagnosis-related groups.
(G) The extent to which the particular grouping algorithm for the
diagnosis-related groups accommodates ICD-10 diagnosis and procedure
codes, and applicable requirements of the federal Health Insurance
Portability and Accountability Act of 1996 (Public Law 104-191).
(H) The basis for calculating relative weights for the various
diagnosis-related groups.
(I) Whether policy adjusters should be used, for which care
categories they should be used, and the frequency of updates to the
policy adjusters.
(J) The extent to which the payment system is budget neutral and
can be expected to result in state budget savings in future years.
(K) Other factors that may be relevant to determining payments,
including, but not limited to, add-on payments, outlier payments,
capital payments, payments for medical education, payments in the
case of early transfers of patients, and payments based on
performance and quality of care.
(c) The department shall submit to the Legislature a status report
on the implementation of this section on April 1, 2011, April 1,
2012, April 1, 2013, and April 1, 2014.
(d) The alternatives for a new system described in paragraph (2)
of subdivision (b) shall be developed in consultation with recognized
experts with experience in hospital reimbursement, economists, the
federal Centers for Medicare and Medicaid Services, and other
interested parties.
(e) In implementing this section, the department may contract, as
necessary, on a bid or nonbid basis, for professional consulting
services from nationally recognized higher education and research
institutions, or other qualified individuals and entities not
associated with a particular hospital or hospital group, with
demonstrated expertise in hospital reimbursement systems. The rate
setting system described in subdivision (b) shall be developed with
all possible expediency. This subdivision establishes an accelerated
process for issuing contracts pursuant to this section and contracts
entered into pursuant to this subdivision shall be exempt from the
requirements of Chapter 1 (commencing with Section 10100) and Chapter
2 (commencing with Section 10290) of Part 2 of Division 2 of the
Public Contract Code.
(f) (1) The department may adopt emergency regulations to
implement the provisions of this section in accordance with
rulemaking provisions of the Administrative Procedure Act (Chapter
3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title
2 of the Government Code). The initial adoption of emergency
regulations and one readoption of the initial regulations shall be
deemed to be an emergency and necessary for the immediate
preservation of the public peace, health and safety, or general
welfare. Initial emergency regulations and the one readoption of
those regulations shall be exempt from review by the Office of
Administrative Law. The initial emergency regulations and the one
readoption of those regulations authorized by this section shall be
submitted to the Office of Administrative Law for filing with the
Secretary of State and publication in the California Code of
Regulations.
(2) As an alternative to paragraph (1), and notwithstanding the
rulemaking provisions of Chapter 3.5 (commencing with Section 11340)
of Part 1 of Division 3 of Title 2 of the Government Code, or any
other law, the department may implement and administer this section
by means of provider bulletins, all-county letters, manuals, or other
similar instructions, without taking regulatory action. The
department shall notify the fiscal and appropriate policy committees
of the Legislature of its intent to issue a provider bulletin,
all-county letter, manual, or other similar instruction, at least
five days prior to issuance. In addition, the department shall
provide a copy of any provider bulletin, all-county letter, manual,
or other similar instruction issued under this paragraph to the
fiscal and appropriate policy committees of the Legislature.
SEC. 2. Section 14105.194 is added to the
Welfare and Institutions Code, to read:
14105.194. (a) Notwithstanding Sections 14105.07, 14105.191,
14105.192, and 14105.193, payments to providers for dates of service
on or after June 1, 2011, shall be determined without application of
the reductions in Sections 14105.07, 14105.191, 14105.192, and
14105.193, except as otherwise provided in this section.
(b) Notwithstanding Sections 14105.07 and 14105.192, and except as
otherwise provided in this section, for managed care health plans
that contract with the department pursuant to this chapter or Chapter
8 (commencing with Section 14200), payments for dates of service
following the effective date of the act adding this section shall be
determined without application of the reductions, limitations, and
adjustments in Sections 14105.07 and 14105.192.
(c) The director shall implement this section to the maximum
extent permitted by federal law and for the maximum time period for
which the director obtains federal approval for federal financial
participation for the payments provided for in this section.
(d) The director shall promptly seek all necessary federal
approvals to implement this section.
SEC. 3. Section 14105.196 is added to the
Welfare and Institutions Code, to read:
14105.196. (a) It is the intent of the Legislature to:
(1) Maintain the increased reimbursement rates for primary care
providers in the Medi-Cal program upon expiration of the temporary
increase provided for under Chapter 23 of the Statutes of 2012, as
amended by Chapter 438 of the Statutes of 2012, in order to ensure
adequate access to these providers.
(2) Increase reimbursement rates for other Medi-Cal providers to
the amounts reimbursed by the federal Medicare program in order to
ensure access to medically necessary health care services, and to
comply with federal Medicaid requirements that care and services are
available to Medi-Cal enrollees at least to the extent that care and
services are available to the general population in the geographic
area.
(3) Increase reimbursement rates for Denti-Cal providers to the
equivalent rate of the percentage increase for other Medi-Cal
providers to the amounts reimbursed by the federal Medicare program
in order to ensure access to medically necessary dental services, and
to comply with federal Medicaid requirements that care and services
are available to Medi-Cal enrollees at least to the extent that care
and services are available to the general population in the
geographic area.
(b) (1) (A) Commencing January 1, 2016, payments for medical care
services rendered by fee-for-service Medi-Cal providers, including
dental providers, shall not be less than 100 percent of the payment
rate that applies to those services as established by the Medicare
program for services rendered by fee-for-service providers.
(B) Commencing January 1, 2016, rates paid to Medi-Cal managed
care plans shall be actuarially equivalent to the payment rate
established under the Medicare program.
(2) This subdivision shall be implemented only to the extent
permitted by federal law and regulations.
(c) Notwithstanding any other law, to the extent permitted by
federal law and regulations, the payments for medical care services
made pursuant to this section shall be exempt from the payment
reductions under Sections 14105.191 and 14105.192.
(d) Payment increases made pursuant to this section shall not
apply to provider rates of payment described in Section 14105.18 for
services provided to individuals not eligible for Medi-Cal or the
Family Planning, Access, Care, and Treatment (Family PACT) Program.
(e) For purposes of this section, "medical care services" means
the services identified in subdivisions (a), (h), (i), (j), (n), (q),
and (w) of Section 14132, and adult dental benefits provided
pursuant to Section 14131.10.
(f) Notwithstanding any other law, the department shall implement
the payment increase required by this section to managed care health
plans that contract pursuant to Chapter 8.75 (commencing with Section
14591) and to contracts with the Senior Care Action Network and the
AIDS Healthcare Foundation in the following manner, to the extent
that the services are provided through any of these contracts,
payments by the department to managed care health plans shall be
increased by the actuarially equivalent amount of the payment
increases pursuant to contract amendments or change orders effective
on or after January 1, 2016.
(g) Notwithstanding Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code, the
department shall implement, clarify, make specific, and define the
provisions of this section by means of provider bulletins or similar
instructions, without taking regulatory action until the time
regulations are adopted. The department shall adopt regulations by
July 1, 2018, in accordance with the requirements of Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title 2 of
the Government Code. Beginning July 1, 2016, and notwithstanding
Section 10231.5 of the Government Code, the department shall provide
a status report to the Legislature on a semiannual basis, in
compliance with Section 9795 of the Government Code, until
regulations have been adopted.
(h) This section shall be implemented only if and to the extent
that federal financial participation is available and any necessary
federal approvals have been obtained.
SEC. 4. This act is an urgency statute
necessary for the immediate preservation of the public peace, health,
or safety within the meaning of Article IV of the Constitution and
shall go into immediate effect. The facts constituting the necessity
are:
In order to ensure, at the earliest possible time, access to
medically necessary care for Medi-Cal beneficiaries, it is necessary
that this act take effect immediately.