BILL ANALYSIS Ó
SENATE COMMITTEE ON HEALTH
Senator Ed Hernandez, O.D., Chair
BILL NO: AB 366
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|AUTHOR: |Bonta |
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|VERSION: |July 7, 2015 |
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|HEARING DATE: |July 15, 2015 | | |
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|CONSULTANT: |Scott Bain |
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SUBJECT : Medi-Cal: annual access monitoring report.
SUMMARY : Requires the Department of Health Care Services (DHCS) to
submit to the Legislature, and post on the DHCS' Internet Web
site, a Medi-Cal access monitoring report. Requires the report
to present results of DHCS' ongoing access monitoring efforts in
fee-for-service and managed care and to 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.
Existing law:
1)Establishes the Medi-Cal program, administered by DHCS, under
which qualified low-income individuals receive health care
services.
2)Requires payments to be reduced by 10% for Medi-Cal
fee-for-service (FFS) benefits for dates of service on and
after June 1, 2011. Requires payments to Medi-Cal managed care
plans to be reduced by the actuarial equivalent amount of the
10% payment reduction. This is referred to as the "AB 97
reductions."
3)Requires the Director of the Department of Health Services
(DHS was the predecessor to DHCS) to annually review the
reimbursement levels for physician and dental services under
Medi-Cal, taking into account the following factors:
a) Annual cost increases for physicians as reflected by
the Consumer Price Index;
b) Physician reimbursement levels of Medicare, Blue
Shield, and other third-party payers;
AB 366 (Bonta) Page 2 of ?
c) Prevailing customary physician charges within the
state and in various geographical areas;
d) Procedures reflected by the current Relative Value
Studies (RVS); and,
e) Characteristics of the current population of
Medi-Cal beneficiaries and the medical services needed.
This bill:
1)Requires DHCS to submit to the Legislature, and post on the
DHCS Internet Web site, a Medi-Cal access monitoring report.
Requires the annual report to be completed by March 15, 2016,
and annually thereafter by February 1st, and to include the
following:
a) Present results of DHCS' ongoing access
monitoring efforts in FFS and managed care. Requires,
for managed care, the report to include results from
the Department of Managed Health Care's oversight of
provider networks and timely access in Medi-Cal
managed care.
b) 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;
c) Include access measurements of sufficient
granularity to reflect patient experience of access to
particular services or provider types, or in
particular geographic areas;
d) 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. Requires, for those services, provider types, or
geographic areas, the annual report to assess and
report on the adequacy of provider payment rates and
identify any other factors that impede access;
Use language clearly understandable to the public; and,
e) Use more than one valid, generally accepted
method to assess access to care.
2)Requires DHCS, at least once annually, to hold a public
meeting to present and discuss the access monitoring report,
and to accept public comment from stakeholders at the public
meeting.
AB 366 (Bonta) Page 3 of ?
3)Permits DHCS to enter into a contract with an independent
entity to perform an ongoing assessment of access to care and
the adequacy of provider payment rates in Medi-Cal.
4)Requires, for services, provider types, or geographic areas
for which rates are identified in the annual report as
inadequate, rate increases to be implemented to the extent
funding is provided in the annual Budget Act and federal
financial participation is available.
5)Makes legislative findings and declarations that it is
important to ensure adequate access to care in the Medi-Cal
program as new enrollees seek appropriate care, that the state
needs to assess the gaps in access to care and act swiftly to
address those gaps, that one area of anticipated need is the
availability of more Medi-Cal providers, that Medi-Cal
provider reimbursement rates have historically been among the
lowest in the nation, that during recent years, the state has
reduced reimbursement rates to Medi-Cal providers due to
budget constraints, and that an assessment of gaps in access
should include a determination of whether current provider
rates are sufficient to ensure access to care.
6)States legislative intent 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.
FISCAL
EFFECT : According to the Assembly Appropriations Committee,
costs in the range of $1 million (General Fund/federal funds)
for enhanced monitoring and reporting of access and adequacy of
provider rates.
PRIOR
VOTES :
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|Assembly Floor: |77 - 0 |
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|Assembly Appropriations Committee: |17 - 0 |
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|Assembly Health Committee: |16 - 0 |
AB 366 (Bonta) Page 4 of ?
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COMMENTS :
1)Author's statement. According to the author, this bill would
provide critical stability to health care provider networks
and ensure access to health care services for people receiving
services in the Medi-Cal program. The author notes that with
the dramatic expansion of enrollment in California's Medi-Cal
program, there is increased concern about access to care.
That concern stems from the low rates in the program.
California already pays its Medi-Cal FFS providers some of the
lowest rates in the entire country (for primary care and
obstetric care, California ranked 48th among all states in
2012, and overall, Medi-Cal compensated physicians at only 51
% of Medicare levels). Having expanded Medi-Cal under the
Patient Protection and Affordable Care Act (ACA), California
needs to ensure that Medi-Cal beneficiaries have sufficient
access to care.
2)Medi-Cal budget. The 2015-16 DHCS budget assumes average
monthly enrollment in Medi-Cal of 12.4 million individuals,
and total expenditures of $91.3 billion ($18.1 billion General
Fund). Each monthly, DHCS assumes 9.5 million individuals, or
76.6% of program enrollment, to be in Medi-Cal managed care
plans, and 23.3%, or 2.9 million, to be in FFS.
3)Medi-Cal rates. To achieve budget savings in Medi-Cal during
the state's fiscal crisis, the state has three principle
policy and fiscal choices: (a) to reduce or restrict who is
eligible for Medi-Cal benefits; (b) to reduce the scope of
benefits provided in the program; and, (c) to reduce the
payments to health care providers and managed care plans for
Medi-Cal services. Federal law has prevented or limited the
state's ability to reduce eligibility, but the state
previously eliminated benefits in Medi-Cal, most notably adult
dental services (which were partially restored in May 2014).
In addition, the state has attempted several times to reduce
Medi-Cal payments to health plans, health facilities and
health care providers. However, some of these rate reductions
did not, and have not taken effect because of court
injunctions, while other reductions have expired by their own
AB 366 (Bonta) Page 5 of ?
terms and been replaced by different rate reductions.
While the number of people receiving health care through
Medi-Cal has grown dramatically, beginning in 2008, Medi-Cal
payment rates to health plans and providers in the program
were reduced to help address state budget deficits. In 2011,
the Legislature passed and Governor Brown signed AB 97 into
law, which largely replaced prior Medi-Cal rate reductions and
which remains in effect today. Major provisions of AB 97
include the following:
a. Reduced Medi-Cal provider payments, with specified
exceptions, by 10% for FFS benefits for dates of service on
and after June 1, 2011;
b. Required Medi-Cal managed care plan rates to be reduced
by the actuarial equivalent amount of the FFS reduction,
effective July 1, 2011;
c. Froze rates at the 2008-09 rate year and then applied
the 10% rate reduction for certain types of facility
providers;
d. Required the payment reductions to be applied
retroactively to June 1, 2011 or on such other date as may
be applicable when federal approval is obtained;
e. Conditioned the implementation of the payment reductions
on the reductions complying with federal Medicaid
requirements;
f. Granted the Director of DHCS the discretion to not
implement a particular payment reduction or adjustment, or
to adjust the payment as necessary to comply with federal
Medicaid requirements, to the extent that the director
determines that the payments do not comply with the federal
Medicaid requirements or that federal financial
participation is not available with respect to any payment
that is reduced; and,
g. Prohibited implementation until federal approval was
obtained.
Federal approval of the AB 97 rate reductions was obtained in
October 2011, but a court injunction prevented DHCS from
implementing many of these reductions. In June 2013, the
injunctions were lifted, giving the state authority to (1)
apply the reductions to current and future payments to
providers on an ongoing basis; and, (2) retroactively recoup
the reductions from past payments that were made to providers
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during the period in which the injunctions were in effect
(this is commonly referred to as a "claw back").
The AB 97 reductions did not apply to certain provider
categories, including hospital inpatient and outpatient
services, critical access hospitals, federally qualified
health centers and hospices, services provided under Family
PACT and payments funded by intergovernmental transfers or
certified public expenditures. Entities subject to the AB 97
rate reduction include physician services to adults, other
health care providers (such as nurse practitioners,
psychologists, podiatrists, optometrists, physical
therapists), blood banks, adult day care centers, MSSP
providers, medical transportation providers, durable medical
equipment/supply providers, dental service providers, clinics
and pharmacy providers.
Since the 2013-14 budget was enacted, several types of
providers and services have been exempted from the ongoing
payment reductions through either administrative decisions by
DHCS or through subsequently enacted legislation. DHCS
administratively exempted from the Medi-Cal managed care plans
from the AB 97 retroactive reduction, and the following
providers/services were exempted prospectively:
a) Pediatric health care;
b) Audiology rates by a particular type of provider;
c) Residential care facilities for the elderly and care
coordinator agencies;
d) Genetic disease screening program;
e) Community-based adult services providers located in San
Francisco;
f) Non-profit dental pediatric surgery centers that provide
at least 99 % of their services under general anesthesia to
children with severe dental disease under age 21;
g) For-profit dental pediatric surgery centers that provide
services to at least 95 % of their Medi-Cal beneficiaries
under age 21; and,
h) Certain prescription drugs (or categories of drugs) that
are generally high-cost drugs used to treat extremely
serious conditions, such as hemophilia, multiple sclerosis,
hepatitis.
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Providers subject to the retroactive payment recoveries
include pharmacies, durable medical equipment/supply
providers, clinical laboratories/laboratory services, distinct
part skilled nursing facilities, and radiology service
providers. DHCS has indicated these retroactive payment
recoveries will not occur until after the prospective 10 %
provider payment reductions are implemented, and DHCS has
indicated it will provide at least 60 days advanced
notification of scheduled recoveries.
DHCS assumes total fund savings from the AB 97 reductions of
$550 million ($275 million General Fund) in 2015-16. The
provisions of AB 97 were not changed in the most recently
enacted 2015-16 budget, except for Denti-Cal services. The AB
97 10% rate reduction was repealed for dental services for by
the health budget trailer bill, SB 75 (Committee on Budget and
Fiscal Review) Chapter 18, Statutes of 2015. Specifically, the
10% rate reduction was repealed for dental services and
applicable ancillary services for dates of service on or after
July 1, 2015, or the effective date of any necessary federal
approvals, whichever is later, and for Denti-Cal managed care
plans for contract amendments or change orders effective on or
after July 1, 2015, or the effective date of any necessary
federal approvals, whichever is later.
1)Physician and dentist participation in Medi-Cal. Surveys of
physicians and dentists have found lower participation in
Medi-Cal and lower reimbursement rates as compared to Medicare
and private insurance. A survey of physicians through the
Medical Board of California found the percentage of California
physicians accepting new patients in 2013 was 62 % for
Medi-Cal, compared to 79 % for private insurance and 75% for
Medicare. The percentage of physicians with any Medi-Cal
patients in their practice (69%) was significantly lower than
the percentage with any Medicare patients (77 %) and much
lower than the percentage with any privately insured patients
(92%). A March 2015 National Centers for Health Statistics
Data Brief found 76.6% of California physicians were accepting
new privately insured patients, 77.2 were accepting new
Medicare patients, as compared to 54.2 % of California
physicians who were accepting new Medi-Cal patients. The
national average for accepting new Medicaid patients was
68.9%.
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A December 2012 publication by the Kaiser Commission on Medicaid
and the Uninsured (KCMU) showed how states compare in their
2012 Medicaid fee levels, and how Medicaid fees compared to
Medicare fees. In California, Medi-Cal fees for all services
were 51 % of Medicare, primary care physician fees were 43% of
Medicare, obstetrical care services were 54% of Medicare, and
other services were 67% of Medicare. A December 2014 Bureau of
State Audits (BSA) review of California's Denti-Cal Program
found that California had similar access to care problems for
children needing dental services, as five counties may lack
active providers, an additional 11 counties had no providers
willing to accept new Medi-Cal patients, and 16 other counties
appear to have an insufficient number of providers. The BSA
stated a primary reason for low dental provider participation
rates is low reimbursement rates compared to national and
regional averages and to the reimbursement rates of other
states BSA examined.
2)Access to care in Medi-Cal. Surveys of Californians conducted
before coverage expansions enacted under the ACA consistently
showed a wide gap between Medi-Cal enrollees and other insured
populations with respect to access to care. A 2011 survey
funded by the California HealthCare Foundation (CHCF) of over
1,500 Medi-Cal beneficiaries identified difficulties in
finding health care providers who accept their coverage, as
34% of Medi-Cal beneficiaries said it was difficult to find
health care providers who accept their insurance, compared to
13% for people with other coverage. The survey found a higher
percentage of adults with Medi-Cal say they have more
difficulty getting appointments with specialists and primary
care providers than adults with other health coverage (42% v.
24% for specialists and 26% v. 15% for primary care
providers).
Similarly, the 2012 California Health Interview Survey asked how
access to care in Medi-Cal compares to access to care in
employer-sponsored insurance (ESI) for adults with similar
health care needs. Medi-Cal had bigger gaps in access to
care, including Medi-Cal beneficiaries being less likely to
have a usual source of care other than the emergency room as
compared to individuals with ESI (21.5% v. 8.1%, Medi-Cal
AB 366 (Bonta) Page 9 of ?
beneficiaries were more likely to have used the emergency room
than individuals with ESI (3.7% v. 0.5%), and Medi-Cal
beneficiaries were either sometimes or never able to get a
physician appointment within two days of seeking an
appointment compared to individuals with ESI (46% v. 20.6%).
3)Primary care rate bump under ACA. The expansion of Medicaid
under the ACA has exacerbated concerns about whether the
supply of primary care providers would be sufficient to ensure
access to care for this new population, particularly given low
reimbursement rates offered by many Medicaid programs. For
this reason, the ACA included a "primary care bump," which
required states, for 2013 and 2014, to increase their Medicaid
primary care rates to those rates provided by Medicare, and
provided states federal funds to make up the difference
between state rates and Medicare rates. Final federal
regulations were released in November 2012, but a state plan
amendment California submitted to implement the federal
requirement was only approved October 24, 2013, nearly 11
months after the effective date. The increased payments
covered the two years the primary care bump was in effect, but
the increased payments ended December 31, 2014.
4)Medi-Cal FFS. Medi-Cal rates and access to care requirements
vary by FFS versus managed care, and are governed by a complex
mix of state and federal laws and regulations, administrative
decisions by DHCS and the federal Centers for Medicare and
Medicaid Services (CMS), and court interpretation of federal
Medicaid requirements.
Medicaid is a cooperative federal-state program, and in order to
qualify for federal funds, states must submit their Medicaid
plan and any amendments to CMS. Before approving a Medicaid
State Plan Amendments (SPA), CMS conducts a review to
determine whether they comply with federal requirements. For
the AB 97 FFS rate reductions, the state submitted several
SPAs for federal approval. Relevant federal law (Section
1902(a)(30)(A) of the Social Security Act) for the AB 97 SPAs
is as follows (emphasis added):
"provide such methods and procedures relating to the
utilization of, and the payment for, care and services
available under the plan . . . as may be necessary to
safeguard against unnecessary utilization of such care
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and services and to assure that payments are consistent
with efficiency, economy, and quality of care and are
sufficient to enlist enough providers so that care and
services are available under the plan at least to the
extent that such care and services are available to the
general population in the geographic area;"
As a condition of approval of the AB 97 FFS rate reductions in
California's SPA, CMS required DHCS to monitor health care
access. DHCS was required to provide metrics which adequately
demonstrated beneficiary access to CMS, and a monitoring plan
that would apply to the services where rates were being
reduced. DHCS developed a health care access monitoring system
to detect if Medi-Cal beneficiaries are experiencing
difficulties accessing health care services in FFS Medi-Cal.
CMS indicated DHCS would monitor predetermined metrics on a
quarterly or annual basis in order to ensure the beneficiary
access is comparable to services available to the general
population in the geographic area. DHCS indicates it will
report on 23 access measures annually and a subset of four
access measures quarterly. The four areas reported quarterly
are changes in physician supply, Medi-Cal beneficiary
participation, service utilization rates per 1,000 member
months, and beneficiary feedback.
5)Medi-Cal managed care. Medi-Cal managed care rates are also
set under state and federal requirements. State law requires
DHCS to pay capitation rates to health plans participating in
the Medi-Cal managed care program using actuarial methods
under what is commonly referred to as the "Mercer methodology"
(Mercer is DHCS' actuarial consulting firm). Medi-Cal managed
care plans must provide DHCS with financial and utilization
data to establish rates. DHCS is required to utilize a county-
and model-specific rate methodology to develop Medi-Cal
managed care capitation rates that includes health
plan-specific encounter and claims data, supplemental
utilization and cost data submitted by the health plans, FFS
data for the underlying county of operation or other
appropriate counties as deemed necessary by DHCS.
Federal regulations for Medicaid managed care plans require all
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payments under risk contracts (such as to Medi-Cal managed
care plans) and all risk-sharing mechanisms in contracts to be
actuarially sound.
For enrollees of Medi-Cal managed care plans, DHCS has
requirements for network adequacy in existing law, regulation,
contracts with health plans, and through All Plan Letters
issued by DHCS. For example, DHCS contractually requires
Medi-Cal managed care plans to abide by the time and distance
standards in the Knox-Keene Health Care Service Plan Act of
1974 (Knox Keene Act). The Knox-Keene Act is the body of law
regulating health plans, and it requires a primary care
physician to be no more than 15 miles or 30 minutes from the
place of residence or work of the member unless the member
chooses a different provider; the Medi-Cal standard is 10
miles from a member's residence unless the plan has a
DHCS-approved alternative.
In addition, the Knox-Keene Act requires Medi-Cal managed care
plans (except for County Organized Health Systems, which are
exempt from the Knox-Keene Act) to make all services be
readily available at reasonable times to each enrollee
consistent with good professional practice. Regulations
implementing the Knox-Keene Act require timely access to care
by requiring urgent and non-urgent appointments to be provided
within specified timeframes.
6)Recent Supreme Court decision on Medicaid rates. In March
2014, the United States Supreme Court issued a decision in
Armstrong et al. v. Exceptional Child Center, Inc., et al. In
that case, providers of "habilitation services" under Idaho's
Medicaid plan are reimbursed by the Idaho's Department of
Health and Welfare. Section 1902(a)(30)(A) of the federal
Medicaid Act requires Idaho's plan to "assure that payments
are consistent with efficiency, economy, and quality of care"
while "safeguard[ing] against unnecessary utilization of . .
.care and services. The providers of habilitation services
sued the Idaho Health and Welfare Department officials,
claiming that petitioner Idaho reimbursed them at rates lower
than §30(A) permits, and sought to enjoin Idaho to increase
these rates. The District Court entered summary judgment for
the providers. The Ninth Circuit affirmed, concluding that the
Supremacy Clause gave the providers an implied right of
action, and that they could sue under this implied right of
action to seek an injunction requiring Idaho to comply with
AB 366 (Bonta) Page 12 of ?
§30(a).
The Supreme Court reversed this decision in a 5-4 opinion. The
Supreme Court concluded that the Supremacy Clause of the
Constitution does not confer a private right of action, and
that Medicaid providers cannot sue for an injunction requiring
compliance with §30(a). The Supreme Court also stated that the
providers of habilitation services suit cannot proceed in
equity as the power of federal courts of equity to enjoin
unlawful executive action is subject to express and implied
statutory limitations. In this case, the express provision of
a single remedy for a State's failure to comply with
Medicaid's requirements-the withholding of Medicaid funds by
the federal Secretary of Health and Human Services, and the
sheer complexity associated with enforcing §30(A) combine to
establish Congress's "intent to foreclose" equitable relief.
7)Related legislation. Last session, SB 870 (Senate Budget and
Fiscal Review Committee), was signed by Governor Brown on June
20, 2014. Among its provisions is uncodified legislative
intent language that requires DHCS to continue to monitor
access to and utilization of Medi-Cal services in the FFS and
managed care settings during the 2014-15 fiscal year, in
conjunction with DHCS' federally approved plan to monitor
health care access for Medi-Cal beneficiaries and any other
methods deemed appropriate by the director. The language would
further require DHCS to use this information to evaluate
current reimbursement levels for Medi-Cal providers and to
make recommendations for targeted changes to the reductions in
reimbursement levels made pursuant to AB 97 (Committee on
Budget, Chapter 3, Statutes of 2011), to the extent DHCS finds
those changes appropriate.
SB 243 (Hernandez), would have repealed prior year Medi-Cal
provider and managed care rate reductions, including the AB 97
reductions. SB 243 would have increased specified FFS Medi-Cal
provider rates to Medicare levels, required rates paid to
Medi-Cal managed care plans to be actuarially equivalent to
the payment rates established under the Medicare program,
required Medi-Cal hospital inpatient claims for
diagnosis-related groups to be increased by 16% for the
2015-16 fiscal year, and to be increased annually thereafter,
and required Medi-Cal managed care plan rates to be increased
by a proportionately equal amount for increased payments for
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hospital services. SB 243 was held on the Senate
Appropriations Committee suspense file.
8)Support. This bill is supported by rural county
representatives, some health care providers, and labor groups,
which argue this bill is important to document the
shortcomings in the Medi-Cal delivery system and the need to
increase reimbursement rates in order to improve access to
care. Supporters argue that as the state expands Medi-Cal
cover increasing numbers of Californians, it is critical to
perform a regular assessment of access to care the adequacy of
provider payments in the program. Supporters conclude that
requiring a regular assessment of access issues and provider
rates is an important part in ensuring the quality and
long-term sustainability of the Medi-Cal program.
SUPPORT AND OPPOSITION :
Support: California Academy of Family Physicians (co-sponsor)
ALS Association Golden West Chapter
Association of California Healthcare Districts
California Association for Health Services at Home
California Hospital Association
California Immigrant Policy Center
California Labor Federation
California Medical Association
California School Employees Association
Community Clinic Association of Los Angeles County
Health Access California
LIUNA Local 777
LIUNA Local 792
Planned Parenthood Affiliates of California
Rural County Representatives of California
Silicon Valley Leadership Group
Western Center on Law and Poverty
Oppose: None received
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