BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session AB 366 (Bonta) - Medi-Cal: annual access monitoring report ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: July 7, 2015 |Policy Vote: HEALTH 9 - 0 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: No | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: August 17, 2015 |Consultant: Brendan McCarthy | | | | ----------------------------------------------------------------- This bill meets the criteria for referral to the Suspense File. Bill Summary: AB 366 would require the Department of Health Care Services to prepare an annual report on access to Medi-Cal services. The bill would require provider rate increases to be implemented, to the extent that provider rates are found to be inadequate and funding is provided in the annual budget act Fiscal Impact: Likely annual costs up to $1 million per year to collect analyze data and prepare the required report by the Department of Health Care Services (General Fund and federal funds). Unknown costs for increased provider payments (General Fund and federal fund). The bill requires provider rate increases to be implemented, to the extent that provider rates are found to be inadequate and funding is provided in the annual budget act. The extent to which the required report will find that provider rates are a barrier to AB 366 (Bonta) Page 1 of ? access is unknown. Therefore, the extent to which the bill will require future rate increases is unknown. Background: Under state and federal law, the Department of Health Care Services operates the Medi-Cal program, which provides health care coverage to low income individuals, families, and children. Medi-Cal provides coverage to childless adults and parents with household incomes up to 138% of the federal poverty level and to children with household incomes up to 266% of the federal poverty level. The federal government provides matching funds that vary from 50% to 90% of expenditures depending on the category of beneficiary. Over the last several years, there have been a variety of attempts by the state to reduce payment rates to Medi-Cal providers, in an effort to reduce state spending on the program. Many of those rate reductions have been enjoined by the courts or repealed and replaced by different budget actions. As part of the 2011-12 budget (AB 97, Committee on Budget, Statutes of 2011), the state imposed a 10% reduction in the rates paid to many fee-for-service Medi-Cal providers and required the capitated rates paid to managed care plans to be reduced by an actuarially equivalent amount. In addition, payment rates for distinct part skilled nursing facilities (located on a hospital campus) were "rolled back" to the payment rates in place in 2008-09 and then reduced by 10%. Rate reductions were made retroactive to June 1, 2011 for all fee-for-service providers. Many of those rate reductions were enjoined by the courts until June 2013. At that point, the state had legal authority to both reduce provider rates going forward and to "claw back" rate reductions for services provided between June 2011 and June 2013. (Providers subject to claw backs include pharmacies, durable medical equipment providers, clinical laboratories, distinct part nursing facilities, and radiology services.) Rate reductions for Medi-Cal managed care providers will be made going forward but the state will not recoup unrealized savings. Since the enactment of the 2013-14 Budget Act, several categories of providers have been exempted from Medi-Cal rate reductions by statute or administrative action of the Department. AB 366 (Bonta) Page 2 of ? Proposed Law: AB 366 would require the Department of Health Care Services to prepare an annual report on access to Medi-Cal services. Specific provisions of the bill would: Require the Department to prepare an annual access monitoring report, to allow an assessment of access to care in Medi-Cal and provide a basis to evaluate the adequacy of provider rates and the existence of other barriers to care; Specify the information required to be included in the report; Require at least one public meeting to present the report; Authorize the Department to enter into a contract with an independent entity to perform an assessment of access to care and the adequacy of provider rates; Require provider rate increases to be implemented, subject to budget act funding, for provider types or geographic areas for which rates are found to be inadequate. Related Legislation: SB 243 (Hernandez) would require the Department of Health Care Services to raise a variety of rates paid to Medi-Cal providers and require the Department to rescind existing rate reductions to specified providers. That bill was held on this committee's Suspense File. Staff Comments: Concerns have been raised by providers and advocates that low reimbursement rates in the Medi-Cal program result in providers limiting their participation in the program. Providers may accept no Medi-Cal patients, refuse new Medi-Cal patients, or limit the number of Medi-Cal patients in their practice. Surveys of providers performed by the Medical Board of California and the National Centers for Health Statistics Data Brief have found that providers accept new Medi-Cal patients at lower rates than new patients with other sources of health care coverage and at lower rates than providers in other states. Currently, about 80% of Medi-Cal beneficiaries are enrolled in Medi-Cal managed care plans. Commercial Medi-Cal managed care plans are subject to network adequacy and timely access to care AB 366 (Bonta) Page 3 of ? requirements under the Knox-Keene Act and regulations adopted by the Department of Managed Health Care. Non-commercial Medi-Cal managed care plans (such as county organized health systems) are not directly regulated by those requirements. However, the Department of Health Care Services includes substantively similar requirements in its contracts with managed care plans. -- END --