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 --