BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON APPROPRIATIONS
                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          AB 1051 (Maienschein) - Denti-Cal program:  reimbursement rates
          
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          |Version: August 2, 2016         |Policy Vote: PUB. S. 6 - 0,     |
          |                                |          HEALTH 8 - 0          |
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          |Urgency: No                     |Mandate: No                     |
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          |Hearing Date: August 8, 2016    |Consultant: Brendan McCarthy    |
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          This bill meets the criteria for referral to the Suspense File.

          Bill  
          Summary:  AB 1051 would require the Department of Health Care  
          Services to increase provider reimbursement rates for the 15  
          most common dental services provided in the Denti-Cal program to  
          average commercial rates.


          Fiscal  
          Impact:  
           One-time costs in the millions to revise program requirements  
            and to process additional enrollment of Denti-Cal providers  
            under the bill (General Fund and federal funds).

           Projected ongoing costs of $535 million per year due to  
            increased costs for services currently being provided in  
            Denti-Cal (General Fund and federal funds). Based on existing  
            utilization of the impacted Denti-Cal services, current  
            Medi-Cal rates, and survey data on commercial rates, the cost  
            to increase Medi-Cal rates to those found in the commercial  
            market would be $525 million per year. Note that those costs  
            reflect the cost increase at current utilization levels.







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           Projected ongoing costs in the hundreds of millions per year  
            due to increased utilization of Denti-Cal services (General  
            Fund and federal funds). Utilization rates of Denti-Cal  
            services are relatively low. There is consensus that low  
            reimbursement rates discourage dentists from participating in  
            the program, limiting access to services. By raising Denti-Cal  
            rates substantially, the bill is likely to encourage dentists  
            to see additional Denti-Cal patients. For every 10% increase  
            in utilization, annual costs would be about $90 million.

           Unknown potential cost-savings due to increased use of  
            preventative dental services (General Fund and federal funds).  
            Regular dental care, particularly for children, is likely to  
            prevent dental conditions, such as cavities, from becoming  
            more serious health problems that require more costly  
            interventions later. To the extent that the bill results in  
            increased utilization of preventative dental services in  
            Denti-Cal, there are likely to be reduced costs for more  
            serious dental services. Given the very high costs that would  
            be incurred under the bill, it does not seem likely that  
            future cost savings would offset those increased costs.


          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. 
          Medi-Cal coverage includes full dental coverage for children and  
          limited dental coverage for adults. (Adult coverage had been  
          eliminated from the program in 2009 but was partially restored  
          in 2013.) Dental services in Medi-Cal, referred to as Denti-Cal,  
          are provided through the fee-for-service system in most of the  
          state. Denti-Cal services are provided through dental managed  
          care in Sacramento and Los Angeles Counties (enrollment in  
          dental managed care is mandatory in Sacramento but optional in  
          Los Angeles).










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          Recent analyses of the Denti-Cal program by the Bureau of State  
          Audits and the Little Hoover Commission have found low levels of  
          utilization (particularly by children), low provider  
          reimbursement rates, and a complicated system for providers to  
          navigate. Estimates of the annual usage vary. According to the  
          Little Hoover Commission, in 2014 only 26% of eligible adults  
          saw a dentist. According to the Department, 52% of eligible  
          children saw a dentist in 2015. According to the federal  
          government, 38% of eligible children saw a dentist in 2014.




          Proposed Law:  
            AB 1051 would require the Department of Health Care Services  
          to increase provider reimbursement rates for the 15 most common  
          dental services provided in the Denti-Cal program to average  
          commercial rates.


          Related  
          Legislation:  
           AB 2207 (Wood) would enact an number of changes to the  
            operation of the Denti-Cal program, relating to provider  
            enrollment, program monitoring, and reporting. That bill is  
            pending on this committee's Suspense File.
           SB 1098 (Canella) would establish a Denti-Cal Advisory Group  
            within the Department of Health Care Services to study and  
            oversee the policies and priorities of the Denti-Cal program.  
            That bill is pending in the Assembly.


          Staff  
          Comments:  As noted above, the reimbursement rates paid by the  
          Denti-Cal program are significantly below average rates paid by  
          commercial dental coverage. According to data provided by the  
          Department of Health Care Services, commercial rates for common  
          dental procedures range from 200% to 400% of the rates paid by  
          Denti-Cal.


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