BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session AB 1051 (Maienschein) - Denti-Cal program: reimbursement rates ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: August 2, 2016 |Policy Vote: PUB. S. 6 - 0, | | | HEALTH 8 - 0 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: No | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: August 8, 2016 |Consultant: Brendan McCarthy | | | | ----------------------------------------------------------------- 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. AB 1051 (Maienschein) Page 1 of ? 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). AB 1051 (Maienschein) Page 2 of ? 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. -- END -- AB 1051 (Maienschein) Page 3 of ?