BILL ANALYSIS Ó
AB 1117
Page 1
Date of Hearing: April 21, 2015
ASSEMBLY COMMITTEE ON HEALTH
Rob Bonta, Chair
AB 1117
(Cristina Garcia) - As Amended March 26, 2015
SUBJECT: Medi-Cal: vaccination rates.
SUMMARY: Establishes a pilot program in Medi-Cal to reward
Medi-Cal managed care organizations (MCOs) and providers for
vaccinating children younger than two years of age.
Specifically, this bill:
1)Directs the Department of Health Care Services (DHCS) to
establish and administer the California Childhood Immunization
Quality Improvement Fund (CCIQIF).
2)Requires DHCS to apply to the Federal Center for Medicare and
Medicaid Services (CMS) for a waiver or demonstration project
to implement the CCIQIF within 120 days of the enactment of
this bill.
3)Establishes that the demonstration project shall operate for a
period of five years.
4)Requires DHCS to consult with stakeholders including the
Medi-Cal Children's Health Advisory Panel and the Managed Care
AB 1117
Page 2
Advisory workgroup.
5)Requires DHCS to develop a plan for the collection and
expenditures of CCIQIF moneys.
6)Directs DHCS to finance the program with voluntary
contributions from MCOs which must be used to draw down
federal match for the program.
7)Provides that 33.3% of CCIQIF expenditures shall be used on
providers to support providers in employing strategies to
improve immunization rates within their practices.
8)Requires DHCS develop these strategies after consideration of
public comment.
9)Provides that 66.7% of CCIQIF expenditures shall be allocated
to MCOs for reward payment for each enroll who receives all
recommended vaccinations by the by the time he or she reaches
two years of age.
10)Requires plans to roll over at least 20% of the CCIQIF funds
used for reward payments to contract providers based on the
number of Medi-Cal enrollees who are under two years of age in
each provider's respect panel.
11)Requires DHCS to contract with the University of California
or other researchers to develop and submit an evaluation of
the effectiveness of the demonstration project after the first
three years of the project have been completed.
AB 1117
Page 3
12)Limits the evaluation to be financed with no more than 5% of
the annual CCIQIF program expenditures during the year the
evaluation is completed.
13)Provides the demonstration project shall be implemented only
if federal financial participation is available and any
necessary federal approvals have been obtained.
EXISTING LAW:
1)Establishes the Medi-Cal program, administered by DHCS, under
which qualified low income individuals receive health care
services.
2)Establishes requirements for Medi-Cal managed care plans,
which includes vaccinations as part of the covered services in
accordance with the Child Health and Disability Prevention
(CHDP) periodicity schedule and under the preventive services
benefit under the Medicaid Early Periodic, Screening, Testing,
and Diagnosis and Treatment (EPSDT), within the contracting
authority and capitation rate negotiated and paid by the
state.
3)Provides for the regulation of health plans by the Department
of Managed Health Care (DMHC).
4)Requires health plans licensed under the Knox-Keene Health
Care Service Plan Act of 1975 to cover all medically necessary
basic health care services, as defined. Defines basic health
care services to include: physician services; hospital
inpatient and outpatient services, including outpatient
physical, occupational, and speech therapy; diagnostic
AB 1117
Page 4
laboratory and x-ray services; preventive and routine care,
such as vaccinations and routine checkups; emergency and
urgent care services, including ambulance and out-of-area
emergency services; and, medically appropriate home health
services.
5)Requires every health plan or health insurer that covers
hospital, medical, or surgical expenses on a group basis to
provide benefits for the comprehensive preventive care of
children 16 years of age or younger, as specified. Requires
every health plan or health insurer that covers hospital,
medical, or surgical expenses on a group basis to offer
benefits for the comprehensive preventive care of children 17
and 18 years of age.
6)Requires that comprehensive preventive care for children for
purposes of 3) above include periodic health evaluations,
immunizations, and laboratory services in connection with
periodic health evaluations.
7)Requires a health plan to reimburse a physician for
immunizations within 45 days of receiving from the physician
documentation that the immunizations were administered.
FISCAL EFFECT: This bill has not yet been analyzed by a fiscal
committee.
COMMENTS:
1)PURPOSE OF THIS BILL. According to the author, Medi-Cal
health plans and providers need greater investments and
supports to provide the quality health care services that they
are required to deliver to young children and that parents and
taxpayers deserve. The author argues this bill would bring
additional resources to the health care system to help improve
AB 1117
Page 5
California's relatively low vaccination rates for 2-year-olds,
without impacting parents' ability to make decisions about
their children's health care. The author notes there is no
existing law to incentivize Medi-Cal managed care plans and
providers to fully immunize 2-year-olds, and as a result,
Medi-Cal has been chronically plagued by low childhood
immunization rates resulting in inefficient use of public
monies and creating a serious public health risk, as
demonstrated by the recent whooping cough and measles
outbreaks. The author states the goal of this bill is to
improve health care quality for children in Medi-Cal by
significantly helping DHCS reach its stated goal of increasing
the childhood immunization rate from 75% in 2013 to 80% in
2016. The author concludes by stating that, this bill will
create a "pay-for-performance" (P4P) incentive as an
enhancement strategy for Medi-Cal health plans, so that all
participating health plans will recoup at least some portion
of their contribution and all plans and providers can benefit
from increased supports.
2)BACKGROUND.
-----------------------------------------------------------------
| a) Immunizations. According to the Centers for Disease |
| Control and Prevention (CDC), vaccines contain the same |
| antigens or parts of antigens that cause diseases, but the |
| antigens in vaccines are either killed or greatly weakened. |
| Vaccine antigens are not strong enough to cause disease, |
| but they are strong enough to make the immune system |
| produce antibodies against them. Memory cells prevent |
| re-infection when they encounter that disease again in the |
| future. Vaccines are responsible for the control of many |
| infectious diseases that were once common around the world, |
| including polio, measles, diphtheria, pertussis (whooping |
| cough), rubella (German measles), mumps, tetanus, and |
| Hepatitis b. Vaccine eradicated smallpox, one of the most |
| devastating diseases in history. Over the years, vaccines |
AB 1117
Page 6
| have prevented countless cases of infectious diseases and |
| saved literally millions of lives. Vaccine-preventable |
| diseases have a costly impact, resulting in doctor's |
| visits, hospitalizations, and premature deaths. Sick |
| children can also cause parents to lose time from work. CDC |
| recommends routine vaccination to prevent 17 |
| vaccine-preventable diseases that occur in infants, |
| children, adolescents, or adults. |
| |
| California children are required to be fully vaccinated |
| before they enter kindergarten, with some exceptions. |
| However, there are no official requirements for younger |
| children, who are often more susceptible to dire |
| consequences from vaccine-preventable diseases due to their |
| immature immune systems. |
| |
| Other states have made efforts to increase their childhood |
| immunization rates and have met with some success. New |
| York, one managed care plan instituted P4P program. |
| Immunization rates in that plan rose at a statistically |
| significant higher rate than plans that used other methods |
| to try and increase vaccination rates. Similarly, when P4P |
| was instituted in Louisiana, the state went from 40th to |
| 5th nationwide in childhood vaccination rates among |
| children aged 19-35 months. However, the state slipped |
| back to 30th raising questions about the durability of the |
| program. Maine initiated a quality improvement program |
| that provides education and technical assistance for |
| providers and they achieved a five percentage point |
| increase in childhood immunization rates. |
| |
| b) Immunization-related expenses. In 2011, the American |
| Academy of Pediatrics (AAP) published a paper on pricing |
| vaccines and immunization administration. The paper lists |
| the following as vaccine-related expenses: |
| |
| i) Purchase price or acquisition cost of vaccine; |
| ii) Personnel costs for ordering and inventory, |
| including staff time to monitor vaccine stock, place |
AB 1117
Page 7
| orders, negotiate prices, delivery and payment term, and |
| monitor storage procedures; |
| iii) Storage costs, including refrigerators and freezers, |
| locks, alarm systems, temperature monitoring devices, and |
| generators for continued electrical supply; |
| iv) Insurance against loss of vaccine; |
| v) Wastage and non-payment; and, |
| vi) Lost opportunity costs for the money invested in |
| vaccines and for which a reasonable return on investment |
| might otherwise be expected. |
| |
| The AAP paper indicates that the appropriate payment must |
| be free of any discounts and based on a transparent and |
| verifiable data source, such as the CDC vaccine price list |
| for the private sector, and cover the vaccine purchase |
| price and all related expenses as indicated above, and a |
| return on the investment for the dollars invested in |
| vaccine inventory. |
| |
| |
| c) Physician Underpayment. In California, some |
| pediatricians report that despite existing law requiring |
| full reimbursement for acquisition of vaccines, they are |
| not receiving reimbursements that cover the full direct |
| costs. A 2008 article in Pediatrics on a national survey |
| of pediatricians and family practice physicians found that |
| about half had delayed the purchase of specific vaccines |
| for financial reasons and experienced a decreased profit |
| margin from immunizations in the past three years. The |
| article reports 5% of pediatricians and 21% of family |
| physicians said their practice had seriously considered |
| whether to stop providing all vaccines to privately insured |
| children. The article and other reports state that because |
| of high vaccine costs, many physicians do not keep enough |
| vaccines on hand to meet demand, or simply do not stock a |
| vaccine, such as the human Papilloma virus (HPV) vaccine, |
| which costs $360 for the full three dose vaccination. The |
| development and recommendation of new vaccines increases |
| the cost of fully vaccinating a child. According to a 2008 |
AB 1117
Page 8
| news article, in 1995, the federal government's cost to |
| purchase all recommended vaccines for a child up to age 12 |
| was $155; by 2007, the cost had risen to $927 for a boy and |
| $1,214 for a girl (including the HPV vaccine). The 2009 |
| CDC Vaccine Price List shows that private sector purchasers |
| are charged substantially more for vaccines than the prices |
| CDC negotiates. CDC prices for vaccines are often |
| one-third less, and in some cases less than half what |
| manufacturers charge private sector purchasers. |
| |
-----------------------------------------------------------------
1)SUPPORT. Supporters note that vaccination rates for kids are
not as high as they need to be, posing a risk for all
children. They point to the risk of failing to vaccinate
children by the 11,000 cases of pertussis in California in
2014 and the more recent measles outbreak in Disneyland.
Supporters point out that although there are requirements for
children to be vaccinated prior to going to school, there are
no official requirements for younger children who often are
more susceptible to dire consequences from infectious diseases
because of their immature immunes systems. Supporters add
that other states, such as New York, Louisiana and Maine have
had successful programs to increase vaccination rates in young
children.
2)RELATED LEGISLATION. SB 277 eliminates the personal belief
exemption from the requirement that children receive specified
vaccines for certain infectious diseases prior to being
admitted to any public or private elementary or secondary
school or day care center. This bill is in the Senate
Education committee.
3)PREVIOUS LEGISLATION.
a) AB 2064 (V. Manuel Pérez) of 2012 would have required a
health care service plan or health insurer that provides
AB 1117
Page 9
coverage for childhood and adolescent immunizations to
reimburse a physician or physician group in an amount not
less than the actual cost of acquiring the vaccine plus
the cost of administration of the vaccine, as specified.
AB 2064 was held on the Assembly Appropriations Committee
suspense file.
b) AB 2093 (V. Manuel Pérez) of 2010, would have
prohibited any contract issued, amended, delivered, or
renewed on or after January 1, 2011 between a physician or
physician group, and a DMHC-regulated health plan or
California Department of Insurance regulated insurer, from
requiring the physician or physician group to assume
financial risk for the cost of acquiring required
immunizations for children, regardless of whether those
immunizations are part of the contract. AB 2093 was
vetoed by Governor Schwarzenegger who indicated it "is an
inappropriate effort to carve various elements out of
negotiated provider contracts and set those reimbursement
rates in statute. Existing law already requires health
plans to fully cover certain preventive benefits,
including immunizations. Reimbursing providers for their
"administrative costs" at a Medicare rate completely
undermines the purpose of capitation and provider
contracts, especially if a provider's actual costs are
below the Medicare fee."
c) AB 1201 (V. Manuel Pérez) of 2009 would have required a
health care service plan or health insurer that provides
coverage for childhood and adolescent immunizations to
reimburse a physician or physician group the entire cost
of acquiring and administering the vaccine, and prohibits
a health plan or insurer from requiring cost-sharing for
immunizations. AB 1201 was held on the Assembly
Appropriations Committee suspense file.
AB 1117
Page 10
4)POLICY COMMENTS.
a) Administrative costs. The bill does not provide for
administrative costs of DHCS to be reimbursed by funds from
CCIQIF. DHCS would have to incur administrative costs in
advance to seek and gain approval of the waiver. Those
could not be reimbursed for administrative costs even if
the waiver is approved as the ongoing administration of an
approved program is also not eligible for reimbursement
from the CCIQIF. The required evaluation can be reimbursed
from the CCIQIF but only an amount exceeding 5% of the
donations can be spent.
b) Requirements on DHCS. Owing to health care reform, DHCS
has been very busy with administering significant changes
in the Medi-Cal program. Among the major efforts are a
possible redesign of the California Children's Services
Program, a reform and waiver for behavioral health and
substance abuse program and a major Section 1115 waiver
request to CMS for continuing the 2010 Bridge to Reform
Waiver. This bill allows DHCS only 120 days from its
effective date to submit a waiver request to CMS. Given
the other activities and the Legislature's general
preference that waivers be subject to ample public input
and review prior to submittal these timetable seems abrupt.
c) Federal limitations on funds from providers. States
have been very clever in designing Medicaid programs which
rely on funds not from the state, but increasingly from
providers and local governments. As these methods became
more common and their impact on federal financing grew, the
response of CMS was to significantly limit and restrict
such sources of funds. The state has run into this directly
with the state's current MCO tax. CMS has directed the
AB 1117
Page 11
state to develop a new tax in line with federal
requirements and have directed the state that the current
tax does not comply with federal requirements. The
committee may wish to hear from the supporters about any
discussions they have had with CMS or precedents for use of
such provider donations.
d) Is the incentive adequate? This program may not provide
any monetary incentive for additional vaccinations. It all
depends on the amount of money raised. Already most
children are vaccinated. The bill provides payments for
all children receiving vaccinations up to the amount of
funds raised. To provide a reward that is likely to change
behavior, plans and providers have to be paid more than
they are currently. The program will have to raise enough
funds so that providers and plans can be assured they will
receive a payment for vaccinating more children than they
currently vaccinate.
REGISTERED SUPPORT / OPPOSITION:
Support
Children NOW (sponsor)
American Academy of Pediatrics, California
American Federation of State, County and Municipal Employees,
AFL-CIO
California Academy of Family Physicians
California Chapter of the American College of Emergency
AB 1117
Page 12
Physicians
California Children's Health Coverage Coalition
California Children's Hospital Association
California Medical Association
California Pan-Ethnic Health Network
Children's Defense Fund - California
Children's Specialty Care Coalition
Family Voices of California
First 5 Alameda County
First 5 Association of California
First 5 Santa Cruz County
Health Access California
Lincoln Child Center
AB 1117
Page 13
Los Angeles Trust for Children's Health
March of Dimes California Chapter
St. John's Well Child and Family Center
The Children's Partnership
United Ways of California
Vision Y Compromiso
Opposition
None on file.
Analysis Prepared by:Roger Dunstan / HEALTH / (916) 319-2097
AB 1117
Page 14