BILL ANALYSIS                                                                                                                                                                                                    Ó



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

          AB 1117 (Cristina Garcia) - Medi-Cal:  vaccination rates
          
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          |Version: June 1, 2015           |Policy Vote: HEALTH 6 - 1       |
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          |Urgency: No                     |Mandate: No                     |
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          |Hearing Date: August 17, 2015   |Consultant: Brendan McCarthy    |
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          This bill meets the criteria for referral to the Suspense File.


          Bill  
          Summary:  AB 1117 would require the Department of Health Care  
          Services to create a program to provide incentive payments to  
          Medi-Cal managed care plans for fully vaccinated children. The  
          incentive payments would be supported with voluntary donations  
          by Medi-Cal managed care plans.


          Fiscal  
          Impact:  
           One-time costs of $315,000 for the Department of Health Care  
            Services to develop program rules and methodologies for  
            distributing incentive payments, apply for federal approval to  
            implement the program, and contract with an independent  
            evaluator (General Fund and federal funds).

           One-time costs likely in the low hundreds of thousands for an  
            independent evaluation of the program (private funds and  
            federal funds).

           Ongoing administrative costs of $125,000 per year to  







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            administer the program and ensure the correct processing of  
            incentive payments (private funds and federal funds).

           Ongoing costs up to $50 million per year to make incentive  
            payments to Medi-Cal managed care plans for children who are  
            currently fully vaccinated and additional incentive payments  
            of about $4 million per year for each additional 5% increase  
            in the rate of fully vaccinated children. There are about  
            540,000 children under age two enrolled in Medi-Cal managed  
            care and currently 75% of two year olds have been fully  
            vaccinated. The bill requires incentive payments of $125 to be  
            made to Medi-Cal managed care plans per fully vaccinated  
            child. The cost to provide incentive payments for children in  
            managed care who are currently fully vaccinated would be about  
            $50 million. To the extent that the bill successfully  
            incentivizes managed care plans to increase vaccination rates,  
            each increase in the vaccination rate of 5% would increase  
            incentive payments by about $4 million.

            The bill requires the program to be implemented to the extent  
            that federal matching funds are available. Under federal law,  
            voluntary contributions can be made to state Medicaid programs  
            to support program activities. However, federal law generally  
            prohibits "bona fide provider-related donations" from  
            including provisions that hold donors harmless or a practice  
            under which donations are returned to the donors. Under this  
            bill, Medi-Cal managed care plans would be making donations  
            that would be paid directly back to managed care plans, and  
            plans that have the highest vaccination rates are most likely  
            to be those plans making donations. Therefore, the program is  
            not likely to meet federal requirements and federal matching  
            funds may not be provided.


          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 covers all recommended childhood vaccines. One of the  








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          quality measures used by the state to evaluate the performance  
          of Medi-Cal managed care plans is the HEDIS measure system,  
          which includes vaccination rates for children under age two.  
          According to the most recent data, the statewide average rate  
          for fully vaccinated children was about 75%.


          The state does not currently use HEDIS or other performance  
          measures to provide financial incentives to Medi-Cal managed  
          care plans. However, in counties where there are more than one  
          Medi-Cal managed care plan, the state does use certain  
          performance measures to assign new managed care enrollees to  
          higher scoring plans when the enrollee does not select a  
          specific plan.




          Proposed Law:  
            AB 1117 would require the Department of Health Care Services  
          to create a program to provide incentive payments to Medi-Cal  
          managed care plans for fully vaccinated children. The incentive  
          payments would be supported with voluntary donations by Medi-Cal  
          managed care plans.
          Specific provisions of the bill would:
                 Require the Department of Health Care services to  
               develop an incentive program to improve childhood  
               immunization rates;
                 Require the Department to apply for federal approval to  
               conduct the program and receive federal matching funds;
                 Make the program operational for five years;
                 Authorize the program to be financed by donations from  
               Medi-Cal managed care plans and matching federal funds;
                 Allocate 33% of program funds for Department  
               administrative costs, training for providers, and other  
               strategies to increase immunization rates;
                 Allocate 67% of funds for $125 incentive payments to  
               Medi-Cal managed care plans for each enrollee who receives  
               all the recommended vaccinations by age two;
                 Require at least 20% of incentive payments made to  
               managed care plans to be passed through to providers;
                 Require an independent evaluation of the program;
                 Require the bill to be implemented only to the extent  
               that federal funding is available;








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                 Sunset the bill upon a declaration of the Director of  
               Health Care Services that the program has concluded.


          Related  
          Legislation:  SB 277 (Pan and Allen, Statutes of 2015)  
          eliminates the personal belief exemption from the requirement  
          that children entering school receive specified vaccinations. 


          Staff  
          Comments:  As noted above, current federal law and regulation  
          seem to prohibit the use of federal funds to match donations to  
          Medicaid programs that will be returned to the donors. It would  
          appear that the financing mechanism in this bill would not meet  
          the necessary criteria for the receipt of federal matching  
          funds.


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