BILL ANALYSIS                                                                                                                                                                                                    Ó



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          Date of Hearing:   April 26, 2016


                            ASSEMBLY COMMITTEE ON HEALTH


                                   Jim Wood, Chair


          AB 1568  
          (Bonta and Atkins) - As Amended April 11, 2016


          SUBJECT:  Medi-Cal: demonstration project.


          SUMMARY:  Enacts the Medi-Cal 2020 Demonstration Project Act  
          (Medi-Cal 2020/Demonstration Project), administered by the  
          Department of Health Care Services (DHCS) which implements the  
          Special Terms and Conditions (STCs) approved by the federal  
          Centers for Medicare and Medicaid Services (CMS).  Specifies the  
          four components of the Demonstration Project, as follows:   
          Global Payment Program (GPP), Public Hospital Redesign and  
          Incentives in Medi-Cal (PRIME), Whole Person Care (WPC) and  
          Dental Transformation Initiative (DTI).  Contains an urgency  
          clause to ensure that the provisions of this bill go into  
          immediate effect upon enactment.  Specifically, this bill:   


          Access Assessment


          1)Requires DHCS to amend its contract with the external quality  
            review organization (EQRO) currently under contract with DHCS  
            and approved by CMS to complete an access assessment within 90  
            days of the effective date of this bill.  


          2)Requires the assessment to do all of the following:








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             a)   Evaluate primary, core specialty, and facility access to  
               care for managed care beneficiaries based on current health  
               plan network adequacy requirements, as specified;
             b)   Consider State Fair Hearing and Independent Medical  
               Review decisions, and grievances, and appeals or complaints  
               data; and, 


             c)   Report on the number of providers accepting new  
               beneficiaries.



          3)Requires DHCS to establish an advisory committee to provide  
            input into the structure of the access assessment.  Requires  
            the EQRO to work with DHCS to establish the advisory  
            committee, as specified.


          4)Requires the advisory committee to include one or more  
            representatives of the following stakeholders:  consumer  
            advocacy organizations, provider associations, health plans  
            and health plan associations, and legislative staff.   
            Specifies functions of the advisory committee.


          5)Requires the EQRO to produce and establish an initial draft  
            and a final access assessment report that includes a  
            comparison of health plan network adequacy compliance across  
            different lines of business.  Requires DHCS to post the  
            initial draft for a 30-day public comment period, as  
            specified, and to be posted no later than 10 months after CMS  
            approves the assessment design.  Requires DHCS to submit the  
            final access assessment report to CMS no later than 90 days  
            after the initial draft report is posted for public comment. 










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          6)Requires the assessment to do all of the following:


             a)   Measure health plan compliance with network adequacy  
               requirements, as specified;
             b)   Review encounter data, including data from subcapitated  
               plans;


             c)   Review compliance with network adequacy requirements, as  
               specified; 


             d)   Review and report applicable network adequacy  
               requirements of the proposed or final Notice of Proposed  
               Rulemaking, as specified;


             e)   Determine health plan compliance with network adequacy,  
               as specified; and, 


             f)   Measure managed care plan compliance with network  
               adequacy requirements, as specified, accounting for  
               geographic differences, previously approved alternate  
               network access standards, access to in-network providers  
               and out-of-network providers, the entire network of  
               providers available to beneficiaries, and other modalities  
               used for accessing care, including telemedicine.



          General Provisions


          1)Requires the STCs to prevail in the event of a conflict with  
            this bill.










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          2)Authorizes DHCS to implement, interpret, or make specific this  
            bill or the STCs through all-county letters, plan letters,  
            provider bulletins, or other actions without regulatory  
            action.  Requires DHCS to inform specified committees of the  
            Legislature when this action is taken.


          3)Exempts contracts entered into by DHCS for purposes of this  
            bill from the Public Contract Code and approval by Department  
            of General Services (DGS).


          4)Requires DHCS to seek any federal approval to implement this  
            bill and conduct any study or activity required under the  
            STCs.  Implements this bill only if necessary federal  
            approvals and federal financial participation (FFP) are  
            available.


          5)Authorizes the Director of DHCS to modify any process or  
            methodology if necessary to comply with federal law or the  
            STCs if the modification is consistent with the goals of the  
            demonstration project.  Requires, if the modification would  
            not be consistent with the goals of this bill or would alter  
            the level of support for affected participating entities, the  
            Director to execute a declaration stating that this  
            determination has been made.  Specifies posting and  
            notification requirements for the declaration.


          6)Provides that in the event of a determination that the amount  
            of FFP available under the demonstration project is reduced  
            due to the application of penalties set forth in the STCs, the  
            enforcement of the demonstration project's budget neutrality  
            limit or other similar, occurrence, DHCS is required to  
            develop the methodology by which payments under the  
            demonstration project are to be reduced, as specified.  










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          7)Authorizes DHCS to develop potential successor payment  
            methodologies that could continue to support entities  
            participating in the demonstration project, as specified.   
            Requires DHCS to consult with entities participating in the  
            payment methodologies in developing successor payment  
            methodology.  Authorizes an extension of the payment  
            methodologies through demonstration year 16 or to subsequent  
            time periods, as specified.


          8)Authorizes DHCS to claim FFP for expenditures associated with  
            the designated state health programs (DSHP), as specified.


          9)Appropriates an amount from General Fund (GF) equal to the FFP  
            to the Health Care Deposit Fund, as specified.


          Global Payment Program 


          1)Requires DHCS to implement the GPP to support participating  
            public health care systems (systems) that provide health care  
            services for the uninsured.  States that GPP systems receive  
            global payments based on the health care they provide to the  
            uninsured, in lieu of traditional disproportionate share  
            hospital (DSH) payments and safety net care pool payments  
            (SNCP), as specified.


          2)Requires systems to receive GPP payments calculated using an  
            innovative value-based point methodology that incorporates  
            measures of value for the patient in conjunction with the  
            recognition of costs.  Requires a system, to receive the full  
            amount of GPP payments, to provide a threshold level of  
            services measured through a point methodology, as specified,  
            and based on the GPP system's historical volume, cost, and mix  
            of services.  Specifies that this payment methodology is  
            intended to support GPP systems that continue to provide  








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            services to the uninsured, while incentivizing the GPP systems  
            to shift the overall delivery of services for the uninsured to  
            provide more cost-effective, higher value care.


          3)Requires DHCS to implement and oversee the GPP pursuant to the  
            STCs, to maximize the amount of FFP available to participating  
            systems.


          4)Defines a GPP system as a public health care system consisting  
            of a designated public hospital (DPH), but excluding hospitals  
            operated by the University of California (UC), and its  
            affiliated and contracted providers.  Authorizes multiple DPHs  
            operated by a single legal entity to belong to the same GPP  
            system, as specified.  


          5)Requires DHCS to determine the GPP's aggregate annual limit,  
            which is the maximum amount of funding available under the GPP  
            and which is the sum components of the following:


             a)   A portion of the federal disproportionate share  
               allotment shall be included as a component of the aggregate  
               annual limit for each GPP program year, as specified; and,


             b)   The aggregate annual limit amount shall also include the  
               amount authorized under the demonstration project for the  
               uncompensated care component of the GPP, as specified.


          6)Requires DHCS to do the following: 


             a)   Develop a methodology for valuing health care services  
               and activities provided to the uninsured that achieves the  
               goals of the GPP.  Requires the points assigned to a  








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               particular service or activity to be the same across all  
               GPP systems.  Specifies when points may be increased or  
               decreased;
             b)   For each GPP system, perform a baseline analysis for  
               each GPP system's historical volume, cost and mix of  
               services to the uninsured to establish an annual threshold  
               for the GPP;


             c)   Determine a pro rata allocation percentage for each GPP  
               system, as specified;


             d)   Determine an annual budget the GPP system will receive  
               if it achieves its threshold;


             e)   Specifies the formula for the GPP system's annual  
               budget;


             f)   Adjust and recalculate each GPP systems' annual  
               threshold and annual budget if there is a change in the  
               aggregate annual limit;


             g)   Specify a reporting schedule for GPP systems to submit  
               an interim yearend report and a final reconciliation  
               report, as specified;


             h)   Claim FFP for GPP payments using intergovernmental  
               transfers (IGTs), as specified; and,


             i)   Conduct or arrange for two evaluations of the GPP.











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          7)Specifies the calculation of the GPP funding payable to each  
            GPP system, including a methodology to redistribute unearned  
            GPP subject to fund availability and the STCs. 


          8)Specifies the manner and timeframes of payments to GPP  
            systems, but no payment can be delayed beyond 21 days after  
            all the necessary IGTs have been made.


          9)States that the GPP provides a source of funding to support  
            health care activities and services available to the  
            uninsured, and not to be construed to constitute or offer  
            health care coverage for individuals receiving services.   
            Provides that the GPP payments are not paid on behalf of  
            specific individuals and allows GPP systems to determine the  
            scope, type and extent of available services, consistent with  
            the STCs.


          10)Requires the nonfederal share of any payments under the GPP  
            to consist of voluntary IGT of funds provided by DPH or  
            affiliated governmental agencies or entities, as specified.   
            Requires DHCS, if FFP is not available or results in  
            recoupment of payments already made, to return any IGT to the  
            transferring entities, as specified.


          11)Establishes the GPP Special Fund (Fund) to consist of moneys  
            that a DPH or affiliated governmental agency or entity elects  
            to transfer to DHCS for deposit into the Fund as a condition  
            of participation in the GPP.  Provides that moneys derived  
            from these IGTs must be used as a source of the nonfederal  
            share of GPP payments.  Specifies distribution of the Fund.  


          12)Provides that as a condition of participation in the GPP,  
            each DPH or affiliated governmental entity agrees to provide  
            IGT of funds necessary to meet the nonfederal share  








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            obligation, as specified.  Considers IGT of funds to be  
            voluntary and prohibits the use of the GF monies to fund the  
            nonfederal share of any GPP payment.


          13)Specifies how DHCS should determine the IGT amount for each  
            GPP system, including the initial transfer amount that is  
            calculated partly with the use of a GPP system-specific IGT  
            factor for each GPP system, as specified.


          14)Authorizes DHCS to initiate audits of GPP systems' data  
            submissions and reports, and to request supporting  
            documentation.  Requires DHCS audits to be conducted within 22  
            months of the ends of the applicable GPP program year to allow  
            for the appropriate finalization of payments to the  
            participating GPP system, but subject to recoupment if it is  
            later determined that FFP is not available for any portion of  
            the applicable systems. 


          Public Hospital Redesign and Incentives in Medi-Cal 


          1)Requires participating PRIME entities to earn incentive  
            payments by undertaking projects set forth in the STCs, for  
            which there are required project metrics and targets.   
            Specifies a minimum number of required projects for each DPH  
            system.


          2)Requires DHCS to provide participating PRIME entities the  
            opportunity to earn the maximum amount of funds authorized for  
            the PRIME program under the demonstration project.  Under the  
            demonstration project, funding is available for the DPH  
            systems and the district and municipal public hospitals (DMPH)  
            through two separate pools.  Authorizes up to $1.4 billion  
            annually for the DPH systems pool, and up to $200 million is  
            authorized annually for the DMPH pool, during the first three  








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            years of the demonstration project, with reductions to those  
            amounts in the fourth and fifth years.  


          3)Requires PRIME payments to be incentive payments, and not  
            payments for services otherwise reimbursable under the  
            Medi-Cal, nor direct reimbursement for expenditures incurred  
            by participating PRIME entities in implementing reforms.   
            Prohibits PRIME incentive payments from offsetting payment  
            amounts otherwise payable by the Medi-Cal program, or to and  
            by Medi-Cal managed care plans for services provided to  
            Medi-Cal beneficiaries, or otherwise supplant provider  
            payments payable to PRIME entities.


          4)Requires, within 30 days following federal approval of the  
            protocols setting forth the PRIME projects, metrics, and  
            funding mechanics, each participating PRIME entity to submit a  
            five-year PRIME project plan containing the specific elements  
            required in the STCs.  Requires DHCS to review all five-year  
            PRIME project plans and take action within 60 days to approve  
            or disapprove each five-year PRIME project plan.


          5)Authorizes PRIME entities to modify projects or metrics in  
            their five-year PRIME project plan, to the extent authorized  
            under the demonstration project and approved by DHCS.


          6)Requires each PRIME entity to submit reports to DHCS twice a  
            year demonstrating progress toward required metric targets.   
            Provides that the submission of project reports constitutes a  
            request for payment.  


          7)Establishes the Public Hospital Investment, Improvement, and  
            Incentive Fund which is continuously appropriated.










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          8)Establishes requirements for the disbursement timeframe for  
            PRIME payments, incentive payments and aggregate annual  
            amounts, as specified.


          9)Requires DHCS to conduct, or arrange an evaluation of the  
            PRIME program.


          10)Provides that the PRIME incentive payments are intended to  
            support DPHs to change care and delivery and strengthen those  
            systems' ability to participate under an alternative payment  
            methodology (APM).  Requires DHCS to issue an all-plan letter  
            to Medi-Cal managed care plans that will promote and encourage  
            positive system transformation.


          11)Requires DPH to contract with at least one Medi-Cal managed  
            care plan in the service area where they operate using an APM  
            methodology by January 1, 2018.  


          Whole Person Care 


          1)Requires DHCS to establish and operate a WPC pilot program to  
            allow for the development of WPC pilots focused on target  
            populations of high-risk, high-utilizing Medi-Cal  
            beneficiaries in local geographic areas.  Specifies the  
            overarching goal of the WPC as the coordination of health,  
            behavioral health, and social services, in a patient-centered  
            manner to improve beneficiary health and well-being through  
            more efficient and effective use of resources.  


          2)States that the WPC pilot provides an option to a county, a  
            city and county, a health or hospital authority, or a  
            consortium of any of the above entities serving a county or  
            region consisting of more than one county, to receive support  








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            to integrate care for particularly vulnerable Medi-Cal  
            beneficiaries who have been identified as high users of  
            multiple systems and who continue to have or are at-risk of  
            poor health outcomes.  Specifies that through collaboration,  
            pilot entities will identify common beneficiaries, share data  
            between systems, coordinate care in real time, and evaluate  
            individual and population progress in order to meet the goal  
            of providing comprehensive coordinated care for the  
            beneficiary resulting in better health outcomes.  


          3)Requires the WPC pilots to include specific strategies to  
            increase integration among local government agencies, health  
            plans, providers, and other entities that serve high-risk,  
            high-utilizing care for the most vulnerable Medi-Cal  
            beneficiaries; reduce inappropriate inpatient and emergency  
            room utilization; improve data collection and sharing among  
            local entities; improve outcomes for the WPC target  
            populations; and, may include other strategies to increase  
            access to housing and supportive services.


          4)Requires DHCS to approve WPC pilots through the process  
            outlined in the STCs.


          5)States that receipt of WPC services is voluntary, and  
            individuals receiving these services may opt out at any time.


          6)Defines a WPC lead entity as the entity designated to  
            coordinate the WPC pilot and be the single point of contact  
            for DHCS.  Authorizes a lead entity to be a county, city and  
            county, a health or hospital authority, a DPH, a district and  
            municipal public hospital or an agency or department of those  
            entities, or a consortium of any of such entities.  Specifies  
            requirements for the lead entity, including operating the WPC  
            pilot, conducting ongoing monitoring of WPC participating  
            entities, arranging for the required reporting, ensuring an  








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            appropriate financial structure is in place, and identifying  
            and securing a permissible source of the nonfederal share of  
            WPC pilot payments.


          7)Requires the WPC to include, at a minimum, all of the  
            following entities as participating entities in addition to  
            the lead entity.


             a)   At least one Medi-Cal managed care plan operating in  
               geographic area of the WPC pilot to work in partnership  
               with the WPC lead entity when implementing the pilot  
               specific to Medi-Cal managed care beneficiaries;
             b)   Health services agency or department for the geographic  
               region where the WPC pilot operates, or any other public  
               entity operating in that capacity for the county or city  
               and city and county;


             c)   Local entities, agencies or departments responsible for  
               specialty mental health services for the geographic region  
               where the WPC pilot operates;  


             d)   At least one other public agency or department, which  
               may include, but is not limited to, county alcohol and  
               substance use disorder programs, human services agencies,  
               public health departments, criminal justice or probation  
               entities, and housing authorities,  regardless of how many  
               of these fall under the same agency head within the  
               geographic area where the WPC pilot operates; and,


             e)   At least two other community partners serving the target  
               population within the applicable geographic area. 











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          8)Requires DHCS to enter into a pilot agreement with each WPC  
            lead entity approved to participate in the WPC pilot program.   
            Specifies requirements for the pilot agreement including the  
            amount of funding that would be available to the WPC pilot and  
            conditions for payments.



          9)Permits the sharing of health information, records, and other  
            data with and among WPC lead entities and WPC participating  
            entities to the extent necessary for the activities and  
            purposes, as specified.

          10)Authorizes WPC pilots to target the focus of their pilot on  
            individuals at risk or are experiencing homelessness who have  
            a demonstrated medical need for housing or supportive  
            services.  States that WPC participating entities may include  
            local housing authorities, local continuum of care programs,  
            community-based organizations, and others servicing the  
            homeless population as entities collaborating and  
            participating in the WPC pilot.  Specifies housing  
            interventions to include:  a) tenancy-based care management  
            services, as specified; and, b) countywide housing pools  
                                             (housing pool), as specified.



          11)Authorizes WPC participating entities to include  
            contributions to a housing pool that will directly provide  
            needed support for medically necessary housing services, with  
            the goal of improving access to housing and reducing churn in  
            the Medi-Cal population.



          12)Authorizes the housing pool to be funded through WPC pilot  
            payments or direct contributions from community entities.   
            Requires state and local government and community entity  
            contributions to the housing pool to be separate from FFP  








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            funds, and may be allocated to fund support for long-term  
            housing, including rental housing subsidies.  Allows the  
            housing pool to leverage local resources to increase access to  
            subsidize housing units.  Allows the housing pool to also  
            incorporate or reinvest a portion of the savings from the  
            reduced utilization of health care services in the housing  
            pool.  As applicable to an approved WPC pilot agreement, WPC  
            investments in housing units or housing subsidies, including  
            any payment for room and board shall not be eligible for FFP.   
            Specifies that "room and board" does not include those  
            housing-related activities or services recognized as  
            reimbursable under CMS policy.



          13)Specifies requirements for payments to WPC pilots, the pilot  
            application and selection criteria, and carry over of  
            remaining funds.



          14)Requires an evaluation of the WPC pilot.



          Dental Transformation Initiative


          1)Requires DHCS to implement the DTI in accordance with the STCs  
            to improve the oral health care for Medi-Cal children through  
            age 20.

          2)States that the DTI is intended to improve the oral health  
            care of Medi-Cal children with a particular focus on  
            increasing the statewide proportion of qualifying children  
            enrolled in the Medi-Cal Dental Program who receive a  
            preventive dental service by 10 percentage points over a five  
            year period.









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          3)Establishes four domains within the DTI including Preventive  
            Services, Caries Risk Assessment, Continuity of Care, and  
            Local Dental Pilot Projects, as follows:

             a)   Increase Preventive Services Utilization for Children:  
               Aim is to increase the statewide proportion of qualifying  
               children enrolled in Medi-Cal who receive a preventive  
               dental service in a given year.  The statewide goal is to  
               increase the utilization among children by at least 10  
               percentage points by the end of the demonstration.

             b)   Caries Risk Assessment and Disease Management Pilot:   
               initially, this will only be available in select pilot  
               counties, designated by DHCS.  Requires participating  
               service office locations to elect to be approved by DHCS to  
               participate in this domain of the DTI program.  Permits, to  
               the extent DHCS determines the pilots to be successful,  
               DHCS to seek to implement this domain on a statewide basis  
               and subject to the availability of funding under the DTI  
               Pool as available for this purpose, as specified. 

             c)   Increase Continuity of Care:  requires a DTI incentive  
               payment to be paid to eligible service office locations who  
               have maintained continuity of care through providing  
               examinations for their enrolled child beneficiaries under  
               21 years of age, as specified in the STCs.  Requires DHCS  
               to begin this effort in select counties and seek to  
               implement on a statewide basis if the pilot is determined  
               to be successful and subject to the availability of funding  
               under the DTI Pool. 

             d)   Local Dental Pilot Projects (LDPPs):  requires LDPPs to  
               address one or more of the three domains identified in  
               paragraph 3) above through alternative LDPPs, as authorized  
               by DHCS pursuant to the STCs, as specified.

          4)Permits incentive payments to be made available within each  
            domain under the DTI to qualified providers who meet the  
            requirements of the domain.  Permits providers in either the  








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            dental fee-for-service (FFS) or dental managed care Medi-Cal  
            delivery systems to participate in the DTI. 

          5)Requires the DTI to be funded at a maximum of $148 million  
            annually, and for five years totaling a maximum of $740  
            million, except as provided in the STCs.  Permits, when DTI  
            funds in a given program year are not expended, those  
            remaining program funds to be available for DTI payments in  
            subsequent years. 

          6)Permits DHCS to earn additional demonstration authority, up to  
            a maximum of $10 million, to be added to the DTI Pool for use  
            in paying incentives to qualifying providers under DTI, as  
            indicated in the STCs.

          7)Requires DHCS to make DTI incentive payments directly to  
            eligible contracted service office locations.  Requires  
            incentive payments to be issued to the service office location  
            based on the services rendered at the location and that  
            service office location's compliance with the criteria  
            enumerated in the STCs.  Permits DHCS to provide DTI incentive  
            payments to eligible service office locations on a semiannual  
            or annual basis.

          8)Specifies that dental managed care provider service office  
            locations are eligible for DTI incentive payments, as  
            specified in the STCs, and specifies that these payments are  
            to be considered separate from payment received from a dental  
            managed care plan.  Prohibits the incentive payments from  
            being considered a direct reimbursement for dental services  
            under the Medi-Cal state plan.

          9)Requires DHCS to disburse DTI incentive payments to eligible  
            service office locations that did not previously participate  
            in Medi-Cal prior to the demonstration and that render  
            preventive dental services during the demonstration to the  
            extent the service office location meets or exceeds the goals  
            specified by DHCS in accordance with the STCs.









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          10)Specifies that safety net clinics are eligible for DTI  
            incentive payments specified in the STCs.  Requires  
            participating safety net clinics to be responsible for  
            submitting data in a manner specified by DHCS for receipt of  
            DTI incentive payments.  Requires each safety net clinic  
            office location to be considered a dental service office  
            location for purposes of specified domains outlined in the  
            STCs.

          11)Requires service office locations to submit all data in a  
            manner acceptable to the DHCS within one year from the date of  
            service or by January 31 for the preceding year that the  
            service was rendered to be eligible for DTI incentive payments  
            associated with that timeframe.

          12)Requires DHCS to conduct, or arrange to have conducted, the  
            evaluation of the DTI as required by the STCs.

          EXISTING LAW:  


          1)Establishes the Medi-Cal program, which is administered by  
            DHCS and under which qualified low-income persons receive  
            health care benefits. 

          2)Establishes a Medicaid Section 1115 demonstration project  
            under the Medi-Cal program until October 31, 2015 known as  
            California's Bridge to Reform, to implement specified  
            objectives, including better care coordination for Seniors and  
            Persons with Disabilities (SPDs) and maximization of  
            opportunities to reduce the number of uninsured individuals.

          3)Provides for payments under the state's Bridge to Reform  
            waiver to DPHs (UC and county hospitals), and for federal DSH,  
            payments to private hospitals (referred to as "DSH replacement  
            payments") and nondesignated public hospitals (NDPHs) through  
            October 1, 2015.  These provisions:  

             a)   Make DPHs eligible for cost-based FFS Medicaid funding  








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               using county certified public expenditures (CPEs) as the  
               federal match, instead of state GF.  DPHs put up the  
               nonfederal share of Medi-Cal FFS payments used to draw down  
               federal Medicaid matching funds, and receive cost-based  
               reimbursement, using CPEs to draw down federal Medicaid  
               matching funds; 

             b)   Provide DSH payments to DPHs, using county CPEs and  
               county IGTs to draw down federal DSH funds; 

             c)   Provide DSH payments to eligible non-designated public  
               hospitals (NDPH are primarily district hospitals) meeting  
               DSH eligibility criteria, using the GF to draw down federal  
               DSH funds;

             d)   Provide for "DSH replacement payments" to private  
               hospitals meeting DSH eligibility criteria, using non-DSH  
               Medicaid funds and state GF as the fund source; 

             e)   Make DPHs eligible for payments from the federally  
               funded SNCP for uncompensated care; and, 

             f)   Make DPHs eligible for payments from the federally  
               funded delivery system reform incentive pool (DSRIP), based  
               on the DPH's progress toward and achievement of milestones  
               and metrics established in its DSRIP proposal, funded by  
               federal funds and IGTs.  

          4)Authorizes DHCS to request one or more temporary waiver  
            extensions to continue the operation of, and the authorities  
            provided under, the Bridge to Reform.  Requires DHCS to extend  
            and apply the existing hospital payment methodologies and  
            allocations on a state fiscal year, annual, partial year, or  
            other basis, to the extent permitted under any approved  
            temporary waiver extension, an approved subsequent waiver, or  
            as otherwise permitted under federal Medicaid law.

          5)Requires the Department of Managed Health Care (DMHC) to  
            develop and adopt regulations to ensure that health plan  








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            enrollees have access to health care services in a timely  
            manner, and requires DMHC to develop indicators of timeliness  
            and consider the following:

             a)   Waiting times for appointments with physicians and  
               specialists;

             b)   Timeliness of care in an episode of illness, including  
               timeliness to referrals; and,

             c)   Waiting time to speak to a physician, registered nurse  
               or other qualified health professional.

          6)Requires contracts between health plans and health care  
            providers to assure compliance with the timely access  
            standards developed by DMHC.  Requires the contracts to  
            require reporting by health care providers to health plans and  
            by health plans to DMHC to ensure compliance with the  
            standards.

          7)Requires health plans to report annually to DMHC on compliance  
            with the timely access standards.

          8)Requires DHCS to conduct annual medical audits of each  
            Medi-Cal managed care plan unless the Director of DHCS  
            determines there is good cause for additional reviews.   
            Requires the reviews to use the standards and criteria  
            established pursuant to the Knox-Keene Health Care Services  
            Act of 1975, or Insurance Code, as appropriate. 

          FISCAL EFFECT:  This bill has not yet been analyzed by a fiscal  
          committee.


          COMMENTS:  


          1)PURPOSE OF THIS BILL.  According to the author, this bill is  
            needed to provide the statutory framework for implementation  








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            of Medi-Cal 2020.  While the STCs outline the programmatic and  
            financing elements of Medi-Cal 2020, state law changes are  
            required, particularly related to hospital financing.  This  
            bill is needed to continue existing Medi-Cal FFS payments to  
            DPHs, to change how federal DSH funds are provided to DPHs  
            consistent with the STCs under the GPP, to continue DSH  
            payments to private and DMPHs, to implement the expanded  
            provisions of PRIME, to appropriate funds for the  
            waiver-related provisions, and to codify the provisions of the  
            STCs establishing the DTI and the access assessments.  In  
            addition, this bill would grant flexibility to DHCS to  
            implement Medi-Cal 2020 without using the regular contracting  
            and regulatory processes due to waiver timelines, and would  
            require notification to the Legislature regarding  
            waiver-related activities. 


          2)BACKGROUND.  


             a)   Medicaid Waivers.  Under a Medicaid waiver, the federal  
               government waives certain Medicaid requirements to give  
               states the flexibility to operate their Medicaid programs  
               (Medi-Cal in California) and allow states to test new  
               approaches and demonstration projects to improve care.   
               Section 1115 of the Social Security Act authorizes the  
               federal government to grant Medicaid waivers.



             To obtain a waiver, a state negotiates with CMS about which  
               Medicaid provisions might be waived, what innovations the  
               state is proposing, and how the state plans to achieve  
               budget neutrality (a requirement that waivers cannot cost  
               the federal government more with the waiver than without  
               the waiver).  The negotiations are memorialized in the STCs  
               which constitute a contract between CMS and the state.  In  
               addition, the state adopts authorizing legislation to  
               implement the waiver.








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             b)   History of California's Recent Medicaid Waivers.  Apart  
               from the Medi-Cal 2020 Waiver, California has negotiated  
               two other waivers with CMS - the 2005 Medi-Cal Waiver and  
               the 2010 Bridge to Reform Waiver.  The 2005 waiver  
               delineated the methods for hospitals to be paid for care to  
               Medi-Cal and uninsured patients.  It established a SNCP for  
               public hospitals which subsidized uncompensated care costs  
               for uninsured individuals.  The 2005 Waiver also provided  
               federal funds to expand coverage to childless adults under  
               a Coverage Initiative project which has provided financial  
               support to 10 counties.



             The 2010 Bridge to Reform Waiver was a five-year  
               demonstration of health care reform initiatives that was  
               projected to provide an additional $10 billion in federal  
               funds over the lifetime of the waiver.  The major  
               components of the Bridge to Reform Waiver include:
               i)     Establishing Low-Income Health Programs (LIHP) which  
                 allow counties to draw down federal matching dollars to  
                 provide coverage to childless adults if they meet certain  
                 requirements;

               ii)    Requiring mandatory enrollment of SPDs on Medi-Cal  
                 into Medi-Cal managed care plans;



               iii)   Requiring DHCS to establish organized health care  
                 delivery pilot models for children with special health  
                 care needs who are eligible for both California  
                 Children's Services and Medi-Cal; and,



               iv)    Continuing the SNCP to provide funding for public  
                 hospitals, a DSRIP, state health care programs, as well  
                 as the Health Care Coverage Initiative.  The 2010 waiver  








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                 also implemented a global payment demonstration project  
                 for hospitals.



          3)MEDI-CAL 2020 WAIVER.  On December 30, 2015, DHCS received CMS  
            approval of Medi-Cal 2020.  This five year, $6.2 billion  
            waiver begins January 1, 2016, and ends December 31, 2020.   
            The details of Medi-Cal 2020 are in the more than 300 page  
            STCs and related attachments agreed to by the state and CMS.   
            Funding by waiver program component is as follows:

              PRIME                      $3.732 billion


                 Global Payment Program$236 million* and **

                 Dental Transformation Initiative$375 million

                 Designated State Health Programs$375 million

                 Whole Person Care     $1.5 billion 

            --------------------------------------------------------------- 
            ---------------

                 Total                    $6.21 billion

            

            * GPP does not include the DSH component of funding. DSH  
            funding over the five years of the waiver is projected to be  
            $10.830 billion total funds ($5.915 billion federal funds).

            ** For GPP, initial federal funding only accounts for the  
            first year of the GPP as funding in subsequent years is based  
            on a study on DPH uncompensated care.
          In addition to the program areas and federal funding under  
          Medi-Cal 2020, the federal government waives specified federal  








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          Medicaid provisions, including the following:


             a)   Freedom of Choice:  to enable California to require  
               participants to receive benefits through certain providers  
               and to permit California to require that individuals  
               receive benefits through managed care providers who could  
               not otherwise be required to enroll in managed care. No  
               waiver of freedom of choice is authorized for family  
               planning providers;

             b)   DSH requirements:  to exempt California from making DSH  
               payments, in accordance with federal Medicaid law to a  
               hospital which qualifies as a DSH during any year for which  
               the Public Health Care System with which the DSH is  
               affiliated with receives payment pursuant to the GPP;


             c)   Statewideness: 

               i)     To enable California to operate the demonstration on  
                 a county-by-county basis and to provide Medi-Cal managed  
                 care plans only in certain geographic areas;
               ii)    To enable California to provide Drug Medi-Cal  
                 Organized Delivery System (DMC-ODS) services to  
                 individuals on a geographically limited basis; 

               iii)   To enable California to authorize WPC pilots and to  
                 provide WPC services to individuals on a geographically  
                 limited basis; and,

               iv)    To enable the state to authorize DTI program pilots  
                 and to provide DTI services to individuals on a  
                 geographically limited basis.


             d)   Amount, Duration, and Scope of Services and  
               Comparability:
               i)      To enable California to provide different benefits  








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                 for low-income pregnant women between 109% up to and  
                 including 138% of the federal poverty level (FPL), as  
                 compared to other pregnant women in the same eligibility  
                 group;
               ii)    To enable California to authorize WPC pilots which  
                 may make available certain services, supports, or  
                 interventions to certain high-risk, vulnerable  
                 populations targeted under an approved WPC pilot program  
                 that are not otherwise available to all beneficiaries in  
                 the same eligibility group;

               iii)   To enable California to provide certain services,  
                 supports and other interventions to eligible individuals  
                 with substance use disorders under the DMC-ODS program  
                 that are not otherwise available to all beneficiaries in  
                 the same eligibility group;

               iv)    To enable California to provide certain services,  
                 supports and other interventions to eligible individuals  
                 under the DTI program that are not otherwise available to  
                 all beneficiaries in the same eligibility group.


          4)DSH.  Medicaid DSH payments are federally required Medicaid  
            payments that states make to hospitals that serve a high  
            proportion of Medicaid and other low-income patients.  DSH  
            payments supplement regular Medicaid payments for hospital  
            services and are intended to improve the financial stability  
            of safety-net hospitals by offsetting uncompensated care costs  
            for Medicaid and uninsured patients.  Each state's annual DSH  
            allotment is calculated by federal law.  DSH payments are  
            limited by annual federal DSH allotments to each state.


            Because hospitals were anticipated to have reduced  
            uncompensated care as a result of the federal Patient  
            Protection and Affordable Care Act (ACA), the ACA reduced  
            federal DSH funds.  Beginning in federal fiscal year (FY)  
            2014, the ACA proposed to dramatically decrease the amount of  








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            funding that will be provided under DSH, based on the premise  
            that the ACA coverage expansions will result in fewer  
            individuals receiving uncompensated care.  Under the ACA, the  
            federal Secretary of the Department of Health and Human  
            Services is required to develop a methodology that will reduce  
            the DSH payments by $14.1 billion during the period of 2014 to  
            2019, pursuant to a schedule set out in the ACA.  These  
            reductions increase over time, and by 2019 represent an  
            approximate 50% reduction over baseline projections.  These  
            reductions have been delayed multiple times and are currently  
            scheduled to begin in FY 2018.  California anticipates  
            receiving $1.2 billion in federal DSH funds in 2015-16.

            Under this bill, and consistent with the previous legislation  
            implementing the 2010 waiver, DHCS will "run the DSH list" to  
            determine which hospitals are eligible for federal DSH funds.   
            In FY 2014-15, the threshold for DSH eligibility is a 40.3%  
            Medi-Cal utilization rate (MUR) or higher, or a low-income  
            utilization rate (LIUR), (county indigent, charity care and  
            Medi-Cal) of 25% (the 25% LIUR is in statute and applies each  
            year while the MUR varies year-to-year).  In FY 2014-15, there  
            were 140 hospitals that were DSH-eligible, plus three UC  
            hospitals (one at UCSF and two at UCLA) that were made  
            DSH-eligible by statute implementing the waiver.  Under  
            existing law dating back to 1994-95, the state had a "rake  
            off" of DSH funds to achieve budget savings.  The current rake  
                                          off amount in statute is $85 million, but the "rake off" was  
            suspended in the legislation implementing the 2005 and 2010  
            waivers, and continues to be suspended in this bill. 

            Private hospitals that are DSH-eligible do not receive DSH  
            funds.  instead, they receive "virtual DSH" (also referred to  
            as "DSH replacement payments") which is the same amount of  
            funding they would have received from DSH funds, except the  
            additional funds are funded by state GFs and "regular" federal  
            Medicaid matching funds (instead of being funded from the  
            capped federal DSH allotment).  DMPHs receive DSH funds, with  
            the state GF providing the matching funds used to draw down  
            federal funds.  These requirements apply in the previous  








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            waiver and continue in this bill.

            Under Medi-Cal 2020, the five UC DPHs will continue to receive  
            DSH funds as they did in the prior waiver, using CPEs to draw  
            down the funds for costs below 100% of their costs, and IGTs  
            to drawn down DSH funds for their amounts between 100-175% of  
            their costs.  Consistent with the previous waiver, this bill  
            makes UCLA and UCSF hospitals DSH-eligible who would not  
            otherwise be DSH eligible.  The amount of DSH funds UC is  
            eligible to receive under this bill systemwide is capped at  
            between 26.2% and 21.8% after amounts for DMPHs are made,  
            depending upon the state fiscal year.  DHCS is required to  
            consult with UC prior to making interim and final DSH  
            payments, and to make any adjustments to the payment  
            distributions requested by UC so long as the aggregate net  
            effect of the adjustments is zero.

            County DPHs will now longer receive DSH funds as they did in  
            the prior waiver.  Instead, county DPHs will receive DSH funds  
            under the new GPP, described in 5) below.

          5)GPP.  The GPP is a new feature of Medi-Cal 2020.  Under GPP, a  
            statewide pool of funding for the remaining uninsured would be  
            established by combining federal DSH funding (which is limited  
            to a hospital under federal law) for county DPHs and some  
            level of federal SNCP funding (a funding component of the  
            previous waiver for the uninsured).  Under the GPP, each  
            individual public hospital system would receive a "global  
            budget" for the remaining uninsured from the overall GPP pool  
            based on annual threshold amount determined through baseline  
            analysis of historical/projected volume/cost/mix of services  
            to the uninsured.  The GPP would integrate and reform Medicaid  
            DSH and SNCP funding by moving away from a cost-based payment  
            methodology restricted to mostly hospital settings to a more  
            "risk-based" and/or "bundled" payment structure. 

            GPP would encourage public hospital systems to provide greater  
            primary and preventive services, as well as alternative  
            modalities such as phone visits, group visits, telemedicine,  








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            and other electronic consultations with the goal of improving  
            the health of the remaining uninsured through coordination of  
            care.  DHCS would establish individual public hospital "global  
            budgets" for remaining uninsured for each DPH from the overall  
            pool based on annual threshold amount determined through  
            baseline analysis of historical/projected volume/cost/mix of  
            services to the uninsured.  Achievement of threshold service  
            targets would be done on a "points" system with a base level  
            of points required for each system to earn their full global  
            budget.  The threshold amounts for each public health care  
            system will initially be constructed using the volume and cost  
            of services occurring in participating providers, and will use  
            the most recent complete state fiscal year data.  Funding  
            would be claimed on a quarterly basis, with the DPHs providing  
            the necessary IGTs for the non-federal share.  Partial funding  
            would be available based on partial achievement of the  
            "points" target. Funding for the GPP is expected to decline  
            over the duration of the waiver due to the scheduled reduction  
            in federal DSH funds, and the amount of funding for the prior  
            SNCP is unknown after the initial year and will be determined  
            based on an assessment of DPH uninsured costs.

            As a condition of participation in the GPP, each DPH or  
            affiliated governmental agency or entity must agree to provide  
            IGTs necessary to meet the nonfederal share obligation.  This  
            bill establishes different IGT transfer amounts for each DPH  
            under a methodology agreed to by the DPHs.  The reason for the  
            different IGT transfer amounts is to take into account  
            hospital systems with high Medi-Cal losses.  The GPP is for  
            the uninsured and it allows for care in non-hospital setting.   
            However, because the points are only for the uninsured and DSH  
            is also intended for Medi-Cal, it disadvantages DPHs that have  
            substantial Medi-Cal hospital losses.  The second reason for  
            the different IGFT transfer amounts is the single standardized  
            point system used in the GPP is regardless of cost variation  
            among DPHs, and it results in a disadvantage to DPH systems in  
            higher cost areas as DPHs in lower-cost areas could meet their  
            threshold by providing relatively fewer services than would  
            otherwise be required.








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          6)PRIME.  PRIME is a continuation and expansion on the DSRIP  
            from the 2010 waiver aimed to improve the care delivery in  
            public hospital systems.  PRIME participating entities consist  
            of DPHs and DMPHs.  DMPHs did not receive funds from DSRIP  
            under the 2010 waiver. There are 21 DPHs operating 17 health  
            and hospital systems, with one system comprised of four  
            hospitals in Los Angeles.  DPHs are located in mostly urban  
            areas in northern, central and southern California.  These  
            hospitals range in size from approximately 160 to 600 beds.  
            DPHs are similar in that they are academic teaching centers  
            providing a broad range of inpatient and outpatient services  
            including specialty care.  More than 50% of patients served  
            across these health and hospital systems are Medi-Cal  
            beneficiaries or uninsured.  DPHs provide 30% of all  
            hospital-based care to the Medi-Cal population in the state  
            and operate more than half of the state's level one trauma  
            centers and more than two-thirds of its burn centers. 

          There are 40 DMPHs spanning 19 counties across California.   
            DMPHs are heterogeneous, varying significantly in size (from  
            approximately three to 500 beds) and in the range of services  
            provided. 

          PRIME entities can earn incentive payments based on the  
            achievement of specified benchmarks across various metrics.   
            In addition, PRIME requires the achievement of set targets in  
            three domains (Outpatient Delivery System Transformation,  
            Targeted High-Risk or High Cost, Populations, Resource  
            Utilization Efficiency) for moving toward APMs for DPHs over  
            the course of the Waiver.  DPHs must participate in all three  
            domains, while DMPHs must participate in only one domain.   
            Within the first two domains, DPHs are required to participate  
            in certain elements (for example, integration of physical and  
            behavioral health, ambulatory care redesign for primary care  
            and specialty care).  The non-federal share of funding for  
            PRIME will be provided by DPHs/DMPHs through IGTs.  Reporting  
            and payments will be made on a semi-annual basis, and PRIME  
            entities can achieve partial payment for partial achievement.   








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            Annual federal funding available by waiver demonstration year  
            (DY) for DPH and DMPHs is shown below:













































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                                     DPHs         DMPHs 

               DY 11 (Jan 2016 - June 2016)       $700 million $100  
          million 
               DY 12 (July 2016 - June 2017)        $700 million $100  
          million 
               DY 13 (July 2017 - June 2018)        $700 million $100  
          million 
               DY 14 (July 2018 - June 2019)        $630 million $90  
          million 
               DY 15 (July 2019 - June 2020)        $535.5 million$76.5  
          million
               ------------------------------------------------------------ 
          --------------------
                 Five Year Total                         $3.2  
            billion$466.6 million
                 
                 A goal of the waiver is to move participating DPH PRIME  
            providers toward a value-based payment structure when  
            receiving payments for managed care beneficiaries.  A new  
            feature in Medi-Cal 2020 is the establishment of APM targets  
            for DPHs in the aggregate that, if not met, result in  
            financial penalties.  The waiver establishes four ways for  
            payments to be counted towards the APM thresholds, and the  
            target percentages are based on the number of Medi-Cal managed  
            care beneficiaries assigned to DPHs where all of, or a portion  
            of, their care is paid for under a contracted APM: 

             a)   50% by January 2018 (DY 13);
             b)   55% by January 2019 (DY 14);
             c)   60% by end of waiver (DY 15) 

            Five percent of DPH PRIME funding at risk in DY14 (July  
            2018-June 2019) and DY15 (July 2019-June 2020) is tied to the  
            achievement of the APM targets.  The APM targets do not apply  
            to DMPHs.

          7)DTI.  The DTI is a new feature of Medi-Cal 2020. It is funded  








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            at $750 million total funds ($375 million in federal funds)  
            generated from Designated State Health Programs.  Of this  
            amount, $10 million in total funds is contingent upon the  
            state meeting statewide metrics. DTI consists of four domain  
            areas as follows:

             a)   Domain 1:  Increase Preventive Services Utilization for  
               Children.  The goal of this domain is to increase statewide  
               proportion of children ages through 20 years of age and  
               enrolled in Medi-Cal who receive a preventive dental  
               service by 10 percentage points over a five-year period.   
               Incentive payments will be made annually to providers for  
               utilization and provider participation and will be used to  
               determine the subsequent year's threshold.  Semi-annual  
               incentive payments will be made to dental provider service  
               locations that provide preventative services to an  
               increased number of Medi-Cal children, as compared to the  
               DHCS-determined baseline. Incentive payments will be made  
               to the service office locations for rendered preventive  
               services once they have met the DHCS-established goal; and,

             b)   Domain 2:  Caries Risk Assessment and Disease  
               Management.  The goal of this domain is to diagnose early  
               childhood caries (cavities) by utilizing CRA to treat  
               caries as a chronic disease for children ages six and  
               under.  The CRA would be a model that proactively prevents  
               and mitigates oral disease through the delivery of  
               preventative services in lieu of more invasive and costly  
               procedures (restorative services).  Children will have  
               treatment plans prescribed based on caries risk level.   
               DHCS will use a baseline year with statewide data for the  
               most recent state fiscal year preceding implementation of  
               the domain. DHCS will track and report the following  
               measures:

               i)     Number of, and percentage change in, restorative  
                 services; 
               ii)    Number of, and percentage change in, preventive  
                 dental services; 








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               iii)   Utilization of CRA dental procedure codes and  
                 reduction of caries risk levels (not available in the  
                 baseline year prior to the waiver implementation); 

               iv)    Change in use of emergency rooms for dental-related  
                 reasons among the targeted children for this domain; and,

               v)     Change in number and proportion of children  
                 receiving dental surgery under general anesthesia.

               Dentists must opt-in by completing a DHCS recognized  
               training program, and incentive payments will be made to  
               providers for successful completion of caries treatment  
               plan and improvement in "elevated risk" levels.  Treatment  
               plans and associated procedures will be carried out as  
               follows, over a 12 month period: 


               i)     "High risk" children will be authorized four visits;  

               ii)    "Moderate risk" children will be authorized three  
                 visits; and,

               iii)   "Low risk" children will be authorized to two  
                 visits.



             c)   Domain 3:  Increase Continuity of Care.  The goal of  
               this domain is to increase continuity of care for  
               beneficiaries ages 20 and under for 2, 3, 4, 5, and 6  
               continuous periods.  DHCS will establish a baseline year,  
               based on data from the most recent complete state fiscal  
               year using claims data to determine the number of  
               beneficiaries who received an examination each year from  
               the same service office location for 2, 3, 4, 5, and 6 year  
               continuous periods.  Incentive payments will be available  
               to service office locations that provide examinations to an  








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               enrolled Medi-Cal child for 2, 3, 4, 5, and 6 continuous  
               periods.  The incentive payment will be an annual flat  
               payment for providing continuity of care to the  
               beneficiary.

             d)   Domain 4: LDPPs.  LDPPS will address 1 or more of the 3  
               domains through alternative programs, potentially using  
               strategies focused on rural areas including local case  
               management initiatives and education partnerships.  DHCS  
               will solicit proposals once at the beginning of the  
               demonstration and will review, approve, and make payments  
               for LDPPs in accordance with the requirements stipulated in  
               the Medi-Cal 2020 Waiver.  A maximum of 15 LDPPs will be  
               approved.  The specific strategies, target populations,  
               payment methodologies, and participating entities will be  
               proposed by the entity submitting the application for  
               participation and included in the submission to DHCS.  Each  
               pilot application must designate a responsible county,  
               Tribe, Indian Health Program, UC, or CSU campus as the  
               entity that will coordinate the pilot. 

          8)WPC. WPC is a new feature of Medi-Cal 2020. WPC is essentially  
            a grant program over the five years of the waiver.  The  
            overarching goal of the WPC pilots is the coordination of  
            health, behavioral health, and social services, as applicable,  
            in a patient-centered manner with the goals of improving  
            beneficiary health and well-being through more efficient and  
            effective use of resources.  WPC pilots will provide an option  
            to participating entities to receive support to integrate care  
            for beneficiaries who are high-risk and high-utilizers of  
            multiple systems and continue to have poor health outcomes.   
            WPC pilots will include collaboration between two or more  
            public entities (e.g. county mental health plans and local  
            housing authorities); at least one Medi-Cal managed care  
            health plan, and other community entities with the goal of  
            improving health outcomes for the WPC population.  Program  
            strategies would include increasing integration, data sharing  
            and coordination among county agencies, health plans,  
            providers, and other entities within the participating county  








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            or counties that serve high-risk, high-utilizing  
            beneficiaries, and develop an infrastructure that will reduce  
            inappropriate emergency and inpatient utilization, increase  
            coordination and appropriate access to care and increase  
            collaboration and integration among the entities participating  
            in the WPC Pilots over the long term. 

          The WPC target populations, include, but are not limited to the  
            following individuals:

             a)   With repeated incidents of avoidable emergency use,  
               hospital admissions, or nursing facility placement; 
             b)   With two or more chronic conditions; 
             c)   With mental health and/or substance use disorders; 
             d)   Who are currently experiencing homelessness; and/or,
             e)   Who are at risk of homelessness, including individuals  
               who will experience homelessness upon release from  
               institutions (e.g. hospital, skilled nursing facility,  
               rehabilitation facility, incarceration, etc.)



            To test interventions that achieve these improved health  
            outcomes and cost savings, WPC Pilots may focus on Medi-Cal  
            beneficiaries with a demonstrated medical need for housing and  
            supportive services.  These Pilots would ensure that the  
            entities collaborating and participating in the Pilot would  
            include local housing authorities, community-based  
            organizations, and others serving the homeless population.   
            WPC pilots with a focus on housing may include interventions  
            such as tenancy-based care management services and county  
            housing pools. 
            Up to $300 million in federal funding is available annually  
            for WPC. No single WPC pilot will be awarded more than 30% of  
            total available funding unless additional funds are available  
            after all initial awards are made. The non-federal share of  
            funds used to draw down federal funding is through IGTs.  










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            The STCs establish an early implementation schedule for WPC.   
            DHCS is required to publish a WPC pilot application process,  
            detailed timeliness and selection criteria by April 1, 2016,  
            or within 90 days following CMS approval of WPC Pilot  
            attachments, whichever is later. WPC lead entities must submit  
            WPC Pilot applications to DHCS by May 15, 2016, or 45 days  
            after DHCS issues the WPC Pilot application process (whichever  
            is later).  DHCS must complete its review of the application  
            within 60 days of submission, and will respond to the WPC  
            Pilot Lead Entity in writing with any questions, concerns or  
            problems identified. Within 30 days after submission of final  
            responses to questions about the application, DHCS will take  
            action on the application and promptly notify the applicant  
            and CMS of that decision. 
          9)DSHPs.  This bill permits DHCS to claim FFP for expenditures  
            associated with DSHPs identified in the STCs.  The state was  
            able to draw down federal funds in the previous waivers to  
            offset GF expenditures.  Any FFP claimed is required to be  
            used to offset applicable GF expenditures. DSHP funds will be  
            used to fund DTI FFP, not to exceed $375 million over five  
            years.  The DSHPs in the waiver are as follows:
             a)   California Children Services (CCS);
             b)   Genetically Handicapped Persons Program;
             c)   Medically Indigent Adult Long Term Care;
             d)   Breast & Cervical Cancer Treatment Program;
             e)   AIDS Drug Assistance Program;
             f)   Department of Developmental Services;
             g)   Prostate Cancer Treatment Program;
             h)   Song Brown Health Care Workforce Training Program;
             i)   Steven M. Thompson Physician Corp Loan Repayment  
               Program; and,
             j)   Mental Health Loan Assumption Program 

          10)WAIVER REQUIRED REPORTS, ASSESSMENTS AND ANALYSES.  The 2020  
            Waiver also contains several independent analyses of the  
            Medi-Cal program and evaluations of the Waiver programs,  
            including:  a) Medi-Cal Managed Care Access Assessment; b)  
            Uncompensated Care Assessments for California hospitals (one  








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            due in 2016 and one due one in 2017); c) GPP; d) PRIME; f) WPC  
            evaluation; g) DTI; and, h) CCS Report on CCS pilots.

          This bill requires DHCS to conduct or arrange to have conducted  
            any study, report, assessment, evaluation or other similar  
            demonstration project activity required under the STCs, and  
            grants DHCS expedited contracting authority by allowing DHCS  
            to enter into exclusive or nonexclusive contracts or amend  
            existing contracts on a bid or negotiated basis, and by  
            exempting these contracts from specified provisions of the  
            Public Contract Code and DGS review.  This bill codifies the  
            one of the evaluations (the Medi-Cal Managed Care Access  
            Assessment). 

          Two foundations are funding the 2016 uncompensated care  
            assessment, which is due May 15, 2016, and is focused on DPHs.  
             This report is significant in that it will be used by CMS to  
            determine the appropriate level of Uncompensated Care Pool  
            funding of those providers in years two through five of the  
            demonstration (this pool of funding and DSH are the two fund  
            sources for the GPP).  This report will review the impact of  
            the uncompensated care pool on those providers who participate  
            in the uncompensated care pool with respect to: uncompensated  
            care provided; Medicaid provider payment rates; Medicaid  
            beneficiary access; and, the role of managed care plans in  
            managing care. CMS will provide a formal determination of the  
            funding levels for demonstration years two through five within  
            60 days of receipt of the complete report. 

          11)THE NEXT WAIVER POST-MEDI-CAL 2020.  The funding in this  
            waiver is reduced from the 2010 waiver. DHCS and the public  
            hospitals both report CMS' desire to standardize waivers  
            across the states and CMS' view that waiver funding should be  
            reduced and/or eliminated due to the coverage expansions  
            enacted by the federal ACA.  The most recent waiver was  
            approved the day before the expiration of the prior waiver,  
                      which, because it occurred when the Legislature was not in  
            session, necessitated legislation (SB 36 (Hernandez and De  
            Leon), Chapter 759, Statutes of 2015) allowing DHCS to  








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            continue the operation of, and the authorities provided under  
            the prior waiver.  This bill contains language similar to SB  
            36 allowing DHCS to extend the hospital methodologies payment  
            in this waiver consistent with federal requirements and after  
            consultation with affected entities.  In addition, this bill  
            contains language authorizing DHCS to work to develop  
            successor payment methodologies that would continue to support  
            entities participating in Medi-Cal 2020 following its  
            expiration that further the goals of this bill and the STCs.

          12)SUPPORT.  The California Hospital Association supports the  
            Medi-Cal 2020 Demonstration, including PRIME, GPP, DTI, and  
            the WPC Pilots.  The California Association of Public  
            Hospitals and Health Systems states that the PRIME, WPC pilot,  
            and GPP components of this bill, along with other efforts in  
            the Medi-Cal 2020 Waiver can improve the state's health care  
            services and as a result, the health of the Medi-Cal and the  
            remaining uninsured populations in California.  



          The Association of California Healthcare Districts supports all  
            elements of the Waiver, especially PRIME.  Medi-Cal 2020 is  
            the first time that DMPHs will participate in PRIME.  District  
            hospitals will begin transformation work, improve outcomes,  
            and increase efficiencies over the next five years of the  
            waiver.  Almost all of the DMPHs submitted PRIME application  
            earlier this month that focus on at least one project in the  
            three project domains:  Domain1:  outpatient delivery system  
            transformation and prevention; Domain 2:  targeted high-risk  
            or high-cost populations; and, Domain 3:  resource utilization  
            efficiency.  District hospitals will only receive federal  
            funding if they meet specific established performance goals.   
            By 2020, PRIME will result in the widespread adoption and  
            sustainability of system transformations that will ensure  
            district hospitals deliver high-quality care to Medi-Cal  
            beneficiaries.

          The California State Association of Counties (CSAC) states that  








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            the WPC Pilots will test new care innovations and leverage  
            lessons learned to improve outcomes; contain costs; and more  
            effectively coordinate care beyond traditional health  
            services.  Additionally, CSAC contends that PRIME will result  
            in the wide-spread adoption and sustainability of system  
            transformations that will ensure public hospitals deliver  
            high-quality care to millions of Medi-Cal beneficiaries.   
            Finally, CSAC contends that the GPP is intended to promote the  
            delivery of more cost-effective and higher-value care to the  
            uninsured.  CSAC concludes that the Medi-Cal 2020 Waiver  
            renewal is a strong and ambitious blueprint for building on  
            the success of the Medi-Cal program and its continued  
            transformation.  

          The County of San Bernardino states that the Medi-Cal 2020  
            Waiver will leverage California's coverage expansion with  
            significant payment reforms and delivery system improvements  
            for public health care systems.  Contra Costa County states  
            that the Medi-Cal 2020 Waiver challenges and supports the  
            public health care systems' efforts to become models of  
            integrated care that are high value, high quality,  
            patient-centered, efficient and equitable, with great patient  
            experience and a demonstrated ability to improve health care  
            and the health status of populations.  The Ventura Board of  
            Supervisors states that this renewed waiver will enable public  
            health care systems to more effectively provide high quality,  
            accessible care to the millions of patients they serve.  
          13)SUPPORT WITH AMENDMENTS.  Western Center on Law & Poverty  
            (WCLP) writes in support and requests amendments on the  
            following:  a) that the access assessment include a geographic  
            assessment of the network that examines how far patients have  
            to go to access core specialists and what transportation  
            assistance and support the plans provide to get patients to  
            remote providers, and an amendment to report languages spoken  
            by the provider's office; b) to require DHCS to issue a final  
            proposed point system for the GPP to stakeholder for comments  
            before finalizing it; c) to clarify that GPP systems may  
            determine the scope, type and extent to which services are  
            available to the extent they are consistent with the STCs but  








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            also to require that a patient's services needs are met; d) to  
            make mandatory (instead of optional) the WPC strategies of  
            increasing access to housing and supportive services for  
            serving the homeless population; and, e) to include a  
            requirement to share such guidance issued by DHCS with  
            stakeholders prior to issuing it and provide a chance for  
            input.


          14)CLARIFICATION.  The California Medical Association,  
            California Hospital Association, California Academy of Family  
            Physicians, Service Employees International Union - United  
            Healthcare Workers West, Children Now, Planned Parenthood  
            Affiliates of California, Medical Oncology Association of  
            Southern California, Inc., Osteopathic Physicians and Surgeons  
            of California (the "organizations") request additional  
            clarification regarding this bill's requirement for an  
            independent assessment of access to care and states that the  
            assessment should be conducted by the appropriate independent  
            entity and should examine the appropriate data points to  
            produce meaningful and actionable policy changes for the  
            Legislature and Governor to consider.  These organizations set  
            forth a number of recommendations for this independent  
            assessment including:  requiring the Bureau of State Audits to  
            conduct the independent assessment; examining access to  
            essential health benefits; examining access to specialty  
            health; examining access to skilled nursing facilities; and,  
            including an examination of payments to downstream providers.   



          15)RELATED LEGISLATION.  SB 815 (Hernández and De Leon) is  
            identical to this bill.  SB 815 is scheduled to be heard in  
            Senate Health Committee on April 27, 2016.


          16)PREVIOUS LEGISLATION










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             a)   SB 36 authorizes DHCS to request one or more temporary  
               waiver extensions to continue the operation of, and the  
               authorities provided under, the current "California Bridge  
               to Reform Demonstration," the state's Section 1115 Medicaid  
               waiver.  Requires DHCS to extend and apply the existing  
               hospital payment methodologies and allocations on a state  
               fiscal year, annual, partial year, or other basis, to the  
               extent permitted under any approved temporary waiver  
               extension, an approved subsequent waiver, or as otherwise  
               permitted under federal Medicaid law.

             b)   AB 1066 (John A. Pérez), Chapter 86, Statutes of 2011,  
               makes further statutory changes to implement the Bridge to  
               Reform for funding DPHs.  AB 1066 continued under the 2010  
               waiver the FFS cost-based reimbursement for DPHs, with  
               those hospitals providing the required federal match using  
               their own funds through CPEs. In addition, AB 1066  
               establishes under the waiver a new distribution methodology  
               for DSH and SNCP funds to DPHs, as specified.

             c)   AB 342 (John A. Pérez), Chapter 723, Statutes of 2010,  
               enacts the LIHP to provide health care benefits to  
               uninsured adults up to 200% of the FPL, at county option  
               through a Medi-Cal waiver demonstration project.

             d)   SB 208 (Steinberg), Chapter 714, Statutes of 2010,  
               implemented provisions of the 2010 Section 1115 waiver  
               including establishing DSRIP, consisting of IGTs from  
               counties or other specified governmental entities, to be  
               matched with federal funds and to be used for investment,  
               improvement and incentive payments for DPHs and the  
               affiliated governmental entities (counties and UC);  
               authorizes DHCS to require the mandatory enrollment of SPDs  
               in a Medi-Cal managed care plan commencing on the later of  
               either June 1, 2011, or obtaining federal approval; and,  
               requires DHCS to implement pilot projects to provide  
               coordinated care to children in the CCS and to persons who  
               are dually eligible for Medi-Cal and Medicare.









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             e)   SB 1100 (Perata), Chapter 560, Statutes of 2005, enacts  
               the statutory framework for implementing a five-year waiver  
               of federal Medicaid requirements that provides federal  
               Medicaid funding under the terms of the waiver to pay DPHs,  
               private, and district hospitals for services provided to  
               Medi-Cal and uninsured patients. 

          17)POLICY ISSUES.

             a)   Need for urgency bill.  This bill contains an urgency  
               clause.  DHCS has indicated it would like to have this bill  
               enacted by June 2016 as several aspects of the work DHCS is  
               required to conduct under the Medi-Cal 2020 waiver cannot  
               be started or fully implemented without legislative  
               authority.  For example, the waiver-required access  
               assessment must be conducted by the DHCS EQRO.  A contract  
               amendment with this entity is needed, and this bill  
               contains the authority for DHCS to move forward on this  
               assessment.  In addition, DHCS requires other contracting  
               resources for other evaluations and technical assistance,  
               which cannot occur until DHCS has the legislative  
               authority, and a delay in the department's ability to  
               contract impedes and delays DHCS' ability to implement the  
               various components of the waiver.  Finally, DHCS indicates  
               that, although it believes the waiver extension legislation  
               from last year provided DHCS the ability to make payments  
               under GPP and PRIME, it is possible that that  
               interpretation could be challenged and without this payment  
               authority, DPH would have severe cash flow issues.
             
             b)   Contracting obligation on DPHs. Under the PRIME  
               provisions of the STCs and this bill, DPHs are required to  
               contract with at least one Medi-Cal managed care plan in  
               the service area where the plan operates using an APM  
               methodology by January 1, 2018.  If a DPH system is unable  
               to meet the requirement and can demonstrate that it has  
               made a good faith effort to contract with a Medi-Cal  
               managed care plan in the service area that it operates in  
               or a gap in contracting period occurs, DHCS has the  








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               discretion to waive this requirement.

             One of the issues faced by patients in Medi-Cal managed care  
               plans is UC hospitals do not always contract with Medi-Cal  
               managed care plans, or they limit their contracting to  
               tertiary services or to letters of agreement for individual  
               patients.  The contracting obligation in this bill and the  
               STCs is narrow in that the requirement that DPHs contract  
               only applies to one plan, and is limited to the service  
               area where they operate.  However, this narrow waiver  
               requirement effectively means UC hospitals in urban  
               locations (UC hospitals are in San Diego, Irvine, San  
               Francisco, Sacramento, and Los Angeles) may not be  
               accessible to patients enrolled in the other Medi-Cal plan  
               in two-plan model counties, or to beneficiaries in rural or  
               inland Medi-Cal managed care plans.  Medi-Cal 2020 provides  
               a benefit to UC hospitals in that it continues to make two  
               of their hospitals (UCSF and UCLA) DSH-eligible who would  
               not otherwise be DSH eligible, as shown below:
             



























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                          DSH Medicaid             DSH Low-Income
                          Utilization Rate              Utilization Rate 
                           
                     Minimum DSH Eligibility            40.3%* 25%
                    UCLA/Ronald Reagan                 20.8%  10.8% 
                   UCLA/Santa Monica                    12.8% 13% 
                   UCSF                               26%       16.1% 
                    *For 2014-15

               In addition, Medi-Cal 2020 enables UC to receive cost-based  
               reimbursement in FFS Medi-Cal, and by making federal  
               funding available for quality improvement through PRIME.   
               However, UC also puts up the state match (through CPEs and  
               IGTs) to draw down federal Medicaid funds, which saves the  
               state GF, and UC argues it has sicker patient population  
               because of the specialized services it provides, and UC  
               uses its hospital to help support its medical schools due  
               to insufficient state support.  Should the requirement that  
               DPHs contracting requirement with Medi-Cal managed care  
               plans be applied more broadly beyond one Medi-Cal managed  
               care plan in that plan's area to include the other Medi-Cal  
               managed care plan in the county and Medi-Cal managed care  
               plans serving patients in inland and rural areas who use UC  
               hospitals for specialized care?
          


          REGISTERED SUPPORT / OPPOSITION:


          Support

          Antelope Valley Hospital
          Association of California Healthcare Districts
          Bear Valley Community Healthcare District
          California Association of Public Hospitals and Health Systems
          California Hospital Association
          California Primary Care Association








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          California State Association of Counties
          Coalinga Regional Medical Center
          Contra Costa County
          County Health Executives Association of California
          County of San Bernardino
          District Hospital Leadership Forum
          El Camino Hospital
          Hazel Hawkins Memorial Hospital
          Kern Valley Healthcare District
          Mammoth Hospital
          Marin General Hospital
          Mayers Memorial Hospital
          Northern Inyo Hospital
          Palo Verde Hospital
          Palomar Health
          Pioneers Memorial Healthcare District
          Plumas District Hospital
          Salinas Valley Memorial Healthcare System
          San Bernardino Mountains Community Hospital District
          San Gorgonio Memorial Hospital
          San Joaquin General Hospital
          Santa Clara County Board of Supervisors
          SEIU California
          Seneca Healthcare District
          Sierra View Medical Center
          Tahoe Forest Hospital District
          Tri-City Medical Center
          University of California
          Urban Counties of California
          Ventura County Board of Supervisors
          Washington Hospital Healthcare System
          Opposition


          None on file.












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          Analysis Prepared by:Rosielyn Pulmano / HEALTH / (916) 319-2097