BILL ANALYSIS Ó AB 1568 Page 1 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: AB 1568 Page 2 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. AB 1568 Page 3 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. AB 1568 Page 4 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. AB 1568 Page 5 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 AB 1568 Page 6 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 AB 1568 Page 7 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. AB 1568 Page 8 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 AB 1568 Page 9 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 AB 1568 Page 10 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. AB 1568 Page 11 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 AB 1568 Page 12 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 AB 1568 Page 13 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. AB 1568 Page 14 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 AB 1568 Page 15 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. AB 1568 Page 16 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 AB 1568 Page 17 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. AB 1568 Page 18 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 AB 1568 Page 19 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 AB 1568 Page 20 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 AB 1568 Page 21 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. AB 1568 Page 22 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 AB 1568 Page 23 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 AB 1568 Page 24 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 AB 1568 Page 25 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 AB 1568 Page 26 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 AB 1568 Page 27 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, AB 1568 Page 28 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. AB 1568 Page 29 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. AB 1568 Page 30 Annual federal funding available by waiver demonstration year (DY) for DPH and DMPHs is shown below: AB 1568 Page 31 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 AB 1568 Page 32 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; AB 1568 Page 33 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 AB 1568 Page 34 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 AB 1568 Page 35 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. AB 1568 Page 36 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 AB 1568 Page 37 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 AB 1568 Page 38 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 AB 1568 Page 39 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 AB 1568 Page 40 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 AB 1568 Page 41 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. AB 1568 Page 42 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 AB 1568 Page 43 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: AB 1568 Page 44 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 AB 1568 Page 45 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. AB 1568 Page 46 Analysis Prepared by:Rosielyn Pulmano / HEALTH / (916) 319-2097