BILL ANALYSIS Ó
AB 1568
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Date of Hearing: May 18, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
AB
1568 (Bonta) - As Amended May 3, 2016
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Urgency: Yes State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill, which contains an urgency clause, authorizes the
Department of Health Care Services (DHCS) to implement the
Medi-Cal 2020 Demonstration Project, implementing the Special
Terms and Conditions (STCs) negotiated with and approved by the
federal Centers for Medicare and Medicaid Services (CMS).
Specifically, this bill:
1)Specifies the four components of Medi-Cal 2020, as follows:
a) Global Payment Program (GPP), which restructures the
distribution of federal funding for uncompensated care,
including disproportionate share hospitals (DSH) funding,
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to designated public hospitals (DPHs), excluding University
of California (UC) hospitals, in order to incentivize
improvements in care delivery and provision of care in
appropriate settings. The bill maintains the DSH funding
methodology for other hospitals, with DSH funding for UC
hospitals capped by fiscal year.
b) Public Hospital Redesign and Incentives in Medi-Cal
(PRIME), which authorizes federal matching funds to make
incentive payments to DPHs and District/Municipal Public
Hospitals (DMPHs), in order to improve care delivery and
strengthen their ability to take on risk-based payments.
c) Whole Person Care (WPC), which allows participating lead
entities (primarily counties) to claim federal matching
funds for efforts to coordinate health, behavioral health,
and social services for high-risk Medi-Cal beneficiaries
who are high utilizers of health care services.
d) Dental Transformation Initiative (DTI), which permits
incentive payments to qualified dental providers to improve
dental care and utilization among children enrolled in
Medi-Cal.
2)Requires a comprehensive assessment of access to care in
Medi-Cal, as specified.
3)Contains a number of administrative provisions, including an
exemption for DHCS from the regulatory process, exemption of
contracts from the Public Contract Code and approval by
Department of General Services, and authorization for the
director of DHCS to modify any process or methodology if
necessary to comply with federal law or the STCs, among other
provisions.
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4)Conditions implementation on federal approval and availability
of federal financial participation (FFP).
5)Authorizes the nonfederal share of matching funds for the DTI
through a fund swap, whereby DHCS may claim FFP for state
expenditures on Designated State Health Programs (DSHPs), as
specified, and appropriates an amount of GF equal to such FFP
to the Health Care Deposit Fund for purposes of the DTI, as
specified.
6)Authorizes the continuation of numerous authorities and
programs approved in prior waivers, as specified, including
continuation of current Medi-Cal fee-for-service payment
methodologies for DPHs from the previous waiver, whereby DPHs
receive cost-based reimbursement with county expenditures used
to draw down federal matching funds.
7)Contains numerous other provisions and details related to
waiver implementation.
FISCAL EFFECT:
1)DHCS has requested administrative resources through an April
2016 Spring Finance Letter totaling $33.6 million for waiver
implementation over its five-year lifetime, $14 million of
which is for contract costs. DHCS requests $10.8 million in
2016-17. Funding will pay for staff and contract costs for
implementation, monitoring, oversight, evaluation and
assessment, technical assistance, program development, and
related activities (GF/federal).
2)Federal matching funds available by waiver program component
are as follows:
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PRIME $3.73 billion
Global Payment Program(GPP)$236 million*
Dental Transformation Initiative (DTI)$375 million
Designated State Health Programs$375 million
Whole Person Care (WPC) $1.5 billion
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Total $6.21 billion
* GPP does not include the federal Disproportionate Share
Hospitals (DSH) component of funding. Federal DSH funding over
the five-year life of the waiver is projected to be about $5.8
billion. In addition, only the first year of federal funding
for GPP is shown here. Funding in subsequent years is based
on a study on DPH uncompensated care.
COMMENTS:
1)Purpose. According to the author, while the STCs outline the
programmatic and financing elements of Medi-Cal 2020, this
bill is needed to provide the statutory framework. 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
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require notification to the Legislature regarding
waiver-related activities. Numerous health care provider and
advocacy groups support this bill, and it has no opposition.
2)Federal Medicaid Waivers. Section 1115 of the federal Social
Security Act authorizes the federal government to waive
certain Medicaid rules. This authority has been used in order
to allow states to test innovative program improvements and to
facilitate coverage expansions. 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, such as this bill, to implement the waiver.
Recent waivers have included the 2005 waiver, which
established Medi-Cal's public hospital funding mechanisms and
provided for coverage expansions in certain counties, and the
2010 "Bridge to Reform" waiver, which included, among other
provisions, a phased implementation of health care reform
through early expansion of Medi-Cal at local option,
expansions of managed care, and a precursor to the PRIME
program for public hospitals called the delivery system reform
incentive pool (DSRIP).
1)California's new 1115 Waiver: Medi-Cal 2020. On December 30,
2015, DHCS received CMS approval of the five-year Medi-Cal
2020 waiver, which began January 1, 2016. Medi-Cal 2020 is
anticipated to provide $6.2 billion in federal matching funds
over the five years of the waiver, as specified above. The
details of Medi-Cal 2020 are in the 300+ page STCs and related
attachments agreed to by the state and CMS. DHCS sought
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significant stakeholder involvement in the development of the
waiver. The WPC, the DTI, and the GPP programs are new
components of this waiver, while the PRIME program is a
redesign of a prior program.
2)Non-federal share of Costs. The waiver does not "provide"
federal funds, but allows states to claim federal matching
funds for designated programs and services that would
otherwise not qualify. The nonfederal share of costs for
Medi-Cal 2020 waiver programs are provided through various
means, as indicated below.
a) Intergovernmental transfers (IGTs). IGTs are transfers
of public funds between governmental entities, such as from
a county to the state. The nonfederal share of PRIME and
GPP will be funded by transfers of funds from public
hospitals to the state, whereby the state will match the
transfer with federal funds and remit the local funds, with
matching federal funds, back to the hospital. The
nonfederal share for the WPC pilots is likely to be funded
by counties through transfers of local revenues.
b) Certified Public Expenditures (CPEs). Under a CPE
arrangement, government providers certify their Medicaid
expenditures to the state, and the state then obtains
federal reimbursement on the basis of the CPEs. Under the
state's prior two waivers as well as this one, DPHs use
CPEs to claim federal matching funds for services provided
to Medi-Cal beneficiaries on a fee-for-service basis.
c) General Fund (GF). GF provides the nonfederal share for
programs being continued under this waiver, including
Medi-Cal managed care and the Coordinated Care Initiative.
In addition, the waiver allows the state to claim federal
matching funds for spending on State Designated Health
Programs, which are various state-funded health programs
specified in the STCs. This essentially frees up an equal
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amount of GF, which is used to fund the nonfederal share
for the DTI.
3)Related Legislation. SB 815 (Hernández) is similar to this
bill, and is pending in the Senate Appropriations Committee.
Analysis Prepared by:Lisa Murawski / APPR. / (916)
319-2081