BILL ANALYSIS Ó AB 1568 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 1568 (Bonta and Atkins) As Amended June 2, 2016 2/3 vote. Urgency -------------------------------------------------------------------- |ASSEMBLY: | 80-0 | May 31, 2016 |SENATE: | 36-0 | June 23, 2016 | | | | | | | | | | | | | | | -------------------------------------------------------------------- Original Committee Reference: HEALTH 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, including the Dental Transformation Initiative (DTI), the Whole Person Care (WPC) program and the evaluations required under the STCs. Requires the DHCS to conduct or arrange to have conducted studies, reports and assessments required under the STCs. Makes the operation of this bill contingent upon the enactment of SB 815 (Hernandez and De León) of the current legislative session. The Senate amendments require DHCS to implement the WPC and DTI provisions of Medi-Cal 2020, and conduct the studies, reports, and assessments required by the STCs. FISCAL EFFECT: According to the Senate Appropriations AB 1568 Page 2 Committee, the following information represents the fiscal impact of the entire Section 1115 waiver. Although this bill contains only a portion of the implementing language for the new waiver, this bill is contingent on SB 815 and the federal government has approved Medi-Cal 2020 as a single waiver. Therefore, the fiscal information below reflects the complete fiscal impact of the waiver. Over the course of the five-year waiver period, the state will be able to access at least $6.2 billion in additional federal funding that the state would not be eligible for without the waiver. The state is eligible for the additional funding under the waiver for two primary reasons. First, the state's continuing use of Medi-Cal managed care reduces costs relative to the alternative fee-for-service system. The federal government will allow the state to use a portion of those projected savings for waiver programs. Second, the federal government will allow the state draw down federal matching funds for certain "state only" health care programs that are not currently eligible for federal funding. The General Fund savings from receiving those additional federal funds will be redirected to a specific waiver program. The following are the major elements of Medi-Cal 2020. Note that the funding amounts are for the five-year waiver period, unless otherwise noted. 1)PRIME - $3.7 billion (federal funds). The Public Hospital Redesign and Incentives in Medi-Cal (PRIME) program authorizes federal matching funds to make incentive payments to Designated Public Hospitals and District/Municipal Public Hospitals in order to improve care delivery and strengthen their ability to take on risk-based payments. 2)Global Payment Program - at least $236 million (federal funds). The Global Payment Program restructures the distribution of federal funding for uncompensated care. This includes disproportionate share hospital (DSH) funding to AB 1568 Page 3 designated public hospitals (excluding University of California (UC) hospitals) in order to incentivize improvements in care delivery and provision of care in appropriate settings. Medi-Cal 2020 maintains the DSH funding methodology for other hospitals, with DSH funding for UC hospitals capped by fiscal year. The $236 million in federal funding is only for the first year of the waiver. Additional funding in subsequent years will be determined based on future uncompensated care. Also, the figures above do not include existing DSH funding of about $5.9 billion in federal funds over the waiver period. 3)Dental Transformation Initiative - $375 million (federal funds). The DTI permits incentive payments to qualified dental providers to improve dental care and utilization among children enrolled in Medi-Cal. The state share of funding for this program is provided through the redirection of existing General Fund support for specific state only health care programs which will be eligible for federal matching funds under the waiver. 4)Designated State Health Programs - $375 million (federal funds). The waiver authorizes the state to access federal matching funds for several existing health care programs that are currently funded only with state and local funds. By making these programs eligible for federal matching funds, the waiver frees up state funding to support the DTI and to draw down federal matching funds. 5)WPC - $1.5 billion (federal funds). This program 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. Federal matching funds will be available for a variety of social services and supports that are not eligible for federal matching funds absent the waiver. AB 1568 Page 4 DHCS has requested additional administrative funding to oversee Medi-Cal 2020 of $34 million over the five-year waiver period, including $11 million in the Budget Year (General Fund and federal funds). COMMENTS: According to the author, this bill is needed to provide the statutory framework for implementation of "Medi-Cal 2020." While the STCs outline the programmatic and financing elements of Medi-Cal 2020, state law changes are required, to appropriate funds for the waiver-related WPC provisions, to enable data sharing as part of WPC projects, and to codify the provisions of the STCs establishing the DTI and the WPC. In addition, this bill would require DHCS to conduct or contract for the waiver-required evaluations. This bill is a companion measure to SB 815. Analysis Prepared by: Rosielyn Pulmano / HEALTH / (916) 319-2097 FN: 0003524