BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 1568


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          CONCURRENCE IN SENATE AMENDMENTS


          AB  
          1568 (Bonta and Atkins)


          As Amended  June 2, 2016


          2/3 vote.  Urgency


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          |ASSEMBLY:  | 80-0 | May 31, 2016  |SENATE: | 36-0 | June 23, 2016   |
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          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  








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          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  








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            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.










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          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