Amended in Senate June 13, 2016

Amended in Assembly April 14, 2016

California Legislature—2015–16 Regular Session

Assembly BillNo. 1605


Introduced bybegin delete Committee on Budget (Assembly Members Ting (Chair), Travis Allen, Bigelow, Bloom, Bonta, Campos, Chávez, Chiu, Cooper, Gordon, Grove, Harper, Holden, Irwin, Kim, Lackey, McCarty, Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Patterson, Rodriguez, Thurmond, Wilk, and Williams)end deletebegin insert Committee on Budget (Assembly Members Ting (Chair), Bloom, Bonta, Campos, Chiu, Cooper, Gordon, Holden, Irwin, McCarty, Mullin, Nazarian, Oend insertbegin insert’Donnell, Rodriguez, Thurmond, and Williams)end insert

January 7, 2016


begin deleteAn act relating to the Budget Act of 2016. end deletebegin insertAn act to amend Section 100504 of the Government Code, to amend Sections 1324.9, 120955, 120960, 130301, 130303, 130305, 130306, 130309, 130310, and 130313 of, to add Section 125281 to, to add Part 6.2 (commencing with Section 1179.80) to Division 1 of, to add Part 7.5 (commencing with Section 122450) to Division 105 of, and to repeal Sections 120965, 130307, and 130312 of, the Health and Safety Code, to amend and repeal Section 138.7 of the Labor Code, and to amend Sections 5848.5, 10752, 14009.5, 14046.7, 14105.436, 14105.45, 14105.456, 14105.86, 14131.10, 14132.56, 14154, 14301.1, and 14592 of, and to amend, repeal, and add Section 14593 of, the Welfare and Institutions Code, relating to health, and making an appropriation therefor, to take effect immediately, bill related to the budget.end insert

LEGISLATIVE COUNSEL’S DIGEST

AB 1605, as amended, Committee on Budget. begin deleteBudget Act of 2016. end deletebegin insertHealth.end insert

begin insert

(1) Existing federal law, the federal Patient Protection and Affordable Care Act (PPACA), enacts various health care coverage market reforms that took effect January 1, 2014. Among other things, PPACA requires each state, by January 1, 2014, to establish an American Health Benefit Exchange that facilitates the purchase of qualified health plans by qualified individuals and qualified small employers. Existing state law establishes the California Health Benefit Exchange (the Exchange) within state government for the purpose of facilitating the enrollment of qualified individuals and qualified small employers in qualified health plans, and specifies the powers and duties of the board governing the Exchange. Existing law authorizes the board of the Exchange to adopt any necessary regulations as emergency regulations until January 1, 2017. Existing law allows the emergency regulations adopted by the board to remain in effect for 3 years, as specified.

end insert
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This bill would authorize the board to adopt any necessary regulations to implement the eligibility, enrollment, and appeals processes for the individual and small business exchanges, changes to the small business exchange, or any act in effect that amends the provisions governing the Exchange that is operative on or before December 31, 2016, as emergency regulations. The bill would instead allow the emergency regulations adopted by the board to remain in effect for 5 years, as specified.

end insert
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(2) Existing law creates the State Department of Public Health and vests it with duties, powers, functions, jurisdiction, and responsibilities with regard to the advancement of public health.

end insert
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This bill would require the department, subject to an appropriation for this purpose in the Budget Act of 2016, to award funding to local health departments, local government agencies, or on a competitive basis to community-based organizations, regional opioid prevention coalitions, or both, to support or establish programs that provide Naloxone to first responders and to at-risk opioid users through programs that serve at-risk drug users, including, but not limited to, syringe exchange and disposal programs, homeless programs, and substance use disorder treatment providers.

end insert
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(3) Existing law establishes the Long-Term Care Quality Assurance Fund in the State Treasury and requires all revenues received by the State Department of Health Care Services categorized by the department as long-term care quality assurance fees, including specified fees on certain intermediate care facilities and skilled nursing facilities, as specified, to be deposited into the fund. Existing law requires the moneys in the fund to be available, upon appropriation by the Legislature, for expenditure by the department to provide supplemental Medi-Cal reimbursement for intermediate care facility services, as specified, and to enhance federal financial participation in the Medi-Cal program or to provide additional reimbursement to, and support facility quality improvement efforts in, licensed skilled nursing facilities.

end insert
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This bill would continuously appropriate the moneys in the fund to the department, thereby making an appropriation.

end insert
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(4) Existing law requires the State Public Health Officer, to the extent that state and federal funds are appropriated, to establish and administer a program to provide drug treatments to persons infected with human immunodeficiency virus (HIV). Existing law establishes the AIDS Drug Assistance Rebate Fund, which is continuously appropriated and contains specified rebates from drug manufacturers, and authorizes expenditures from the fund for purposes of this program.

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This bill would require the State Public Health Officer, to the extent that state and federal funds are appropriated, to establish and administer a program to provide drug treatments to persons who are HIV-negative who have been prescribed preexposure prophylaxis included on the ADAP formulary for the prevention of HIV infection. The bill would authorize the State Public Health Officer, to the extent allowable under federal law and as appropriated in the annual Budget Act, to expend funding from the AIDS Drug Assistance Program Rebate Fund for this HIV infection prevention program to cover the costs of prescribed ADAP formulary medications for the prevention of HIV infection and other specified costs.

end insert
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Existing law authorizes the State Department of Public Health to subsidize certain cost-sharing requirements for persons otherwise eligible for the AIDS Drug Assistance Program (ADAP) with existing non-ADAP drug coverage by paying for prescription drugs included on the ADAP formulary within the existing ADAP operational structure, as specified. Under existing law, if the State Public Health Officer determines that it would result in a cost savings to the state, the department is authorized to subsidize, using available federal funds and moneys from the AIDS Drug Assistance Program Rebate Fund, costs associated with a health care service plan or health insurance policy and premiums to purchase or maintain health insurance coverage.

end insert
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The bill would delete the requirement that the State Public Health Officer determine that there would be a cost savings to the state before the department may subsidize the above-described costs with available federal funds and moneys from the AIDS Drug Assistance Program Rebate Fund.

end insert
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Existing law requires the department to establish and administer a payment schedule to determine the payment obligation of a person receiving drugs under the program, as specified. Existing law limits the payment obligation to the lessor of 2 times the person’s annual state income tax liability, less health insurance premium payments, or the cost of the drugs.

end insert
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This bill would delete the above-described payment obligation. The bill would also make conforming changes.

end insert
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(5) Existing law establishes the State Department of Public Health for purposes of, among other things, providing or facilitating access to certain health services and programs. Existing law requires the department to administer certain programs related to hepatitis B and hepatitis C, as specified.

end insert
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This bill would require the State Department of Public Health to, among other things, purchase and distribute certain hepatitis B and hepatitis C materials to local entities for purposes of testing and vaccination, as specified. The bill would further require the department to facilitate related training and other technical assistance relating to syringe exchanges. The bill would authorize the department to issue grants for these purposes. The bill would make these provisions subject to funding provided for these purposes.

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(6) Existing law authorizes any postsecondary higher educational institution with a medical center to establish diagnostic and treatment centers for Alzheimer’s disease, and requires the State Department of Public Health to administer grants to the postsecondary higher educational institutions that establish a center pursuant to these provisions.

end insert
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This bill would require the department to allocate funds to those centers, from funds appropriated to the department in the Budget Act of 2016, to be used for specified purposes, including to conduct targeted outreach to health professionals and to provide low-cost, accessible detection and diagnosis tools, as specified.

end insert
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(7) Existing law establishes the Office of Health Information Integrity, headed by the Director of the Office of Health Information Integrity, within the California Health and Human Services Agency and requires the office to assume statewide leadership, coordination, policy formulation, direction, and oversight responsibilities for implementation of the federal Health Insurance Portability and Accountability Act (HIPAA). Existing law requires the director to establish an advisory committee to obtain information on statewide HIPAA implementation activities, which is required to meet at a minimum 2 times per year. Existing law requires the Department of Finance to develop and annually publish prior to August 1 guidelines for state entities, as defined, to obtain additional HIPAA funding, and to report to the Legislature quarterly on HIPAA allocations, redirections, and expenditures, categorized by state entity and by project.

end insert
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This bill would revise those provisions to reflect the office’s duties regarding ongoing compliance with HIPAA. The bill would delete the provisions pertaining to the advisory committee and the Department of Finance requirements to publish guidelines and report to the Legislature.

end insert
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(8) Existing law establishes a workers’ compensation system, administered by the Administrative Director of the Division of Workers’ Compensation, to compensate an employee for injuries sustained in the course of his or her employment. Existing law prohibits a person or public or private entity who is not a party to a claim for workers’ compensation benefits from obtaining individually identifiable information, as defined, that is obtained or maintained by the Division of Workers’ Compensation of the Department of Industrial Relations on that claim, except as specified. Existing law authorizes, until January 1, 2017, the use by the State Department of Health Care Services of individually identifiable information to seek recovery of Medi-Cal costs.

end insert
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This bill would delete that January 1, 2017, date of repeal and thereby extend the operation of this authority of the State Department of Health Care Services indefinitely.

end insert
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(9) The California Health Facilities Financing Authority Act authorizes the California Health Facilities Financing Authority (authority) to make loans from the continuously appropriated California Health Facilities Financing Authority Fund to participating health institutions for financing or refinancing the acquisition, construction, or remodeling of health facilities.

end insert
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Existing law, the Mental Health Services Act, an initiative measure enacted by the voters as Proposition 63 at the November 2, 2004, statewide general election, establishes the Mental Health Services Oversight and Accountability Commission (commission) to oversee the administration of various parts of the Mental Health Services Act. The act provides that it may be amended by the Legislature by a 2/3 vote of each house as long as the amendment is consistent with and furthers the intent of the act, and that the Legislature may also clarify procedures and terms of the act by majority vote.

end insert
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Existing law establishes the Investment in Mental Health Wellness Act of 2013. Existing law provides that funds appropriated by the Legislature to the authority for the purposes of the act be made available to selected counties or counties acting jointly, except as otherwise provided, and used to increase capacity for client assistance and services in crisis intervention, crisis stabilization, crisis residential treatment, rehabilitative mental health services, and mobile crisis support teams. Existing law requires the authority to develop and to consider specified selection criteria for awarding grants, as prescribed. Existing law provides that funds appropriated by the Legislature to the commission for the purposes of the act be allocated to selected counties, counties acting jointly, or city mental health departments, as determined by the commission through a selection process, for triage personnel to provide intensive case management and linkage to services for individuals with mental health disorders. Existing law requires the commission to consider specified selection criteria for awarding grants. Existing law prohibits funds awarded by the authority or commission from being used to supplant existing financial and resource commitments of the grantee.

end insert
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This bill would extend the application of these provisions for purposes of providing mental health services to children and youth 21 years of age and under, subject to appropriation in the 2016 Budget Act. The bill would similarly provide that funds appropriated by the Legislature to the authority for these purposes be made available to selected counties or counties acting jointly, and used to increase capacity for client assistance and crisis services, as specified. The bill would require the authority to develop and consider specified selection criteria for awarding grants, as prescribed. The bill would similarly provide that funds appropriated by the Legislature to the commission for these purposes be allocated to selected counties, counties acting jointly, or city mental health departments, as determined by the commission through a selection process, for specified purposes. The bill would require the commission to consider specified selection criteria for awarding grants. The bill would require the authority and the commission to provide prescribed reports to the fiscal and policy committees of the Legislature by January 1, 2018, and annually thereafter.

end insert
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(10) Existing law provides for the Medi-Cal program, which is administered by the State Department of Health Care Services and under which qualified low-income persons receive health care benefits. The Medi-Cal program is, in part, governed and funded by federal Medicaid provisions.

end insert
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Existing federal law requires the state to seek adjustment or recovery from an individual’s estate for specified medical assistance, including nursing facility services, home and community-based services, and related hospital and prescription drug services, if the individual was 55 years of age or older when he or she received the medical assistance. Existing federal law allows the state, at its own option, to seek recovery for any items or services covered under the state’s Medicaid plan.

end insert
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Existing state law, with certain exceptions, requires the State Department of Health Care Services to claim against the estate of a decedent, or against any recipient of the property of that decedent by distribution or survival, an amount equal to the payments for Medi-Cal services received or the value of the property received by any recipient from the decedent by distribution or survival, whichever is less. Existing law provides for certain exemptions that restrict the department from filing a claim against a decedent’s property, including if there is a surviving spouse during his or her lifetime. Existing law requires the department, however, to make a claim upon the death of the surviving spouse, as prescribed. Existing law requires the department to waive its claim, in whole or in part, if it determines that enforcement of the claim would result in a substantial hardship, as specified. Existing law, which has been held invalid by existing case law, provides that the exemptions shall only apply to the proportionate share of the decedent’s estate or property that passes to those recipients, by survival or distribution, who qualify for the exemptions.

end insert
begin insert

This bill would instead require the department to make these claims only in specified circumstances for those health care services that the state is required to recover under federal law and would define health care services for these purposes. The bill would limit any claims against the estate of a decedent to only the real and personal property or other assets in the individual’s probate estate that the state is required to seek recovery from under federal law. The bill would delete the proportionate share provision and would delete the requirement that the department make a claim upon the death of the surviving spouse. The bill would prohibit the department from filing a claim against a decedent’s property if there is a surviving registered domestic partner. The bill would require the department, subject to federal approval, to waive its claim when the estate subject to recovery is a homestead of modest value, as defined. The bill would limit the amount of interest that is entitled to accrue on a voluntary postdeath lien, as specified. The bill would also require the department to provide a current or former member, or his or her authorized representative, upon request, with a copy of the amount of Medi-Cal expenses that would be recoverable under these provisions, as specified. The bill would apply the changes made by these provisions only to individuals who die on or after January 1, 2017.

end insert
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(11) Existing law requires the State Department of Health Care Services to establish and administer, until July 1, 2021, the Medi-Cal Electronic Health Records Incentive Program, for the purposes of providing federal incentive payments to Medi-Cal providers for the implementation and use of electronic records systems. Existing law generally prohibits General Fund moneys from being used for this purpose, except that no more than $200,000 from the General Fund may be used annually for state administrative costs associated with implementing these provisions.

end insert
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This bill would increase the amount of General Fund moneys that may be used annually for state administrative costs to no more than $425,000.

end insert
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(12) Existing law provides for a schedule of benefits under the Medi-Cal program, which includes Early and Periodic Screening, Diagnosis, and Treatment for any individual under 21 years of age, consistent with the requirements of federal law. Under existing law, to the extent required by the federal government and effective no sooner than required by the federal government, behavioral health treatment (BHT), as defined, is a covered service for individuals under 21 years of age, as specified.

end insert
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This bill would authorize the department, commencing on the effective date of the bill to March 31, 2017, inclusive, to make available to specified individuals whom the department identifies as no longer eligible for Medi-Cal solely due to the transition of BHT coverage pursuant to the above provisions, contracted services to assist the individuals with health insurance enrollment, without regard to whether federal funds are available for the contracted services.

end insert
begin insert

(13) Existing law prohibits the reimbursement to Medi-Cal pharmacy providers for legend and nonlegend drugs, as defined, from exceeding the lowest of either the estimated acquisition cost of the drug plus a professional fee for dispensing or the pharmacy’s usual and customary charge, as defined. The professional fee is statutorily set at $7.25 per dispensed prescription and at $8 for legend drugs dispensed to a beneficiary residing in a skilled nursing facility or intermediate care facility, as defined. If the State Department of Health Care Services determines that a change in the dispensing fee is necessary, existing law requires the department to establish the new dispensing fee through the state budget process and prohibits any adjustments to the dispensing fee from exceeding a specified amount. Existing law requires the estimated acquisition cost of the drug to be equal to the lowest of the average wholesale price minus 17%, the average acquisition cost, the federal upper limit, or the maximum allowable ingredient cost.

end insert
begin insert

This bill, commencing April 1, 2017, would make inoperative the prescribed amounts for the professional fees and, instead, require the department to implement a new professional dispensing fee or fees, as defined, established by the department consistent with a specified provision of federal law. The bill would require the department to adjust the professional dispensing fee through the state budget process if necessary to comply with federal Medicaid requirements. The bill would revise the definition of “federal upper limit.”

end insert
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(14) Existing law provides for a schedule of benefits under the Medi-Cal program, which includes specified outpatient services, including acupuncture to the extent federal matching funds are provided for acupuncture, subject to utilization controls. Notwithstanding this provision, existing law excludes certain optional Medi-Cal benefits, including, among others, acupuncture services, from coverage under the Medi-Cal program.

end insert
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This bill, commencing July 1, 2016, would restore acupuncture services as a covered benefit under the Medi-Cal program.

end insert
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(15) Existing law requires counties to determine Medi-Cal eligibility, and requires each county to meet specified performance standards in administering Medi-Cal eligibility. Existing law requires the department to establish and maintain a plan, known as the County Administrative Cost Control Plan, for the purpose of effectively controlling costs related to the county administration of the determination of eligibility for benefits under the Medi-Cal program within the amounts annually appropriated for that administration. Under existing law, the Legislature finds and declares that linking appropriate funding for county Medi-Cal administrative operations, including annual cost-of-doing-business adjustments, with performance standards will give counties the incentive to meet the performance standards and enable them to continue to do the work they do on behalf of the state. Existing law further provides that it is the intent of the Legislature to provide appropriate funding to the counties for the effective administration of the Medi-Cal program, and that it is the intent of the Legislature to not appropriate money for a cost-of-doing-business adjustment for specified fiscal years.

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This bill would additionally provide that it is the intent of the Legislature to not appropriate funds for the cost-of-doing-business adjustment for the 2016-17 fiscal year.

end insert
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(16) Under existing law, the Emergency Medical Air Transportation Act, a penalty of $4 is imposed upon every conviction for a violation of the Vehicle Code, or a local ordinance adopted pursuant to the Vehicle Code, other than a parking offense. Existing law requires the county or the court that imposed the fine to transfer the moneys collected pursuant to this act to the Emergency Medical Air Transportation Act Fund. Existing law requires the State Department of Health Care Services to administer the Emergency Medical Air Transportation Act Fund and to use the moneys in the fund, upon appropriation by the Legislature, to, among other things, offset the state portion of the Medi-Cal reimbursement rate for emergency medical air transportation services and augment emergency medical air transportation reimbursement payments made through the Medi-Cal program. Under existing law, the assessment of these penalties will terminate on January 1, 2018, and any moneys unexpended and unencumbered in the Emergency Medical Air Transportation Act Fund on June 30, 2019, will transfer to the General Fund. Existing law requires the department, by March 1, 2017, and in coordination with the Department of Finance, to develop a funding plan that ensures adequate reimbursement to emergency medical air transportation providers following the termination of the penalty assessments.

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This bill would instead require the department, by March 1, 2017, and in coordination with the Department of Finance, to notify the Legislature of the fiscal impact on the Medi-Cal program resulting from, and the planned reimbursement methodology for emergency medical air transportation services after, the termination of the penalty assessments.

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(17) Existing federal law establishes the Program of All-Inclusive Care for the Elderly (PACE), which provides specified services for older individuals so that they may continue living in the community. Federal law authorizes states to implement the PACE program as a Medicaid state option. Existing law authorizes the department to enter into contracts with up to 15 PACE organizations, defined as public or private nonprofit organizations, to implement the PACE program, as specified. Existing law, on and after April 1, 2015, requires the department to establish capitation rates paid to each PACE organization at no less than 95% of the fee-for-service equivalent cost, including the department’s cost of administration, that the department estimates would be payable for all services covered under the PACE organization contract if all those services were to be furnished to Medi-Cal beneficiaries under the fee-for-service program.

end insert
begin insert

This bill would require the department to develop and pay capitation rates to contracted PACE organizations, for rates implemented no earlier than January 1, 2017, in accordance with criteria specific to those organizations, based on, among other things, standardized rate methodologies for similar populations, adjustments for geographic location, and the level of care being provided. The bill would delete the requirement that contracts for implementation of the PACE program be entered into with organizations that are nonprofit.

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This bill also would authorize the department, to the extent federal financial participation is available, to seek increased federal regulatory flexibility to modernize the PACE program, as specified. Implementation of the new capitation rate methodology would be contingent on receipt of federal approval and the availability of federal financial participation. The bill would provide alternative rate capitation methodologies, depending upon whether or not the Coordinated Care Initiative is operative, as specified.

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(18) This bill would also delete or make inoperative various obsolete provisions of law and make various other technical changes.

end insert
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(19) This bill would declare that it is to take effect immediately as a bill providing for appropriations related to the Budget Bill.

end insert
begin delete

This bill would express the intent of the Legislature to enact statutory changes relating to the Budget Act of 2016.

end delete

Vote: majority. Appropriation: begin deleteno end deletebegin insertyesend insert. Fiscal committee: begin deleteno end deletebegin insertyesend insert. State-mandated local program: no.

The people of the State of California do enact as follows:

P12   1begin insert

begin insertSECTION 1.end insert  

end insert

begin insertSection 100504 of the end insertbegin insertGovernment Codeend insertbegin insert is
2amended to read:end insert

3

100504.  

(a) The board may do the following:

4(1) With respect to individual coverage made available in the
5Exchange, collect premiums and assist in the administration of
6subsidies.

7(2) Enter into contracts.

8(3) Sue and be sued.

9(4) Receive and accept gifts, grants, or donations of moneys
10from any agency of the United States, any agency of the state, and
11any municipality, county, or other political subdivision of the state.

12(5) Receive and accept gifts, grants, or donations from
13individuals, associations, private foundations, and corporations,
14in compliance with the conflict of interest provisions to be adopted
15by the board at a public meeting.

16(6) Adopt rules and regulations, as necessary. Until January 1,
172017, any necessary rules and regulations may be adopted as
18emergency regulations in accordance with the Administrative
19Procedure Act (Chapter 3.5 (commencing with Section 11340) of
20Part 1 of Division 3 of Title 2).begin insert Until January 1, 2019, any
21necessary rules and regulations to implement the eligibility,
22enrollment, and appeals processes for the individual and small
23business exchanges, changes to the small business exchange, or
24any act in effect that amends this title that is operative on or before
25December 31, 2016, may be adopted as emergency regulations in
26accordance with the Administrative Procedure Act (Chapter 3.5
27(commencing with Section 11340) of Part 1 of Division 3 of Title
282).end insert
The adoption ofbegin delete these regulationsend deletebegin insert emergency regulations
29pursuant to this sectionend insert
shall be deemed to be an emergency and
30necessary for the immediate preservation of the public peace, health
31and safety, or general welfare. Notwithstanding Chapter 3.5
32(commencing with Section 11340) of Part 1 of Division 3 of Title
332, including subdivisions (e) and (h) of Section 11346.1, any
34emergency regulation adopted pursuant to this section shall be
35repealed by operation of law unless the adoption, amendment, or
36repeal of the regulation is promulgated by the board pursuant to
37Chapter 3.5 (commencing with Section 11340) of Part 1 of Division
383 of Title 2 of the Government Code withinbegin delete threeend deletebegin insert fiveend insert years of the
P13   1initial adoption of the emergency regulation. Notwithstanding
2subdivision (h) of Section 11346.1, until January 1, 2020, the
3Office of Administrative Law may approve more than two
4readoptions of an emergency regulation adopted pursuant to this
5section. The amendments made to this paragraph by the act adding
6this sentence shall apply to any emergency regulation adopted
7pursuant to this section prior to the effective date of the Budget
8Act of 2015.

9(7) Collaborate with the State Department of Health Care
10Services and the Managed Risk Medical Insurance Board, to the
11extent possible, to allow an individual the option to remain enrolled
12with his or her carrier and provider network in the event the
13individual experiences a loss of eligibility of premium tax credits
14and becomes eligible for the Medi-Cal program or the Healthy
15Families Program, or loses eligibility for the Medi-Cal program
16or the Healthy Families Program and becomes eligible for premium
17tax credits through the Exchange.

18(8) Share information with relevant state departments, consistent
19with the confidentiality provisions in Section 1411 of the federal
20act, necessary for the administration of the Exchange.

21(9) Require carriers participating in the Exchange to make
22available to the Exchange and regularly update an electronic
23directory of contracting health care providers so that individuals
24seeking coverage through the Exchange can search by health care
25provider name to determine which health plans in the Exchange
26include that health care provider in their network. The board may
27also require a carrier to provide regularly updated information to
28the Exchange as to whether a health care provider is accepting
29new patients for a particular health plan. The Exchange may
30provide an integrated and uniform consumer directory of health
31care providers indicating which carriers the providers contract with
32and whether the providers are currently accepting new patients.
33The Exchange may also establish methods by which health care
34providers may transmit relevant information directly to the
35Exchange, rather than through a carrier.

36(10) Make available supplemental coverage for enrollees of the
37Exchange to the extent permitted by the federal act, provided that
38no General Fund money is used to pay the cost of that coverage.
39Any supplemental coverage offered in the Exchange shall be
P14   1subject to the charge imposed under subdivision (n) of Section
2100503.

3(b) The Exchange shall only collect information from individuals
4or designees of individuals necessary to administer the Exchange
5and consistent with the federal act.

6(c) (1) The board shall have the authority to standardize
7products to be offered through the Exchange. Any products
8standardized by the board pursuant to this subdivision shall be
9discussed by the board during at least one properly noticed board
10meeting prior to the board meeting at which the board adopts the
11standardized products to be offered through the Exchange.

12(2) The adoption, amendment, or repeal of a regulation by the
13board to implement this subdivision is exempt from the rulemaking
14provisions of the Administrative Procedure Act (Chapter 3.5
15(commencing with Section 11340) of Part 1 of Division 3 of Title
162).

17begin insert

begin insertSEC. 2.end insert  

end insert

begin insertPart 6.2 (commencing with Section 1179.80) is added
18to Division 1 of the end insert
begin insertHealth and Safety Codeend insertbegin insert, to read:end insert

begin insert

19 

20PART begin insert6.2.end insert  Naloxone Grant Program

21

 

22

begin insert1179.80.end insert  

(a) In order to reduce the rate of fatal overdose from
23opioid drugs including heroin and prescription opioids, the State
24Department of Public Health shall, subject to an appropriation
25for this purpose in the Budget Act of 2016, award funding to local
26health departments, local government agencies, or on a competitive
27basis to community-based organizations, regional opioid
28prevention coalitions, or both, to support or establish programs
29that provide Naloxone to first responders and to at-risk opioid
30users through programs that serve at-risk drug users, including,
31but not limited to, syringe exchange and disposal programs,
32homeless programs, and substance use disorder treatment
33providers.

34
(b) The department may award grants itself or enter into
35 contracts to carry out the provisions of subdivision (a). The award
36of contracts and grants is exempt from Part 2 (commencing with
37Section 10100) of Division 2 of the Public Contract Code and is
38exempt from approval by the Department of General Services prior
39to their execution.

P15   1
(c) Not more than 10 percent of the funds appropriated shall
2be available to the department for its administrative costs in
3implementing this section. If deemed necessary by the department,
4the department may allocate funds to other state departments to
5assist in the implementation of subdivision (a).

end insert
6begin insert

begin insertSEC. 3.end insert  

end insert

begin insertSection 1324.9 of the end insertbegin insertHealth and Safety Codeend insertbegin insert is
7amended to read:end insert

8

1324.9.  

(a) The Long-Term Care Quality Assurance Fund is
9hereby created in the State Treasury.begin delete Moneys in the fund shall be
10available, upon appropriation by the Legislature, for expenditure
11byend delete
begin insert Notwithstanding Section 13340 of the Government Code,
12moneys in the fund shall be continuously appropriated, without
13regard to fiscal year, toend insert
the State Department of Health Care
14Services for the purposes of this article and Article 7.6
15(commencing with Section 1324.20). Notwithstanding Section
1616305.7 of the Government Code, the fund shall contain all interest
17and dividends earned on moneys in the fund.

18(b) Notwithstanding any other law, beginning August 1, 2013,
19all revenues received by the State Department of Health Care
20Services categorized by the State Department of Health Care
21Services as long-term care quality assurance fees shall be deposited
22into the Long-Term Care Quality Assurance Fund. Revenue that
23shall be deposited into this fund shall include quality assurance
24fees imposed pursuant to this article and quality assurance fees
25imposed pursuant to Article 7.6 (commencing with Section
261324.20).

27(c) Notwithstanding any other law, the Controller may use the
28funds in the Long-Term Care Quality Assurance Fund for cashflow
29loans to the General Fund as provided in Sections 16310 and 16381
30of the Government Code.

31begin insert

begin insertSEC. 4.end insert  

end insert

begin insertSection 120955 of the end insertbegin insertHealth and Safety Codeend insertbegin insert is
32amended to read:end insert

33

120955.  

(a) (1)  To the extent that state and federal funds are
34appropriated in the annual Budget Act for these purposes, the
35director shall establish and may administer a program to provide
36drug treatments to persons infected with human immunodeficiency
37virus (HIV), the etiologic agent of acquired immunodeficiency
38syndromebegin delete (AIDS).end deletebegin insert (AIDS), and to persons who are HIV-negative
39who have been prescribed preexposure prophylaxis included on
40the ADAP formulary for the prevention of HIV infection. To the
P16   1extent allowable under federal law, and as appropriated in the
2annual Budget Act, the director may expend funding from the AIDS
3Drug Assistance Program Rebate Fund for this HIV infection
4prevention program to cover the costs of prescribed ADAP
5formulary medications for the prevention of HIV infection and
6related medical copays, coinsurance, and deductibles.end insert
If the
7director makes a formal determination that, in any fiscal year,
8funds appropriated for the program will be insufficient to provide
9all of those drug treatments to existing eligible persons for the
10fiscal year and that a suspension of the implementation of the
11program is necessary, the director may suspend eligibility
12determinations and enrollment in the program for the period of
13time necessary to meet the needs of existing eligible persons in
14the program.

15(2) The director, in consultation with the AIDS Drug Assistance
16Program Medical Advisory Committee, shall develop, maintain,
17and update as necessary a list of drugs to be provided under this
18program. The list shall be exempt from the requirements of the
19 Administrative Procedure Act (Chapter 3.5 (commencing with
20Section 11340), Chapter 4 (commencing with Section 11370), and
21Chapter 5 (commencing with Section 11500) of Part 1 of Division
223 of Title 2 of the Government Code), and shall not be subject to
23the review and approval of the Office of Administrative Law.

24(b) The director may grant funds to a county public health
25department through standard agreements to administer this program
26in that county. To maximize the recipients’ access to drugs covered
27by this program, the director shall urge the county health
28department in counties granted these funds to decentralize
29distribution of the drugs to the recipients.

30(c) The director shall establish a rate structure for reimbursement
31for the cost of each drug included in the program. Rates shall not
32be less than the actual cost of the drug. However, the director may
33purchase a listed drug directly from the manufacturer and negotiate
34the most favorable bulk price for that drug.

35(d) Manufacturers of the drugs on the list shall pay the
36department a rebate equal to the rebate that would be applicable
37to the drug under Section 1927(c) of the federal Social Security
38Act (42 U.S.C. Sec. 1396r-8(c)) plus an additional rebate to be
39negotiated by each manufacturer with the department, except that
40no rebates shall be paid to the department under this section on
P17   1drugs for which the department has received a rebate under Section
21927(c) of the federal Social Security Act (42 U.S.C. Sec.
31396r-8(c)) or that have been purchased on behalf of county health
4departments or other eligible entities at discount prices made
5available under Section 256b of Title 42 of the United States Code.

6(e) The department shall submit an invoice, not less than two
7times per year, to each manufacturer for the amount of the rebate
8required by subdivision (d).

9(f) Drugs may be removed from the list for failure to pay the
10rebate required by subdivision (d), unless the department
11determines that removal of the drug from the list would cause
12substantial medical hardship to beneficiaries.

13(g) The department may adopt emergency regulations to
14implement amendments to this chapter made during the 1997-98
15Regular Session, in accordance with the Administrative Procedure
16Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of
17Division 3 of Title 2 of the Government Code). The initial adoption
18of emergency regulations shall be deemed to be an emergency and
19considered by the Office of Administrative Law as necessary for
20the immediate preservation of the public peace, health and safety,
21or general welfare. Emergency regulations adopted pursuant to
22this section shall remain in effect for no more than 180 days.

23(h) Reimbursement under this chapter shall not be made for any
24drugs that are available to the recipient under any other private,
25state, or federal programs, or under any other contractual or legal
26entitlements, except that the director may authorize an exemption
27from this subdivision where exemption would represent a cost
28savings to the state.

29(i) The department may also subsidize certain cost-sharing
30requirements for persons otherwise eligible for the AIDS Drug
31Assistance Program (ADAP) with existing non-ADAP drug
32coverage by paying for prescription drugs included on the ADAP
33formulary within the existing ADAP operational structure up to,
34but not exceeding, the amount of that cost-sharing obligation. This
35cost sharing may only be applied in circumstances in which the
36other payer recognizes the ADAP payment as counting toward the
37individual’s cost-sharing obligation.begin delete If the director determines that
38it would result in a cost savings to the state, theend delete
begin insert Theend insert department
39may subsidize, using available federal funds and moneys from the
40AIDS Drug Assistance Program Rebate Fund, costs associated
P18   1with a health care service plan or health insurance policy, including
2medical copayments and deductibles for outpatient care, and
3premiums to purchase or maintain health insurance coverage.

4begin insert

begin insertSEC. 5.end insert  

end insert

begin insertSection 120960 of the end insertbegin insertHealth and Safety Codeend insertbegin insert is
5amended to read:end insert

6

120960.  

(a) The department shall establish uniform standards
7of financial eligibility for the drugs under the program established
8under this chapter.

9(b) Nothing in the financial eligibility standards shall prohibit
10drugs to an otherwise eligible person whose modified adjusted
11gross income does not exceed 500 percent of the federal poverty
12level per year based on family size and household income.
13However, the director may authorize drugs for persons with
14incomes higher than 500 percent of the federal poverty level per
15year based on family size and household income if the estimated
16cost of those drugs in one year is expected to exceed 20 percent
17of the person’s modified adjusted gross income.

begin delete

18(c) The department shall establish and may administer a payment
19schedule to determine the payment obligation of a person receiving
20drugs. No person shall be obligated for payment whose modified
21adjusted gross income is less than four times the federal poverty
22level based on family size and household income. The payment
23obligation shall be the lesser of the following:

24(1) Two times the person’s annual state income tax liability,
25less funds expended by the person for health insurance premiums.

26(2) The cost of drugs.

27(d) Persons who have been determined to have a payment
28obligation pursuant to subdivision (c) shall be advised by the
29department of their right to request a reconsideration of that
30determination to the department. Written notice of the right to
31request a reconsideration shall be provided to the person at the
32time that notification is given that he or she is subject to a payment
33obligation. The payment determination shall be reconsidered if
34one or more of the following apply:

35(1) The determination was based on an incorrect calculation
36made pursuant to subdivision (b).

37(2) There has been a substantial change in income since the
38previous eligibility determination that has resulted in a current
39income that is inadequate to meet the calculated payment
40obligation.

P19   1(3) Unavoidable family or medical expenses that reduce the
2disposable income and that result in current income that is
3inadequate to meet the payment obligation.

4(4) Any other situation that imposes undue financial hardship
5on the person and would restrict his or her ability to meet the
6payment obligation.

7(e) The department may exempt a person, who has been
8determined to have a payment obligation pursuant to subdivision
9(c), from the obligation if both of the following criteria are
10satisfied:

11(1) One or more of the circumstances specified in subdivision
12(d) exist.

13(2) The department has determined that the payment obligation
14will impose an undue financial hardship on the person.

15(f) If a person requests reconsideration of the payment obligation
16determination, the person shall not be obligated to make any
17payment until the department has completed the reconsideration
18request pursuant to subdivision (d). If the department denies the
19exemption, the person shall be obligated to make payments for
20drugs received while the reconsideration request is pending.

21(g)

end delete

22begin insert(c)end insert A county public health department administering this
23program pursuant to an agreement with the director pursuant to
24subdivision (b) of Section 120955 shall use no more than 5 percent
25of total payments it collects pursuant to this section to cover any
26administrative costs related to eligibility determinations, reporting
27requirements, and the collection of payments.

begin delete

28(h)

end delete

29begin insert(d)end insert A county public health department administering this
30program pursuant to subdivision (b) of Section 120955 shall
31provide all drugs added to the program pursuant to subdivision (a)
32of Section 120955 within 60 days of the action of thebegin delete director,
33subject to the repayment obligations specified in subdivision (d)
34of Section 120965.end delete
begin insert director.end insert

begin delete

35(i)

end delete

36begin insert(e)end insert For purposes of this section, the following terms shall have
37the following meanings:

38(1) “Family size” has the meaning given to that term in Section
3936B(d)(1) of the Internal Revenue Code of 1986, and shall include
40same or opposite sex married couples, registered domestic partners,
P20   1and any tax dependents, as defined by Section 152 of the Internal
2Revenue Code of 1986, of either spouse or registered domestic
3partner.

4(2) “Federal poverty level” refers to the poverty guidelines
5updated periodically in the Federal Register by the United States
6Department of Health and Human Services under the authority of
7Section 9902(2) of Title 42 of the United States Code.

8(3) “Household income” means the sum of the applicant’s or
9recipient’s modified adjusted gross income, plus the modified
10adjusted gross income of the applicant’s or recipient’s spouse or
11registered domestic partner, and the modified adjusted gross
12 incomes of all other individuals for whom the applicant or
13recipient, or the applicant’s or recipient’s spouse or registered
14domestic partner, is allowed a federal income tax deduction for
15the taxable year.

16(4) “Internal Revenue Code of 1986” means Title 26 of the
17United States Code, including all amendments enacted to that code.

18(5) “Modified adjusted gross income” has the meaning given
19to that term in Section 36B(d)(2)(B) of the Internal Revenue Code
20of 1986.

21begin insert

begin insertSEC. 6.end insert  

end insert

begin insertSection 120965 of the end insertbegin insertHealth and Safety Codeend insertbegin insert is
22repealed.end insert

begin delete
23

120965.  

(a)  Effective March 15, 1991, a person determined
24eligible for benefits under this chapter shall be subject to the
25payment obligation specified in subdivision (c) of Section 120960.

26(b)  Persons who are receiving benefits under a HIV drug
27treatment subsidy program administered by the department prior
28to March 15, 1991, shall not be subject to the payment obligation
29specified in subdivision (c) of Section 120960.

30(c)  Notwithstanding subdivision (b), if any person is disenrolled
31from eligibility in a HIV drug treatment subsidy program
32administered by the department for any reason after March 15,
331991, the subsequent enrollment of that person for benefits under
34this chapter shall be in accordance with the payment obligation
35specified in subdivision (c) of Section 120960.

36(d)  Notwithstanding subdivision (b), if a drug is added pursuant
37to subdivision (a) of Section 120955, any person determined
38eligible for benefits under this chapter, regardless of the date of
39enrollment, shall be subject to the payment obligation specified in
40subdivision (c) of Section 120960 for the added drug. The payment
P21   1obligation for any other drug shall be determined in accordance
2with subdivision (b).

end delete
3begin insert

begin insertSEC. 7.end insert  

end insert

begin insertPart 7.5 (commencing with Section 122450) is added
4to Division 105 of the end insert
begin insertHealth and Safety Codeend insertbegin insert, to read:end insert

begin insert

5 

6PART begin insert7.5.end insert  Communicable Disease Testing and
7Prevention

8

 

9

begin insert122450.end insert  

(a) Of the funds appropriated in the 2016 Budget Act
10for this purpose, the State Department of Public Health shall do
11all of the following:

12
(1) Purchase and distribute hepatitis B vaccine and related
13materials to local health jurisdictions and community-based
14organizations to test and vaccinate high-risk adults.

15
(2) Purchase hepatitis C test kits and related materials to
16distribute to local health jurisdictions and community-based testing
17programs.

18
(3) Train nonmedical personnel to perform HCV and HIV testing
19waived under the federal Clinical Laboratory Improvement
20Amendments of 1998 (CLIA) (42 U.S.C. Sec. 263a) in local health
21jurisdictions and community-based settings.

22
(4) Provide technical assistance to local governments and
23community-based organizations to increase the number of syringe
24exchange and disposal programs throughout California and the
25number of jurisdictions in which syringe exchange and disposal
26programs are authorized.

27
(b) The State Department of Public Health may issue grants for
28the materials and activities provided for in subdivision (a).

end insert
29begin insert

begin insertSEC. 8.end insert  

end insert

begin insertSection 125281 is added to the end insertbegin insertHealth and Safety Codeend insertbegin insert,
30to read:end insert

begin insert
31

begin insert125281.end insert  

From funds appropriated to the department in the
32Budget Act of 2016 for these purposes, the department shall
33allocate funds to the diagnostic and treatment centers for
34Alzheimer’s disease established pursuant to Section 125280 to be
35used for all of the following purposes:

36
(a) To determine the standard of care in early and accurate
37diagnosis drawing on peer-reviewed evidence, best practices,
38Medicare and Medicaid policy and reimbursement, and experience
39working with patients seeking services at a center.

P22   1
(b) To conduct targeted outreach to health professionals through
2medical school instruction, hospital grant rounds, continuing
3education, community education, and free online resources.

4
(c) To provide low-cost, accessible detection and diagnosis
5tools that the center shall make available via open source portals
6of the postsecondary higher educational institution that established
7the center. Furthermore, the department shall post these tools on
8its Internet Web site to serve as a resource for the state.

9
(d) To endorse and disseminate low-cost, accessible detection
10and diagnosis tools for broad use by health professionals
11practicing in a variety of settings.

12
(e) To address unique health disparities that exist within diverse
13populations, with special focus and attention on reaching African
14Americans, Latinos, and women.

15
(f) To evaluate the educational effectiveness and measure the
16impact of these efforts, including pretests and posttests for health
17professionals, metrics, and documented practice change.

end insert
18begin insert

begin insertSEC. 9.end insert  

end insert

begin insertSection 130301 of the end insertbegin insertHealth and Safety Codeend insertbegin insert is
19amended to read:end insert

20

130301.  

The Legislature finds and declares the following:

21(a) The federal Health Insurance Portability and Accountability
22Act (Public Law 104-191), known as HIPAA, was enacted on
23August 21, 1996.

24(b) HIPAA extends health coverage benefits to workers after
25they terminate or change employment by allowing the worker to
26participate in existing group coverage plans, thereby avoiding the
27additional expense associated with obtaining individual coverage
28as well as the potential loss of coverage because of a preexisting
29health condition.

30(c) Administrative simplification is a key feature of HIPAA,
31requiring standard national identifiers for providers, employers,
32and health plans and the development of uniform standards for the
33coding and transmission of claims and health care information.
34Administration simplification is intended to promote the use of
35information technology, thereby reducing costs and increasing
36efficiency in the health care industry.

37(d) HIPAA also containsbegin delete newend delete standards for safeguarding the
38privacy and security of health information. Therefore, the
39development of policies for safeguarding the privacy and security
40of health records is a fundamental and indispensable part of HIPAA
P23   1implementation that must accompany or precede the expansion or
2standardization of technology for recording or transmitting health
3information.

4(e) The federal Department of Health and Human Services has
5published, and continues to publish, rules pertaining to the
6 implementation of HIPAA. Following a 60-day congressional
7concurrence period, health providers and insurers have 24 months
8in which to implement these rules.

9(f) These federal rules directly apply to state and county
10departments that provide health coverage, health care, mental
11health services, and alcohol and drug treatment programs. Other
12state and county departments are subject to these rules to the extent
13they use or exchange information with the departments to which
14the federal rules directly apply.

15(g) In view of the substantial changes that HIPAA will require
16in the practices of both private and public health entities and their
17business associates, the ability of California government to
18continue the delivery of vital health services will depend upon the
19implementationbegin delete ofend deletebegin insert of, and compliance with,end insert HIPAA in a manner
20that is coordinated among state departments as well as our partners
21in county government and the private health sector.

22(h) The implementation of HIPAA shall be accomplished as
23required by federal law and regulations and shall be a priority for
24state departments.

25begin insert

begin insertSEC. 10.end insert  

end insert

begin insertSection 130303 of the end insertbegin insertHealth and Safety Codeend insertbegin insert is
26amended to read:end insert

27

130303.  

The office shall assume statewide leadership,
28coordination, policy formulation, direction, and oversight
29responsibilities for HIPAAbegin delete implementation.end deletebegin insert implementation and
30compliance.end insert
The office shall exercise full authority relative to state
31entities to establish policy, provide direction to state entities,
32monitor progress, and report on implementationbegin delete efforts.end deletebegin insert and
33compliance activities.end insert

34begin insert

begin insertSEC. 11.end insert  

end insert

begin insertSection 130305 of the end insertbegin insertHealth and Safety Codeend insertbegin insert is
35amended to read:end insert

36

130305.  

The office shall be staffed, at a minimum, with the
37following personnel:

38(a) Legal counsel to perform activities that may include, but are
39not limited to, determining the application of federal law pertaining
40to HIPAA.

P24   1(b) Staff with expertise in the rules promulgated by HIPAA.

begin delete

2(c) Staff to oversee the development of training curricula and
3tools and to modify the curricula and tools as required by the state’s
4ongoing HIPAA compliance effort.

end delete
begin delete

5(d) Information technology staff.

end delete
begin delete

6(e)

end delete

7begin insert(end insertbegin insertc)end insert Staff, as necessary, to coordinate and monitor the progress
8made by all state entities in HIPAAbegin delete implementation.end delete
9
begin insert implementation and compliance.end insert

begin delete

10(f) Administrative staff, as necessary.

end delete
11begin insert

begin insertSEC. 12.end insert  

end insert

begin insertSection 130306 of the end insertbegin insertHealth and Safety Codeend insertbegin insert is
12amended to read:end insert

13

130306.  

begin delete(a)end deletebegin deleteend deleteThe office shall perform the following functions:

begin delete

14(1)

end delete

15begin insert(end insertbegin inserta)end insert Standardizing the HIPAA implementation process used in
16all state entities, which includes the following:

begin delete

17(A)

end delete

18begin insert(end insertbegin insert1)end insert Developingbegin delete a master plan andend deletebegin insert anend insert overall state strategy for
19HIPAA implementationbegin insert and complianceend insert that includes timeframes
20within which specified activities will be completed.

begin delete

21(B)

end delete

22begin insert(end insertbegin insert2)end insert Specifying tools, such as protocols for assessment and
23reporting, and any other tools as determined by the director for
24HIPAAbegin delete implementation.end deletebegin insert implementation and compliance.end insert

begin delete

25(C)

end delete

26begin insert(end insertbegin insert3)end insert Developing uniform policies on privacy, security, and other
27matters related to HIPAA that shall be adopted and implemented
28by all state entities. In developing these policies, the office shall
29consult with representatives from the private sector, state
30government, and other public entities affected by HIPAA.

begin delete

31(D)

end delete

32begin insert(end insertbegin insert4)end insert Providing an ongoing evaluation of HIPAA implementation
33begin insert and complianceend insert in California and refining the plans, tools, and
34policies as required to effect implementation.

begin delete

35(E)

end delete

36begin insert(end insertbegin insert5)end insert Developing standards for the office to use in determining
37the extent of HIPAA compliance.

begin delete

38(2)

end delete

39begin insert(end insertbegin insertb)end insert Representing the State of California in HIPAA discussions
40with the federal Department of Health and Human Services and
P25   1at the Workgroup for Electronic Data Interchange and other
2national and regional groups developing standards for HIPAA
3implementation, including those authorized by the federal
4Department of Health and Human Services to receive comments
5related to HIPAA.begin delete In preparing comments for submission to these
6entities, the office shall work in coordination with private and
7public entities to which the comments relate.end delete
The office may review
8and approve all comments related to HIPAA that state entities or
9representatives from the University of California, to the extent
10authorized by its Regents, propose for submission to the federal
11Department of Health and Human Services or any other body or
12organization.

begin delete

13(3)

end delete

14begin insert(end insertbegin insertc)end insert Monitoring the HIPAA implementationbegin insert and complianceend insert
15 activities of state entities and requiring these entities to report on
16theirbegin delete implementationend delete activities at times specified by the director
17using a format prescribed by the director. The office shall seek the
18cooperation of counties in monitoring HIPAA implementationbegin insert and
19complianceend insert
in programs that are administered by county
20government.

begin delete

21(4)

end delete

22begin insert(end insertbegin insertd)end insert Providing state entities with technical assistance as the
23director deems necessary and appropriate to advance the state’s
24implementationbegin insert and complianceend insert of HIPAA as required by the
25schedule adopted by the federal Department of Health and Human
26Services. This assistance shall also include sharing information
27obtained by the office relating to HIPAA.

begin delete

28(5) Providing the Department of Finance with recommendations
29on HIPAA implementation expenditures, including proposals
30submitted by state entities and a recommendation on the amount
31to be appropriated for allocation by the Department of Finance to
32entities implementing HIPAA.

end delete
begin delete

33(6) Conducting a periodic assessment at least once every three
34years to determine whether staff positions established in the office
35and in other state entities to perform HIPAA compliance activities
36continue to be necessary or whether additional staff positions are
37required to complete these activities.

end delete
begin delete

38(7) Reviewing and approving contracts relating to HIPAA to
39which a state entity is a party prior to the contract’s effective date.

end delete
begin delete

40(8)

end delete

P26   1begin insert(end insertbegin inserte)end insert Reviewing and approving all HIPAA legislationbegin insert and
2regulationsend insert
proposed by state entities, other than state control
3agencies, prior to the proposal’s review by any other entity and
4reviewing all analyses and positions, other than those prepared by
5state control agencies, on HIPAA related legislation being
6considered by either Congress or the Legislature.

begin delete

7(9)

end delete

8begin insert(end insertbegin insertf)end insert Ensuring state departments claim federal funding for those
9activities that qualify under federal funding criteria.

begin delete

10(10) Establishing a

end delete

11begin insert(g)end insertbegin insertend insertbegin insertMaintaining an Internetend insert Web site that is accessible to the
12public to provide information in a consistent and accessible format
13concerning state HIPAA implementation activities, timeframes
14for completing those activities, HIPAA implementation
15requirements that have been met, and the promulgation of federal
16regulations pertaining to HIPAA implementation.begin delete The office shall
17update this Web site quarterly.end delete

begin delete

18(b) In performing these functions, the office shall coordinate its
19activities with the State Office of Privacy Protection.

end delete
20begin insert

begin insertSEC. 13.end insert  

end insert

begin insertSection 130307 of the end insertbegin insertHealth and Safety Codeend insertbegin insert is
21repealed.end insert

begin delete
22

130307.  

The director shall establish an advisory committee to
23obtain information on statewide HIPAA implementation activities,
24which shall meet at a minimum of two times per year. It is the
25intent of the Legislature that the committee’s membership include
26representatives from county government, from consumers, and
27from a broad range of provider groups, such as physicians and
28surgeons, clinics, hospitals, pharmaceutical companies, health care
29service plans, disability insurers, long-term care facilities, facilities
30for the developmentally disabled, and mental health providers.
31The director shall invite key stakeholders from the federal
32government, the Judicial Council, health care advocates, nonprofit
33health care organizations, public health systems, and the private
34sector to provide information to the committee.

end delete
35begin insert

begin insertSEC. 14.end insert  

end insert

begin insertSection 130309 of the end insertbegin insertHealth and Safety Codeend insertbegin insert is
36amended to read:end insert

37

130309.  

(a) All state entities subject to HIPAA shall complete
38an assessment, in a form specified by thebegin delete office, prior to January
391, 2002,end delete
begin insert officeend insert to determine the impact of HIPAA on their
40operations.begin delete The office shall report the statewide results of the
P27   1assessment to the appropriate policy and fiscal committees of the
2Legislature on or before May 15, 2002.end delete

3(b)  begin deleteOther end delete begin insertAll end insertstate entities shall cooperate with the office to
4determine whether they are subject to HIPAA, including, but not
5limited to, providing a completed assessment as prescribed by the
6office.

7begin insert

begin insertSEC. 15.end insert  

end insert

begin insertSection 130310 of the end insertbegin insertHealth and Safety Codeend insertbegin insert is
8amended to read:end insert

9

130310.  

All state entities shall cooperate with the efforts of
10the office to monitor HIPAA implementationbegin insert and complianceend insert
11 activities and to obtain information on those activities.

12begin insert

begin insertSEC. 16.end insert  

end insert

begin insertSection 130312 of the end insertbegin insertHealth and Safety Codeend insertbegin insert is
13repealed.end insert

begin delete
14

130312.  

(a) The Department of Finance shall provide a
15complete accounting of HIPAA expenditures made by all state
16entities.

17(b) The Department of Finance, in consultation with the office,
18shall develop and annually publish prior to August 1, guidelines
19for state entities to obtain additional HIPAA funding. All funding
20requests from state entities for HIPAA implementation, including,
21but not limited to, requests for appropriations through the Budget
22Act or other legislation and requests for allocation of lump-sum
23funds from the Department of Finance, shall be reviewed and
24approved by the office prior to being submitted to the Department
25of Finance. Funding requests pertaining to information technology
26activities shall also be reviewed and approved by the Department
27of Information Technology.

28(c) The Department of Finance shall notify the office and the
29Chairperson of the Senate Committee on Budget and Fiscal Review
30and the Chairperson of the Assembly Budget Committee of each
31allocation it approves within 10 working days of the approval. The
32Department of Finance shall also report to the Legislature quarterly
33on HIPAA allocations, redirections, and expenditures, categorized
34by state entity and by project.

end delete
35begin insert

begin insertSEC. 17.end insert  

end insert

begin insertSection 130313 of the end insertbegin insertHealth and Safety Codeend insertbegin insert is
36amended to read:end insert

37

130313.  

To the extent that funds are appropriated in the annual
38Budget Act, the office shall perform the following functions in
39order to comply with HIPAA requirements:

P28   1(a) begin deleteThe establishment and ongoing end deletebegin insertOngoing end insertsupport of
2departmental HIPAA project management offices.

3(b) The development, revision, and issuance of HIPAA
4compliance policies.

5(c) Modifications of programs in accordance with any revised
6policies.

7(d) Staff training on HIPAA compliance policies and programs.

8(e) Coordination and communication with other affected entities.

begin delete

9(f) Modifications to, or replacement of, information technology
10systems.

end delete
begin insert

11
(f) Evaluate, monitor, and report on HIPAA implementation
12and compliance activities of state entities affected by HIPAA.

end insert

13(g) Consultation with appropriate stakeholders.

14begin insert

begin insertSEC. 18.end insert  

end insert

begin insertSection 138.7 of the end insertbegin insertLabor Codeend insertbegin insert, as amended by
15Section 80 of Chapter 46 of the Statutes of 2012, is amended to
16read:end insert

17

138.7.  

(a) Except as expressly permitted in subdivision (b), a
18person or public or private entity not a party to a claim for workers’
19compensation benefitsbegin delete mayend deletebegin insert shallend insert not obtain individually
20identifiable information obtained or maintained by the division on
21that claim. For purposes of this section, “individually identifiable
22information” means any data concerning an injury or claim that is
23linked to a uniquely identifiable employee, employer, claims
24administrator, or any other person or entity.

25(b) (1) (A) The administrative director, or a statistical agent
26designated by the administrative director, may use individually
27identifiable information for purposes of creating and maintaining
28the workers’ compensation information system as specified in
29Section 138.6.

30(B) The administrative director may publish the identity of
31claims administrators in the annual report disclosing the compliance
32rates of claims administrators pursuant to subdivision (d) of Section
33138.6.

34(2) (A) The State Department of Public Health may use
35individually identifiable information for purposes of establishing
36and maintaining a program on occupational health and occupational
37disease prevention as specified in Section 105175 of the Health
38and Safety Code.

39(B) (i) The State Department of Health Care Services may use
40individually identifiable information for purposes of seeking
P29   1recovery of Medi-Cal costs incurred by the state for treatment
2provided to injured workers that should have been incurred by
3employers and insurance carriers pursuant to Article 3.5
4(commencing with Section 14124.70) of Chapter 7 of Part 3 of
5Division 9 of the Welfare and Institutions Code.

6(ii) The Department of Industrial Relations shall furnish
7individually identifiable information to the State Department of
8Health Care Services, and the State Department of Health Care
9Services may furnish the information to its designated agent,
10provided that the individually identifiable information shall not
11be disclosed for use other than the purposes described in clause
12(i). The administrative director may adopt regulations solely for
13the purpose of governing access by the State Department of Health
14Care Services or its designated agents to the individually
15identifiable information as defined in subdivision (a).

16(3) (A) Individually identifiable information may be used by
17the Division of Workers’ Compensation and the Division of
18Occupational Safety and Health as necessary to carry out their
19duties. The administrative director shall adopt regulations
20governing the access to the information described in this
21subdivision by these divisions. Any regulations adopted pursuant
22to this subdivision shall set forth the specific uses for which this
23information may be obtained.

24(B) Individually identifiable information maintained in the
25workers’ compensation information system and the Division of
26Workers’ Compensation may be used by researchers employed by
27or under contract to the Commission on Health and Safety and
28Workers’ Compensation as necessary to carry out the commission’s
29research. The administrative director shall adopt regulations
30governing the access to the information described in this
31subdivision by commission researchers. These regulations shall
32set forth the specific uses for which this information may be
33obtained and include provisions guaranteeing the confidentiality
34of individually identifiable information. Individually identifiable
35information obtained under this subdivision shall not be disclosed
36to commission members. No individually identifiable information
37obtained by researchers under contract to the commission pursuant
38to this subparagraph may be disclosed to any other person or entity,
39public or private, for a use other than that research project for
40which the information was obtained. Within a reasonable period
P30   1of time after the research for which the information was obtained
2has been completed, the data collected shall be modified in a
3manner so that the subjects cannot be identified, directly or through
4identifiers linked to the subjects.

5(4) The administrative director shall adopt regulations allowing
6reasonable access to individually identifiable information by other
7persons or public or private entities for the purpose of bona fide
8statistical research. This research shall not divulge individually
9identifiable information concerning a particular employee,
10employer, claims administrator, or any other person or entity. The
11regulations adopted pursuant to this paragraph shall include
12provisions guaranteeing the confidentiality of individually
13identifiable information. Within a reasonable period of time after
14the research for which the information was obtained has been
15completed, the data collected shall be modified in a manner so that
16the subjects cannot be identified, directly or through identifiers
17linked to the subjects.

18(5) (A) This section shall not operate to exempt from disclosure
19any information that is considered to be a public record pursuant
20to the California Public Records Act (Chapter 3.5 (commencing
21with Section 6250) of Division 7 of Title 1 of the Government
22Code) contained in an individual’s file once an application for
23adjudication has been filed pursuant to Section 5501.5.

24(B) begin deleteHowever, individually end deletebegin insertIndividually end insertidentifiable information
25shall not be provided to any person or public or private entity who
26is not a party to the claim unless that person identifies himself or
27herself or that public or private entity identifies itself and states
28the reason for making the request. The administrative director may
29require the person or public or private entity making the request
30to produce information to verify that the name and address of the
31requester is valid and correct. If the purpose of the request is related
32to preemployment screening, the administrative director shall
33notify the person about whom the information is requested that
34the information was provided and shall include the following in
3512-point type:


37“IT MAY BE A VIOLATION OF FEDERAL AND STATE
38LAW TO DISCRIMINATE AGAINST A JOB APPLICANT
39BECAUSE THE APPLICANT HAS FILED A CLAIM FOR
40WORKERS’ COMPENSATION BENEFITS.”


P31   2(C) Any residence address is confidential and shall not be
3disclosed to any person or public or private entity except to a party
4to the claim, a law enforcement agency, an office of a district
5attorney, any person for a journalistic purpose, or other
6governmental agency.

7(D) begin deleteNothing in this end deletebegin insertThis end insertparagraphbegin delete shall be construed toend deletebegin insert does
8notend insert
prohibit the use of individually identifiable information for
9purposes of identifying bona fide lien claimants.

10(c) Except as provided in subdivision (b), individually
11identifiable information obtained by the division is privileged and
12is not subject to subpoena in a civil proceeding unless, after
13reasonable notice to the division and a hearing, a court determines
14that the public interest and the intent of this section will not be
15jeopardized by disclosure of the information. This section shall
16not operate to restrict access to information by any law enforcement
17agency or district attorney’s office or to limit admissibility of that
18information in a criminal proceeding.

19(d) Itbegin delete shall beend deletebegin insert isend insert unlawful for any person who has received
20individually identifiable information from the division pursuant
21to this section to provide that information to any person who is
22not entitled to it under this section.

begin delete

23(e) This section shall remain in effect only until January 1, 2017,
24and as of that date is repealed, unless a later enacted statute, that
25is enacted before January 1, 2017, deletes or extends that date.

end delete
26begin insert

begin insertSEC. 19.end insert  

end insert

begin insertSection 138.7 of the end insertbegin insertLabor Codeend insertbegin insert, as amended by
27Section 81 of Chapter 46 of the Statutes of 2012, is repealed.end insert

begin delete
28

138.7.  

(a) Except as expressly permitted in subdivision (b), a
29person or public or private entity not a party to a claim for workers’
30compensation benefits may not obtain individually identifiable
31information obtained or maintained by the division on that claim.
32For purposes of this section, “individually identifiable information”
33means any data concerning an injury or claim that is linked to a
34uniquely identifiable employee, employer, claims administrator,
35or any other person or entity.

36(b) (1) (A) The administrative director, or a statistical agent
37designated by the administrative director, may use individually
38identifiable information for purposes of creating and maintaining
39the workers’ compensation information system as specified in
40Section 138.6.

P32   1(B) The administrative director may publish the identity of
2claims administrators in the annual report disclosing the compliance
3rates of claims administrators pursuant to subdivision (d) of Section
4138.6.

5(2) The State Department of Public Health may use individually
6identifiable information for purposes of establishing and
7maintaining a program on occupational health and occupational
8disease prevention as specified in Section 105175 of the Health
9and Safety Code.

10(3) (A) Individually identifiable information may be used by
11the Division of Workers’ Compensation and the Division of
12Occupational Safety and Health as necessary to carry out their
13duties. The administrative director shall adopt regulations
14governing the access to the information described in this
15subdivision by these divisions. Any regulations adopted pursuant
16to this subdivision shall set forth the specific uses for which this
17information may be obtained.

18(B) Individually identifiable information maintained in the
19workers’ compensation information system and the Division of
20Workers’ Compensation may be used by researchers employed by
21or under contract to the Commission on Health and Safety and
22Workers’ Compensation as necessary to carry out the commission’s
23research. The administrative director shall adopt regulations
24governing the access to the information described in this
25subdivision by commission researchers. These regulations shall
26set forth the specific uses for which this information may be
27obtained and include provisions guaranteeing the confidentiality
28of individually identifiable information. Individually identifiable
29information obtained under this subdivision shall not be disclosed
30to commission members. No individually identifiable information
31obtained by researchers under contract to the commission pursuant
32to this subparagraph may be disclosed to any other person or entity,
33public or private, for a use other than that research project for
34which the information was obtained. Within a reasonable period
35of time after the research for which the information was obtained
36has been completed, the data collected shall be modified in a
37manner so that the subjects cannot be identified, directly or through
38identifiers linked to the subjects.

39(4) The administrative director shall adopt regulations allowing
40reasonable access to individually identifiable information by other
P33   1persons or public or private entities for the purpose of bona fide
2statistical research. This research shall not divulge individually
3identifiable information concerning a particular employee,
4employer, claims administrator, or any other person or entity. The
5 regulations adopted pursuant to this paragraph shall include
6provisions guaranteeing the confidentiality of individually
7identifiable information. Within a reasonable period of time after
8the research for which the information was obtained has been
9completed, the data collected shall be modified in a manner so that
10the subjects cannot be identified, directly or through identifiers
11linked to the subjects.

12(5) (A) This section shall not operate to exempt from disclosure
13any information that is considered to be a public record pursuant
14to the California Public Records Act (Chapter 3.5 (commencing
15with Section 6250) of Division 7 of Title 1 of the Government
16Code) contained in an individual’s file once an application for
17adjudication has been filed pursuant to Section 5501.5.

18(B) However, individually identifiable information shall not be
19provided to any person or public or private entity who is not a
20party to the claim unless that person identifies himself or herself
21or that public or private entity identifies itself and states the reason
22for making the request. The administrative director may require
23the person or public or private entity making the request to produce
24information to verify that the name and address of the requester
25is valid and correct. If the purpose of the request is related to
26preemployment screening, the administrative director shall notify
27the person about whom the information is requested that the
28information was provided and shall include the following in
2912-point type:


31“IT MAY BE A VIOLATION OF FEDERAL AND STATE
32LAW TO DISCRIMINATE AGAINST A JOB APPLICANT
33BECAUSE THE APPLICANT HAS FILED A CLAIM FOR
34WORKERS’ COMPENSATION BENEFITS.”
35


36(C) Any residence address is confidential and shall not be
37disclosed to any person or public or private entity except to a party
38to the claim, a law enforcement agency, an office of a district
39attorney, any person for a journalistic purpose, or other
40governmental agency.

P34   1(D) Nothing in this paragraph shall be construed to prohibit the
2use of individually identifiable information for purposes of
3identifying bona fide lien claimants.

4(c) Except as provided in subdivision (b), individually
5identifiable information obtained by the division is privileged and
6is not subject to subpoena in a civil proceeding unless, after
7reasonable notice to the division and a hearing, a court determines
8that the public interest and the intent of this section will not be
9jeopardized by disclosure of the information. This section shall
10not operate to restrict access to information by any law enforcement
11agency or district attorney’s office or to limit admissibility of that
12information in a criminal proceeding.

13(d) It shall be unlawful for any person who has received
14individually identifiable information from the division pursuant
15to this section to provide that information to any person who is
16not entitled to it under this section.

17(e) This section shall become operative on January 1, 2017.

end delete
18begin insert

begin insertSEC. 20.end insert  

end insert

begin insertSection 5848.5 of the end insertbegin insertWelfare and Institutions Codeend insert
19
begin insert is amended to read:end insert

20

5848.5.  

(a) The Legislature finds and declares all of the
21following:

22(1) California has realigned public community mental health
23services to counties and it is imperative that sufficient
24community-based resources be available to meet the mental health
25needs of eligible individuals.

26(2) Increasing access to effective outpatient and crisis
27stabilization services provides an opportunity to reduce costs
28associated with expensive inpatient and emergency room care and
29to better meet the needs of individuals with mental health disorders
30in the least restrictive manner possible.

31(3) Almost one-fifth of people with mental health disorders visit
32a hospital emergency room at least once per year. If an adequate
33array of crisis services is not available, it leaves an individual with
34little choice but to access an emergency room for assistance and,
35potentially, an unnecessary inpatient hospitalization.

36(4) Recent reports have called attention to a continuing problem
37of inappropriate and unnecessary utilization of hospital emergency
38rooms in California due to limited community-based services for
39individuals in psychological distress and acute psychiatric crisis.
40Hospitals report that 70 percent of people taken to emergency
P35   1rooms for psychiatric evaluation can be stabilized and transferred
2to a less intensive level of crisis care. Law enforcement personnel
3report that their personnel need to stay with people in the
4emergency room waiting area until a placement is found, and that
5less intensive levels of care tend not to be available.

6(5) Comprehensive public and private partnerships at both local
7and regional levels, including across physical health services,
8mental health, substance use disorder, law enforcement, social
9services, and related supports, are necessary to develop and
10maintain high quality, patient-centered, and cost-effective care for
11individuals with mental health disorders that facilitates their
12recovery and leads towards wellness.

13(6) The recovery of individuals with mental health disorders is
14important for all levels of government, business, and the local
15community.

16(b) This section shall be known, and may be cited, as the
17Investment in Mental Health Wellness Act of 2013. The objectives
18of this section are to do all of the following:

19(1) Expand access to early intervention and treatment services
20to improve the client experience, achieve recovery and wellness,
21and reduce costs.

22(2) Expand the continuum of services to address crisis
23intervention, crisis stabilization, and crisis residential treatment
24needs that are wellness, resiliency, and recovery oriented.

25(3) Add at least 25 mobile crisis support teams and at least 2,000
26crisis stabilization and crisis residential treatment beds to bolster
27capacity at the local level to improve access to mental health crisis
28services and address unmet mental health care needs.

29(4) Add at least 600 triage personnel to provide intensive case
30management and linkage to services for individuals with mental
31health care disorders at various points of access, such as at
32designated community-based service points, homeless shelters,
33and clinics.

34(5) Reduce unnecessary hospitalizations and inpatient days by
35appropriately utilizing community-based services and improving
36access to timely assistance.

37(6) Reduce recidivism and mitigate unnecessary expenditures
38of local law enforcement.

39(7) Provide local communities with increased financial resources
40to leverage additional public and private funding sources to achieve
P36   1improved networks of care for individuals with mental health
2disorders.

begin insert

3
(8) Provide a complete continuum of crisis services for children
4and youth 21 years of age and under regardless of where they live
5in the state. The funds included in the 2016 Budget Act for the
6purpose of developing the continuum of mental health crisis
7services for children and youth 21 years of age and under shall
8be for the following objectives:

end insert
begin insert

9
(A) Provide a continuum of crisis services for children and
10youth 21 years of age and under regardless of where they live in
11the state.

end insert
begin insert

12
(B) Provide for early intervention and treatment services to
13improve the client experience, achieve recovery and wellness, and
14reduce costs.

end insert
begin insert

15
(C) Expand the continuum of community-based services to
16address crisis intervention, crisis stabilization, and crisis
17residential treatment needs that are wellness-, resiliency-, and
18recovery-oriented.

end insert
begin insert

19
(D) Add at least 200 mobile crisis support teams.

end insert
begin insert

20
(E) Add at least 120 crisis stabilization services and beds and
21crisis residential treatment beds to increase capacity at the local
22level to improve access to mental health crisis services and address
23unmet mental health care needs.

end insert
begin insert

24
(F) Add triage personnel to provide intensive case management
25and linkage to services for individuals with mental health care
26disorders at various points of access, such as at designated
27community-based service points, homeless shelters, schools, and
28clinics.

end insert
begin insert

29
(G) Expand family respite care to help families and sustain
30caregiver health and well-being.

end insert
begin insert

31
(H) Expand family supportive training and related services
32designed to help families participate in the planning process,
33access services, and navigate programs.

end insert
begin insert

34
(I) Reduce unnecessary hospitalizations and inpatient days by
35appropriately utilizing community-based services.

end insert
begin insert

36
(J) Reduce recidivism and mitigate unnecessary expenditures
37of local law enforcement.

end insert
begin insert

38
(K) Provide local communities with increased financial
39resources to leverage additional public and private funding sources
P37   1to achieve improved networks of care for children and youth 21
2years of age and under with mental health disorders.

end insert

3(c) Through appropriations provided in the annual Budget Act
4for this purpose, it is the intent of the Legislature to authorize the
5California Health Facilities Financing Authority, hereafter referred
6to as the authority, and the Mental Health Services Oversight and
7Accountability Commission, hereafter referred to as the
8commission, to administer competitive selection processes as
9provided in this section for capital capacity and program expansion
10to increase capacity for mobile crisis support, crisis intervention,
11crisis stabilization services, crisis residential treatment, and
12specified personnel resources.

13(d) Funds appropriated by the Legislature to the authority for
14purposes of this section shall be made available to selected
15counties, or counties acting jointly. The authority may, at its
16discretion, also give consideration to private nonprofit corporations
17and public agencies in an area or region of the state if a county, or
18counties acting jointly, affirmatively supports this designation and
19collaboration in lieu of a county government directly receiving
20grant funds.

21(1) Grant awards made by the authority shall be used to expand
22local resources for the development, capital, equipment acquisition,
23and applicable program startup or expansion costs to increase
24capacity for client assistance and services in the following areas:

25(A) Crisis intervention, as authorized by Sections 14021.4,
2614680, and 14684.

27(B) Crisis stabilization, as authorized by Sections 14021.4,
2814680, and 14684.

29(C) Crisis residential treatment, as authorized by Sections
3014021.4, 14680, and 14684.

31(D) Rehabilitative mental health services, as authorized by
32Sections 14021.4, 14680, and 14684.

33(E) Mobile crisis support teams, including personnel and
34equipment, such as the purchase of vehicles.

35(2) The authority shall develop selection criteria to expand local
36 resources, including those described in paragraph (1), and processes
37for awarding grants after consulting with representatives and
38interested stakeholders from the mental health community,
39including, but not limited to, the County Behavioral Health
40Directors Association of California, service providers, consumer
P38   1organizations, and other appropriate interests, such as health care
2providers and law enforcement, as determined by the authority.
3The authority shall ensure that grants result in cost-effective
4expansion of the number of community-based crisis resources in
5regions and communities selected for funding. The authority shall
6also take into account at least the following criteria and factors
7when selecting recipients of grants and determining the amount
8of grant awards:

9(A) Description of need, including, at a minimum, a
10comprehensive description of the project, community need,
11population to be served, linkage with other public systems of health
12and mental health care, linkage with local law enforcement, social
13services, and related assistance, as applicable, and a description
14of the request for funding.

15(B) Ability to serve the target population, which includes
16individuals eligible for Medi-Cal and individuals eligible for county
17health and mental health services.

18(C) Geographic areas or regions of the state to be eligible for
19grant awards, which may include rural, suburban, and urban areas,
20and may include use of the five regional designations utilized by
21the County Behavioral Health Directors Association of California.

22(D) Level of community engagement and commitment to project
23completion.

24(E) Financial support that, in addition to a grant that may be
25awarded by the authority, will be sufficient to complete and operate
26the project for which the grant from the authority is awarded.

27(F) Ability to provide additional funding support to the project,
28including public or private funding, federal tax credits and grants,
29foundation support, and other collaborative efforts.

30(G) Memorandum of understanding among project partners, if
31applicable.

32(H) Information regarding the legal status of the collaborating
33partners, if applicable.

34(I) Ability to measure key outcomes, including improved access
35to services, health and mental health outcomes, and cost benefit
36of the project.

37(3) The authority shall determine maximum grants awards,
38which shall take into consideration the number of projects awarded
39to the grantee, as described in paragraph (1), and shall reflect
40reasonable costs for the project and geographic region. The
P39   1authority may allocate a grant in increments contingent upon the
2phases of a project.

3(4) Funds awarded by the authority pursuant to this section may
4be used to supplement, but not to supplant, existing financial and
5resource commitments of the grantee or any other member of a
6collaborative effort that has been awarded a grant.

7(5) All projects that are awarded grants by the authority shall
8be completed within a reasonable period of time, to be determined
9by the authority. Funds shall not be released by the authority until
10the applicant demonstrates project readiness to the authority’s
11satisfaction. If the authority determines that a grant recipient has
12failed to complete the project under the terms specified in awarding
13the grant, the authority may require remedies, including the return
14of all or a portion of the grant.

15(6) A grantee that receives a grant from the authority under this
16section shall commit to using that capital capacity and program
17expansion project, such as the mobile crisis team, crisis
18stabilization unit, or crisis residential treatment program, for the
19duration of the expected life of the project.

20(7) The authority may consult with a technical assistance entity,
21as described in paragraph (5) of subdivision (a) of Section 4061,
22for purposes of implementing this section.

23(8) The authority may adopt emergency regulations relating to
24the grants for the capital capacity and program expansion projects
25described in this section, including emergency regulations that
26define eligible costs and determine minimum and maximum grant
27 amounts.

28(9) The authority shall provide reports to the fiscal and policy
29committees of the Legislature on or before May 1, 2014, and on
30or before May 1, 2015, on the progress of implementation, that
31include, but are not limited to, the following:

32(A) A description of each project awarded funding.

33(B) The amount of each grant issued.

34(C) A description of other sources of funding for each project.

35(D) The total amount of grants issued.

36(E) A description of project operation and implementation,
37including who is being served.

38(10) A recipient of a grant provided pursuant to paragraph (1)
39shall adhere to all applicable laws relating to scope of practice,
40licensure, certification, staffing, and building codes.

begin insert

P40   1
(e) Of the funds specified in paragraph (8) of subdivision (b),
2it is the intent of the Legislature to authorize the authority and the
3commission to administer competitive selection processes as
4provided in this section for capital capacity and program expansion
5to increase capacity for mobile crisis support, crisis intervention,
6crisis stabilization services, crisis residential treatment, family
7respite care, family supportive training and related services, and
8triage personnel resources for children and youth 21 years of age
9and under.

end insert
begin insert

10
(f) Funds appropriated by the Legislature to the authority to
11address crisis services for children and youth 21 years of age and
12under for the purposes of this section shall be made available to
13selected counties or counties acting jointly. The authority may, at
14its discretion, also give consideration to private nonprofit
15corporations and public agencies in an area or region of the state
16if a county, or counties acting jointly, affirmatively support this
17designation and collaboration in lieu of a county government
18directly receiving grant funds.

end insert
begin insert

19
(1) Grant awards made by the authority shall be used to expand
20local resources for the development, capital, equipment acquisition,
21and applicable program startup or expansion costs to increase
22capacity for client assistance and crisis services for children and
23youth 21 years of age and under in the following areas:

end insert
begin insert

24
(A) Crisis intervention, as authorized by Sections 14021.4,
2514680, and 14684.

end insert
begin insert

26
(B) Crisis stabilization, as authorized by Sections 14021.4,
2714680, and 14684.

end insert
begin insert

28
(C) Crisis residential treatment, as authorized by Sections
2914021.4, 14680, and 14684.

end insert
begin insert

30
(D) Mobile crisis support teams, including the purchase of
31equipment and vehicles.

end insert
begin insert

32
(E) Family respite care.

end insert
begin insert

33
(2) The authority shall develop selection criteria to expand local
34resources, including those described in paragraph (1), and
35processes for awarding grants after consulting with representatives
36and interested stakeholders from the mental health community,
37including, but not limited to, county mental health directors, service
38providers, consumer organizations, and other appropriate interests,
39such as health care providers and law enforcement, as determined
40by the authority. The authority shall ensure that grants result in
P41   1cost-effective expansion of the number of community-based crisis
2resources in regions and communities selected for funding. The
3authority shall also take into account at least the following criteria
4and factors when selecting recipients of grants and determining
5the amount of grant awards:

end insert
begin insert

6
(A) Description of need, including, at a minimum, a
7comprehensive description of the project, community need,
8population to be served, linkage with other public systems of health
9and mental health care, linkage with local law enforcement, social
10services, and related assistance, as applicable, and a description
11of the request for funding.

end insert
begin insert

12
(B) Ability to serve the target population, which includes
13individuals eligible for Medi-Cal and individuals eligible for county
14health and mental health services.

end insert
begin insert

15
(C) Geographic areas or regions of the state to be eligible for
16grant awards, which may include rural, suburban, and urban
17areas, and may include use of the five regional designations utilized
18by the California Behavioral Health Directors Association.

end insert
begin insert

19
(D) Level of community engagement and commitment to project
20completion.

end insert
begin insert

21
(E) Financial support that, in addition to a grant that may be
22awarded by the authority, will be sufficient to complete and operate
23the project for which the grant from the authority is awarded.

end insert
begin insert

24
(F) Ability to provide additional funding support to the project,
25including public or private funding, federal tax credits and grants,
26foundation support, and other collaborative efforts.

end insert
begin insert

27
(G) Memorandum of understanding among project partners, if
28applicable.

end insert
begin insert

29
(H) Information regarding the legal status of the collaborating
30partners, if applicable.

end insert
begin insert

31
(I) Ability to measure key outcomes, including utilization of
32services, health and mental health outcomes, and cost benefit of
33the project.

end insert
begin insert

34
(3) The authority shall determine maximum grant awards, which
35shall take into consideration the number of projects awarded to
36the grantee, as described in paragraph (1), and shall reflect
37reasonable costs for the project, geographic region, and target
38ages. The authority may allocate a grant in increments contingent
39upon the phases of a project.

end insert
begin insert

P42   1
(4) Funds awarded by the authority pursuant to this section
2may be used to supplement, but not to supplant, existing financial
3and resource commitments of the grantee or any other member of
4a collaborative effort that has been awarded a grant.

end insert
begin insert

5
(5) All projects that are awarded grants by the authority shall
6be completed within a reasonable period of time, to be determined
7by the authority. Funds shall not be released by the authority until
8the applicant demonstrates project readiness to the authority’s
9satisfaction. If the authority determines that a grant recipient has
10failed to complete the project under the terms specified in awarding
11the grant, the authority may require remedies, including the return
12of all, or a portion, of the grant.

end insert
begin insert

13
(6) A grantee that receives a grant from the authority under this
14section shall commit to using that capital capacity and program
15expansion project, such as the mobile crisis team, crisis
16stabilization unit, family respite care, or crisis residential treatment
17program, for the duration of the expected life of the project.

end insert
begin insert

18
(7) The authority may consult with a technical assistance entity,
19as described in paragraph (5) of subdivision (a) of Section 4061,
20for the purposes of implementing this section.

end insert
begin insert

21
(8) The authority may adopt emergency regulations relating to
22the grants for the capital capacity and program expansion projects
23described in this section, including emergency regulations that
24define eligible costs and determine minimum and maximum grant
25amounts.

end insert
begin insert

26
(9) The authority shall provide reports to the fiscal and policy
27committees of the Legislature on or before January 10, 2018, and
28annually thereafter, on the progress of implementation, that
29include, but are not limited to, the following:

end insert
begin insert

30
(A) A description of each project awarded funding.

end insert
begin insert

31
(B) The amount of each grant issued.

end insert
begin insert

32
(C) A description of other sources of funding for each project.

end insert
begin insert

33
(D) The total amount of grants issued.

end insert
begin insert

34
(E) A description of project operation and implementation,
35including who is being served.

end insert
begin insert

36
(10) A recipient of a grant provided pursuant to paragraph (1)
37shall adhere to all applicable laws relating to scope of practice,
38licensure, certification, staffing, and building codes.

end insert
begin delete

39(e)

end delete

P43   1begin insert(g)end insert Funds appropriated by the Legislature to the commission
2for purposes of this section shall be allocated for triage personnel
3to provide intensive case management and linkage to services for
4individuals with mental health disorders at various points of access.
5These funds shall be made available to selected counties, counties
6acting jointly, or city mental health departments, as determined
7by the commission through a selection process. It is the intent of
8the Legislature for these funds to be allocated in an efficient manner
9to encourage early intervention and receipt of needed services for
10individuals with mental health disorders, and to assist in navigating
11the local service sector to improve efficiencies and the delivery of
12services.

13(1) Triage personnel may provide targeted case management
14services face to face, by telephone, or by telehealth with the
15individual in need of assistance or his or her significant support
16person, and may be provided anywhere in the community. These
17service activities may include, but are not limited to, the following:

18(A) Communication, coordination, and referral.

19(B) Monitoring service delivery to ensure the individual accesses
20and receives services.

21(C) Monitoring the individual’s progress.

22(D) Providing placement service assistance and service plan
23development.

24(2) The commission shall take into account at least the following
25criteria and factors when selecting recipients and determining the
26amount of grant awards for triage personnel as follows:

27(A) Description of need, including potential gaps in local service
28connections.

29(B) Description of funding request, including personnel and use
30of peer support.

31(C) Description of how triage personnel will be used to facilitate
32linkage and access to services, including objectives and anticipated
33outcomes.

34(D) Ability to obtain federal Medicaid reimbursement, when
35applicable.

36(E) Ability to administer an effective service program and the
37degree to which local agencies and service providers will support
38and collaborate with the triage personnel effort.

39(F) Geographic areas or regions of the state to be eligible for
40grant awards, which shall include rural, suburban, and urban areas,
P44   1and may include use of the five regional designations utilized by
2the County Behavioral Health Directors Association of California.

3(3) The commission shall determine maximum grant awards,
4and shall take into consideration the level of need, population to
5be served, and related criteria, as described in paragraph (2), and
6shall reflect reasonable costs.

7(4) Funds awarded by the commission for purposes of this
8section may be used to supplement, but not supplant, existing
9financial and resource commitments of the county, counties acting
10jointly, or city mental health department that received the grant.

11(5) Notwithstanding any other law, a county, counties acting
12jointly, or city mental health department that receives an award of
13funds for the purpose of supporting triage personnel pursuant to
14this subdivision is not required to provide a matching contribution
15of local funds.

16(6) Notwithstanding any other law, the commission, without
17taking any further regulatory action, may implement, interpret, or
18make specific this section by means of informational letters,
19bulletins, or similar instructions.

20(7) The commission shall provide a status report to the fiscal
21and policy committees of the Legislature on the progress of
22implementation no later than March 1, 2014.

begin insert

23
(h) Funds appropriated by the Legislature to the commission
24pursuant to paragraph (8) of subdivision (b) for the purposes of
25addressing children’s crisis services shall be allocated to support
26triage personnel and family supportive training and related
27services. These funds shall be made available to selected counties,
28counties acting jointly, or city mental health departments, as
29determined by the commission through a selection process. The
30commission may, at its discretion, also give consideration to
31private nonprofit corporations and public agencies in an area or
32region of the state if a county, or counties acting jointly,
33affirmatively supports this designation and collaboration in lieu
34of a county government directly receiving grant funds.

end insert
begin insert

35
(1) These funds may provide for a range of crisis-related
36services for a child in need of assistance, or his or her parent,
37guardian, or caregiver. These service activities may include, but
38are not limited to, the following:

end insert
begin insert

39
(A) Intensive coordination of care and services.

end insert
begin insert

40
(B) Communication, coordination, and referral.

end insert
begin insert

P45   1
(C) Monitoring service delivery to the child or youth.

end insert
begin insert

2
(D) Monitoring the child’s progress.

end insert
begin insert

3
(E) Providing placement service assistance and service plan
4development.

end insert
begin insert

5
(F) Crisis or safety planning.

end insert
begin insert

6
(2) The commission shall take into account at least the following
7criteria and factors when selecting recipients and determining the
8amount of grant awards for these funds, as follows:

end insert
begin insert

9
(A) Description of need, including potential gaps in local service
10connections.

end insert
begin insert

11
(B) Description of funding request, including personnel.

end insert
begin insert

12
(C) Description of how personnel and other services will be
13used to facilitate linkage and access to services, including
14objectives and anticipated outcomes.

end insert
begin insert

15
(D) Ability to obtain federal Medicaid reimbursement, when
16applicable.

end insert
begin insert

17
(E) Ability to provide a matching contribution of local funds.

end insert
begin insert

18
(F) Ability to administer an effective service program and the
19degree to which local agencies and service providers will support
20and collaborate with the triage personnel effort.

end insert
begin insert

21
(G) Geographic areas or regions of the state to be eligible for
22grant awards, which shall include rural, suburban, and urban
23areas, and may include use of the five regional designations utilized
24by the County Behavioral Health Directors Association of
25California.

end insert
begin insert

26
(3) The commission shall determine maximum grant awards,
27and shall take into consideration the level of need, population to
28be served, and related criteria, as described in paragraph (2), and
29shall reflect reasonable costs.

end insert
begin insert

30
(4) Funds awarded by the commission for purposes of this
31section may be used to supplement, but not supplant, existing
32financial and resource commitments of the county, counties acting
33jointly, or a city mental health department that received the grant.

end insert
begin insert

34
(5) Notwithstanding any other law, a county, counties acting
35jointly, or a city mental health department that receives an award
36of funds for the purpose of this section is not required to provide
37a matching contribution of local funds.

end insert
begin insert

38
(6) Notwithstanding any other law, the commission, without
39taking any further regulatory action, may implement, interpret, or
P46   1make specific this section by means of informational letters,
2bulletins, or similar instructions.

end insert
begin insert

3
(7) The commission may waive requirements in this section for
4counties with a population of 100,000 or less, if the commission
5determines it is in the best interest of the state and meets the intent
6of the law.

end insert
begin insert

7
(8) The commission shall provide a status report to the fiscal
8and policy committees of the Legislature on the progress of
9implementation no later than January 10, 2018, and annually
10thereafter.

end insert
11begin insert

begin insertSEC. 21.end insert  

end insert

begin insertSection 10752 of the end insertbegin insertWelfare and Institutions Codeend insert
12
begin insert is amended to read:end insert

13

10752.  

The department shall, by March 1, 2017, in coordination
14with the Department of Finance,begin delete develop a funding plan that
15ensures adequate reimbursement to emergency medical air
16transportation providers followingend delete
begin insert notify the Legislature of the
17fiscal impact on the Medi-Cal program resulting from, and the
18planned reimbursement methodology for emergency medical air
19transportation services after,end insert
the termination of penalty
20assessments pursuant to subdivision (f) of Section 76000.10 of the
21Government Code on January 1, 2018.

22begin insert

begin insertSEC. 22.end insert  

end insert

begin insertSection 14009.5 of the end insertbegin insertWelfare and Institutions Codeend insert
23
begin insert is amended to read:end insert

24

14009.5.  

(a) begin deleteNotwithstanding end deletebegin insertIt is the intent of the Legislature,
25with the amendments made to this section by the act that added
26subdivision (g), to do all of the following:end insert

begin insert

27
(1) Limit Medi-Cal estate recovery only for those services
28required to be collected under federal law.

end insert
begin insert

29
(2) Limit the definition of “estate” to include only the real and
30personal property and other assets required to be collected under
31federal law.

end insert
begin insert

32
(3) Require the State Department of Health Care Services to
33implement the option in the State Medicaid Manual to waive its
34claim, as a substantial hardship, when the estate subject to
35recovery is a homestead of modest value, subject to federal
36approval.

end insert
begin insert

37
(4) Prohibit recovery from the estate of a deceased Medi-Cal
38member who is survived by a spouse or registered domestic
39partner.

end insert
begin insert

P47   1
(5) Ensure that Medi-Cal members can easily and timely receive
2information about how much their estate may owe Medi-Cal when
3they die.

end insert

4begin insert(b)end insertbegin insertend insertbegin insertNotwithstanding end insertany other provision of this chapter, the
5department shall claim against the estate of the decedent, or against
6any recipient of the property of that decedent bybegin delete distribution or
7survivalend delete
begin insert distribution,end insert an amount equal to the payments for the
8health care services received or the value of the property received
9by any recipient from the decedent bybegin delete distribution or survival,
10whichever is less.end delete
begin insert distribution, whichever is less, only in either of
11the following circumstances:end insert

begin delete

12(b) The department may not claim in any of the following
13circumstances:

end delete
begin delete

14(1) The decedent was under 55 when services were received,
15except in the case of an individual who had been an inpatient in a
16nursing facility.

end delete
begin delete

17(2) Where there is any of the following:

end delete
begin insert

18
(1) Against the real property of a Medi-Cal member of any age
19who meets the criteria in Section 1396p(a)(1)(B) of Title 42 of the
20United States Code and who was or is an inpatient in a nursing
21facility in accordance with Section 1396p(b)(1)(A) of Title 42 of
22the United States Code.

end insert
begin insert

23
(2) (A) The decedent was 55 years of age or older when the
24individual received health care services.

end insert
begin insert

25
(B) The department shall not claim under this paragraph when
26there is any of the following:

end insert
begin delete

27(A)

end delete

28begin insert(end insertbegin inserti)end insert A surviving begin delete spouse during his or her lifetime. However, upon
29the death of a surviving spouse, the department shall make a claim
30against the estate of the surviving spouse, or against any recipient
31of property from the surviving spouse obtained by distribution or
32survival, for either the amount paid for the medical assistance
33given to the decedent or the value of any of the decedent’s property
34received by the surviving spouse through distribution or survival,
35whichever is less. Any statute of limitations that purports to limit
36the ability to recover for medical assistance granted under this
37chapter shall not apply to any claim made for reimbursement.end delete

38
begin insert spouse or surviving registered domestic partner.end insert

begin delete

39(B)

end delete

40begin insert(ii)end insert A surviving child who is underbegin delete age 21.end deletebegin insert 21 years of age.end insert

begin delete

P48   1(C)

end delete

2begin insert(iii)end insert A surviving child who is blind orbegin delete permanently and totallyend delete
3 disabled, within the meaning of Section 1614 of the federal Social
4Security Act (42begin delete U.S.C.A.end deletebegin insert U.S.C.end insert Sec. 1382c).

begin delete

5(3) Any exemption described in paragraph (2) that restricts the
6department from filing a claim against a decedent’s property shall
7apply only to the proportionate share of the decedent’s estate or
8property that passes to those recipients, by survival or distribution,
9who qualify for an exemption under paragraph (2).

end delete

10(c) (1) The department shall waive its claim, in whole or in
11part, if it determines that enforcement of the claim would result in
12substantial hardship to other dependents, heirs, or survivors of the
13individual against whose estate the claim exists.

begin insert

14
(2) In determining the existence of substantial hardship, in
15addition to other factors considered by the department consistent
16with federal law and guidance, the department shall, subject to
17federal approval, waive its claim when the estate subject to
18recovery is a homestead of modest value.

end insert
begin delete

19(2)

end delete

20begin insert(end insertbegin insert3)end insert The department shall notify individuals of the waiver
21provision and the opportunity for a hearing to establish that a
22waiver should be granted.

begin insert

23
(d) If the department proposes and accepts a voluntary postdeath
24lien, the voluntary postdeath lien shall accrue interest at the rate
25equal to the annual average rate earned on investments in the
26Surplus Money Investment Fund in the calendar year preceding
27the year in which the decedent died or simple interest at 7 percent
28per annum, whichever is lower.

end insert
begin insert

29
(e) (1) The department shall provide a current or former
30member, or his or her authorized representative designated under
31Section 14014.5, upon request, a copy of the amount of Medi-Cal
32expenses that may be recoverable under this section through the
33date of the request. The information may be requested once per
34calendar year for a fee to cover the department’s reasonable
35administrative costs, not to exceed five dollars ($5) if the current
36or former member meets either of the following descriptions:

end insert
begin insert

37
(A) An individual who is 55 years of age or older when the
38individual received health care services.

end insert
begin insert

P49   1
(B) A permanently institutionalized individual who is an
2inpatient in a nursing facility, intermediate care facility for the
3intellectually disabled, or other medical institution.

end insert
begin insert

4
(2) The department shall permit a member to request the
5information described in paragraph (1) through the Internet, by
6telephone, by mail, or through other commonly available electronic
7means. Upon receipt of the request for information described in
8paragraph (1), the department shall work with the member to
9ensure that the member submits documentation necessary to
10identify the individual and process the member’s request.

end insert
begin insert

11
(3) The department shall conspicuously post on its Internet Web
12site a description of the methods by which a request under this
13subdivision may be made, including, but not limited to, the
14department’s telephone number and any addresses that may be
15used for this purpose. The department shall also include this
16information in its pamphlet for the Medi-Cal Estate Recovery
17Program and any other notices the department distributes to
18members specifically regarding estate recovery.

end insert
begin insert

19
(4) Upon receiving a request for the information described in
20paragraph (1) and all necessary supporting documentation, the
21department shall provide the information requested within 90 days
22after receipt of the request.

end insert
begin delete

23(d)

end delete

24begin insert(end insertbegin insertf)end insert The following definitions shall govern the construction of
25this section:

26(1) “Decedent” means abegin delete beneficiaryend deletebegin insert memberend insert who has received
27health care under this chapter or Chapter 8 (commencing with
28Section 14200) and who has died leaving property to othersbegin delete either
29through distribution or survival.end delete
begin insert through distribution.end insert

30(2) “Dependents” includes, but is not limited to, immediate
31family or blood relatives of the decedent.

begin insert

32
(3) “Estate” means all real and personal property and other
33assets in the individual’s probate estate that are required to be
34subject to a claim for recovery pursuant to Section 1396p(b)(4)(A)
35of Title 42 of the United States Code.

end insert
begin insert

36
(4) “Health care services” means only those services required
37to be recovered under Section 1396p(b)(1)(B)(i) of Title 42 of the
38United States Code.

end insert
begin insert

39
(5) “Homestead of modest value” means a home whose fair
40market value is 50 percent or less of the average price of homes
P50   1in the county where the homestead is located, as of the date of the
2decedent’s death.

end insert
begin insert

3
(g) The amendments made to this section by the act that added
4this subdivision shall apply only to individuals who die on or after
5January 1, 2017.

end insert
6begin insert

begin insertSEC. 23.end insert  

end insert

begin insertSection 14046.7 of the end insertbegin insertWelfare and Institutions Codeend insert
7
begin insert is amended to read:end insert

8

14046.7.  

(a) General Fund moneys shall not be used for the
9purposes of this article.

10(b) Notwithstanding subdivision (a), no more thanbegin delete two hundred
11thousand dollars ($200,000)end delete
begin insert four hundred twenty-five thousand
12dollars ($425,000)end insert
from the General Fund may be used annually
13for state administrative costs associated with implementing this
14article.

15begin insert

begin insertSEC. 24.end insert  

end insert

begin insertSection 14105.436 of the end insertbegin insertWelfare and Institutions
16Code
end insert
begin insert is amended to read:end insert

17

14105.436.  

(a) Effective July 1, 2002, all pharmaceutical
18manufacturers shall provide to the department a state rebate, in
19addition to rebates pursuant to other provisions of state or federal
20law, for any drug products that have been added to the Medi-Cal
21list of contract drugs pursuant to Section 14105.43 or 14133.2 and
22reimbursed through the Medi-Cal outpatient fee-for-service drug
23program. The state rebate shall be negotiated as necessary between
24the department and the pharmaceutical manufacturer. The
25negotiations shall take into account offers such as rebates,
26discounts, disease management programs, and other cost savings
27offerings and shall be retroactive to July 1, 2002.

28(b) The department may use existing administrative mechanisms
29for any drug for which the department does not obtain a rebate
30pursuant to subdivision (a). The department may only use those
31mechanisms in the event that, by February 1, 2003, the
32manufacturer refuses to provide the additional rebate. This
33subdivision shall become inoperative on January 1, 2010.

34(c) For purposes of this section, “Medi-Cal utilization data”
35means the data used by the department to reimburse providers
36under all programs that qualify for federal drug rebates pursuant
37to Section 1927 of the federal Social Security Act (42 U.S.C. Sec.
381396r-8) or that otherwise qualify for federal funds under Title
39XIX of the federal Social Security Act (42 U.S.C. Sec. 1396 et
40seq.) pursuant to the Medicaid state plan or waivers. Medi-Cal
P51   1utilization data excludes data from covered entities identified in
2Section 256b(a)(4) of Title 42 of the United States Code in
3accordance with Sections 256b(a)(5)(A) and 1396r-8(a)(5)(C) of
4Title 42 of the United States Code, and those capitated plans that
5include a prescription drug benefit in the capitated rate and that
6have negotiated contracts for rebates or discounts with
7manufacturers.

8(d) begin deleteSubdivision end deletebegin insertUpon implementation of paragraphs (4) and
9(5) of subdivision (b) of Section 14105.33 for drugs pursuant to
10this section, subdivisions (a) and end insert
(c) shall become inoperative
11begin delete when the department implements paragraphs (4) and (5) ofend deletebegin insert and
12“utilization data” shall be described pursuant toend insert
subdivision (b)
13of Section 14105.33. The department shall post on its Internet Web
14site a notice that it has implemented paragraphs (4) and (5) of
15subdivision (b) of Sectionbegin delete 14105.33.end deletebegin insert 14105.33 for drugs pursuant
16to this section.end insert

17(e) Effective July 1, 2009, all pharmaceutical manufacturers
18shall provide to the department a state rebate, in addition to rebates
19pursuant to other provisions of state or federal law, equal to an
20amount not less than 10 percent of the average manufacturer price
21based on Medi-Cal utilization data for any drug products that have
22been added to the Medi-Cal list of contract drugs pursuant to
23Section 14105.43 or 14133.2.

24(f) Pharmaceutical manufacturers shall, by January 1, 2010,
25enter into a supplemental rebate agreement for the rebate required
26in subdivisionbegin delete (d)end deletebegin insert (e)end insert for drug products added to the Medi-Cal list
27of contract drugs on or before December 31, 2009.

28(g) Effective January 1, 2010, all pharmaceutical manufacturers
29who have not entered into a supplemental rebate agreement
30pursuant to subdivisionsbegin delete (d)end deletebegin insert (e)end insert andbegin delete (e),end deletebegin insert (f)end insert shall provide to the
31department a state rebate, in addition to rebates pursuant to other
32provisions of state or federal law, equal to an amount not less than
3320 percent of the average manufacturer price based on Medi-Cal
34utilization data for any drug products that have been added to the
35Medi-Cal list of contract drugs pursuant to Section 14105.43 or
3614133.2 prior to January 1, 2010. If the pharmaceutical
37manufacturer does not enter into a supplemental rebate agreement
38by March 1, 2010, the manufacturer’s drug product shall be made
39available only through an approved treatment authorization request
40pursuant to subdivisionbegin delete (h).end deletebegin insert (i).end insert

P52   1(h) For a drug product added to the Medi-Cal list of contract
2drugs pursuant to Section 14105.43 or 14133.2 on or after January
31, 2010, a pharmaceutical manufacturer shall provide to the
4department a state rebate pursuant to subdivisionbegin delete (d).end deletebegin insert (e).end insert If the
5pharmaceutical manufacturer does not enter into a supplemental
6rebate agreement within 60 days after the addition of the drug to
7the Medi-Cal list of contract drugs, the manufacturer shall provide
8to the department a state rebate equal to not less than 20 percent
9of the average manufacturers price based on Medi-Cal utilization
10data for any drug products that have been added to the Medi-Cal
11list of contract drugs pursuant to Section 14105.43 or 14133.2. If
12the pharmaceutical manufacturer does not enter into a supplemental
13rebate agreement within 120 days after the addition of the drug to
14the Medi-Cal list of contract drugs, the pharmaceutical
15 manufacturer’s drug product shall be made available only through
16an approved treatment authorization request pursuant to subdivision
17begin delete (h).end deletebegin insert (i).end insert For supplemental rebate agreements executed more than
18120 days after the addition of the drug product to the Medi-Cal
19list of contract drugs, the state rebate shall equal an amount not
20less than 20 percent of the average manufacturers price based on
21Medi-Cal utilization data for any drug products that have been
22added to the Medi-Cal list of contract drugs pursuant to Section
2314105.43 or 14133.2.

24(i) Notwithstanding any otherbegin delete provision ofend delete law, drug products
25added to the Medi-Cal list of contract drugs pursuant to Section
2614105.43 or 14133.2 of manufacturers who do not execute an
27agreement to pay additional rebates pursuant to thisbegin delete section,end deletebegin insert sectionend insert
28 shall be available only through an approved treatment authorization
29request.

30(j) For drug products added on or before December 31, 2009,
31a beneficiary may obtain a drug product that requires a treatment
32authorization request pursuant to subdivisionbegin delete (h)end deletebegin insert (i)end insert if the
33beneficiary qualifies for continuing care status. To be eligible for
34continuing care status, a beneficiary must be taking the drug
35product and the department must have record of a reimbursed claim
36for the drug product with a date of service that is within 100 days
37prior to the date the drug product was placed on treatment
38authorization request status. A beneficiary may remain eligible for
39continuing care status, provided that a claim is submitted for the
40drug product in question at least every 100 days and the date of
P53   1service of the claim is within 100 days of the date of service of the
2last claim submitted for the same drug product.

3(k) Changes made to the Medi-Cal list of contract drugs under
4this section shall be exempt from the requirements of the
5Administrative Procedure Act (Chapter 3.5 (commencing with
6Section 11340), Chapter 4 (commencing with Section 11370), and
7Chapter 5 (commencing with Section 11500) of Part 1 of Division
83 of Title 2 of the Government Code), and shall not be subject to
9the review and approval of the Office of Administrative Law.

10begin insert

begin insertSEC. 25.end insert  

end insert

begin insertSection 14105.45 of the end insertbegin insertWelfare and Institutions Codeend insert
11
begin insert is amended to read:end insert

12

14105.45.  

(a) For purposes of this section, the following
13definitions shall apply:

14(1) “Average acquisition cost” means the average weighted cost
15determined by the department to represent the actual acquisition
16cost paid for drugs by Medi-Cal pharmacy providers, including
17those that provide specialty drugs. The average acquisition cost
18shall not be considered confidential and shall be subject to
19disclosure pursuant to the California Public Records Act (Chapter
203.5 (commencing with Section 6250) of Division 7 of Title 1 of
21the Government Code).

22(2) “Average manufacturers price” means the price reported to
23the department by the federal Centers for Medicare and Medicaid
24Services pursuant to Section 1927 of the Social Security Act (42
25U.S.C. Sec. 1396r-8).

26(3) “Average wholesale price” means the price for a drug
27product listed as the average wholesale price in the department’s
28primary price reference source.

29(4) “Estimated acquisition cost” means the department’s best
30estimate of the price generally and currently paid by providers for
31a drug product sold by a particular manufacturer or principal labeler
32in a standard package.

33(5) “Federal upper limit” means the maximum per unit
34reimbursement when established by the federal Centers for
35Medicare and Medicaidbegin delete Services and published by the department
36in Medi-Cal pharmacy provider bulletins and manuals.end delete
begin insert Services.end insert

37(6) “Generically equivalent drugs” means drug products with
38the same active chemical ingredients of the same strength and
39dosage form, and of the same generic drug name, as determined
40by the United States Adopted Names (USAN) and accepted by the
P54   1federal Food and Drug Administration (FDA), as those drug
2products having the same chemical ingredients.

3(7) “Legend drug” means any drug whose labeling states
4“Caution: Federal law prohibits dispensing without prescription,”
5“Rx only,” or words of similar import.

6(8) “Maximum allowable ingredient cost” (MAIC) means the
7maximum amount the department will reimburse Medi-Cal
8pharmacy providers for generically equivalent drugs.

9(9) “Innovator multiple source drug,” “noninnovator multiple
10source drug,” and “single source drug” have the same meaning as
11those terms are defined in Section 1396r-8(k)(7) of Title 42 of the
12United States Code.

13(10) “Nonlegend drug” means any drug whose labeling does
14not contain the statement referenced in paragraph (7).

15(11) “Pharmacy warehouse,” as defined in Section 4163 of the
16Business and Professions Code, means a physical location licensed
17as a wholesaler for prescription drugs that acts as a central
18warehouse and performs intracompany sales or transfers of those
19drugs to a group of pharmacies under common ownership and
20control.

begin insert

21
(12) “Professional dispensing fee” has the same meaning as
22that term is defined in Section 447.502 of Title 42 of the Code of
23Federal Regulations.

end insert
begin delete

24(12)

end delete

25begin insert(13)end insert “Specialty drugs” means drugs determined by the
26department pursuant to subdivision (f) of Section 14105.3 to
27generally require special handling, complex dosing regimens,
28specialized self-administration at home by a beneficiary or
29caregiver, or specialized nursing facility services, or may include
30extended patient education, counseling, monitoring, or clinical
31support.

begin delete

32(13)

end delete

33begin insert(14)end insert “Volume weighted average” means the aggregated average
34volume for a group of legend or nonlegend drugs, weighted by
35each drug’s percentage of the group’s total volume in the Medi-Cal
36fee-for-service program during the previous six months. For
37purposes of this paragraph, volume is based on the standard billing
38unit used for the legend or nonlegend drugs.

begin delete

39(14)

end delete

P55   1begin insert(15)end insert “Wholesaler” means a drug wholesaler that is engaged in
2wholesale distribution of prescription drugs to retail pharmacies
3in California.

begin delete

4(15)

end delete

5begin insert(16)end insert “Wholesaler acquisition cost” means the price for a drug
6product listed as the wholesaler acquisition cost in the department’s
7primary price reference source.

8(b) (1) Reimbursement to Medi-Cal pharmacy providers for
9legend and nonlegend drugs shall not exceed the lowest of either
10of the following:

11(A) The estimated acquisition cost of the drug plus a professional
12
begin delete fee for dispensing.end deletebegin insert dispensing fee.end insert

13(B) The pharmacy’s usual and customary charge as defined in
14Section 14105.455.

15(2) begin deleteThe professional end deletebegin insert(A)end insertbegin insertend insertbegin insertUntil April 1, 2017, the professional
16dispensing end insert
fee shall be seven dollars and twenty-five cents ($7.25)
17per dispensedbegin delete prescription. The professionalend deletebegin insert prescription, and the
18professional dispensingend insert
fee for legend drugs dispensed to a
19beneficiary residing in a skilled nursing facility or intermediate
20care facility shall be eight dollars ($8) per dispensed prescription.
21For purposes of thisbegin delete paragraphend deletebegin insert paragraph,end insert “skilled nursing facility”
22and “intermediate care facility”begin delete shallend delete have the same meaning as
23begin insert those terms areend insert defined in Division 5 (commencing with Section
2470001) of Title 22 of the California Code of Regulations. begin delete If the
25department determines that a change in dispensing fee is necessary
26 pursuant to this section, the department shall establish the new
27dispensing fee through the budget process and implement the new
28dispensing fee pursuant to subdivision (d).end delete

begin insert

29
(B) Commencing April 1, 2017, the department shall implement
30a new professional dispensing fee or fees.

end insert
begin insert

31
(i) When establishing the new professional dispensing fee or
32fees, the department shall establish the professional dispensing
33fee or fees consistent with subdivision (d) of Section 447.518 of
34Title 42 of the Code of Federal Regulations.

end insert
begin insert

35
(ii) The department shall consult with interested parties and
36appropriate stakeholders in implementing this subparagraph.

end insert
begin insert

37
(C) If the department determines that a change in the amount
38of a professional dispensing fee is necessary pursuant to this
39section in order to meet federal Medicaid requirements, the
P56   1department shall establish the new professional dispensing fee
2through the state budget process.

end insert

3(3) The department shall establish the estimated acquisition cost
4of legend and nonlegend drugs as follows:

5(A) For single source and innovator multiple source drugs, the
6estimated acquisition cost shall be equal to the lowest of the
7average wholesale price minus 17 percent, the average acquisition
8cost, the federal upper limit, or the MAIC.

9(B) For noninnovator multiple source drugs, the estimated
10acquisition cost shall be equal to the lowest of the average
11wholesale price minus 17 percent, the average acquisition cost,
12the federal upper limit, or the MAIC.

13(C) Average wholesale price shall not be used to establish the
14estimated acquisition cost once the department has determined
15that the average acquisition cost methodology has been fully
16implemented.

17(4) For purposes of paragraph (3), the department shall establish
18a list of MAICs for generically equivalent drugs, which shall be
19published in pharmacy provider bulletins and manuals. The
20department shall establish a MAIC only when three or more
21generically equivalent drugs are available for purchase and
22dispensing by retail pharmacies in California. The department shall
23update the list of MAICs and establish additional MAICs in
24accordance with all of the following:

25(A) The department shall base the MAIC on the mean of the
26average manufacturer’s price of drugs generically equivalent to
27the particular innovator drug plus a percent markup determined
28by the department to be necessary for the MAIC to represent the
29average purchase price paid by retail pharmacies in California.

30(B) If average manufacturer prices are unavailable, the
31department shall establish the MAIC in one of the following ways:

32(i) Based on the volume weighted average of wholesaler
33acquisition costs of drugs generically equivalent to the particular
34innovator drug plus a percent markup determined by the department
35to be necessary for the MAIC to represent the average purchase
36price paid by retail pharmacies in California.

37(ii) Pursuant to a contract with a vendor for the purpose of
38surveying drug price information, collecting data, and calculating
39a proposed MAIC.

P57   1(iii) Based on the volume weighted average acquisition cost of
2drugs generically equivalent to the particular innovator drug
3adjusted by the department to represent the average purchase price
4paid by Medi-Cal pharmacy providers.

5(C) The department shall update MAICs at least every three
6months and notify Medi-Cal providers at least 30 days prior to the
7effective date of a MAIC.

8(D) The department shall establish a process for providers to
9seek a change to a specific MAIC when the providers believe the
10MAIC does not reflect current available market prices. If the
11department determines a MAIC change is warranted, the
12department may update a specific MAIC prior to notifying
13providers.

14(E) In determining the average purchase price, the department
15shall consider the provider-related costs of the products that
16include, but are not limited to, shipping, handling, storage, and
17delivery. Costs of the provider that are included in the costs of the
18dispensing shall not be used to determine the average purchase
19price.

20(5) (A) The department may establish the average acquisition
21cost in one of the following ways:

22(i) Based on the volume weighted average acquisition cost
23adjusted by the department to ensure that the average acquisition
24cost represents the average purchase price paid by retail pharmacies
25in California.

26(ii) Based on the proposed average acquisition cost as calculated
27by the vendor pursuant to subparagraph (B).

28(iii) Based on a national pricing benchmark obtained from the
29federal Centers for Medicare and Medicaid Services or on a similar
30benchmark listed in the department’s primary price reference
31source adjusted by the department to ensure that the average
32acquisition cost represents the average purchase price paid by retail
33pharmacies in California.

34(B) For the purposes of paragraph (3), the department may
35contract with a vendor for the purposes of surveying drug price
36information, collecting data from providers, wholesalers, or drug
37manufacturers, and calculating a proposed average acquisition
38cost.

39(C) (i) Medi-Cal pharmacy providers shall submit drug price
40information to the department or a vendor designated by the
P58   1department for the purposes of establishing the average acquisition
2cost. The information submitted by pharmacy providers shall
3include, but not be limited to, invoice prices and all discounts,
4rebates, and refunds known to the provider that would apply to the
5acquisition cost of the drug products purchased during the calendar
6quarter. Pharmacy warehouses shall be exempt from the survey
7process, but shall provide drug cost information upon audit by the
8department for the purposes of validating individual pharmacy
9provider acquisition costs.

10(ii) Pharmacy providers that fail to submit drug price information
11to the department or the vendor as required by this subparagraph
12shall receive notice that if they do not provide the required
13information within five working days, they shall be subject to
14suspension under subdivisions (a) and (c) of Section 14123.

15(D) (i) For new drugs or new formulations of existing drugs,
16begin delete whereend deletebegin insert ifend insert drug price information is unavailable pursuant to clause
17(i) of subparagraph (C), drug manufacturers and wholesalers shall
18submit drug price information to the department or a vendor
19designated by the department for the purposes of establishing the
20average acquisition cost. Drug price information shall include, but
21not be limited to, net unit sales of a drug product sold to retail
22pharmacies in California divided by the total number of units of
23the drug sold by the manufacturer or wholesaler in a specified
24period of time determined by the department.

25(ii) Drug products from manufacturers and wholesalers that fail
26to submit drug price information to the department or the vendor
27as required by this subparagraphbegin delete mayend deletebegin insert shallend insert not be a reimbursable
28benefit of the Medi-Cal program for those manufacturers and
29wholesalers until the department has established the average
30acquisition cost for those drug products.

31(E) Drug pricing information provided to the department or a
32vendor designated by the department for the purposes of
33establishing the average acquisition cost pursuant to this section
34shall be confidential and shall be exempt from disclosure under
35the California Public Records Act (Chapter 3.5 (commencing with
36Section 6250) of Division 7 of Title 1 of the Government Code).

37(F) Prior to the implementation of an average acquisition cost
38methodology, the department shall collect data through a survey
39of pharmacy providers for purposes of establishing a professional
P59   1begin delete fee for dispensingend deletebegin insert dispensing fee or feesend insert in compliance with federal
2Medicaid requirements.

3(i) The department shall seek stakeholder input on the retail
4pharmacy factors and elements used for the pharmacy survey
5relative to both average acquisition costs andbegin delete dispensing costs.
6Any adjustment to the dispensing fee shall not exceed the aggregate
7savings associated with the implementation of the average
8acquisition cost methodology.end delete
begin insert professional dispensing costs.end insert

9(ii) For drug products provided by pharmacy providers pursuant
10to subdivision (f) of Section 14105.3, a differential professional
11fee or payment for services to provide specialized care may be
12considered as part of the contracts established pursuant to that
13section.

14(G) When the department implements the average acquisition
15cost methodology, the department shall update the Medi-Cal claims
16processing system to reflect the average acquisition cost of drugs
17not later than 30 days after the department has established average
18acquisition cost pursuant to subparagraph (A).

19(H) Notwithstanding any otherbegin delete provision ofend delete law, if the
20department implements average acquisition cost pursuant to clause
21(i) or (ii) of subparagraph (A), the department shall update actual
22acquisition costs at least every three months and notify Medi-Cal
23providers at least 30 days prior to the effective date of any change
24in an actual acquisition cost.

25(I) The department shall establish a process for providers to
26seek a change to a specific average acquisition cost when the
27providers believe the average acquisition cost does not reflect
28current available market prices. If the department determines an
29average acquisition cost change is warranted, the department may
30update a specific average acquisition cost prior to notifying
31providers.

32(c) The director shall implement this section in a manner that
33is consistent with federal Medicaid law and regulations. The
34director shall seek any necessary federal approvals for the
35implementation of this section. This section shall be implemented
36only to the extent that federal approval is obtained.

37(d) Notwithstanding Chapter 3.5 (commencing with Section
3811340) of Part 1 of Division 3 of Title 2 of the Government Code,
39the department may implement, interpret, or make specific this
P60   1section by means of a provider bulletin or notice, policy letter, or
2other similar instructions, without taking regulatory action.

3(e) The department may enter into contracts with a vendor for
4the purposes of implementing this section on a bid or nonbid basis.
5In order to achieve maximum cost savings, the Legislature declares
6that an expedited process for contracts under this section is
7necessary. Therefore, contracts entered into to implement this
8section, and all contract amendments and change orders, shall be
9exempt from Chapter 2 (commencing with Section 10290) of Part
102 of Division 2 of the Public Contract Code.

11(f) (1) The rates provided for in this section shall be
12implemented only if the director determines that the rates will
13 comply with applicable federal Medicaid requirements and that
14federal financial participation will be available.

15(2) In determining whether federal financial participation is
16available, the director shall determine whether the rates comply
17with applicable federal Medicaid requirements, including those
18set forth in Section 1396a(a)(30)(A) of Title 42 of the United States
19Code.

20(3) To the extent that the director determines that the rates do
21not comply with applicable federal Medicaid requirements or that
22federal financial participation is not available with respect to any
23rate of reimbursement described in this section, the director retains
24the discretion not to implement that rate and may revise the rate
25as necessary to comply with federal Medicaid requirements.

26(g) The director shall seek any necessary federal approvals for
27the implementation of this section.

28(h) This section shall not be construed to require the department
29to collect cost data, to conduct cost studies, or to set or adjust a
30rate of reimbursement based on cost data that has been collected.

31(i) Adjustments to pharmacy drug product payment pursuant to
32Section 14105.192 shall no longer apply when the department
33determines that the average acquisition cost methodology has been
34fully implemented and the department’s pharmacy budget reduction
35targets, consistent with payment reduction levels pursuant to
36Section 14105.192, have been met.

37(j) Prior to implementation of this section, the department shall
38provide the appropriate fiscal and policy committees of the
39Legislature with information on the department’s plan for
P61   1implementation of the average acquisition cost methodology
2pursuant to this section.

3begin insert

begin insertSEC. 26.end insert  

end insert

begin insertSection 14105.456 of the end insertbegin insertWelfare and Institutions
4Code
end insert
begin insert is amended to read:end insert

5

14105.456.  

(a) For purposes of this section, the following
6definitions shall apply:

7(1) “Generically equivalent drugs” means drug products with
8the same active chemical ingredients of the same strength, quantity,
9and dosage form, and of the same generic drug name, as determined
10by the United States Adopted Names Council (USANC) and
11accepted by the federal Food and Drug Administration (FDA), as
12those drug products having the same chemical ingredients.

13(2) “Legend drug” means any drug with a label that states
14“Caution: Federal law prohibits dispensing without prescription,”
15“Rx only,” or words of similar import.

16(3) “Medicare rate” means the rate of reimbursement established
17by the Centers for Medicare and Medicaid Services for the
18Medicare Program.

19(4) “Nonlegend drug” means any drug with a label that does
20not contain a statement referenced in paragraph (2).

21(5) “Pharmacy rate of reimbursement” means the reimbursement
22to a Medi-Cal pharmacy provider pursuant to the provisions of
23paragraphbegin delete (2)end deletebegin insert (3)end insert of subdivision (b) of Section 14105.45.

24(6) “Physician-administered drug” means any legend drug,
25nonlegend drug, or vaccine administered or dispensed to a
26beneficiary by a Medi-Cal provider other than a pharmacy provider
27and billed to the department on a fee-for-service basis.

28(7) “Volume-weighted average” means the aggregated average
29volume for generically equivalent drugs, weighted by each drug’s
30percentage of the total volume in the Medi-Cal fee-for-service
31program during the previous six months. For purposes of this
32paragraph, volume is based on the standard billing unit used for
33the generically equivalent drugs.

34(b) The department may reimburse providers for a
35physician-administered drug using either a Healthcare Common
36Procedure Coding System code or a National Drug Code.

37(c) The Healthcare Common Procedure Coding System code
38rate of reimbursement for a physician-administered drug shall be
39equal to the volume-weighted average of the pharmacy rate of
40reimbursement for generically equivalent drugs. The department
P62   1shall publish the Healthcare Common Procedure Coding System
2code rates of reimbursement.

3(d) The National Drug Code rate of reimbursement shall equal
4the pharmacy rate of reimbursement.

5(e) Notwithstanding subdivisions (c) and (d), the department
6may reimburse providers for physician-administered drugs at a
7rate not less than the Medicare rate.

8(f) Notwithstanding Chapter 3.5 (commencing with Section
911340) of Part 1 of Division 3 of Title 2 of the Government Code,
10the department may implement this section by means of a provider
11bulletin or notice, policy letter, or other similar instructions, without
12taking regulatory action.

13(g) (1) The rates provided for in this section shall be
14implemented commencing January 1, 2011, but only if the director
15determines that the rates comply with applicable federal Medicaid
16requirements and that federal financial participation will be
17available.

18(2) In assessing whether federal financial participation is
19available, the director shall determine whether the rates comply
20with the federal Medicaid requirements, including those set forth
21in Section 1396a(a)(30)(A) of Title 42 of the United States Code.
22To the extent that the director determines that a rate of
23reimbursement described in this section does not comply with the
24federal Medicaid requirements, the director retains the discretion
25not to implement that rate and may revise the rate as necessary to
26comply with the federal Medicaid requirements.

27(h) The director shall seek any necessary federal approval for
28the implementation of this section. To the extent that federal
29financial participation is not available with respect to a rate of
30reimbursement described in this section, the director retains the
31discretion not to implement that rate and may revise the rate as
32necessary to comply with the federal Medicaid requirements.

33begin insert

begin insertSEC. 27.end insert  

end insert

begin insertSection 14105.86 of the end insertbegin insertWelfare and Institutions Codeend insert
34
begin insert is amended to read:end insert

35

14105.86.  

(a) For the purposes of this section, the following
36definitions apply:

37(1) (A) “Average sales price” means the price reported to the
38federal Centers for Medicare and Medicaid Services by the
39manufacturer pursuant to Section 1847A of the federal Social
40Security Act (42 U.S.C. Sec. 1395w-3a).

P63   1(B) “Average manufacturer price” means the price reported to
2the federal Centers for Medicare and Medicaid Services pursuant
3to Section 1927 of the federal Social Security Act (42 U.S.C. Sec.
41396r-8).

5(2) “Blood factors” means plasma protein therapies and their
6recombinant analogs. Blood factors include, but are not limited
7 to, all of the following:

8(A) Coagulation factors, including:

9(i) Factor VIII, nonrecombinant.

10(ii) Factor VIII, porcine.

11(iii) Factor VIII, recombinant.

12(iv) Factor IX, nonrecombinant.

13(v) Factor IX, complex.

14(vi) Factor IX, recombinant.

15(vii) Antithrombin III.

16(viii) Anti-inhibitor factor.

17(ix) Von Willebrand factor.

18(x) Factor VIIa, recombinant.

19(B) Immune Globulin Intravenous.

20(C) Alpha-1 Proteinase Inhibitor.

21(b) The reimbursement for blood factors shall be by national
22drug code number and shall not exceed 120 percent of the average
23sales price of the last quarter reported.

24(c) The average sales price for blood factors of manufacturers
25or distributors that do not report an average sales price pursuant
26to subdivision (a) shall be identical to the average manufacturer
27price. The average sales price for new products that do not have
28a calculable average sales price or average manufacturer price
29shall be equal to a projected sales price, as reported by the
30manufacturer to the department. Manufacturers reporting a
31projected sales price for a new product shall report the first monthly
32average manufacturer price reported to the federal Centers for
33Medicare and Medicaid Services. The reporting of an average sales
34price that does not meet the requirement of this subdivision shall
35result in that blood factor no longer being considered a covered
36benefit.

37(d) The average sales price shall be reported at the national drug
38code level to the department on a quarterly basis.

39(e) (1) Effective July 1, 2008, the department shall collect a
40state rebate, in addition to rebates pursuant to other provisions of
P64   1state or federal law, for blood factors reimbursed pursuant to this
2section by programs that qualify for federal drug rebates pursuant
3to Section 1927 of the federal Social Security Act (42 U.S.C. Sec.
41396r-8) or otherwise qualify for federal funds under Title XIX
5of the federal Social Security Act (42 U.S.C. Sec. 1396 et seq.)
6pursuant to the Medicaid state plan or waivers and the programs
7authorized by Article 5 (commencing with Section 123800) of
8Chapter 3 of Part 2 of, and Article 1 (commencing with Section
9125125) of Chapter 2 of Part 5 of, Division 106 of the Health and
10Safety Code.

11(2) begin deleteParagraph (1) shall become inoperative when the department
12implements end delete
begin insertUpon implementation of end insertparagraphs (4) and (5) of
13subdivision (b) of Sectionbegin delete 14105.33.end deletebegin insert 14105.33 for blood factors
14pursuant to this section, “utilization data” used to determine the
15state rebate shall be described pursuant to subdivision (b) of
16Section 14105.33.end insert
The department shall post on its Internet Web
17site a notice that it has implemented paragraphs (4) and (5) of
18subdivision (b) of Sectionbegin delete 14105.33.end deletebegin insert 14105.33 for blood factors
19pursuant to this section.end insert

20(3) The state rebate shall be negotiated as necessary between
21the department and the manufacturer. Manufacturers who do not
22execute an agreement to pay additional rebates pursuant to this
23section shall have their blood factors available only through an
24approved treatment or service authorization request. All blood
25factors that meet the definition of a covered outpatient drug
26pursuant to Section 1927 of the federal Social Security Act (42
27U.S.C. Sec. 1396r-8) shall remain a benefit subject to the utilization
28controls provided for in this section.

29(4) In reviewing authorization requests, the department shall
30approve the lowest net cost product that meets the beneficiary’s
31medical need. The review of medical need shall take into account
32a beneficiary’s clinical history or the use of the blood factor
33pursuant to payment by another third party, or both.

34(f) A beneficiary may obtain blood factors that require a
35treatment or service authorization request pursuant to subdivision
36(e) if the beneficiary qualifies for continuing care status. To be
37eligible for continuing care status, a beneficiary must be taking
38the blood factor and the department has reimbursed a claim for
39the blood factor with a date of service that is within 100 days prior
40to the date the blood factor was placed on treatment authorization
P65   1request status. A beneficiary may remain eligible for continuing
2care status, provided that a claim is submitted for the blood factor
3in question at least every 100 days and the date of service of the
4claim is within 100 days of the date of service of the last claim
5submitted for the same blood factor.

6(g) Changes made to the list of covered blood factors under this
7or any other section shall be exempt from the requirements of the
8Administrative Procedure Act (Chapter 3.5 (commencing with
9Section 11340), Chapter 4 (commencing with Section 11370), and
10Chapter 5 (commencing with Section 11500) of Part 1 of Division
113 of Title 2 of the Government Code), and shall not be subject to
12the review and approval of the Office of Administrative Law.

13begin insert

begin insertSEC. 28.end insert  

end insert

begin insertSection 14131.10 of the end insertbegin insertWelfare and Institutions Codeend insert
14
begin insert is amended to read:end insert

15

14131.10.  

(a) Notwithstanding any other provision of this
16chapter, Chapter 8 (commencing with Section 14200), or Chapter
178.75 (commencing with Section 14591), in order to implement
18changes in the level of funding for health care services, specific
19optional benefits are excluded from coverage under the Medi-Cal
20program.

21(b) (1) The following optional benefits are excluded from
22coverage under the Medi-Cal program:

23(A) Adult dental services, except as specified in paragraph (2).

begin delete

24(B) Acupuncture services.

end delete
begin delete

25(C)

end delete

26begin insert(end insertbegin insertB)end insert Audiology services and speech therapy services.

begin delete

27(D)

end delete

28begin insert(end insertbegin insertC)end insert Chiropractic services.

begin delete

29(E)

end delete

30begin insert(end insertbegin insertD)end insert Optometric and optician services, including services
31provided by a fabricating optical laboratory.

begin delete

32(F)

end delete

33begin insert(end insertbegin insertE)end insert Podiatric services.

begin delete

34(G)

end delete

35begin insert(end insertbegin insertF)end insert Psychology services.

begin delete

36(H)

end delete

37begin insert(end insertbegin insertG)end insert Incontinence creams and washes.

38(2) (A) Medical and surgical services provided by a doctor of
39dental medicine or dental surgery, which, if provided by a
40physician, would be considered physician services, and which
P66   1services may be provided by either a physician or a dentist in this
2state, are covered.

3(B) Emergency procedures are also covered in the categories
4of service specified in subparagraph (A). The director may adopt
5regulations for any of the services specified in subparagraph (A).

6(C) Effective May 1, 2014, or the effective date of any necessary
7federal approvals as required by subdivision (f), whichever is later,
8for persons 21 years of age or older, adult dental benefits, subject
9to utilization controls, are limited to all the following medically
10necessary services:

11(i) Examinations, radiographs/photographic images, prophylaxis,
12and fluoride treatments.

13(ii) Amalgam and composite restorations.

14(iii) Stainless steel, resin, and resin window crowns.

15(iv) Anterior root canal therapy.

16(v) Complete dentures, including immediate dentures.

17(vi) Complete denture adjustments, repairs, and relines.

18(D) Services specified in this paragraph shall be included as a
19covered medical benefit under the Medi-Cal program pursuant to
20Section 14132.89.

21(3) Pregnancy-related services and services for the treatment of
22other conditions that might complicate the pregnancy are not
23excluded from coverage under this section.

24(c) The optional benefit exclusions do not apply to either of the
25following:

26(1) Beneficiaries under the Early and Periodic Screening
27Diagnosis and Treatment Program.

28(2) Beneficiaries receiving long-term care in a nursing facility
29that is both:

30(A) A skilled nursing facility or intermediate care facility as
31defined in subdivisions (c) and (d) of Section 1250 of the Health
32and Safety Code.

33(B) Licensed pursuant to subdivision (k) of Section 1250 of the
34Health and Safety Code.

35(d) This section shall only be implemented to the extent
36permitted by federal law.

37(e) Notwithstanding Chapter 3.5 (commencing with Section
3811340) of Part 1 of Division 3 of Title 2 of the Government Code,
39the department may implement the provisions of this section by
P67   1means of all-county letters, provider bulletins, or similar
2instructions, without taking further regulatory action.

begin delete

3(f) The department shall seek approval for federal financial
4participation and coverage of services specified in subparagraph
5(C) of paragraph (2) of subdivision (b) under the Medi-Cal
6program.

end delete
begin delete

7(g) This section, except as specified in subparagraph (C) of
8paragraph (2) of subdivision (b), shall be implemented on the first
9day of the month following 90 days after the operative date of this
10section.

end delete
begin insert

11
(f) This section shall be implemented only to the extent that
12federal financial participation is available and any necessary
13federal approvals have been obtained.

end insert
14begin insert

begin insertSEC. 29.end insert  

end insert

begin insertSection 14132.56 of the end insertbegin insertWelfare and Institutions Codeend insert
15
begin insert is amended to read:end insert

16

14132.56.  

(a) (1) Only to the extent required by the federal
17government and effective no sooner than required by the federal
18government, behavioral health treatment (BHT), as defined by
19Section 1374.73 of the Health and Safety Code, shall be a covered
20Medi-Cal service for individuals under 21 years of age.

21(2) It is the intent of the Legislature that, to the extent the federal
22government requires BHT to be a covered Medi-Cal service, the
23department shall seek statutory authority to implement this new
24benefit in Medi-Cal.

25(b) The department shall implement, or continue to implement,
26this section only after all of the following occurs or has occurred:

27(1) The department receives all necessary federal approvals to
28obtain federal funds for the service.

29(2) The department seeks an appropriation that would provide
30the necessary state funding estimated to be required for the
31applicable fiscal year.

32(3) The department consults with stakeholders.

33(c) The department shall develop and define eligibility criteria,
34provider participation criteria, utilization controls, and delivery
35system structure for services under this section, subject to
36limitations allowable under federal law, in consultation with
37stakeholders.

begin insert

38
(d) (1) The department, commencing on the effective date of
39the act that added this subdivision until March 31, 2017, inclusive,
40may make available to individuals described in paragraph (2)
P68   1contracted services to assist those individuals with health insurance
2enrollment, without regard to whether federal funds are available
3for the contracted services.

end insert
begin insert

4
(2) The contracted services described in paragraph (1) may be
5provided only to an individual under 21 years of age whom the
6department identifies as no longer eligible for Medi-Cal solely
7due to the transition of BHT coverage from the waiver program
8under Section 1915(c) of the federal Social Security Act to the
9Medi-Cal state plan in accordance with this section and who meets
10all of the following criteria:

end insert
begin insert

11
(A) He or she was enrolled in the home and community-based
12services waiver for persons with developmental disabilities under
13Section 1915(c) of the Social Security Act as of January 31, 2016.

end insert
begin insert

14
(B) He or she was deemed to be institutionalized in order to
15establish eligibility under the terms of the waiver.

end insert
begin insert

16
(C) He or she has not been found eligible under any other
17federally funded Medi-Cal criteria without a share of cost.

end insert
begin insert

18
(D) He or she had received a BHT service from a regional center
19for persons with developmental disabilities as provided in Chapter
205 (commencing with Section 4620) of Division 4.5.

end insert
begin delete

21(d)

end delete

22begin insert(e)end insert Notwithstanding Chapter 3.5 (commencing with Section
2311340) of Part 1 of Division 3 of Title 2 of the Government Code,
24the department, without taking any further regulatory action, shall
25implement, interpret, or make specific this section by means of
26all-county letters, plan letters, plan or provider bulletins, or similar
27instructions until regulations are adopted. The department shall
28adopt regulations by July 1, 2017, in accordance with the
29requirements of Chapter 3.5 (commencing with Section 11340) of
30Part 1 of Division 3 of Title 2 of the Government Code.
31Notwithstanding Section 10231.5 of the Government Code,
32beginning six months after the effective date of this section, the
33department shall provide semiannual status reports to the
34Legislature, in compliance with Section 9795 of the Government
35Code, until regulations have been adopted.

begin delete

36(e)

end delete

37begin insert(f)end insert For the purposes of implementing this section, the department
38may enter into exclusive or nonexclusive contracts on a bid or
39negotiated basis, including contracts for the purpose of obtaining
40subject matter expertise or other technical assistance. Contracts
P69   1may be statewide or on a more limited geographic basis. Contracts
2entered into or amended under this subdivision shall be exempt
3from Part 2 (commencing with Section 10100) of Division 2 of
4the Public Contractbegin delete Codeend deletebegin insert Code, Section 19130 of the Government
5Code,end insert
and Chapter 6 (commencing with Section 14825) of Part
65.5 of Division 3 of the Government Code, and shall be exempt
7from the review or approval of any division of the Department of
8General Services.

begin delete

9(f)

end delete

10begin insert(g)end insert The department may seek approval of any necessary state
11plan amendments or waivers to implement this section. The
12department shall make any state plan amendments or waiver
13requests public at least 30 days prior to submitting to the federal
14Centers for Medicare and Medicaid Services, and the department
15shall work with stakeholders to address the public comments in
16the state plan amendment or waiver request.

begin delete

17(g)

end delete

18begin insert(h)end insert This section shall be implemented only to the extent that
19federal financial participation is available and any necessary federal
20approvals have been obtained.

21begin insert

begin insertSEC. 30.end insert  

end insert

begin insertSection 14154 of the end insertbegin insertWelfare and Institutions Codeend insert
22
begin insert is amended to read:end insert

23

14154.  

(a) (1) The department shall establish and maintain a
24plan whereby costs for county administration of the determination
25of eligibility for benefits under this chapter will be effectively
26controlled within the amounts annually appropriated for that
27administration. The plan, to be known as the County Administrative
28Cost Control Plan, shall establish standards and performance
29criteria, including workload, productivity, and support services
30standards, to which counties shall adhere. The plan shall include
31standards for controlling eligibility determination costs that are
32incurred by performing eligibility determinations at county
33hospitals, or that are incurred due to the outstationing of any other
34eligibility function. Except as provided in Section 14154.15,
35reimbursement to a county for outstationed eligibility functions
36shall be based solely on productivity standards applied to that
37county’s welfare department office.

38(2) (A) The plan shall delineate both of the following:

P70   1(i) The process for determining county administration base costs,
2which include salaries and benefits, support costs, and staff
3development.

4(ii) The process for determining funding for caseload changes,
5cost-of-living adjustments, and program and other changes.

6(B) The annual county budget survey document utilized under
7the plan shall be constructed to enable the counties to provide
8sufficient detail to the department to support their budget requests.

9(3) The plan shall be part of a single state plan, jointly developed
10by the department and the State Department of Social Services, in
11conjunction with the counties, for administrative cost control for
12the California Work Opportunity and Responsibility to Kids
13(CalWORKs), CalFresh, and Medical Assistance (Medi-Cal)
14programs. Allocations shall be made to each county and shall be
15limited by and determined based upon the County Administrative
16Cost Control Plan. In administering the plan to control county
17administrative costs, the department shall not allocate state funds
18to cover county cost overruns that result from county failure to
19meet requirements of the plan. The department and the State
20Department of Social Services shall budget, administer, and
21allocate state funds for county administration in a uniform and
22consistent manner.

23(4) The department and county welfare departments shall
24develop procedures to ensure the data clarity, consistency, and
25reliability of information contained in the county budget survey
26document submitted by counties to the department. These
27procedures shall include the format of the county budget survey
28document and process, data submittal and its documentation, and
29the use of the county budget survey documents for the development
30of determining county administration costs. Communication
31between the department and the county welfare departments shall
32be ongoing as needed regarding the content of the county budget
33surveys and any potential issues to ensure the information is
34complete and well understood by involved parties. Any changes
35developed pursuant to this section shall be incorporated within the
36state’s annual budget process by no later than the 2011-12 fiscal
37year.

38(5) The department shall provide a clear narrative description
39along with fiscal detail in the Medi-Cal estimate package, submitted
40to the Legislature in January and May of each year, of each
P71   1component of the county administrative funding for the Medi-Cal
2program. This shall describe how the information obtained from
3the county budget survey documents was utilized and, if applicable,
4modified and the rationale for the changes.

5(6) Notwithstanding any other law, the department shall develop
6and implement, in consultation with county program and fiscal
7representatives, a new budgeting methodology for Medi-Cal county
8administrative costs that reflects the impact of PPACA
9implementation on county administrative work. The new budgeting
10methodology shall be used to reimburse counties for eligibility
11processing and case maintenance for applicants and beneficiaries.

12(A) The budgeting methodology may include, but is not limited
13to, identification of the costs of eligibility determinations for
14applicants, and the costs of eligibility redeterminations and case
15maintenance activities for recipients, for different groupings of
16cases, based on variations in time and resources needed to conduct
17eligibility determinations. The calculation of time and resources
18shall be based on the following factors: complexity of eligibility
19rules, ongoing eligibility requirements, and other factors as
20determined appropriate by the department. The development of
21the new budgeting methodology may include, but is not limited
22to, county survey of costs, time and motion studies, in-person
23observations by department staff, data reporting, and other factors
24deemed appropriate by the department.

25(B) The new budgeting methodology shall be clearly described,
26state the necessary data elements to be collected from the counties,
27and establish the timeframes for counties to provide the data to
28the state.

29(C) The new budgeting methodology developed pursuant to this
30paragraph shall be implemented no sooner than the 2015-16 fiscal
31year. The department may develop a process for counties to phase
32in the requirements of the new budgeting methodology.

33(D) The department shall provide the new budgeting
34methodology to the legislative fiscal committees by March 1 of
35the fiscal year immediately preceding the first fiscal year of
36implementation of the new budgeting methodology.

37(E) To the extent that the funding for the county budgets
38developed pursuant to the new budget methodology is not fully
39appropriated in any given fiscal year, the department, with input
P72   1from the counties, shall identify and consider options to align
2funding and workload responsibilities.

3(F) For purposes of this paragraph, “PPACA” means the federal
4Patient Protection and Affordable Care Act (Public Law 111-148),
5as amended by the federal Health Care and Education
6Reconciliation Act of 2010 (Public Law 111-152) and any
7subsequent amendments.

8(G) Notwithstanding Chapter 3.5 (commencing with Section
911340) of Part 1 of Division 3 of Title 2 of the Government Code,
10the department may implement, interpret, or make specific this
11paragraph by means of all-county letters, plan letters, plan or
12provider bulletins, or similar instructions until the time any
13necessary regulations are adopted. The department shall adopt
14regulations by July 1, 2017, in accordance with the requirements
15of Chapter 3.5 (commencing with Section 11340) of Part 1 of
16Division 3 of Title 2 of the Government Code. Beginning six
17months after the implementation of the new budgeting methodology
18pursuant to this paragraph, and notwithstanding Section 10231.5
19of the Government Code, the department shall provide a status
20report to the Legislature on a semiannual basis, in compliance with
21Section 9795 of the Government Code, until regulations have been
22adopted.

23(b) Nothing in this section, Section 15204.5, or Section 18906
24shall be construed to limit the administrative or budgetary
25responsibilities of the department in a manner that would violate
26Section 14100.1, and thereby jeopardize federal financial
27participation under the Medi-Cal program.

28(c) (1) The Legislature finds and declares that in order for
29counties to do the work that is expected of them, it is necessary
30that they receive adequate funding, including adjustments for
31reasonable annual cost-of-doing-business increases. The Legislature
32further finds and declares that linking appropriate funding for
33county Medi-Cal administrative operations, including annual
34cost-of-doing-business adjustments, with performance standards
35will give counties the incentive to meet the performance standards
36and enable them to continue to do the work they do on behalf of
37the state. It is therefore the Legislature’s intent to provide
38appropriate funding to the counties for the effective administration
39of the Medi-Cal program at the local level to ensure that counties
P73   1can reasonably meet the purposes of the performance measures as
2contained in this section.

3(2) It is the intent of the Legislature to not appropriate funds for
4the cost-of-doing-business adjustment for the 2008-09, 2009-10,
52010-11, 2011-12, 2012-13, 2014-15,begin delete and 2015-16end deletebegin insert 2015-16,
6and 2016-end insert
begin insert17end insert fiscal years.

7(d) The department is responsible for the Medi-Cal program in
8accordance with state and federal law. A county shall determine
9Medi-Cal eligibility in accordance with state and federal law. If
10in the course of its duties the department becomes aware of
11accuracy problems in any county, the department shall, within
12available resources, provide training and technical assistance as
13appropriate. Nothing in this section shall be interpreted to eliminate
14any remedy otherwise available to the department to enforce
15accurate county administration of the program. In administering
16the Medi-Cal eligibility process, each county shall meet the
17following performance standards each fiscal year:

18(1) Complete eligibility determinations as follows:

19(A) Ninety percent of the general applications without applicant
20errors and are complete shall be completed within 45 days.

21(B) Ninety percent of the applications for Medi-Cal based on
22disability shall be completed within 90 days, excluding delays by
23the state.

24(2) (A) The department shall establish best-practice guidelines
25for expedited enrollment of newborns into the Medi-Cal program,
26preferably with the goal of enrolling newborns within 10 days after
27the county is informed of the birth. The department, in consultation
28with counties and other stakeholders, shall work to develop a
29process for expediting enrollment for all newborns, including those
30born to mothers receiving CalWORKs assistance.

31(B) Upon the development and implementation of the
32best-practice guidelines and expedited processes, the department
33and the counties may develop an expedited enrollment timeframe
34for newborns that is separate from the standards for all other
35applications, to the extent that the timeframe is consistent with
36these guidelines and processes.

37(3) Perform timely annual redeterminations, as follows:

38(A) Ninety percent of the annual redetermination forms shall
39be mailed to the recipient by the anniversary date.

P74   1(B) Ninety percent of the annual redeterminations shall be
2completed within 60 days of the recipient’s annual redetermination
3date for those redeterminations based on forms that are complete
4and have been returned to the county by the recipient in a timely
5manner.

6(C) Ninety percent of those annual redeterminations where the
7redetermination form has not been returned to the county by the
8recipient shall be completed by sending a notice of action to the
9recipient within 45 days after the date the form was due to the
10county.

begin delete

11(D) If a child is determined by the county to change from no
12share of cost to a share of cost and the child meets the eligibility
13criteria for the Healthy Families Program established under Section
1412693.98 of the Insurance Code, the child shall be placed in the
15Medi-Cal-to-Healthy Families Bridge Benefits Program, and these
16cases shall be processed as follows:

17(i) Ninety percent of the families of these children shall be sent
18a notice informing them of the Healthy Families Program within
19five working days from the determination of a share of cost.

20(ii) Ninety percent of all annual redetermination forms for these
21children shall be sent to the Healthy Families Program within five
22working days from the determination of a share of cost if the parent
23has given consent to send this information to the Healthy Families
24Program.

25(iii) Ninety percent of the families of these children placed in
26the Medi-Cal-to-Healthy Families Bridge Benefits Program who
27have not consented to sending the child’s annual redetermination
28form to the Healthy Families Program shall be sent a request,
29within five working days of the determination of a share of cost,
30to consent to send the information to the Healthy Families Program.

31(E) Subparagraph (D) shall not be implemented until 60 days
32after the Medi-Cal and Joint Medi-Cal and Healthy Families
33applications and the Medi-Cal redetermination forms are revised
34to allow the parent of a child to consent to forward the child’s
35information to the Healthy Families Program.

end delete

36(e) The department shall develop procedures in collaboration
37with the counties and stakeholder groups for determining county
38review cycles, sampling methodology and procedures, and data
39reporting.

P75   1(f) On January 1 of each year, each applicable county, as
2determined by the department, shall report to the department on
3the county’s results in meeting the performance standards specified
4in this section. The report shall be subject to verification by the
5department. County reports shall be provided to the public upon
6written request.

7(g) If the department finds that a county is not in compliance
8with one or more of the standards set forth in this section, the
9county shall, within 60 days, submit a corrective action plan to the
10department for approval. The corrective action plan shall, at a
11minimum, include steps that the county shall take to improve its
12performance on the standard or standards with which the county
13is out of compliance. The plan shall establish interim benchmarks
14for improvement that shall be expected to be met by the county in
15order to avoid a sanction.

16(h) (1) If a county does not meet the performance standards for
17completing eligibility determinations and redeterminations as
18specified in this section, the department may, at its sole discretion,
19reduce the allocation of funds to that county in the following year
20by 2 percent. Any funds so reduced may be restored by the
21department if, in the determination of the department, sufficient
22improvement has been made by the county in meeting the
23performance standards during the year for which the funds were
24reduced. If the county continues not to meet the performance
25standards, the department may reduce the allocation by an
26additional 2 percent for each year thereafter in which sufficient
27improvement has not been made to meet the performance standards.

28(2) No reduction of the allocation of funds to a county shall be
29imposed pursuant to this subdivision for failure to meet
30performance standards during any period of time in which the
31cost-of-doing-business increase is suspended.

begin delete

32(i) The department shall develop procedures, in collaboration
33with the counties and stakeholders, for developing instructions for
34the performance standards established under subparagraph (D) of
35paragraph (3) of subdivision (d), no later than September 1, 2005.

36(j) No later than September 1, 2005, the department shall issue
37a revised annual redetermination form to allow a parent to indicate
38parental consent to forward the annual redetermination form to
39the Healthy Families Program if the child is determined to have a
40share of cost.

P76   1(k) The department, in coordination with the Managed Risk
2Medical Insurance Board, shall streamline the method of providing
3the Healthy Families Program with information necessary to
4determine Healthy Families eligibility for a child who is receiving
5services under the Medi-Cal-to-Healthy Families Bridge Benefits
6Program.

7(l) 

end delete

8begin insert(i)end insertbegin insertend insert Notwithstanding Chapter 3.5 (commencing with Section
911340) of Part 1 of Division 3 of Title 2 of the Government Code,
10and except as provided in subparagraph (G) of paragraph (6) of
11subdivision (a), the department shall, without taking any further
12regulatory action, implement, interpret, or make specific this
13section and any applicable federal waivers and state plan
14amendments by means of all-county letters or similar instructions.

15begin insert

begin insertSEC. 31.end insert  

end insert

begin insertSection 14301.1 of the end insertbegin insertWelfare and Institutions Codeend insertbegin insert,
16as amended by Section 28 of Chapter 37 of the Statutes of 2013,
17is amended to read:end insert

18

14301.1.  

(a) For rates established on or after August 1, 2007,
19the department shall pay capitation rates to health plans
20participating in the Medi-Cal managed care program using actuarial
21methods and may establish health-plan- and county-specific rates.
22Notwithstanding any other law, this section shall apply to any
23managed care organization, licensed under the Knox-Keene Health
24Care Service Plan Act of 1975 (Chapter 2.2 (commencing with
25Section 1340) of Division 2 of the Health and Safety Code), that
26has contracted with the department as a primary care case
27management plan pursuant to Article 2.9 (commencing with
28Section 14088) of Chapter 7 to provide services to beneficiaries
29who are HIV positive or who have been diagnosed with AIDS for
30rates established on or after July 1, 2012. The department shall
31utilize a county- and model-specific rate methodology to develop
32Medi-Cal managed care capitation rates for contracts entered into
33between the department and any entity pursuant to Article 2.7
34(commencing with Section 14087.3), Article 2.8 (commencing
35with Section 14087.5), and Article 2.91 (commencing with Section
3614089) of Chapter 7 that includes, but is not limited to, all of the
37following:

38(1) Health-plan-specific encounter and claims data.

39(2) Supplemental utilization and cost data submitted by the
40health plans.

P77   1(3) Fee-for-service data for the underlying county of operation
2or other appropriate counties as deemed necessary by the
3department.

4(4) Department of Managed Health Care financial statement
5data specific to Medi-Cal operations.

6(5) Other demographic factors, such as age, gender, or
7diagnostic-based risk adjustments, as the department deems
8appropriate.

9(b) To the extent that the department is unable to obtain
10sufficient actual plan data, it may substitute plan model, similar
11plan, or county-specific fee-for-service data.

12(c) The department shall develop rates that include
13administrative costs, and may apply different administrative costs
14with respect to separate aid code groups.

15(d) The department shall develop rates that shall include, but
16are not limited to, assumptions for underwriting, return on
17investment, risk, contingencies, changes in policy, and a detailed
18review of health plan financial statements to validate and reconcile
19costs for use in developing rates.

20(e) The department may develop rates that pay plans based on
21performance incentives, including quality indicators, access to
22care, and data submission.

23(f) The department may develop and adopt condition-specific
24payment rates for health conditions, including, but not limited to,
25childbirth delivery.

26(g) (1) Prior to finalizing Medi-Cal managed care capitation
27rates, the department shall provide health plans with information
28on how the rates were developed, including rate sheets for that
29specific health plan, and provide the plans with the opportunity to
30provide additional supplemental information.

31(2) For contracts entered into between the department and any
32entity pursuant to Article 2.8 (commencing with Section 14087.5)
33of Chapter 7, the department, by June 30 of each year, or, if the
34budget has not passed by that date, no later than five working days
35after the budget is signed, shall provide preliminary rates for the
36upcoming fiscal year.

37(h) For the purposes of developing capitation rates through
38implementation of this ratesetting methodology, Medi-Cal managed
39care health plans shall provide the department with financial and
40utilization data in a form and substance as deemed necessary by
P78   1the department to establish rates. This data shall be considered
2proprietary and shall be exempt from disclosure as official
3information pursuant to subdivision (k) of Section 6254 of the
4Government Code as contained in the California Public Records
5Act (Division 7 (commencing with Section 6250) of Title 1 of the
6Government Code).

7(i) Notwithstanding any otherbegin delete provision ofend delete law, on and after the
8effective date of the act adding this subdivision, the department
9may apply this section to the capitation rates it pays under any
10managed care health plan contract.

11(j) Notwithstanding Chapter 3.5 (commencing with Section
1211340) of Part 1 of Division 3 of Title 2 of the Government Code,
13the department may set and implement managed care capitation
14rates, and interpret or make specific this section and any applicable
15federal waivers and state plan amendments by means of plan letters,
16plan or provider bulletins, or similar instructions, without taking
17regulatory action.

18(k) The department shall report, upon request, to the fiscal and
19policy committees of the respective houses of the Legislature
20regarding implementation of this section.

21(l) Prior to October 1, 2011, the risk-adjusted countywide
22capitation rate shall comprise no more than 20 percent of the total
23capitation rate paid to each Medi-Cal managed care plan.

24(m) (1) It is the intent of the Legislature to preserve the policy
25goal to support and strengthen traditional safety net providers who
26treat high volumes of uninsured and Medi-Cal patients when
27Medi-Cal enrollees are defaulted into Medi-Cal managed care
28plans.

29(2) As the department adds additional factors, such as managed
30care plan costs, to the Medi-Cal managed care plan default
31assignment algorithm, it shall consult with the Auto Assignment
32Performance Incentive Program stakeholder workgroup to develop
33cost factor disregards related to intergovernmental transfers and
34required wraparound payments that support safety net providers.

begin insert

35
(n) (1) The department shall develop and pay capitation rates
36to entities contracted pursuant to Chapter 8.75 (commencing with
37Section 14591), using actuarial methods and in a manner consistent
38with this section, except as provided in this subdivision.

end insert
begin insert

39
(2) The department may develop capitation rates using a
40standardized rate methodology across managed care plan models
P79   1for comparable populations. The specific rate methodology applied
2to PACE organizations shall address features of PACE that
3distinguishes it from other managed care plan models.

end insert
begin insert

4
(3) The department may develop statewide rates and apply
5geographic adjustments, using available data sources deemed
6appropriate by the department. Consistent with actuarial methods,
7the primary source of data used to develop rates for each PACE
8organization shall be its Medi-Cal cost and utilization data or
9other data sources as deemed necessary by the department.

end insert
begin insert

10
(4) Rates developed pursuant to this subdivision shall reflect
11the level of care associated with the specific populations served
12under the contract.

end insert
begin insert

13
(5) The rate methodology developed pursuant to this subdivision
14shall contain a mechanism to account for the costs of high-cost
15drugs and treatments.

end insert
begin insert

16
(6) Rates developed pursuant to this subdivision shall be
17actuarially certified prior to implementation.

end insert
begin insert

18
(7) The department shall consult with those entities contracted
19pursuant to Chapter 8.75 (commencing with Section 14591) in
20developing a rate methodology according to this subdivision.

end insert
begin insert

21
(8) Consistent with the requirements of federal law, the
22department shall calculate an upper payment limit for payments
23to PACE organizations. In calculating the upper payment limit,
24the department shall correct the applicable data as necessary and
25shall consider the risk of nursing home placement for the
26comparable population when estimating the level of care and risk
27of PACE participants.

end insert
begin insert

28
(9) During the first three rate years in which the methodology
29developed pursuant to this subdivision is used by the department
30to set rates for entities contracted pursuant to Chapter 8.75
31(commencing with Section 14591), the department shall pay the
32entity at a rate within the certified actuarially sound rate range
33developed with respect to that entity, to the extent consistent with
34federal requirements and subject to paragraph (11), as necessary
35to mitigate the impact to the entity during the transition to the
36methodology developed pursuant to this subdivision.

end insert
begin insert

37
(10) During the first two years in which a new PACE
38organization or existing PACE organization enters a previously
39unserved area, the department shall pay at a rate within the
40certified actuarially sound rate range developed with respect to
P80   1that entity, to the extent consistent with federal requirements and
2subject to paragraph (11).

end insert
begin insert

3
(11) This subdivision shall be implemented only to the extent
4that any necessary federal approvals are obtained and federal
5financial participation is available.

end insert
begin insert

6
(12) This subdivision shall apply for rates implemented no
7earlier than January 1, 2017.

end insert
begin delete

8(n)

end delete

9begin insert(o)end insert This section shall be inoperative if the Coordinated Care
10Initiative becomes inoperative pursuant to Section 34 ofbegin delete the act
11that added this subdivision.end delete
begin insert Chapter 37 of the Statutes of 2013.end insert

12begin insert

begin insertSEC. 32.end insert  

end insert

begin insertSection 14301.1 of the end insertbegin insertWelfare and Institutions Codeend insertbegin insert,
13as added by Section 29 of Chapter 37 of the Statutes of 2013, is
14amended to read:end insert

15

14301.1.  

(a) For rates established on or after August 1, 2007,
16the department shall pay capitation rates to health plans
17participating in the Medi-Cal managed care program using actuarial
18methods and may establish health-plan- and county-specific rates.
19The department shall utilize a county- and model-specific rate
20methodology to develop Medi-Cal managed care capitation rates
21for contracts entered into between the department and any entity
22pursuant to Article 2.7 (commencing with Section 14087.3), Article
232.8 (commencing with Section 14087.5), and Article 2.91
24(commencing with Section 14089) of Chapter 7 that includes, but
25is not limited to, all of the following:

26(1) Health-plan-specific encounter and claims data.

27(2) Supplemental utilization and cost data submitted by the
28health plans.

29(3) Fee-for-service data for the underlying county of operation
30or other appropriate counties as deemed necessary by the
31department.

32(4) Department of Managed Health Care financial statement
33data specific to Medi-Cal operations.

34(5) Other demographic factors, such as age, gender, or
35diagnostic-based risk adjustments, as the department deems
36appropriate.

37(b) To the extent that the department is unable to obtain
38sufficient actual plan data, it may substitute plan model, similar
39plan, or county-specific fee-for-service data.

P81   1(c) The department shall develop rates that include
2administrative costs, and may apply different administrative costs
3with respect to separate aid code groups.

4(d) The department shall develop rates that shall include, but
5are not limited to, assumptions for underwriting, return on
6investment, risk, contingencies, changes in policy, and a detailed
7review of health plan financial statements to validate and reconcile
8costs for use in developing rates.

9(e) The department may develop rates that pay plans based on
10performance incentives, including quality indicators, access to
11care, and data submission.

12(f) The department may develop and adopt condition-specific
13payment rates for health conditions, including, but not limited to,
14childbirth delivery.

15(g) (1) Prior to finalizing Medi-Cal managed care capitation
16rates, the department shall provide health plans with information
17on how the rates were developed, including rate sheets for that
18specific health plan, and provide the plans with the opportunity to
19provide additional supplemental information.

20(2) For contracts entered into between the department and any
21entity pursuant to Article 2.8 (commencing with Section 14087.5)
22of Chapter 7, the department, by June 30 of each year, or, if the
23budget has not passed by that date, no later than five working days
24after the budget is signed, shall provide preliminary rates for the
25upcoming fiscal year.

26(h) For the purposes of developing capitation rates through
27implementation of this ratesetting methodology, Medi-Cal managed
28care health plans shall provide the department with financial and
29utilization data in a form and substance as deemed necessary by
30the department to establish rates. This data shall be considered
31proprietary and shall be exempt from disclosure as official
32information pursuant to subdivision (k) of Section 6254 of the
33Government Code as contained in the California Public Records
34Act (Division 7 (commencing with Section 6250) of Title 1 of the
35Government Code).

36(i) The department shall report, upon request, to the fiscal and
37policy committees of the respective houses of the Legislature
38regarding implementation of this section.

P82   1(j) Prior to October 1, 2011, the risk-adjusted countywide
2capitation rate shall comprise no more than 20 percent of the total
3capitation rate paid to each Medi-Cal managed care plan.

4(k) (1) It is the intent of the Legislature to preserve the policy
5goal to support and strengthen traditional safety net providers who
6treat high volumes of uninsured and Medi-Cal patients when
7Medi-Cal enrollees are defaulted into Medi-Cal managed care
8plans.

9(2) As the department adds additional factors, such as managed
10care plan costs, to the Medi-Cal managed care plan default
11assignment algorithm, it shall consult with the Auto Assignment
12Performance Incentive Program stakeholder workgroup to develop
13cost factor disregards related to intergovernmental transfers and
14required wraparound payments that support safety net providers.

begin insert

15
(l) (1) The department shall develop and pay capitation rates
16to entities contracted pursuant to Chapter 8.75 (commencing with
17Section 14591), using actuarial methods and in a manner consistent
18with this section, except as provided in this subdivision.

end insert
begin insert

19
(2) The department may develop capitation rates using a
20standardized rate methodology across managed care plan models
21for comparable populations. The specific rate methodology applied
22to PACE organizations shall address features of PACE that
23distinguish it from other managed care plan models.

end insert
begin insert

24
(3) The department may develop statewide rates and apply
25geographic adjustments, using available data sources deemed
26appropriate by the department. Consistent with actuarial methods,
27the primary source of data used to develop rates for each PACE
28organization shall be its Medi-Cal cost and utilization data or
29other data sources as deemed necessary by the department.

end insert
begin insert

30
(4) Rates developed pursuant to this subdivision shall reflect
31the level of care associated with the specific populations served
32under the contract.

end insert
begin insert

33
(5) The rate methodology developed pursuant to this subdivision
34shall contain a mechanism to account for the costs of high-cost
35drugs and treatments.

end insert
begin insert

36
(6) Rates developed pursuant to this subdivision shall be
37actuarially certified prior to implementation.

end insert
begin insert

38
(7) The department shall consult with those entities contracted
39pursuant to Chapter 8.75 (commencing with Section 14591) in
40developing a rate methodology according to this subdivision.

end insert
begin insert

P83   1
(8) Consistent with the requirements of federal law, the
2department shall calculate an upper payment limit for payments
3to PACE organizations. In calculating the upper payment limit,
4the department shall correct the applicable data as necessary and
5shall consider the risk of nursing home placement for the
6comparable population when estimating the level of care and risk
7of PACE participants.

end insert
begin insert

8
(9) During the first three rate years in which the methodology
9developed pursuant to this subdivision is used by the department
10to set rates for entities contracted pursuant to Chapter 8.75
11(commencing with Section 14591), the department shall pay the
12entity at a rate within the certified actuarially sound rate range
13developed with respect to that entity, to the extent consistent with
14federal requirements and subject to paragraph (11), as necessary
15to mitigate the impact to the entity during the transition to the
16methodology developed pursuant to this subdivision.

end insert
begin insert

17
(10) During the first two years in which a new PACE
18organization or existing PACE organization enters a previously
19unserved area, the department shall pay at a rate within the
20certified actuarially sound rate range developed with respect to
21that entity, to the extent consistent with federal requirements and
22subject to paragraph (11).

end insert
begin insert

23
(11) This subdivision shall be implemented only to the extent
24any necessary federal approvals are obtained and federal financial
25participation is available.

end insert
begin insert

26
(12) This subdivision shall apply for rates implemented no
27earlier than January 1, 2017.

end insert
begin delete

28(l)

end delete

29begin insert(m)end insert This section shall be operative only if Section 28 ofbegin delete the act
30that added this sectionend delete
begin insert Chapter 37 of the Statutes of 2013end insert becomes
31inoperative pursuant to subdivision (n) of that Section 28.

32begin insert

begin insertSEC. 33.end insert  

end insert

begin insertSection 14592 of the end insertbegin insertWelfare and Institutions Codeend insert
33
begin insert is amended to read:end insert

34

14592.  

(a) For purposes of this chapter, “PACE organization”
35means an entity as defined in Section 460.6 of Title 42 of the Code
36of Federal Regulations.

37(b) The Director of Health Care Services shall establish the
38California Program of All-Inclusive Care for the Elderly, to provide
39community-based, risk-based, and capitated long-term care services
40as optional services under the state’s Medi-Cal State Plan and
P84   1under contracts entered into between the federal Centers for
2Medicare and Medicaid Services, the department, and PACE
3organizations, meeting the requirements of the Balanced Budget
4Act of 1997 (Public Law 105-33) and begin delete Part 460 (commencing with
5Section 460.2) of Title 42 of the Code of Federal Regulations.end delete
begin insert any
6other applicable law or regulation.end insert

7begin insert

begin insertSEC. 34.end insert  

end insert

begin insertSection 14593 of the end insertbegin insertWelfare and Institutions Codeend insert
8
begin insert is amended to read:end insert

9

14593.  

(a) (1) The department may enter into contracts with
10public or privatebegin delete nonprofitend delete organizations for implementation of
11the PACE program, and also may enter into separate contracts
12with PACE organizations, to fully implement the single state
13agency responsibilities assumed by the department in those
14contracts, Section 14132.94, and any other state requirement found
15necessary by the department to provide comprehensive
16community-based, risk-based, and capitated long-term care services
17to California’s frail elderly.

18(2) The department may enter into separate contracts as specified
19inbegin delete subdivision (a)end deletebegin insert paragraph (1)end insert with up to 15 PACE organizations.
20
begin insert This paragraph shall become inoperative upon federal approval
21of a capitation rate methodology, pursuant to subdivision (n) of
22Section 14301.1.end insert

23(b) The requirements of the PACE model, as provided for
24pursuant to Section 1894 (42 U.S.C. Sec. 1395eee) and Section
251934 (42 U.S.C. Sec. 1396u-4) of the federal Social Security Act,
26shall not be waived or modified. The requirements that shall not
27be waived or modified include all of the following:

28(1) The focus on frail elderly qualifying individuals who require
29the level of care provided in a nursing facility.

30(2) The delivery of comprehensive, integrated acute and
31long-term care services.

32(3) The interdisciplinary team approach to care management
33and service delivery.

34(4) Capitated, integrated financing that allows the provider to
35pool payments received from public and private programs and
36individuals.

37(5) The assumption by the provider of full financial risk.

38(6) The provision of a PACE benefit package for all participants,
39regardless of source of payment, that shall include all of the
40following:

P85   1(A) All Medicare-covered items and services.

2(B) All Medicaid-covered items and services, as specified in
3the state’s Medicaid plan.

4(C) Other services determined necessary by the interdisciplinary
5team to improve and maintain the participant’s overall health status.

6(c) Sections 14002, 14005.12, 14005.17, and 14006 shall apply
7when determining the eligibility for Medi-Cal of a person receiving
8the services from an organization providing services under this
9chapter.

10(d) Provisions governing the treatment of income and resources
11of a married couple, for the purposes of determining the eligibility
12of a nursing-facility certifiable or institutionalized spouse, shall
13be established so as to qualify for federal financial participation.

14(e) (1) The department shall establish capitation rates paid to
15each PACE organization at no less than 95 percent of the
16fee-for-service equivalent cost, including the department’s cost of
17administration, that the department estimates would be payable
18for all services covered under the PACE organization contract if
19all those services were to be furnished to Medi-Cal beneficiaries
20under the fee-for-service Medi-Cal program provided for pursuant
21to Chapter 7 (commencing with Section 14000).

22(2) This subdivision shall be implemented only to the extent
23that federal financial participation is available.

begin insert

24
(3) This subdivision shall become inoperative upon federal
25approval of a capitation rate methodology, pursuant to subdivision
26(n) of Section 14301.1.

end insert

27(f) Contracts under this chapter may be on a nonbid basis and
28shall be exempt from Chapter 2 (commencing with Section 10290)
29of Part 2 of Division 2 of the Public Contract Code.

begin delete

30(g) This section shall become operative on April 1, 2015.

end delete
begin insert

31
(g) (1) Notwithstanding subdivision (b), and only to the extent
32federal financial participation is available, the department, in
33consultation with PACE organizations, shall seek increased federal
34regulatory flexibility from the federal Centers for Medicare and
35Medicaid Services to modernize the PACE program, which may
36include, but is not limited to, addressing all of the following:

end insert
begin insert

37
(A) Composition of PACE interdisciplinary teams (IDT).

end insert
begin insert

38
(B) Use of community-based physicians.

end insert
begin insert

39
(C) Marketing practices.

end insert
begin insert

40
(D) Development of a streamlined PACE waiver process.

end insert
begin insert

P86   1
(2) This subdivision shall be operative upon federal approval
2of a capitation rate methodology pursuant to subdivision (n) of
3Section 14301.1.

end insert
begin insert

4
(h) This section shall become inoperative if the Coordinated
5Care Initiative becomes inoperative pursuant to Section 34 of
6Chapter 37 of the Statutes of 2013 and shall be repealed on
7January 1 next following the date upon which it becomes
8inoperative.

end insert
9begin insert

begin insertSEC. 35.end insert  

end insert

begin insertSection 14593 is added to the end insertbegin insertWelfare and Institutions
10Code
end insert
begin insert, to read:end insert

begin insert
11

begin insert14593.end insert  

(a) (1) The department may enter into contracts with
12public or private organizations for implementation of the PACE
13program, and also may enter into separate contracts with PACE
14organizations, to fully implement the single state agency
15responsibilities assumed by the department in those contracts,
16Section 14132.94, and any other state requirement found necessary
17by the department to provide comprehensive community-based,
18risk-based, and capitated long-term care services to California's
19frail elderly.

20
(2) The department may enter into separate contracts as
21specified in paragraph (1) with up to 15 PACE organizations. This
22paragraph shall become inoperative upon federal approval of a
23capitation rate methodology pursuant to subdivision (l) of Section
2414301.1.

25
(b) The requirements of the PACE model, as provided for
26pursuant to Section 1894 (42 U.S.C. Sec. 1395eee) and Section
271934 (42 U.S.C. Sec. 1396u-4) of the federal Social Security Act,
28shall not be waived or modified. The requirements that shall not
29be waived or modified include all of the following:

30
(1) The focus on frail elderly qualifying individuals who require
31the level of care provided in a nursing facility.

32
(2) The delivery of comprehensive, integrated acute and
33long-term care services.

34
(3) The interdisciplinary team approach to care management
35and service delivery.

36
(4) Capitated, integrated financing that allows the provider to
37pool payments received from public and private programs and
38individuals.

39
(5) The assumption by the provider of full financial risk.

P87   1
(6) The provision of a PACE benefit package for all participants,
2regardless of source of payment, that shall include all of the
3following:

4
(A) All Medicare-covered items and services.

5
(B) All Medicaid-covered items and services, as specified in the
6state’s Medicaid plan.

7
(C) Other services determined necessary by the interdisciplinary
8team to improve and maintain the participant’s overall health
9status.

10
(c) Sections 14002, 14005.12, 14005.17, and 14006 shall apply
11when determining the eligibility for Medi-Cal of a person receiving
12the services from an organization providing services under this
13chapter.

14
(d) Provisions governing the treatment of income and resources
15of a married couple, for the purposes of determining the eligibility
16of a nursing-facility certifiable or institutionalized spouse, shall
17be established so as to qualify for federal financial participation.

18
(e) (1) The department shall establish capitation rates paid to
19each PACE organization at no less than 95 percent of the
20fee-for-service equivalent cost, including the department’s cost of
21administration, that the department estimates would be payable
22for all services covered under the PACE organization contract if
23all those services were to be furnished to Medi-Cal beneficiaries
24under the fee-for-service Medi-Cal program provided for pursuant
25to Chapter 7 (commencing with Section 14000).

26
(2) This subdivision shall be implemented only to the extent that
27federal financial participation is available.

28
(3) This subdivision shall become inoperative upon federal
29approval of a capitation rate methodology pursuant to subdivision
30(l) of Section 14301.1.

31
(f) Contracts under this chapter may be on a nonbid basis and
32shall be exempt from Chapter 2 (commencing with Section 10290)
33of Part 2 of Division 2 of the Public Contract Code.

34
(g) (1) Notwithstanding subdivision (b), and only to the extent
35federal financial participation is available, the department, in
36consultation with PACE organizations, shall seek increased federal
37regulatory flexibility from the federal Centers for Medicare and
38Medicaid Services to modernize the PACE program, which may
39include, but is not limited to, addressing:

40
(A) Composition of PACE interdisciplinary teams (IDT).

P88   1
(B) Use of community-based physicians.

2
(C) Marketing practices.

3
(D) Development of a streamlined PACE waiver process.

4
(2) This subdivision shall be operative upon federal approval
5of a capitation rate methodology pursuant to subdivision (l) of
6Section 14301.1.

7
(h) This section shall become operative only if Section 28 of
8Chapter 37 of the Statutes of 2013 becomes inoperative.

end insert
9begin insert

begin insertSEC. 36.end insert  

end insert
begin insert

The amendments made to Section 14131.10 of the
10Welfare and Institutions Code by this act shall become operative
11on July 1, 2016.

end insert
12begin insert

begin insertSEC. 37.end insert  

end insert
begin insert

This act is a bill providing for appropriations related
13to the Budget Bill within the meaning of subdivision (e) of Section
1412 of Article IV of the California Constitution, has been identified
15as related to the budget in the Budget Bill, and shall take effect
16immediately.

end insert
begin delete
17

SECTION 1.  

It is the intent of the Legislature to enact statutory
18changes relating to the 2016 Budget Act.
19

end delete

CORRECTIONS:

Heading--Lines 1, 2, 3, 4, and 5.




O

Corrected 6-15-16—See last page.     97