BILL ANALYSIS Ó AB 2077 Page 1 Date of Hearing: April 20, 2016 ASSEMBLY COMMITTEE ON APPROPRIATIONS Lorena Gonzalez, Chair AB 2077 (Burke) - As Amended March 18, 2016 ----------------------------------------------------------------- |Policy |Health |Vote:|18 - 0 | |Committee: | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: YesReimbursable: No SUMMARY: This bill establishes specific procedures to ensure eligible recipients move from Medi-Cal and other insurance affordability programs such as the California Health Benefit Exchange (CoveredCA), without any breaks in coverage as required by current law. Specifically, this bill: 1)Establishes a grace period for persons no longer eligible for AB 2077 Page 2 Medi-Cal, during which Medi-Cal benefits are not terminated unless an individual enrolls in another health plan before the specified termination date (Medi-Cal to CoveredCA transition). 2)Specifies procedures counties must follow to enroll individuals in Medi-Cal who are deemed ineligible for subsidized coverage through Covered California due to income that appears to make them Medi-Cal eligible (CoveredCA to Medi-Cal transition). 3)Specifies other requirements related to the content of notices and related administrative procedures. FISCAL EFFECT: 1)Uncertain Information Technology (IT) costs to the CalHEERS system (GF/federal/special), to the county-administered Statewide Automated Welfare System (SAWS), and to the Medicaid Eligibility Data System (MEDS) (GF/federal) to effectuate the policy changes. There is already a "change request" to these IT systems planned that will modify eligibility, enrollment and notifications. This change request could potentially be modified to accomplish the bill's requirements at little additional cost. To the extent this bill would require IT changes beyond the scope of the current request, there could be additional costs. 2)This bill's requirements could result in unknown but large additional state cost pressure in Medi-Cal. Although current law requires the state to provide for a seamless transition, to the extent the specific procedures required by this bill preclude the state from pursuing other, most cost-efficient ways to ensure individuals seamlessly move between programs, costs would increase beyond the status quo, even when AB 2077 Page 3 considering currently planned changes. The largest fiscal impact is associated with the creation of a grace period to move from Medi-Cal and enroll in a CoveredCA plan, where the state would pay for Medi-Cal coverage for a longer period of time in order to extend the window most consumers have to pick a CoveredCA plan. This bill would prohibit Medi-Cal eligibility from being terminated until at least 30 days after the county sends a "notice of action" about the termination, allowing individuals to stay on Medi-Cal longer than they otherwise would. Based on the fact that eligibility is provided on a monthly basis, it appears this bill would provide additional time to about 2/3 of the individuals enrolling in CoveredCA from Medi-Cal. Under current rules, these individuals would have been terminated from enrollment at the end of the month in which they were determined ineligible, whereas under this bill they would gain another month of eligibility. The UC Berkeley Labor Center estimated around 16%, or 2 million beneficiaries, would be income-eligible to transition out of Medi-Cal to CoveredCA every year. This is likely an overestimate, but the "churn" between programs is nevertheless significant. If even a portion of this projected 2 million stayed on Medi-Cal for an extra month while transitioning from Medi-Cal to CoveredCA, the state could experience cost in tens of millions. It is unknown precisely what the overall cost of this grace period would be. It would depend on the number of such transitions, which is not currently reported, and how long they would stay on the program under the new rules versus the status quo. Over a large base of beneficiaries, small changes can have an enormous fiscal effect. Finally, it is unclear whether federal rules allow for federal financial participation (FFP) during this proposed coverage grace period as currently envisioned by this bill. If federal rules do not allow FFP, any costs would be state-only GF AB 2077 Page 4 costs. COMMENTS: 1)Purpose. Current law requires the state to ensure individuals can transition between insurance affordability programs without a gap in coverage. This bill intends to establish specific administrative procedures that effectuate this broad requirement. Western Center on Law and Poverty (WCLP), this bill's sponsor, believes such specific guidance is necessary in order to ensure individuals are enrolled into Medi-Cal in a timely way, and to meet other goals such as encouraging individuals to select a Medi-Cal plan and ensuring they receive timely and accurate information about eligibility. It attempts to make the process consumer-friendly without being overly burdensome on the state administration of the programs. 2)Background. CalHEERS is the computer system that operates as a single online portal to apply for state health care affordability programs, including Medi-Cal and premium subsidies through CoveredCA. The transition between these programs- when individuals lose eligibility for one program and gain eligibility for another due to changes in income or family size- is the subject of this bill. Adults are generally eligible for Medi-Cal if they make under 138% of the poverty level, while higher levels apply to children and different rules apply to seniors. An individual receiving Medi-Cal or CoveredCA subsidies is supposed to report a change in income to CalHEERS in order to re-determine the benefits for which one is eligible. Many transitions also occur during required annual redeterminations. Transitioning from Medi-Cal to subsidized coverage is different than transitioning in the other direction. The differences include: AB 2077 Page 5 Currently, applications for persons who appear Medi-Cal eligible due to income are forwarded to county eligibility offices to make a final determination for Medi-Cal eligibility, while CalHEERS makes a final determination for CoveredCA subsidies. Medi-Cal plan selection can be done through a default algorithm, while individuals must actively select a plan and pay premiums in order to enroll in a CoveredCA plan. Although Medi-Cal enrollment is year-round, individuals can only choose plans and receive subsidized coverage through CoveredCA during open enrollment periods or if they experience a qualifying life event, such as a change in income. This bill attempts to address some of these nuances by specifying certain processes that apply in each case, such as timelines and notice requirements for Medi-Cal plan selections. Currently, CoveredCA and DHCS are conducting stakeholder workgroups to address concerns with such transitions. 1)Prior Legislation. AB 1296 (Bonilla), Chapter 641, Statutes of 2011, enacts the Health Care Reform Eligibility, Enrollment, and Retention Planning Act (Act), which requires the California Health and Human Services Agency (CHHSA), in consultation with specified entities, to establish standardized single, accessible application forms and related renewal procedures for state health subsidy programs, as defined, in accordance with specified requirements. It also addressed coverage transitions, requiring "during the processing of an application, renewal, or a transition due to AB 2077 Page 6 a change in circumstances, an entity making eligibility determinations for a public health coverage program shall ensure that an eligible applicant and recipient of state health subsidy programs that meets all program eligibility requirements and complies with all necessary requests for information moves between programs without any breaks in coverage and without being required to provide any forms, documents, or other information or undergo verification that is duplicative or otherwise unnecessary." 2)Staff Comments. This bill offers a specific solution to implement a current-law requirement for seamless coverage transitions that the author contends has not yet been realized. Staff notes there may be other workable solutions available that are consumer-friendly but at a lower state cost. At the very least, implementing a process contingent on whether federal matching funds are available seems reasonable. It does not appear that information about the number and seamlessness of transitions is meaningfully tracked at this time, raising questions about whether the state is able to monitor its own compliance with current state law, which specifies individuals should move between programs with any breaks in coverage. It is difficult to demonstrate the extent of a problem or measure progress without this data. According to DHCS, this data will soon be reported and monitored as part of a report required pursuant to AB X1 1 (J. Perez), Chapter 3, Statutes of 2013 Finally, there is an inherent tension between maintaining seamless coverage and providing consumers adequate time to make informed decisions about plan choice, if appropriate. There is also a tension between the state's interest in maintaining seamless coverage and minimizing its growing burden of health care costs. There is not likely to be a solution that optimizes all of the variables at once- AB 2077 Page 7 instead, the question is how the state should balance these trade-offs. Analysis Prepared by:Lisa Murawski / APPR. / (916) 319-2081