BILL ANALYSIS                                                                                                                                                                                                    

                                                                    AB 2077

                                                                    Page  1

          Date of Hearing:  April 20, 2016


                               Lorena Gonzalez, Chair

          2077 (Burke) - As Amended March 18, 2016

          |Policy       |Health                         |Vote:|18 - 0       |
          |Committee:   |                               |     |             |
          |             |                               |     |             |
          |             |                               |     |             |
          |             |                               |     |             |
          |             |                               |     |             |
          |             |                               |     |             |

          Urgency:  No  State Mandated Local Program:  YesReimbursable:   


          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



          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  

                     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  

          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  

          Analysis Prepared by:Lisa Murawski / APPR. / (916)