BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session SB 36 (Hernandez) - Medi-Cal: demonstration project ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: December 1, 2014 |Policy Vote: HEALTH 9 - 0 | | | | |--------------------------------+--------------------------------| | | | |Urgency: Yes |Mandate: No | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: April 20, 2015 |Consultant: Brendan McCarthy | | | | ----------------------------------------------------------------- This bill does not meet the criteria for referral to the Suspense File. Bill Summary: SB 36 would require the Department of Health Care Services to submit an application to the federal government for a Section 1115 waiver of federal law, to allow the state to make changes to the operation of the Medi-Cal program for the period of 2015 to 2020. Fiscal Impact: No new administrative costs to the Department of Health Care Services are anticipated due to this bill. The Department is currently in the process of developing a waiver application and has been engaged in planning and stakeholder discussions which will continue into 2015-16. Because the Department is already undertaking these efforts this bill will not impose new administrative duties on the Department. SB 36 (Hernandez) Page 1 of ? Background: Under state and federal law, the Department of Health Care Services operates the Medi-Cal program, which provides health care coverage to low income individuals, families, and children. The federal government provides matching funds that vary from 50 percent to 90 percent of expenditures depending on the category of beneficiary. Current federal law allows states to apply for "Section 1115 waivers" of requirements of the federal Social Security Act. This process allows states, on a case by case basis, to make changes to their Medicaid program with the approval of the federal Centers for Medicare and Medicaid Services. In general, for the federal government to approve a waiver, the state must demonstrate that will assist in promoting the objectives of Medicaid and that total federal costs will not exceed fee-for-service equivalent costs to the federal government over the period of the waiver, typically five years. California's existing Section 1115 wavier, referred to as the "Bridge to Reform Waiver" will expire in October 2015. The existing wavier was designed to provide about $10 billion in addition federal funding to the state to fund an early implementation of the coverage expansion under the Affordable Care Act and to invest in safety net health care programs. (The additional federal funds were available due to cost savings created through the use of Medi-Cal managed care to reduce per beneficiary expenditures below what they would have been through fee-for-service health care.) The Department of Health Care Services has been engaged in the process for developing a new Section 1115 waiver and has submitted a preliminary proposal to the federal government. Under that proposal, the state would be eligible for about $17 billion in additional federal funding to invest in innovative programs, such as more comprehensive care for the uninsured population, workforce development, and programs to transform health care delivery systems. Proposed Law: SB 36 would require the Department of Health Care Services to submit an application to the federal government for a Section SB 36 (Hernandez) Page 2 of ? 1115 waiver of federal law, to allow the state to make changes to the operation of the Medi-Cal program for the period of 2015 to 2020. The bill is an urgency measure. Related Legislation: AB 72 (Bonta and Atkins) is identical to this bill. That bill is on the Assembly Floor. Staff Comments: The intention in developing the new Section 1115 wavier is to allow the state to generate cost savings (chiefly by using managed care to provide appropriate primary care and preventative care to avoid costly hospitalizations) and to use a portion of the projected cost savings to fund other state programs, such as safety net programs for the uninsured population. Based on preliminary analyses by the Department, the state has indicated to the federal government that it will be requesting about $17 billion in shared savings over the five year waiver period from the federal government to support additional waiver programs. While this bill requires the Department to submit a waiver application to the federal government, it does not specify the programmatic requirements of such a waiver. -- END --