BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 36|
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THIRD READING
Bill No: SB 36
Author: Hernandez (D) and De León (D)
Introduced:12/1/14
Vote: 27 - Urgency
SENATE HEALTH COMMITTEE: 9-0, 4/8/15
AYES: Hernandez, Nguyen, Hall, Mitchell, Monning, Nielsen,
Pan, Roth, Wolk
SENATE APPROPRIATIONS COMMITTEE: 7-0, 4/20/15
AYES: Lara, Bates, Beall, Hill, Leyva, Mendoza, Nielsen
SUBJECT: Medi-Cal: demonstration project
SOURCE: Author
DIGEST: This bill requires the Department of Health Care
Services (DHCS) to submit an application to the federal Centers
for Medicare and Medicaid Services (CMS) for a waiver to
implement a demonstration project that furthers the delivery of
high-quality and cost-efficient care for Medi-Cal beneficiaries,
ensures the long-term viability of the delivery system following
the expansion of Medi-Cal eligibility under the federal Patient
Protection and Affordable Care Act (ACA), and continues
California's momentum and successes in innovation achieved under
the 2010 "Bridge to Reform" Waiver.
ANALYSIS:
Existing law:
1)Establishes the Medi-Cal program, which is administered by
DHCS and under which qualified low-income persons receive
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health care benefits.
2)Establishes a demonstration project under the Medi-Cal program
until October 31, 2015, to implement specified objectives,
including better care coordination for Seniors and Persons
with Disabilities (SPDs) and maximization of opportunities to
reduce the number of uninsured individuals.
This bill:
1)Requires DHCS to submit an application to CMS for a waiver to
implement a demonstration project that does all of the
following:
a) Furthers the delivery of high-quality and cost-efficient
care for Medi-Cal beneficiaries;
b) Ensures the long-term viability of the delivery system
following the expansion of Medi-Cal eligibility under ACA;
and,
c) Continues California's momentum and successes in
innovation achieved under the 2010 "Bridge to Reform"
Waiver.
2)Requires DHCS to consult with interested stakeholders and the
Legislature in developing the waiver application.
3)Contains an urgency clause that will make this bill effective
upon enactment.
Comments
1)Author's statement. According to the author, this bill is one
of two legislative vehicles to make the necessary statutory
changes to implement a new Section 1115 Medicaid waiver as the
2010 California Bridge to Reform Waiver (Waiver) expires on
October 31, 2015. The Waiver renewal is critical to the
long-term fiscal sustainability of the Medi-Cal program and to
California's ability to continue to provide high quality
health care to Medi-Cal beneficiaries. The goals of the Waiver
are to continue to support ACA implementation, improve the
health care quality and outcomes of the over 12 million
individuals enrolled in Medi-Cal, and provide for the
long-term fiscal stability of the Medi-Cal program through
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delivery system transformation. Specific strategies
anticipated to be included in the waiver renewal include a
federal-state shared savings initiative; housing and
supportive services for vulnerable populations; various health
plan and provider delivery system transformation and alignment
incentive programs, including a new Delivery System Reform
Incentive Program (DSRIP) at designated public hospitals and
non-designated public hospitals; workforce development
strategies to expand provider access and capacity; and safety
net payment and delivery system transformation.
2)Federal Section 1115 Waiver and Expenditure Authority.
Medicaid (known as Medi-Cal in California) is a joint
federal-state program to provide health coverage to low-income
individuals. Section 1115 of the federal Social Security Act
(Act) gives the Secretary of the Department of Health and
Human Services (HHS) authority to waive provisions of major
health and welfare programs authorized under the Act. This
includes certain federal Medicaid requirements in any
experimental pilot or demonstration project which, in the
judgment of the Secretary, is likely to assist in promoting
the objectives of Medicaid. In addition, Section 1115 also
allows states to use federal Medicaid funds to reimburse for
costs in ways that are not otherwise allowed under federal
Medicaid law. This is referred to as expenditure authority for
"costs not otherwise matchable" or CNOM.
Section 1115 waivers are approved at the discretion of the
Secretary of HHS through negotiations between a state and CMS
for projects that the Secretary determines promote Medicaid
program objectives. Section 1115 waivers are generally
approved for a five-year period and then must be renewed.
Although not required by statute or regulation, longstanding
federal administrative policy has required waivers to be
"budget neutral" for the federal government, meaning that
federal spending under a waiver must not be more than
projected federal spending in the state without the waiver.
3)Bridge to Reform Waiver. California's existing Section 1115
"California Bridge to Reform Demonstration" Waiver is a
five-year demonstration of health care reform initiatives that
was projected to provide an additional $10 billion in federal
funds over the lifetime of the waiver. The waiver prepared the
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state for successful implementation of health care reform
through an early expansion of Medicaid, and tested innovations
in health care support for safety net providers. California is
currently in the fourth year of this waiver, which began
November 1, 2010 and expires October 31, 2015. Under the
current waiver, California is required to submit an extension
request no later than six months prior to the expiration date
of the current demonstration. California also operates its
Medi-Cal managed care delivery system under this federal
waiver. The Bridge to Reform Waiver enabled California to:
a) Implement an early expansion of Medicaid to low-income
adults without minor children under ACA through the Low
Income Health Program, which enrolled 650,000 individuals;
b) Require the mandatory enrollment of SPDs into Medi-Cal
managed care plans in specified counties;
c) Provide federal funding for delivery system reform and
uncompensated care in designated public hospital systems
(21 county and University of California hospitals) through
the DSRIP and Safety Net Care Pool Uncompensated Care;
d) Provided federal funding for designated state health
care programs and workforce development programs related to
medically disadvantaged service areas;
e) Operate its Medi-Cal managed care program,
Community-Based Adult Services program, and seven county
Coordinated Care Initiative (under the Initiative,
individuals dually eligible for Medicare and Medi-Cal
receive their Medi-Cal and Medicare benefits through one
health plan).
1)DHCS Waiver Submission. On March 27, 2014, following several
months of waiver-related stakeholder meetings, DHCS submitted
an application to renew the state's Section 1115 Waiver
Demonstration entitled "Medi-Cal 2020: Key Concepts for
Renewal" (Medi-Cal 2020). DHCS identified five core goals in
that document, as follows:
a) Improve health care quality and outcomes for the
Medi-Cal population;
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b) Strengthen primary care delivery and access;
c) Build a foundation for an integrated health care
delivery system that incentivizes quality and efficiency;
d) Address social determinants of health and improve health
care equity; and,
e) Use California's sophisticated Medicaid Program as an
incubator to test innovative approaches to whole-person
care.
In addition to the continuation of existing waiver programs,
DHCS will pursue a set of six, cross-cutting approaches that
together will advance delivery system transformation in
California as part of Medi-Cal waiver renewal:
a) Managed Care Systems Transformation & Improvement
Program;
b) Fee-for-Service Transformation & Improvement Program;
c) Public Safety Net System Transformation & Improvement
Program;
d) Workforce Development Program;
e) Increased Access to Housing and Supportive Services
Program;
f) Whole Person Care Pilots; and,
g) Public Safety Net System Global Payment for the
Remaining Uninsured.
In support of California's efforts to achieve the goals
outlined above, DHCS seeks to test a new investment strategy
in partnership with the federal government by initiating a
federal-state shared savings model. California's shared
savings initiative would involve a reinvestment of federal
funding in recognition of the savings that California's
Section 1115 demonstration initiatives generate to the benefit
of both the state and the federal government. This
reinvestment would provide the state with a portion of the
federal savings that are generated through the demonstration
to facilitate and augment continued Medi-Cal delivery system
transformation.
The state's waiver request in Medi-Cal 2020 is for $17.1
billion in federal funds over the five years of the waiver.
FISCAL EFFECT: Appropriation: No Fiscal
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Com.:YesLocal: No
According to the Senate Appropriations Committee, no new
administrative costs to DHCS are anticipated due to this bill.
DHCS 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 DHCS is
already undertaking these efforts, this bill will not impose new
administrative duties on DHCS.
SUPPORT: (Verified 4/22/15)
Arc and United Cerebral Palsy California Collaboration
Association of California Health Care Districts
California Association of Physician Groups
California Commission on Aging
California Primary Care Association
California State Association of Counties
California State Council of the Service Employees International
Union
OPPOSITION: (Verified4/22/15)
None received
ARGUMENTS IN SUPPORT: The California Association of
Physician Groups (CAPG) writes that it supports policy measures
that encourage the implementation of the Triple Aim which
include decreased cost, improved patient experience and
development of population health management. CAPG writes the new
"Medi-Cal 2020" waiver seeks approximately $17 billion in
federal investment to further the achievements California has
made in health care reform that a set of payment and delivery
system transformation strategies. CAPH states it continues to
support and participate in the waiver renewal stakeholder
process.
The California State Association of Counties (CSAC) writes in
support that DHCS' Medi-Cal 2020 waiver renewal addresses the
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counties' priorities, and introduces a new concept transforming
California's public safety net for the remaining uninsured by
creating a global payment system. CSAC states the global
payments offer a unique opportunity for California to serve as
an incubator in testing new payment methods for delivering care
to the uninsured and in transforming care away from high-cost
settings (such as emergency rooms) towards primary care. CSAC
argues these individual payments would allow each hospital
system more certainty about its budget and how much in federal
funds will be available.
Prepared by:Scott Bain / HEALTH /
4/22/15 16:19:58
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