BILL ANALYSIS Ó
SB 36
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Date of Hearing: July 14, 2015
ASSEMBLY COMMITTEE ON HEALTH
Rob Bonta, Chair
SB
36 (Ed Hernandez and De León) - As Introduced December 1, 2014
SENATE VOTE: 35-0
SUBJECT: Medi-Cal: demonstration project.
SUMMARY: 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 of federal Medicaid
requirements to implement a demonstration project. Contains an
urgency clause to ensure that the provisions of this bill go
into immediate effect upon enactment. Specifically, this bill:
1)Requires that the demonstration project to do all of the
following:
a) Further the delivery of high-quality and cost-efficient
care for Medi-Cal beneficiaries;
b) Ensure 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,
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c) Continue California's momentum and successes in
innovation achieved under the 2010 waiver.
2)Requires DHCS to consult with interested stakeholders and the
Legislature in developing the waiver application.
EXISTING LAW:
1)Establishes the Medi-Cal program to provide comprehensive health
benefits to low-income persons.
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.
FISCAL EFFECT: 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.
COMMENTS:
1)PURPOSE OF THIS BILL. 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 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
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individuals enrolled in Medi-Cal, and provide for the
long-term fiscal stability of the Medi-Cal program through
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)BACKGROUND.
a) Federal Section 1115 Waiver and Expenditure Authority.
Medicaid (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 gives the Secretary of the Department of Health and
Human Services (HHS) authority to waive provisions of major
health and welfare programs. This includes certain federal
Medicaid requirements in any experimental pilot or
demonstration project which, in the judgment of the HHS
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.
Section 1115 waivers are approved at the discretion of the
Secretary of HHS through negotiations between a state and
CMS. 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
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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.
b) Bridge to Reform Waiver. California's existing Section
1115 waiver, commonly called "the California Bridge to
Reform Demonstration" 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 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 (MCMC) delivery
system under this federal waiver. The current Bridge to
Reform waiver enabled California to:
i) Implement an early expansion of Medicaid to
low-income adults without minor children under the ACA
through the Low Income Health Program (LIHP), which
enrolled 650,000 individuals;
ii) Require the mandatory enrollment of SPDs into MCMC
plans in specified counties;
iii) Provide federal funding for delivery system reform
and uncompensated care in designated public hospital
systems (21 county and University of California
hospitals) through DSRIP and Safety Net Care Pool
Uncompensated Care (SNCP);
iv) Provide federal funding for designated state health
care programs and workforce development programs related
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to medically disadvantaged service areas; and,
v) Operate its MCMC program, Community-Based Adult
Services (CBAS) program, and seven county Coordinated
Care Initiative (under the Coordinated Care Initiative
(CCI), individuals dually eligible for Medicare and
Medi-Cal receive their Medi-Cal and Medicare benefits
through one health plan).
c) What Provisions of federal law are "Waived" in the
Current Waiver? In the current Bridge to Reform waiver,
the federal government waived specified federal Medicaid
provisions. Major provisions waived include the following:
i) The "freedom of choice" requirement to enable
California to require participants to receive benefits
through certain providers and to permit the state to
require that Medi-Cal beneficiaries receive benefits
through managed care plans, who could not otherwise be
required to enroll in managed care;
ii) The "statewideness" requirement to enable California
to operate the demonstration and implement coverage for
new Medi-Cal eligibles on a county-by-county basis, and
to provide managed care plans only in certain geographic
areas; and,
iii) The "amount, duration, and scope of services and
comparability" requirement to enable California to offer
a different benefit package to Medi-Cal beneficiaries in
the SPD program that includes benefits that are not
available to all categorically needy individuals.
d) 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." DHCS identified five core goals in that
document, as follows:
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i) Improve health care quality and outcomes for the
Medi-Cal population;
ii) Strengthen primary care delivery and access;
iii) Build a foundation for an integrated health care
delivery system that incentivizes quality and efficiency;
iv) Address social determinants of health and improve
health care equity; and,
v) Use California's sophisticated Medicaid program as
an incubator to test innovative approaches to
whole-person care.
DHCS indicates the focus of the waiver renewal will be on
continuing to drive the transformation of its Medi-Cal
program, ensuring ongoing support for the safety net in
California, and ensuring the long-term viability of the
program and the Medicaid expansion. Existing 1115 waiver
authorities and programs that would continue under the next
waiver include the CCI, the CBAS waiver, managed care
program, Indian Health Services uncompensated care,
Designated State Health Programs, the pending Drug Medi-Cal
Organized Delivery System program, and the provision of
full scope benefits for pregnant women with incomes between
109% to 138% of the federal poverty level (FPL).
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. In support of California's efforts to transform
the delivery system, 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
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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. Under this initiative,
California would be required to demonstrate that the
federal savings generated under the waiver are substantial
enough to permit California to retain a portion or
percentage of that savings. The state would need to
demonstrate that, even after reinvestment in the waiver
strategies, the federal government will continue to realize
savings. If the waiver strategies implemented through
Medi-Cal 2020 do not result in the level of federal savings
that is projected, California would be required to limit
the spending on waiver reinvestment initiatives to ensure
overall savings and budget neutrality.
3)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) supports
this bill because DHCS' Medi-Cal 2020 waiver renewal addresses
the 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
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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.
4)RELATED LEGISLATION. AB 72 (Bonta) is similar to this bill
and is scheduled to be heard in the Senate Health Committee on
July 14, 2015.
REGISTERED SUPPORT / OPPOSITION:
Support
Association of California Health Care Districts
California Association of Physician Groups
California Association of Public Hospitals and Health Systems
California Commission on Aging
California Primary Care Association
California State Association of Counties
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California State Council of the Service Employees International
Union
Community Clinic Association of Los Angeles County
District Hospital Leadership Forum
MidPen Housing Coalition
Planned Parenthood Affiliates of California
The Arc and United Cerebral Palsy California Collaboration
University of California
Opposition
None on file.
Analysis Prepared by:Roger Dunstan / HEALTH / (916)
319-2097
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