BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                      SB 36


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          Date of Hearing:  September 9, 2015


                            ASSEMBLY COMMITTEE ON HEALTH


                                  Rob Bonta, Chair


          SB  
          36 (Hernandez) - As Amended September 4, 2015


          SENATE VOTE:  Not relevant


          SUBJECT:  Medi-Cal: demonstration project.


          SUMMARY:  Authorizes the Department of Health Care Services  
          (DHCS) to request one or more temporary waiver extensions to  
          continue the operation of, and the authorities provided under,  
          the current "California Bridge to Reform Demonstration," the  
          state's Section 1115 Medicaid waiver which is set to expire on  
          October 31, 2015.  Contains an urgency clause to ensure that the  
          provisions of this bill go into immediate effect upon enactment.  
           Specifically, this bill:  





          1)Requires DHCS to extend and apply the existing hospital  
            payment methodologies and allocations on a state fiscal year,  
            annual, partial year, or other basis, to the extent permitted  
            under any approved temporary waiver extension, an approved  
            subsequent waiver, or as otherwise permitted under federal  
            Medicaid law.









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          2)Conditions the provisions of this bill on DHCS obtaining any  
            necessary federal approvals and continuing eligibility to  
            obtain federal matching funds.


          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:  This bill, as amended, has not been analyzed by  
          a fiscal committee.


          COMMENTS:  


          1)PURPOSE OF THIS BILL.  According to the author, this bill  
            bridges the gap between the current Medicaid Section 1115  
            waiver which expires October 31, 2015 and the new waiver by  
            allowing DHCS to request one or more temporary waiver  
            extensions, and by requiring DHCS to extend the current  
            hospital payment methodologies.  The author states a new  
            waiver agreement has not been reached between the state and  
            federal government and is unlikely to be reached before the  
            Legislature adjourns on September 11, 2015. An extension of  
            the current hospital financing methodologies would continue to  
            provide essential funding for safety net hospitals in the  
            event of a delay in completion of the next waiver and until  
            state hospital financing law is amended to determine the new  
            waiver-related hospital funding provisions resulting from the  








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            next federal Section 1115 Medicaid waiver.



          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  
               the federal Centers for Medicare and Medicaid Services  
               (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  
               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  








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               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.  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  
                 Patient Protection and Affordable Care Act through the  
                 Low Income Health Program, 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 Delivery System Reform Incentive  
                 Payments Program and Safety Net Care Pool Uncompensated  
                 Care (SNCP); 

               iv)    Provide federal funding for designated state health  
                 care programs and workforce development programs related  
                 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),  
                 individuals dually eligible for Medicare and Medi-Cal  
                 receive their Medi-Cal and Medicare benefits through one  








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                 health plan).

          3)RELATED LEGISLATION.  AB 72 (Bonta) requires DHCS to submit an  
            application to CMS for a waiver of federal Medicaid  
            requirements to implement a demonstration project.   This bill  
            was subsequently amended to a different subject.

          4)SUPPORT.  According to the California Association of Public  
            Hospitals (CAPH), in the event of a delay in negotiating a new  
            waiver, it is critical for the state to maintain existing  
            expenditure authority, in order to ensure that funds can  
            continue to flow to public safety net providers.  CAPH argues  
            this bill includes two important provisions to allow for  
            continuity during these negotiations.  The Association of  
            California Healthcare Districts argues in support because the  
            waiver extension will build on the priorities of the  
            association, which include access to care, workforce  
            development, expanding the use of telehealth and improving  
            mental health and substance use disorder treatment.


          REGISTERED SUPPORT / OPPOSITION:




          Support


          Association of California Healthcare Districts


          California Association of Public Hospitals




          Opposition









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          None on file.




          Analysis Prepared by:Roger Dunstan / HEALTH / (916)  
          319-2097