BILL ANALYSIS Ó
SB 36
Page 1
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.
SB 36
Page 2
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
SB 36
Page 3
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
SB 36
Page 4
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
SB 36
Page 5
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
SB 36
Page 6
None on file.
Analysis Prepared by:Roger Dunstan / HEALTH / (916)
319-2097