BILL ANALYSIS Ó SENATE COMMITTEE ON HEALTH Senator Ed Hernandez, O.D., Chair BILL NO: SB 36 --------------------------------------------------------------- |AUTHOR: |Hernandez | |---------------+-----------------------------------------------| |VERSION: |September 4, 2015 | --------------------------------------------------------------- --------------------------------------------------------------- |HEARING DATE: |September 11, | | | | |2015 | | | --------------------------------------------------------------- --------------------------------------------------------------- |CONSULTANT: |Scott Bain | --------------------------------------------------------------- PURSUANT TO SENATE RULE 29.10 SUBJECT : Medi-Cal: demonstration project. SUMMARY : This bill 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. 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. Existing law: 1)Establishes the Medi-Cal program, which is administered by DHCS and under which qualified low-income persons receive health care benefits. 2)Establishes a Medicaid Section 1115 demonstration project under the Medi-Cal program until October 31, 2015 known as California's Bridge to Reform, 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. 3)Provides for payments under the Bridge to Reform under the "Medi-Cal Hospital/Uninsured Care Demonstration Project Act" to designated public hospitals (DPHs are the approximately 20 UC and county hospitals), and for federal disproportionate share (DSH), payments to private hospitals (referred to as SB 36 (Hernandez) Page 2 of ? "DSH replacement payments") and non-designated public hospitals (NDPHs are district hospitals) through October 1, 2015. These provisions: a) Make DPHs eligible for cost-based fee-for-service Medicaid funding using certified public expenditures (CPEs) as the federal match, instead of state General Fund. DPHs put up the nonfederal share of Medi-Cal fee-for-service payments used to draw down federal Medicaid matching funds, and receive cost-based reimbursement, using CPEs to draw down federal Medicaid matching funds; b) Provide DSH payments to DPHs, using CPEs and intergovernmental transfers (IGTs) to draw down federal DHS funds; c) Provide DSH payments to eligible non-designated public hospitals (NDPH are primarily district hospitals) meeting DSH eligibility criteria, using state General Fund to draw down federal DSH funds; d) Provide for "DSH replacement payments" to private hospitals meeting DSH eligibility criteria, using non-DSH Medicaid funds and state General Fund as the fund source; e) Make DPHs eligible for payments from the federally funded Safety Net Care Pool (SNCP) for uncompensated care; and, f) Make DPHs eligible for payments from the federally funded delivery system reform incentive pool (DSRIP), based on the DPH's progress toward and achievement of milestones and metrics established in its DSRIP proposal, funded by federal funds and IGTs. This bill: 1)Permits the director of DHCS to request one or more temporary waiver extensions, as necessary to continue the operation of, and the authorities provided under, the current "California Bridge to Reform Demonstration" waiver until the approved effective date of the next waiver, if DHCS has not received adequate assurances from the federal Centers for Medicare and Medicaid Services (CMS) before November 1, 2015, that DHCS's application for a subsequent waiver is likely to be approved with an effective date of November 1, 2015. SB 36 (Hernandez) Page 3 of ? 2)Requires DHCS, after consulting with the affected DPHs, to extend and apply the payment methodologies and allocations in the existing "Medi-Cal Hospital/Uninsured Care Demonstration Project Act" that are in effect under the current waiver, on a state fiscal year, annual, partial year, or other basis. 3)Requires the extension and application of the current payment methodologies and allocations to be consistent with any applicable implementing provisions of the Medi-Cal state plan and requirements imposed by CMS. 4)Implements the provisions in 2) and 3) above to the extent permitted under the terms of any approved temporary waiver extension obtained by DHCS, an approved subsequent waiver, or as otherwise permitted under federal Medicaid law. 5)Permits DHCS to make payments on an interim basis, subject to reconciliation to amounts payable under the payment and allocation methodologies in any approved temporary extension obtained by DHCS under this bill, or under an approved subsequent waiver. 6)Implements this bill only to the extent that any necessary federal approvals are obtained and federal financial participation is available and is not jeopardized. 7)Requires, until July 1, 2016, in the event of a conflict between the terms of any federally approved waiver extension obtained by DHCS and the provisions of the "Medi-Cal Hospital/Uninsured Care Demonstration Project Act," the terms of the federally approved temporary extension to control. Requires DHCS to provide notice of the conflict to the appropriate policy and fiscal committees of the Legislature. 8)Permits DHCS to implement, interpret, or make specific this bill by means of all-county letters, plan letters, plan or provider bulletins, or similar instructions without taking regulatory action until July 1, 2016. 9)Would take effect immediately as an urgency statute. FISCAL EFFECT : This current version of the bill has not been analyzed by a fiscal committee. SB 36 (Hernandez) Page 4 of ? COMMENTS : 1)Author's statement. According to the author, According to the author, this bill is needed because the current Section 1115 Medicaid waiver known as California Bridge to Reform Waiver (Waiver) expires on October 31, 2015, but an agreement on a subsequent waiver have not been agreed to by the state and the federal government, and an agreement appears unlikely to be reached before the Legislature adjourns on September 11, 2015 so that state law could be amended to incorporate the new waiver-related funding provisions. This two-part bill would bridge the gap between the current waiver and the new waiver by allowing DHCS to request one or more temporary waiver extensions, and by requiring DHCS to extend and apply the current hospital payment methodologies and allocations in effect under the current waiver on a state fiscal year, annual, partial year, or other basis, to the extent allowed by the federal government. The extension of the current hospital financing methodologies would continue to provide essential funding for safety net providers in the event of a delay in completion of the next waiver and until state hospital financing law is amended to determine the new DSH and waiver-related funding provisions for private hospitals, NDPHs and DPHs resulting from the next federal Section 1115 Medicaid waiver. 2)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 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 SB 36 (Hernandez) Page 5 of ? 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 SNCP; 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).. 3)Support. The California Association of Public Hospitals and Health Systems (CAPH) writes in support that there is a chance wavier negotiations could extend beyond October 31, 2015 when the "Bridge to Reform" waiver expires. CAPH argues, in the event of a delay, 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 states this bill includes two important provisions to allow for continuity during these negotiations. These provisions grant DHCS the authority to extend the existing waiver and make waiver expenditures in the case of a delay, as many other states have experienced delays in renewing their waivers due to the time it can take the federal government to complete a Section 1115 waiver negotiation. In addition, this bill requires the continuation of existing hospital funding distribution methodologies in the event of a delay. While waivers make certain payment streams available, state law specifies how those funds must be distributed amongst providers. As such, if there are any delays in renewing the waiver, there would be no new guidance for how to distribute DSH and SNCP payments to public and private hospitals, and SNCP payments to public hospitals. This bill requires the continued distribution of DSH and SNCP payments according to SB 36 (Hernandez) Page 6 of ? current methodologies in the event of a delay, which is important to hospitals as the total federal funding for these programs in the current waiver year is $1.2 billion in federal DSH funds and $236 million in federal SNCP funds. SUPPORT AND OPPOSITION : Support: Association of California Health Care Districts California Association of Public Hospitals and Health Systems California Hospital Association California State Association of Counties District Hospital Leadership Forum Oppose: None received. -- END --