BILL ANALYSIS                                                                                                                                                                                                    

                                                                     SB 145  

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          Date of Hearing:  September 11, 2015


                                 Jimmy Gomez, Chair

          SB 145  
          (Pan) - As Amended September 10, 2015

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          Urgency:  No  State Mandated Local Program:  NoReimbursable:  No


          This bill requires the Department of Health Care Services (DHCS)  
          to provide stop-loss coverage to a private multi-employer trust  
          providing health care benefits to farmworkers. Specifically,  
          this bill:


                                                                     SB 145  

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          1)Requires DHCS to annually reimburse the Robert F. Kennedy  
            Farmworkers Medical Plan (RFK Medical Plan) for claim payments  
            that exceed $70,000.  

          2)Requires reimbursement made by the plan on behalf of an  
            eligible employee or dependent for a single episode of care on  
            or after September 1, 2016.

          3)Limits total reimbursement to three million dollars  
            ($3,000,000) per year.

          4)Requires the RFK Medical Plan to submit to the department  
            completed data, verified by an independent certified public  
            accountant, for claims paid by the plan for services during  
            the preceding year from September 1 to August 31, inclusive. 

          FISCAL EFFECT:

          GF costs of up to $3 million per year to DHCS to reimburse RFK  
          Medical Plan for episodes of high-cost care incurred by RFK  
          Medical Plan enrollees. 


                                                                     SB 145  

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          1)Purpose. According to the author, this bill will provide state  
            funding critical to allow a particular health trust fund to  
            continue to provide health benefits to their enrollees.   
            Absent this funding, the author contends, the plan would cease  
            providing benefits and individuals would either enroll in  
            Medi-Cal or lose insurance coverage.  Because Medi-Cal would  
            incur additional costs if low-income eligible individuals  
            enrolled in coverage, the author argues this bill actually  
            saves the state money.

          2)Background. The RFK Medical Plan is a self-funded,  
            self-insured health plan that is subject to a collective  
            bargaining agreement between the United Farm Workers (UFW) and  
            multiple agricultural employers.  According to the UFW, the  
            RFK Medical Plan provided health insurance to more than 13,000  
            people living in California farmworker families.  UFW points  
            out that their plan had imposed a $70,000 limit on annual  
            benefits as a cost control measure, but the federal Patient  
            Protection and Affordable Care Act's (ACA's) prohibits such  
            benefit limits.  This has resulted in significant cost  
            pressure that UFW states is unrealistic to expect employers  
            and employees to bear.  UFW states there are approximately  
            16,000 California farmworkers covered by the plan and about  
            2,000 other individuals. Staff calculates the increased  
            contribution to cover $3 million in additional costs incurred  
            on behalf of 18,000 enrollees would be about $167 per  
            enrollee, per year, including dependents.  


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          3)Prior Budget Actions. The Legislature took two separate budget  
            actions in recent years to provide special fund dollars to the  
            RFK Medical Plan to purchase stop-loss coverage that covers  
            the costs of episodes of care over $70,000.  This supplemental  
            funding has allowed the plan to maintain the annual benefit  
            limits and comply with the ACA requirement, without passing  
            these costs on to covered employees and employers.   
            Specifically, the 2014 Budget Act allocated $3.2 million in  
            one-time Proposition 99 funds, and the 2015 Budget Act  
            allocated $2.5 million in Proposition 99 funds.  The allocated  
            funds were previously used to fund the Major Risk Medical  
            Insurance Program, which provided coverage to enrollees who  
            were denied coverage in the private market, prior to the  
            federal ACA.  The budget actions were intended to provide  
            one-time funding in order to prevent insolvency and allow RFK  
            Medical Plan to modify its business model to adapt to the  
            federal ACA. 


             a)   Recent amendments impose a five-year sunset in order to  
               prevent the state from becoming the default payer of  
               high-cost claims for this plan on a permanent basis.  The  
               Health Committee policy analysis indicates a sunset date  
               also offers the RFK Medical Plan a timeline under which it  
               can continue to strive toward self-sustainment, and report  
               back its progress to the Legislature.  However, the bill  
               does not specify reporting or accountability measures, nor  
               clearly state intent language related to self-sufficiency.   


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             b)   This bill has intent language stating the Legislature  
               has found it is efficient and cost-effective to provide  
               health care through the RFK Medical Plan, and indicating  
               the plan has saved the state significant sums of money.   
               However, there does not appear to be a legislative analysis  
               conclusively demonstrating savings. 

             c)   According to UFW, some enrollees in the RFK Medical Plan  
               are not California farmworkers.  Therefore, it appears that  
               this bill would authorize reimbursement for enrollees who  
               do not work in California.  

           Analysis Prepared by:Lisa Murawski / APPR. / (916)