BILL ANALYSIS Ó
SB 260
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SENATE THIRD READING
SB
260 (Monning)
As Amended July 14, 2015
Majority vote
SENATE VOTE: 37-0
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|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Health |12-5 |Bonta, Bonilla, |Maienschein, |
| | |Burke, Chiu, Gomez, |Chávez, Lackey, |
| | |Gonzalez, |Patterson, |
| | | |Steinorth |
| | | | |
| | |Roger Hernández, | |
| | |Nazarian, Rodriguez, | |
| | |Santiago, Thurmond, | |
| | |Waldron | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Appropriations | |Gomez, Bloom, Bonta, |Bigelow, Chang, |
| | |Calderon, Nazarian, |Gallagher, Jones, |
| | |Eggman, Eduardo |Wagner |
| | |Garcia, Holden, | |
| | |Quirk, Rendon, Weber, | |
| | |Wood | |
SB 260
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SUMMARY: Deems a county organized health system (COHS) to be a
health care service plan (plan) subject to the Knox-Keene Health
Care Service Plan Act of 1975 (Knox-Keene Act). Specifically,
this bill:
1)Repeals an exemption for counties contracting with the
Department of Health Care Services (DHCS) for the purposes of
providing or arranging for the provision of health care
services to Medi-Cal beneficiaries (referred to as COHS) from
the Knox-Keene Act.
2)Deems a COHS subject to the Knox-Keene Act for the purposes of
carrying out those contracts with DHCS as a health care
service plan unless expressly provided otherwise by the
Knox-Keene Act.
3)Prescribes timeframes by which COHS must obtain Knox-Keene Act
licensure.
FISCAL EFFECT: According to the Assembly Appropriations
Committee, this bill will result in:
1)Increased fee revenue to Department of Managed Health Care
(DMHC) of approximately $3.2 million annually (Managed Care
Fund). Revenue will vary year over year depending on DMHC's
regulatory costs and the per covered life annual rate health
plans must pay to support those costs.
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2)Ongoing costs to DMHC commensurate with regulation of
additional lives, likely in the range of $3.2 million annually
(Managed Care Fund). First-year costs may be slightly higher
as initial licenses are filed. Total cost will depend how
much additional workload will be incurred by the DMHC help
center, which is based on utilization and is difficult to
predict. Data suggests Medi-Cal enrollees use the Help Center
in disproportionately small numbers compared to their number
of covered lives, so costs could be slightly lower than
projected if this pattern continues for COHS members.
3)Estimated cost pressure of $4 million (General Fund
(GF)/federal funds) to reimburse COHS for administrative costs
incurred for compliance, including fees paid to DMHC, through
higher Medi-Cal rates. These costs would be reflected in
reporting to DHCS for purposes of Medi-Cal managed care rate
development, and will be reimbursed on an ongoing basis once
costs are incorporated into rates two years later, according
to the current rate development process. This $4 million
estimate includes the fees paid to DMHC plus administrative
costs at the plan level (GF/federal). For example, $4 million
overall in administrative costs to COHS plans incurred in
2016-17 would incur a commensurate GF/federal funds budget
impact in 2018-19, in the form of higher managed care rates to
COHS. DHCS is currently exploring modifying the managed care
rates development process to better incentivize quality and
value, so future changes to the way managed care rates are
developed could change this fiscal impact.
COMMENTS: According to the author, this bill will ensure
greater equity across Medi-Cal managed care (MCMC) plans by
affording all consumer protections to COHS plan enrollees. The
author reports that most COHS plans already have at least one
other line of business licensed under the Knox-Keene Act. As
such, these plans are already familiar with Knox-Keene Act
licensure and DMHC regulation, and the requirement of obtaining
a Knox-Keene license will not be overly burdensome. The author
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argues that requiring COHS to obtain a Knox-Keene Act license
will ensure uniform standards and regulation for all MCMC plans,
and will extend important protections that accompany Knox-Keene
Act licensure to Medi-Cal beneficiaries in COHS plans that they
cannot access today, including Independent Medical Review (IMR),
DMHC External Review, and others. The author states that, while
COHS plans do a good job at providing quality managed health
care for Medi-Cal beneficiaries throughout the 22 COHS counties,
there have been cases where Medi-Cal beneficiaries would have
benefited from the additional consumer protections provided
under the Knox-Keene Act, and would have received a better
health outcome had they simply lived in a county that was not
served by a COHS plan. The author concludes that the time has
come for all Medi-Cal plans to have a standard form of
regulation.
COHS are one model of MCMC, where DHCS contracts with a COHS to
be the sole administrator of Medi-Cal benefits for an entire
county. There are six COHS operating in 22 counties, and
serving approximately 2.1 million Medi-Cal beneficiaries.
Almost all Medi-Cal-eligible beneficiaries in COHS counties are
mandatorily enrolled into the COHS plan.
All MCMC plans, except the COHS, are required to obtain a
Knox-Keene Act license for their Medi-Cal lines of business and
are subject to dual oversight by DHCS and DMHC. Although COHS
are exempt from requirements to obtain Knox-Keene Act licensure,
one COHS, the Health Plan of San Mateo (HPSM) voluntarily
obtained a Knox-Keene Act license. Additionally, four other
COHS, have obtained a Knox-Keene Act license for other,
non-Medi-Cal lines of business. Only one COHS has no Knox-Keene
Act license for any line of business.
While, federal and state laws establish the rules that govern
MCMC plans, many significant requirements are established and
enforced by DHCS through contracts, including compliance with
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financial viability and standards; quality improvement systems;
utilization management; and, access and provider networks. The
requirements set forth in the contracts largely mirror those
required by the Knox-Keene Act, which is enforced by DMHC.
However, there are some differences. The most notable
difference in consumer protections is with regard to IMR of
disputed health care services and external review of disputed
coverage decisions. The Knox-Keene Act requires DMHC to
establish an IMR system through which all plan enrollees,
including MCMC enrollees in Knox-Keene Act licensed plans, may
request an objective review by independent clinical
professionals of a decision by a plan to deny, modify, or delay
a health care service or treatment based on the plan's
determination that the service or treatment is not medically
necessary.
MCMC beneficiaries may choose to request an IMR or file for a
state fair hearing. Since COHS are not required to obtain a
Knox-Keene Act license, COHS beneficiaries, with exception of
beneficiaries of the HPSM, do not have the option to request an
IMR, and may only request a state fair hearing to resolve
disputes.
The Western Center on Law and Poverty (WCLP), the sponsor of
this bill, and other supporters argue that over two million
Medi-Cal beneficiaries are served by COHS, and they should have
access to the same regulatory structure and Knox-Keene Act
protections as all other Medi-Cal beneficiaries. Supporters
state that the current exemption from the Knox-Keene Act allows
for a separate standard for consumer protection that does not
include certain protections such as IMR or external review for
disputes over covered benefits, and that bill ensures uniform
protections and creates equity across all MCMC plans. WCLP also
argues that, given that all other Medi-Cal plans, including the
public LI plans, must be licensed by DMHC, it does not make
sense to exempt COHS plans.
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Four of the six COHS, as well as the County of Solano oppose
this bill arguing that it will result in unnecessary,
duplicative regulatory and financial burdens on the COHS, which
are already providing high-quality care to, and maintaining high
quality ratings among, Medi-Cal beneficiaries. The opponents
state that they are already overseen by both the federal
government and DHCS, and adding a third regulator will add costs
to both COHS and the state without providing tangible value
received in return. The opponents state that, through their
contracts with DHCS, COHS are already required to meet relevant
Knox-Keene Act standards, and requiring additional regulation to
address singular concerns such as establishing an IMR process is
unnecessary, inefficient, and expensive. The opponents state
that a Knox-Keene Act license is not necessary to establish an
IMR, and they are willing to establish an IMR process outside of
Knox-Keene Act regulation. The opponents further argue that, by
requiring COHS to pay fees for Knox-Keene Act licensure, this
bill will reduce the amount of funding they are able to spend on
direct services to MCMC beneficiaries, including transportation,
podiatry, vision, and other supplemental non-Medi-Cal benefits
currently provided to Medi-Cal beneficiaries.
Analysis Prepared by: Kelly Green / HEALTH / (916) 319-2097
FN: 0001655
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