BILL ANALYSIS Ó SENATE COMMITTEE ON HEALTH Senator Ed Hernandez, O.D., Chair BILL NO: SB 435 --------------------------------------------------------------- |AUTHOR: |Pan | |---------------+-----------------------------------------------| |VERSION: |April 6, 2015 | --------------------------------------------------------------- --------------------------------------------------------------- |HEARING DATE: |April 22, 2015 | | | --------------------------------------------------------------- --------------------------------------------------------------- |CONSULTANT: |Vince Marchand | --------------------------------------------------------------- SUBJECT : Medical home: health care delivery model SUMMARY : Requires the Secretary of the Health and Human Services Agency to convene a working group to identify appropriate payment methods to align incentives in support of patient centered medical homes. Existing law permits the Department of Health Care Services (DHCS) to establish a California Health Home Program to provide health home services, as defined, to Medi-Cal beneficiaries and Section 1115 waiver demonstration populations with chronic conditions, and to develop a payment methodology, including payment structures that may include tiered payment rates that take into account the intensity of services necessary to outreach to, engage, and serve the populations the department identifies. Allows this this Health Home Program to be implemented only if federal financial participation is available, necessary federal approval is obtained, and no additional General Fund moneys are used to fund the administration or cost of services. This bill: 1.Requires the Secretary of the Health and Human Services (HHS) Agency to convene a working group of public payers, private health insurance carriers, third-party purchasers, and health care providers to identify appropriate payment methods to align incentives in support of patient centered medical homes (PCMHs). 2.Requires the working group convened pursuant to this bill to consult with, and provide recommendations to, the Legislature and relevant state agencies on all matters relating to the implementation of a PCMH care model. SB 435 (Pan) Page 2 of ? 3.Requires the working group to have the authority to do all of the following: a. Develop consensus on strategies for implementing the PCMH care model and service delivery change at the practice, community, and health care system level; b. Create alignment regarding payment, reporting, and infrastructure investments; c. Design and compose pilot projects, including multipayor pilot projects; d. Utilize public and private purchasing power and enable competing payors to work collaboratively to establish common PCMH initiatives; and, e. Propose participation in relevant federally funded pilot and demonstration projects. 4.Requires the state to use existing state resources and available federal funds to implement this bill, and permits the Secretary of HHS, if state or federal funds are not available, to apply for and accept grants, or receive donations and other financial support from public or private sources. FISCAL EFFECT : This bill has not been analyzed by a fiscal committee. COMMENTS : 1.Author's statement. According to the author, it is important that our state supports care that is patient centered, cost efficient, continuous, focused on prevention, and built on sound, evidence-based medicine rather than episodic, illness oriented care. PCMHs provide the needed team-based care that has proven to decrease costs and improve health outcomes. No one should have to navigate this complex health system alone and PCMHs ensure that no one will. This bill will establish a group that will make sure the best PCMH model is created for California. 2.Background on the PCMH model. According to a September 2012 brief prepared by the National Conference of State Legislatures (NCSL), the PCMH model of care offers one method of transforming the health care delivery system. PCMHs can reduce costs while improving quality and efficiency through an innovative approach to delivering comprehensive SB 435 (Pan) Page 3 of ? patient-centered preventive and primary care. This model is designed around patient needs and aims to improve access to care (e.g. through extended office hours and increased communication between providers and patients via email and telephone), increase care coordination and enhance overall quality, while simultaneously reducing costs. The PCMH relies on a team of providers-such as physicians, nurses, nutritionists, pharmacists, and social workers-to meet a patient's health care needs. Studies have shown that the PCMH model's attention to the whole-person and integration of all aspects of health care offer potential to improve physical health, behavioral health, access to community-based social services and management of chronic conditions. NCSL notes that although general agreement exists about the basic tenets of the PCMH, the model is still evolving. Not all PCMHs look alike or use the same strategies to reduce costs, improve quality and coordinate care. Accreditation offers formal recognition and a stamp of approval to those that successfully meet specific standards and requirements, facilitating payment from both public and private payers. PCMH accreditation is available from national accreditation organizations, as well as a few states that have developed their own standards. Although certain health care providers already embody many elements of the PCMH, many are seeking formal recognition, due in part to the fact that medical practices that participate in PCMH pilot programs often qualify for enhanced reimbursement rates, or receive other financial incentives for coordinating care. According to NCSL, as of April 2013, 43 states had policies promoting the PCMH model for certain Medicaid or CHIP beneficiaries. States have created pilot projects, reformed payment structures, invested in health information technology, restructured Medicaid provider systems, and included the PCMH model in service delivery. 3.Affordable Care Act (ACA) and AB 361. The ACA contained several provisions to support and advance the PCMH model of care. One of these was entitled, "Establishing Community Health Teams to Support the Patient-Centered Medical Home." This is a grant program to help establish community-based interdisciplinary, interprofessional teams to support primary care practices, and requires grants to be used to establish health teams to provide support services to primary care SB 435 (Pan) Page 4 of ? providers and provide capitated payments to primary care providers. Under this program, PCMH is defined as a model of care that includes the following: 1) personal physicians; 2) whole person orientation; 3) coordinated and integrated care; 4) safe and high-quality care through evidence-informed medicine, appropriate use of health information technology, and continuous quality improvements; 5) expanded access to care; and, 6) payment that recognizes added value from additional components of patient-centered care. Another provision of the ACA, entitled "State Option to Provide Health Homes for Enrollees with Chronic Conditions," established a waiver program to give states the option of enrolling Medicaid beneficiaries with chronic conditions into a health home. "Health home," for purposes of this program, is defined as "a designated provider (including a provider that operates in coordination with a team of health care professionals) or a health team selected by an eligible individual with chronic conditions to provide health home services." This waiver program would provide a 90 percent federal match for the first two years. States are permitted to tier payments to reflect a team of health care professionals operating with a designated provider, as well as the severity or number of individual's with chronic conditions or the specific capabilities of the designated provider and health team. "Health home services" is defined as comprehensive and timely high-quality services that are provided by a designated provider or a team of health care professionals operating with a designated provider and include: 1) comprehensive care management; 2) care coordination and health promotion; 3) comprehensive transitional care, including appropriate follow-up, from inpatient to other settings; 4) patient and family support; 5) referral to community and social support services; and, 6) use of health information technology to link services. In 2013, the Legislature passed AB 361 (Mitchell), Chapter 642, Statutes of 2013, which permitted DHCS to submit a waiver application under the above provision of the ACA to establish a California Health Home Program to provide health home services to Medi-Cal beneficiaries and Section 1115 waiver demonstration populations with chronic conditions. While the bill required that no General Fund moneys be used, to supplement the 90 percent federal match, The California Endowment has offered to fund the remaining 10 percent of SB 435 (Pan) Page 5 of ? funds, up to $25 million per year, required for these additional services for the two years of the federal match. According to DHCS, through a complementary planning process, the California State Innovation Model (CalSIM) initiative, it has developed a recommendation to create "Health Homes for Patients with Complex Needs" (HHPCN). According to DHCS, in collaboration with the CalSIM initiative and with respect to the requirements of the ACA and AB 361, the state has developed a set of policy goals that will guide the planning and implementation of the HHPCN. DHCS intends to submit a state plan amendment application in summer/fall of 2015, which would provide federal regulatory authority for implementing the HHPCN model for Medi-Cal beneficiaries. 4.Anti-trust concerns. As described in the supporting arguments later in this analysis, the sponsor of this bill states in support that "state participation, especially as a convener, enables competing payers to work collaboratively to establish a common initiative without risking antitrust violations." In July 2013, The Commonwealth Fund published an issue brief entitled, "State Strategies to Avoid Antitrust Concerns in Multipayer PCMH Initiatives." According to this issue brief, convening multiple payers distributes the costs associated with creating a PCMH and results in greater alignment around payment, reporting, and infrastructure investments. However, the issue brief notes that states that promote collaboration among payers to reach agreement on common or aligned payments for their PCMH initiatives risk antitrust liability for their participating payers. The cooperation and collaboration to set prices and payments among a group of otherwise competitive payers would be seen as illegal restraint of trade under the Sherman Act. According to this issue brief, immunity from federal antitrust laws when convening multiple payers may be available to states as well as private payers under the state action doctrine, first articulated in Parker v. Brown in 1943. The doctrine of Parker v. Brown may extend immunity to both state actors and private entities if the policy in place meets two criteria. First, the state must have clearly articulated a policy to displace competition. This requires that the policy both justifies the anticompetitive behavior and sufficiently expresses that such behavior is both expected and endorsed. Secondly, the state must have committed to active supervision of activities by health care payers; simple authorization or regulation of proceedings is not sufficient. The state must be able to review potential anticompetitive acts such as setting SB 435 (Pan) Page 6 of ? prices and rates among payers. 5.Prior legislation. ACR 152 (Pan), Resolution Chapter 143, Statutes of 2014, stated that the Legislature supports and encourages the development and expansion of a California health care delivery system that identifies PCMHs and is based upon certain principles of coordination of patient care. AB 1208 (Pan), of 2013 proposed to establish the PCMH Act of 2013 and established a definition for a PCMH based upon specified standards (similar to SB 393 from 2012). AB 1208 was later amended on the Senate Floor to address a different subject matter. AB 361 (Mitchell), Chapter 642, Statutes of 2013, permitted DHCS to establish a California Health Home Program to provide health home services to Medi-Cal beneficiaries and Section 1115 waiver demonstration populations with chronic conditions. Implements this bill only if federal financial participation is available and the federal Centers for Medicare and Medicaid Services approve the state plan amendment. AB 2266 (Mitchell), of 2012, would have required DHCS to establish a program to provide specified health home services, with the intent of reducing avoidable hospitalization or use of emergency medical services. AB 2266 died on the Senate Inactive File. SB 393 (Hernandez), would have enacted the PCMH Act of 2012 and established a definition for a PCMH based upon specified standards. SB 393 was vetoed by the Governor. In his veto message, the Governor stated that he commended the author for trying to improve the delivery of health care by encouraging the greater use of "patient-centered medical homes" but because the concept is still evolving, he thought more work was needed before the definition was codified. AB 1542 (Jones), of 2010, would have defined a PCMH to mean, in part, a health care delivery model in which a patient establishes an ongoing relationship with a physician or other licensed health care provider, working in a physician-directed practice team to provide comprehensive, accessible, and continuous evidence-based primary care and coordinate the patient's health care needs across the health care system. AB 1542 died on the Assembly Floor. SB 435 (Pan) Page 7 of ? SB 1738 (Steinberg), of 2008, would have required DHCS to establish a three-year pilot program to provide intensive multidisciplinary services to 2,500 Medi-Cal beneficiaries identified as frequent users of health care. SB 1738 was vetoed by Governor Schwarzenegger. 6.Support. This bill is sponsored by the California Academy of Family Physicians (CAFP), which states that this bill would allow the Secretary of HHS to act as a "convener," waiving specific anti-trust liability and bringing together public payers, private health carriers, third-party purchasers, and providers in order to identify appropriate payment methods to align incentives to support the PCMH and improve care of chronic illnesses. CAFP states that multi-payer projects have been shown to support high-performing delivery systems by aligning incentives and reporting requirements. Despite the obvious benefits of alignment, CAFP states that stakeholders struggle with a variety of challenges to achieve a more streamlined system, given conflicting interests and payer concerns regarding lost autonomy and competitive advantage. According to CAFP, the state can play an important role to help overcome these articles. Through its power to waive specific anti-trust liability, the state can convene payers, purchasers and providers to develop a consistent payment model for chronic care management, common performance and outcome measures, and align incentives to support the PCMH. According to CAFP, state participation, especially as a convener, enables competing payers to work collaboratively to establish a common initiative without risking antitrust violations. SUPPORT AND OPPOSITION : Support: California Academy of Family Physicians (sponsor) Oppose: None received -- END --