BILL ANALYSIS Ó
SB 435
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Date of Hearing: July 14, 2015
ASSEMBLY COMMITTEE ON HEALTH
Rob Bonta, Chair
SB
435 (Pan) - As Amended July 7, 2015
SENATE VOTE: 27-11
SUBJECT: Medical home: health care delivery model.
SUMMARY: Requires the Secretary of California Health and Human
Services Agency (HHSA) to convene a working group to identify
appropriate payment methods to align incentives in support of
patient centered medical homes (PCMHs). Specifically, this
bill:
1)Requires the HHSA Secretary to convene a working group of
public payers, private health insurance carriers, third-party
purchasers, consumer representatives, and health care
providers to identify appropriate payment methods to align
incentives in support of PCMHs.
2)Requires the working group to consult with, and provide
recommendations to, the Legislature and relevant state
agencies on all matters relating to the implementation of a
PCMH.
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3)Authorizes the working group 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) Identify ways to create alignment regarding payment,
reporting, and infrastructure investments;
c) Identify ways to utilize public and private purchasing
power and ways to enable competing payers to work
collaboratively to establish common PCMH initiatives; and,
d) Propose participation in federally funded pilot and
demonstration projects.
4)Requires the Secretary to convene the working group only to
after he or she makes a determination that sufficient
non-state funds have been received to pay for all costs of
implementing the workgroup.
5)Makes legislative findings and declarations regarding the
intent of the Legislature to exempt and immunize activities
undertaken in connection with PCMH from state and federal
antitrust laws.
EXISTING LAW:
1)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
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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 it identifies.
2)Authorizes the Health Home Program to be implemented only if
federal participation is available, necessary federal approval
is obtained, and no additional General Fund moneys are used to
fund the administration or cost of services.
FISCAL EFFECT: According to the Senate Appropriations
Committee, this bill, as amended April 6, 2015, results in
likely one-time costs of $150,000 to $300,000 to provide staff
support and technical assistance to the workgroup (private
funds).
COMMENTS:
1)PURPOSE OF THIS BILL. According to the author, it is
important that the 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.
The author states that this bill will establish a group that
will make sure the best PCMH model is created for California.
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2)BACKGROUND.
a) PCMHs. One goal of the federal Patient Protection and
Affordable Care Act (ACA) is to strengthen the primary care
system by encouraging the adoption of PCMH models of care.
According to the federal Department of Health and Human
Services, the PCMH delivery model is designed to improve
quality of care through team-based coordination of care,
treating the many needs of the patient at once, increasing
access to care, and empowering the patient to be a partner
in their own care. The central features of PCMHs include
enhanced patient access to a regular source of primary
care, continuous relationships with clinicians, increased
access to preventive services, and improved management of
chronic conditions. One important aspect of the PCMH model
is funding for infrastructure investments.
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 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
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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 Children's
Health Insurance Program 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.
b) ACA and AB 361 (Mitchell), Chapter 642, Statutes of
2013. 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 providers and
provide capitated payments to primary care providers. Under
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this program, PCMH is defined as a model of care that
includes the following: i) personal physicians; ii) whole
person orientation; iii) coordinated and integrated care;
iv) safe and high-quality care through evidence-informed
medicine, appropriate use of health information technology,
and continuous quality improvements; v) expanded access to
care; and, vi) 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% 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: i) comprehensive care
management; ii) care coordination and health promotion;
iii) comprehensive transitional care, including appropriate
follow-up, from inpatient to other settings; iv) patient
and family support; v) referral to community and social
support services; and, vi) use of health information
technology to link services.
In 2013, the Legislature passed AB 361 which permitted DHCS
to submit a waiver application under the above provision of
the ACA to establish a California Health Home Program to
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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% federal match, the
California Endowment has offered to fund the remaining 10%
of funds, up to $25 million per year, required for these
additional services for the two years of the federal match.
According to DHCS, the state has developed a set of policy
goals that will guide the planning and implementation of AB
361. DHCS intends to submit a state plan amendment
application to the federal Centers for Medicare and
Medicaid Services (CMS) which would provide federal
regulatory authority for implementing the health home model
for Medi-Cal beneficiaries.
c) Anti-trust concerns. 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, a federal
antitrust law.
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, 317 U.S. 341 (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
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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
prices and rates among payers.
3)SUPPORT. The California Academy of Family Physicians (CAFP)
is the sponsor of this bill and states that, as a convener
under the bill, the HHSA Secretary will be able to bring
together public payers, private health carriers, third-party
purchasers, and providers to identify appropriate payment
methods and align incentives to support the PCMH model and
improve care of chronic illnesses. CAFP states that
California's health care delivery system too often fails to
provide effective, coordinated care for patients, particularly
those with chronic illnesses. Despite the obvious benefits of
alignment, stakeholders struggle with a variety of challenges
to achieve a more streamlined system: consensus building is
difficult given conflicting interests and payer concerns
regarding lost autonomy and competitive advantage. CAFP
states that the state can play an important role to help
overcome these obstacles, and through its power to waive
specific anti-trust liability, it can convene payers,
purchasers, and providers to identify a consistent payment
model for chronic care management, common performance and
outcome measures, and align incentives to support the PCMH.
CAFP argues that state participation, especially as a
convener, enables competing payers to work collaboratively to
establish a common initiative without risking antitrust
violations, and that only by coordinating payer efforts with
common goals and expectations, as well as creating reliable
financing streams, can true system reform occur.
4)PREVIOUS LEGISLATION.
a) ACR 152 (Pan), Resolution Chapter 143, Statutes of 2014,
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states 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.
b) AB 1208 (Pan) of 2013 proposed to establish the PCMH Act
of 2013 and would have 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.
c) AB 361 permits 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
CMS approves the state plan amendment.
d) 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.
e) SB 393 (Ed Hernandez) would have enacted the PCMH Act of
2012 and would have 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.
f) 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
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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 while on concurrence.
g) 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.
REGISTERED SUPPORT / OPPOSITION:
Support
California Academy of Family Physicians (sponsor)
Community Clinic Association of Los Angeles County
Health Access California
Opposition
None on file.
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Analysis Prepared by:Kelly Green / HEALTH / (916)
319-2097