BILL ANALYSIS Ó
SB 435
Page 1
SENATE THIRD READING
SB
435 (Pan)
As Amended July 7, 2015
Majority vote
SENATE VOTE: 27-11
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|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Health |14-4 |Bonta, Maienschein, |Chávez, Lackey, |
| | |Bonilla, Burke, Chiu, |Patterson, |
| | |Gomez, Gonzalez, |Steinorth |
| | |Roger Hernández, | |
| | |Nazarian, | |
| | |Ridley-Thomas, | |
| | |Santiago, Thurmond, | |
| | |Waldron, Wood | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Appropriations |12-5 |Gomez, Bloom, Bonta, |Bigelow, Chang, |
| | |Calderon, Nazarian, |Gallagher, Jones, |
| | |Eggman, Eduardo |Wagner |
| | |Garcia, Holden, | |
| | |Quirk, Rendon, Weber, | |
| | |Wood | |
| | | | |
SB 435
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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 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.
3)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.
4)Authorizes the working group to develop consensus on
strategies for implementing the PCMH care model and service
delivery change at the practice, community, and health care
system level; identify ways to create alignment regarding
payment, reporting, and infrastructure investments; identify
ways to utilize public and private purchasing power and ways
to enable competing payers to work collaboratively to
establish common PCMH initiatives; and, propose participation
in federally funded pilot and demonstration projects.
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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.
FISCAL EFFECT: According to the Assembly Appropriations
Committee:
1) Costs of $20,000 to HHSA to convene a workgroup.
2)This bill includes intent to exempt from applicable antitrust
laws, but does not do so. Specifically, it does not include a
process by which the state can manage the requirements of
immunity from federal antitrust laws under the State Action
Doctrine. This liability poses General Fund risk. The
California Department of Justice (DOJ) notes that in light of
recent Supreme Court case law, it is likely that the antitrust
immunity provisions contained in this bill would not comply
with the State Action Doctrine. DOJ indicates enactment of
this bill will expose the state to liability and damages for
collaborations formed under the statute. DOJ costs as a
result of these liabilities are impossible to predict but
potentially significant.
COMMENTS: 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
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created for California.
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.
According to the National Council of State Legislatures,
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. 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.
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
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seen as illegal restraint of trade under the Sherman Act, a
federal antitrust law. Immunity from federal antitrust laws
when convening multiple payers may be available to states as
well as private payers under the "state action doctrine," 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 prices and rates among
payers.
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
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expectations, as well as creating reliable financing streams,
can true system reform occur.
There is no known opposition to this bill.
Analysis Prepared by:
Kelly Green / HEALTH / (916) 319-2097 FN:
0001666