BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
SB 586 (Hernandez) - Children's services
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|Version: April 28, 2015 |Policy Vote: HEALTH 8 - 0 |
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|Urgency: No |Mandate: No |
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|Hearing Date: May 11, 2015 |Consultant: Brendan McCarthy |
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This bill meets the criteria for referral to the Suspense File.
Bill
Summary: SB 586 would eliminate the existing sunset of the
"carve out" of the California Children's Services (CCS) program
from Medi-Cal managed care. Instead, the bill would require the
Department of Health Care Services to enter into contracts with
one or more Kids Integrated Delivery Systems (KIDS) to provide
integrated care that includes both existing CCS benefits and all
other health care services provided under the Medi-Cal program.
Fiscal
Impact:
One-time administrative costs, likely in the low millions, to
design the program requirements, adopt regulations, and
negotiate contracts with KIDS plans (General Fund and federal
funds).
SB 586 (Hernandez) Page 1 of
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Unknown impact on overall Medi-Cal expenditures for services
provided to CCS-eligible Medi-Cal beneficiaries (General Fund
and federal funds). There are several factors that will impact
the overall costs or savings to the state under the bill. (See
below.)
Background: Under state and federal law, the Department of Health Care
Services operates the Medi-Cal program, which provides health
care coverage to low income individuals, families, and children.
Medi-Cal provides coverage to childless adults and parents with
household incomes up to 138 percent of the federal poverty level
and to children with household incomes up to 266 percent of the
federal poverty level. The federal government provides matching
funds that vary from 50 percent to 90 percent of expenditures
depending on the category of beneficiary.
In addition, the Department operates the California Children's
Services program which provides diagnosis, treatment, and case
management to children under age 21 who have complex medical
needs. (90% of CCS enrollees are Medi-Cal eligible. About 10%
are eligible only for CCS services, paid for with county funds).
Under current law, the CCS program is "carved out" of Medi-Cal
managed care, meaning that the program is operated on a
fee-for-service basis. (CCS eligible children receive services
related to their CCS eligible condition through the program, but
receive other health care services through Medi-Cal managed
care.) Under current law, the carve out expires at the end of
2015, at which time the Department could transition the CCS
population fully into managed care.
Current law allows the Department to establish pilot projects
for integrated care for CCS enrollees. Five demonstration
projects have been approved, but only one has been implemented
(operated by the San Mateo Health Plan).
The Department has been conducting a stakeholder process to seek
input on the future of the CCS program. The Department has
indicated that it would like to move the CCS program away from
the fee-for-service system to a more integrated care model.
SB 586 (Hernandez) Page 2 of
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Proposed Law:
SB 586 would eliminate the existing sunset of the "carve out"
of the California Children's Services (CCS) program from
Medi-Cal managed care. Instead, the bill would require the
Department of Health Care Services to enter into contracts with
one or more Kids Integrated Delivery Systems to provide
integrated care that includes both existing CCS benefits and all
other health care services provided under the Medi-Cal program.
Specific provisions of the bill would:
Define the eligible population, including individuals from age
21 to 26 who were formerly eligible for CCS;
Require, by January 1, 2018, the Department to enter into
contract with one or more KIDS networks to provide
comprehensive medical care to eligible children;
Specify the requirements for participation as a KIDS network,
including a requirement that the KIDS network include a CCS
tertiary hospital;
Specify the services to be provided and excluded from the
contract;
Authorize the contracts to include opportunities for risk
sharing between the state and the KIDS network, with a
requirement that shared savings be reinvested in services;
Allow an enrollee to continue to receive care from a KIDS
network for 12 months following termination of eligibility for
CCS (providing the individual is still eligible for Medi-Cal).
Related
Legislation: AB 187 (Bonta) would extend the CCS carve out
until an evaluation of certain CCS pilot projects have been
completed.
Staff Comments: Under current law, the "carve out" of CCS
benefits from Medi-Cal managed care is set to expire at the end
of 2015. After that, the Department could transition CCS
eligible beneficiaries from the current system into Medi-Cal
managed care. Historically, the state has assumed that shifting
Medi-Cal beneficiaries into managed care will reduce costs,
relative to the fee-for-service system, due to better
coordination of care and less utilization of high-cost services.
Whether that would occur under current law is highly uncertain,
however, given the serious health issues experienced by
CCS-eligible children.
SB 586 (Hernandez) Page 3 of
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This bill does not simply eliminate the carve out, but would
replace it with a new system, under which the state would
contract with KIDS networks to provide both CCS services and the
non-CCS benefits that beneficiaries currently receive. The KIDS
networks would not be fully capitated managed care plans, but
would share some risk with the state for the costs to provide
services. In theory, KIDS networks could reduce costs through
better care coordination. However, since this is a new model of
delivering care to a population with complex medical needs, it
is difficult to predict whether savings would occur.
Additionally, the bill states that any "shared savings" from
such an arrangement shall be reinvested in services. It is not
clear whether this requirement would apply to total cost savings
or whether it would apply only to the share of savings accruing
to the KIDS network under the contract.
In addition, the bill would authorize a formerly CCS eligible
child to remain within the KIDS network until age 26 (providing
the individual was still eligible for Medi-Cal). The universe of
such individuals is not likely to be large and it is not known
yet whether the overall cost to provide care through a KIDS
network would be greater or less than in a traditional Medi-Cal
managed care plan.
Total expenditures in the CCS program are over $2.2 billion per
year. If the contracts with KIDS networks are structured to
allow the state to retain a portion of savings due to better
care coordination (and such savings actually occur), state
savings could be substantial.
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