BILL ANALYSIS Ó SB 586 Page 1 Date of Hearing: August 10, 2016 ASSEMBLY COMMITTEE ON APPROPRIATIONS Lorena Gonzalez, Chair SB 586 (Hernandez) - As Amended August 2, 2016 ----------------------------------------------------------------- |Policy |Health |Vote:|18 - 0 | |Committee: | | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: YesReimbursable: No SUMMARY: This bill extends the California Children's Services (CCS) "carve out" for most counties until January 1, 2022, and establishes the Whole Child Model (WCM) program for CCS-eligible children in counties with county organized health systems for delivery of Medi-Cal managed care (COHS counties). Specifically, this bill: 1)Authorizes a WCM pilot no sooner than July 1, 2017, in specified counties, and establishes goals for the pilot. SB 586 Page 2 2)Requires monitoring and oversight standards, data reporting and analysis, and a stakeholder process. 3)Establishes readiness standards, an assessment process, and other requirements for COHS plans. 4)Delineates responsibility of various functions between COHS plans and existing CCS staff, including maintaining medical therapy as a county function. 5)Requires any DHCS-proposed changes in CCS medical eligibility to trigger notification to the legislature and a stakeholder process, as specified. 6)Requires DHCS to develop a memorandum of understanding (MOU) template to be used by participating counties and health plans, and requires notice to, and consultation with, the counties in determining their administrative allocation for the CCS program. 7)Specifies an appeals process in the case of disagreements with respect to CCS services. 8)Establishes continuity of care provisions that maintain existing treatment relationships for three years under specified conditions, and continuity of care for durable medical equipment for one year. 9)Allows enrollees to continue receiving case management from a public health nurse with whom they have an existing relationship, and allows COHS plans to implement this by SB 586 Page 3 collocating county public health nurses with the plan or establishing an MOU with the county. 10)Requires the department to pay any managed care plan participating in the Whole Child Model program a separate, actuarially sound rate specifically for CCS children and youth, as long as an actuarially sound rate can be developed for the managed care plan's CCS population. 11)Requires COHS plans to pay physician provider services at rates that are equal to or exceed the applicable CCS fee-for-service rates, unless the physician enters into an agreement on an alternative payment methodology mutually agreed to by the physician and surgeon and the Medi-Cal managed care plan. 12)Requires a robust independent program evaluation by January 1, 2021. FISCAL EFFECT: 1)This bill largely aligns with existing administrative plans to implement a WCM program. However, there are several required activities that will result in costs (GF/federal): a) Monitoring and oversight standards: $500,000 per year. b) Stakeholder advisory group: $50,000 per year. c) Independent evaluation: $300,000-$500,000 one-time. SB 586 Page 4 2)The requirements for managed care plans to pay providers at existing rates results in unknown fiscal impact. To the extent access to care could be maintained with lower payment rates, this may lead to potential unrealized savings. 3)Extending the carve-out in non-COHS counties results in an unknown, potentially significant fiscal impact to the extent it reduces flexibility to provide care in a more cost-efficient manner. However, there are currently no plans to eliminate the CCS services carve-out for non-COHS counties, so it essentially continues current practice. COMMENTS: 1)Purpose. According to the author, this bill authorizes the creation of a WCM in counties served by a Medi-Cal COHS. CCS has been carved out of managed care since 1993 because the Legislature recognized this population required a unique approach. In over two decades since that time, the CCS carve-out has been extended numerous times, and the state has engaged in periodic efforts to pilot CCS alternative arrangements. The current carve out ends December 31, 2016, and the administration has signaled that they will support an extension of the carve-out only if it is accompanied by a plan for an organized delivery system that combines CCS-services in a WCM. This bill responds to that call by establishing a WCM in COHS plans. This bill extends the carve-out in non-COHS counties, ensures there is an incentive to continue to identify CCS-eligible children and adequately funds their care by requiring a stand-alone capitation payment paid to MCMC plans, ensures access to physician specialists by requiring a payment floor for CCS physician services, provides extended continuity of care so that children can continue to see their current providers, ensures continuity and consistency of CCS SB 586 Page 5 program expertise in care coordination and service authorization, requires an evaluation of the WCM, and ensures family involvement in the WCM at both the state and local level. 2)Background. The California Children's Services Program (CCS) provides diagnostic and treatment services, medical case management, and physical and occupational therapy services to children under 21 years of age with CCS-eligible conditions (e.g., severe genetic diseases, chronic and severe medical conditions, and traumatic injuries) from families unable to afford catastrophic health care costs. Established in 1927 to help children obtain treatment for services that were amenable to surgery, the CCS program currently serves approximately 180,000 children, 90% of whom are also eligible for Medi-Cal. Most Medi-Cal beneficiaries, including children, are required to enroll in Medi-Cal managed care plans. However, for children who are enrolled in both MediCal and CCS, CCS services are "carved-out" of Medi-Cal managed care in most counties until January 1, 2017. 3)Eligibility. A child eligible for CCS must be a resident of California, have a CCS-eligible condition, and be in a family with an adjusted gross income (AGI) of $40,000 or less in the most recent tax year. Children in families with higher incomes may still be eligible for CCS if the estimated cost of care to the family in one year is expected to exceed 20% of the family's adjusted gross income. 4)Funding. The CCS program is administered as a partnership between county health departments and DHCS. Counties pay a portion of the nonfederal share of cost. The CCS program is funded by several different fund sources depending upon the enrollment status of the child (for example, Medi-Cal versus state-only CCS) and the types of services received (for SB 586 Page 6 example, diagnosis and treatment versus medical therapy). CCS reimburses providers mostly through the fee-for-service system, and at rates that are substantially higher than standard Medi-Cal rates. 5)Recent Administrative Initiatives. CCS has been lauded for high standards and service levels, as well as access to specialists, but it creates a fragmented delivery system of care to the eligible child, since only the CCS-eligible condition is treated by the program. Other health care needs are generally managed by a managed care plan in which the child is dually enrolled. In order to improve care coordination and implement a patient and family-centered approach, DHCS engaged stakeholders since the fall of 2014 to investigate potential improvements or changes to the CCS program. In mid-2015, the Department of Health Care Services (DHCS) released its proposal for the CCS program based on a WCM initiative under which a CCS-eligible child would receive all of their care through the Medi-Cal managed care plan, rather than continuing to receive care for their CCS-eligible conditions outside the plan. For counties outside the "whole-child model" DHCS proposed a three-year carve-out extension (until at least January 2019). This bill largely aligns with the department's existing WCM initiative, but includes a number of statutory protections that stakeholders value, such as a floor on provider rates, continuity of care protections, an evaluation, and numerous requirements on participating COHS plans. SB 586 Page 7 6)Prior Legislation. AB 187 (Bonta), Chapter 738, Statutes of 2015, was the most recent sunset extension on the prohibition on incorporating CCS covered services into managed care. Analysis Prepared by:Lisa Murawski / APPR. / (916) 319-2081