BILL ANALYSIS                                                                                                                                                                                                    Ó



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          Date of Hearing:  August 10, 2016


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                               Lorena Gonzalez, Chair


          SB 586  
          (Hernandez) - As Amended August 2, 2016


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          |Policy       |Health                         |Vote:|18 - 0       |
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          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. 









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          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  








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            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. 








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          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  








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            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  








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            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. 









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          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