BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON HEALTH
                          Senator Ed Hernandez, O.D., Chair

          BILL NO:                    SB 815    
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          |AUTHOR:        |Hernandez and De Leon                          |
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          |VERSION:       |April 11, 2016                                 |
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          |HEARING DATE:  |April 27, 2016 |               |               |
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          |CONSULTANT:    |Scott Bain                                     |
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           SUBJECT  :  Medi-Cal:  demonstration project

           SUMMARY  : Enacts the statutory provisions of "Medi-Cal 2020," the state's  
          recently approved five-year federal Section 1115 waiver, which  
          runs through December 31, 2020. Implements the Public Hospital  
          Redesign and Incentive in Medi-Cal, the Global Payment Program  
          for county designated public hospitals, the Dental  
          Transformation Initiative, the Whole Person Care program and the  
          access assessment required under the Special Terms of Conditions  
          of Medi-Cal 2020. Urgency bill.
          
          Existing law:
          1)Establishes the Medi-Cal program, which is administered by the  
            Department of Health Care Services (DHCS) and under which  
            qualified low-income persons receive health care benefits. 

          2)Establishes a Medicaid Section 1115 demonstration project  
            under the Medi-Cal program until October 31, 2015 known as  
            California's Bridge to Reform, to implement specified  
            objectives, including better care coordination for Seniors and  
            Persons with Disabilities (SPDs) and maximization of  
            opportunities to reduce the number of uninsured individuals.

          3)Provides for payments under the state's Bridge to Reform  
            waiver to designated public hospitals (DPHs are the University  
            of California [UC] and county hospitals), and for federal  
            disproportionate share (DSH), payments to private hospitals  
            (referred to as "DSH replacement payments") and non-designated  
            public hospitals (NDPHs are now referred to as  
            District/Municipal Public Hospitals or DMPH) through October  
            1, 2015. These provisions:  

             a)   Make DPHs eligible for cost-based fee-for-service (FFS)  







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               Medicaid funding using county certified public expenditures  
               (CPEs) as the federal match, instead of state General Fund.  
               DPHs put up the nonfederal share of Medi-Cal FFS payments  
               used to draw down federal Medicaid matching funds, and  
               receive cost-based reimbursement, using CPEs to draw down  
               federal Medicaid matching funds; 
             b)   Provide DSH payments to DPHs, using county CPEs and  
               county intergovernmental transfers (IGTs) to draw down  
               federal DSH funds; 
             c)   Provide DSH payments to eligible DMPHs meeting DSH  
               eligibility criteria, using state General Fund to draw down  
               federal DSH funds;
             d)   Provide for "DSH replacement payments" to private  
               hospitals meeting DSH eligibility criteria, using non-DSH  
               Medicaid funds and state General Fund as the fund source; 
             e)   Make DPHs eligible for payments from the federally  
               funded Safety Net Care Pool (SNCP) for uncompensated care;  
               and, 
             f)   Make DPHs eligible for payments from the federally  
               funded delivery system reform incentive pool (DSRIP), based  
               on the DPH's progress toward and achievement of milestones  
               and metrics established in its DSRIP proposal, funded by  
               federal funds and IGTs.  


          1)Authorizes DHCS to request one or more temporary waiver  
            extensions to continue the operation of, and the authorities  
            provided under, the Bridge to Reform. Requires DHCS to extend  
            and apply the existing hospital payment methodologies and  
            allocations on a state fiscal year, annual, partial year, or  
            other basis, to the extent permitted under any approved  
            temporary waiver extension, an approved subsequent waiver, or  
            as otherwise permitted under federal Medicaid law.

          This bill:
          1)Requires DHCS to implement the Medi-Cal 2020 Demonstration  
            Project, consistent with federal law and the Special Terms and  
            Conditions (STCs). Requires the STCs to prevail in the event  
            of a conflict between this bill and the STCs.

          2)Continues the current Medi-Cal FFS payment methodologies for  
            DPHs from the previous waiver, whereby DPHs receive cost-based  
            reimbursement with county CPEs used to draw down federal  
            Medicaid matching funds, and which require DPHs to receive  
            supplemental reimbursements for the costs incurred by for  








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            physician and non-physician services provided to Medi-Cal  
            beneficiaries who are patients of the hospital, to the extent  
            those services are not claimed as inpatient hospital services  
            by the hospital.

          3)Requires DSH payments to be paid only to UC DPHs and DMPHs,  
            and requires private DSH hospitals to receive "virtual DSH"  
            payments (also known as "DSH replacement payments") funded by  
            GF and federal Medicaid funds (instead of federal DSH funds)  
            in the same manner as under the previous waiver, with the  
            federal DSH amounts going to UC DPHs capped by fiscal year.  
            Requires federal DSH payments and federal funds under the SNCP  
            to be used for a new Global Payment Program (GPP).

          4)Requires DSH and SNCP payments made to DPHs under specified  
            timeframes to be reconciled to payments under this bill, as  
            specified. Requires DSH and SNCP payment determinations and  
            payments for 2013-14 and 2014-15 fiscal years to be deemed  
            final, as specified.

          5)Establishes provisions for repayment in the event of a federal  
            deferral or disallowance, and how to account for a repayment  
            amount in determining a county's redirection obligation under  
            specified provisions of law requiring counties to shift funds  
            to the state required by AB 85 (Committee on Budget, Chapter  
            24, and Statutes of 2013).

          6)Requires DHCS to implement the new GPP to supporting  
            participating health care systems that provide health care for  
            the uninsured. Requires, under GPP, GPP systems to receive  
            global payments based on the health care they provide to the  
            uninsured, in lieu of traditional DSH payments and payments  
            from an uncompensated care pool (referred to as the SNCP under  
            the prior waiver). 

          7)Requires GHPP systems to receive GPP payments based on a  
            value-based point methodology that incorporates measures of  
            value for patients in conjunction with the recognition of  
            costs. Requires the points assigned to a particular service or  
            activity to be the same across all GPP systems.

          8)Requires DHCS to determine the maximum amount of GPP funding  
            each GPP system would receive, consisting of federal DSH funds  
            for county DPHs and amounts authorized for the uncompensated  
            care component of the GPP as determined under the STCs.








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          9)Requires DHCS to perform a baseline analysis of the GPP's  
            system historical volume, cost and mix of services to the  
            uninsured to establish an annual threshold for purposes of  
            GPP. Requires DHCS to determine a pro rate allocation for each  
            GPP system, and an annual budget the GPP system will receive  
            if it achieves its threshold.  Requires DHCS to develop a  
            methodology to redistribute unearned GPP funds for a given  
            year to those GPP systems that exceed their threshold in that  
            same year. 

          10)Prohibits GPP from being construed to constitute or offer  
            health coverage for individuals receiving services, and  
            permits participating GPP systems to determine the scope, type  
            and extent to which services are available to the extent  
            consistent with the STCs. Prohibits the GPP from being  
            construed to decrease, expand or otherwise alter the scope of  
            county's existing obligation to the medically indigent.

          11)Requires the nonfederal share of payment under GPP to be  
            funded by IGTs. 

          12)Requires DHCS to determine the IGT amount for each GPP system  
            under this bill, and establishes different GPP payment amounts  
            for each county DPH system, as specified.

          13)Requires DHCS, if it determines, after consulting with GPP  
            systems, to terminate the GPP in subsequent years, to notify  
            CMS. 

          14)Requires DHCS to establish and operate the PRIME program,  
            which is intended to accelerate efforts by participating PRIME  
            entities to change care delivery to maximize health care value  
            and strengthen their ability to successfully perform under  
            risk-based alternative payment models (APM). PRIME is the  
            successor to the DSRIP from the previous waiver.

          15)Designates DPHs and DMPHs as participating PRIME entities.  
            Subject to the STCs, authorizes up to $1.2 billion available  
            to DPHs and $200 million available to DMPHs.

          16)Makes participating PRIME entities eligible to earn incentive  
            payments by undertaking projects set forth in the STCs for  
            which there are required metrics.









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          17)Requires that PRIME payments to be incentive payments and not  
            payments for services otherwise reimbursable under Medi-Cal.  
            Prohibits expenditures by PRIME entities from offsetting  
            payment amounts otherwise payable by Medi-Cal or Medi-Cal  
            managed care plans or otherwise supplant provider payments  
            payable to PRIME entities.

          18)Requires PRIME entities, within 30 days following federal  
            approval of protocols for PRIME projects, metrics and funding,  
            to submit a five-year PRIME project plan containing the  
            specific elements of the STCs. Requires DHCS to review all  
            five-year PRIME project plans and take action within 60 days  
            to approve or disapprove each plan.

          19)Requires each PRIME entity to submit reports to DHCS twice a  
            year demonstrating progress toward required metric targets,  
            using a standardized form developed jointly by DHCS and  
            participating PRIME entities.

          20)Establishes provisions for the amount of PRIME incentive  
            payments payable to a participating PRIME entity, and requires  
            amounts payable to each PRIME entity to be determined using  
            the methodology in the STCs.

          21)Makes each participating PRIME entity individually  
            responsible for progress toward and achievement of project  
            specific metrics targets. Requires that participating PRIME  
            entities earn reduced payment for partial achievement, as  
            described in the STCs.

          22)Requires the nonfederal share of PRIME payments to consist of  
            voluntary IGTs. 

          23)Requires DPH systems to contract with at least one Medi-Cal  
            managed care plan in the service area where they operate using  
            an APM by January 1, 2018. Permits DHCS to waive this  
            requirement if the DPH system is unable to meet the  
            requirement and can demonstrate that it has made a good faith  
            effort to contract.

          24)Requires DPHs and Medi-Cal managed care plans to seek to  
            strengthen their data and information sharing for purposes of  
            identifying and treating applicable beneficiaries, including  
            the timely sharing and reporting of beneficiary data,  
            assessment and treatment information.








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          25)Requires DHCS to establish and operate the Whole Person Care  
            (WPC) pilot program as authorized under Medi-Cal 2020 to allow  
            for development of WPC pilots focused on target populations of  
            high-risk, high-utilizing Medi-Cal beneficiaries in local  
            geographic areas. 

          26)Establishes as the goal of WPC is the coordination of health,  
            behavioral health, and social services, as applicable, in a  
            patient-centered manner to improve beneficiary health and  
            well-being through more efficient and effective use of  
            resources.

          27)Requires WPC pilots to provide an option to a county, city  
            and county, a health or hospital authority or a consortium of  
            any of these entities to receive support to integrate care for  
            particularly vulnerable Medi-Cal beneficiaries who have been  
            identified as high users of multiple systems and who continue  
            to have or are at-risk of poor health outcomes. 

          28)Defines the WPC target population as the population or  
            populations identified by a WPC pilot through a collaborative  
            data approach across partnering entities that identifies  
            common Medi-Cal high-risk, high-utilizing beneficiaries who  
            frequently access urgent and emergency services, including  
            across multiple systems. Permits, at the discretion of the WPC  
            lead entity, and in accordance with guidance as may be issued  
            by DHCS during the application process and approved by DHCS,  
            the WPC target population to include individuals who are not  
            Medi-Cal patients, subject to the funding restrictions in the  
            STCs regarding the availability of FFP for services provided  
            to these individuals.

          29)Requires WPC pilots to include specific strategies to  
            increase integration among local governmental agencies, health  
            plans, providers, and other entities that serve high-risk,  
            high-utilizing beneficiaries, increase coordination and  
            appropriate access to care, reduce inappropriate inpatient and  
            emergency room utilization, improve data collection and  
            sharing among local entities, improve health outcomes for the  
            WPC target population and permits it to include other  
            strategies to increase access to housing and supportive  
            services.

          30)Requires WPC pilots to be approved by DHCS through the  








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            process outlined in the STCs.

          31)Makes receipt of WPC services voluntary, and permits  
            beneficiaries to opt out at any time.

          32)Requires the WPC lead entity to be responsible for operating  
            the WPC pilot, conducting ongoing monitoring of WPC  
            participating entities, arranging for the required reporting,  
            ensuring an appropriate financial structure is in place, and  
            identifying and securing a permissible source of the  
            nonfederal share for WPC pilot payments.

          33)Requires each WPC pilot to include, at a minimum, all of the  
            following entities as WPC participating entities in addition  
            to the WPC lead entity: 

             a)   At least one Medi-Cal managed care plan operating in the  
               geographic area of the WPC pilot;
             b)   The health services agency or agencies or department or  
               departments for the geographic region where the WPC pilot  
               operates, or any other public entity operating in that  
               capacity for the county or city and county; 
             c)   The local entities, agencies, or departments responsible  
               for specialty mental health services for the geographic  
               area where the WPC pilot operates; 
             d)   At least one other public agency or department, which  
               may include, but is not limited to, county alcohol and  
               substance use disorder programs, human services agencies,  
               public health departments, criminal justice or probation  
               entities, and housing authorities, regardless of how many  
               of these fall under the same agency head within the  
               geographic area where the WPC pilot operates; and, 
             a)   At least two other community partners serving the target  
               population within the applicable geographic area.

          1)Permits a WPC lead entity to request an exemption from this  
            requirement from DHCS if a WPC lead entity cannot reach an  
            agreement with a required participant.

          2)Requires DHCS to enter into a pilot agreement with each WPC  
            lead entity approved for participation in the WPC pilot  
            program. 

          3)Permits the sharing of health information, records, and other  
            data with and among WPC lead entities, and allows WPC  








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            participating entities to share health information, records,  
            and other data with and among prospective WPC lead entities  
            and WPC participating entities in the process of identifying a  
            proposed target population and preparing an application for a  
            WPC pilot.

          4)Permits WPC pilots to target the focus of their pilot on  
            individuals at risk of or are experiencing homelessness who  
            have a demonstrated medical need for housing or supportive  
            services. Requires, in these instances, WPC participating  
            entities to include local housing authorities, local continuum  
            of care programs, community-based organizations, and others  
            serving the homeless population as entities collaborating and  
            participating in the WPC pilot. 

          5)Permits the housing interventions to include tenancy-based  
            care management services, defined as supports to assist the  
            target population in locating and maintaining medically  
            necessary housing, and countywide housing pools.

          6)Permits WPC participating entities to include contributions to  
            a countywide housing pool that will directly provide needed  
            support for medically necessary housing services, with the  
            goal of improving access to housing and reducing churn in the  
            Medi-Cal population.

          7)Requires payments to WPC pilots to be disbursed twice a year  
            to the WPC lead entity following the submission of required  
            reports.

          8)Requires DHCS to issue a WPC pilot application and selection  
            criteria consistent with the STCs, requires DHCS to approve  
            applicants that meet the WPC pilot selection criteria  
            established by DHCS, and requires DHCS to allocate available  
            funding to those approved WPC pilots up to the full amount of  
            FFP authorized under the demonstration project for WPC pilots  
            during each calendar year from 2016 to 2020.

          9)Requires that payments to the WPC pilot are intended to  
            support infrastructure to integrate services among local  
            entities that serve the WPC target population, to support the  
            availability of services not otherwise covered or directly  
            reimbursed by Medi-Cal to improve care for the WPC target  
            population, and to foster other strategies to improve  
            integration, reduce unnecessary utilization of health care  








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            services, and improve health outcomes. 

          10)Requires WPC lead entities to submit mid-year and annual  
            reports to DHCS, in accordance with the schedules and  
            guidelines established by DHCS and consistent with the STCs. 

          11)Requires the nonfederal share of any payments under the WPC  
            pilot program to consist of voluntary IGTs of funds provided  
            by participating governmental agencies or entities, in  
            accordance with this bill and the terms of the pilot  
            agreement.

          12)Requires DHCS to claim FFP for WPC pilot payments using  
            moneys from the IGTs and FFP, and requires moneys disbursed  
            from the fund, and all associated FFP to be distributed to WPC  
            lead entities.

          13)Requires DHCS to implement the Dental Transformation  
            Initiative (DTI) in accordance with the STCs, with the goal of  
            improving the oral health care for Medi-Cal children 0 to 20,  
            inclusive, years of age.

          14)Establishes as the purpose of the DTI is to improve the oral  
            health care for Medi-Cal children with a particular focus on  
            increasing the statewide proportion of qualifying children  
            enrolled in the Medi-Cal Dental Program who receive a  
            preventive dental service by 10 percentage points over a  
            five-year period.

          15)Requires the DTI to include the following four domains as  
            outlined in the STCs:

             a)   Increase Preventive Services Utilization for Children;
             b)   Caries Risk Assessment and Disease Management Pilot; 
             c)   Increase continuity of care; and,
             d)   Local Dental Pilot Projects (LDPPs).
              
          1)Requires, under the DTI, incentive payments within each domain  
            to be available to qualified providers who meet the  
            requirements of the domain.

          2)Requires the DTI to be funded at a maximum of $148 million  
            annually, and for five years totaling a maximum of $740  
            million, except as provided in the STCs. Permits unspent funds  
            to be rolled over to subsequent years.








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          3)Permits DHCS to earn additional demonstration authority, up to  
            a maximum of $10 million to be added to the DTI Pool for use  
            in paying incentives to qualifying providers under DTI by  
            achieving higher performance improvement, as indicated in the  
            STCs.

          4)Permits providers in either the dental FFS or dental managed  
            care Medi-Cal delivery systems to participate in the DTI. 

          5)Requires DHCS to make DTI incentive payments directly to  
            eligible contracted service office locations. 

          6)Requires incentive payments to be issued to the service office  
            location based on the services rendered at the location and  
            that service office location's compliance with the criteria  
            enumerated in the STCs.

          7)Requires that incentive payments from the DTI Pool are  
            intended to support and reward eligible service office  
            locations for achievements within one or more of the project  
            domains. Prohibits incentive payments from being considered as  
            a direct reimbursement for dental services under Medi-Cal.

          8)Requires service office locations to submit all data in a  
            manner acceptable to DHCS within one year from the date of  
            service or by January 31 for the preceding year that the  
            service was rendered, whichever occurs sooner, to be eligible  
            for DTI incentive payments associated with that timeframe.

          9)Permits DHCS to implement this bill or the STCs by means of  
            letters or bulletins without taking regulatory action.  
            Requires notification to the Joint Legislative Budget  
            Committee and to the Senate Committees on Appropriations,  
            Budget and Fiscal Review, and Health, and the 
          Assembly Committees on Appropriations, Budget, and Health within  
            10 business days after the above-described action is taken.

          10)Permits DHCS to enter into exclusive or nonexclusive  
            contracts or amend existing contracts on a bid or negotiated  
            basis. Exempts these contracts from specified provisions of  
                                                  the Public Contract Code and Department of General Services  
            (DGS) review.

          11)Requires DHCS to seek any federal approval as necessary to  








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            implement Medi-Cal 2020, this bill and any changes to the STCs  
            as deemed necessary. Implements this only to the extent  
            federal financial participation (FFP) is available and is not  
            otherwise jeopardized.

          12)Permits the DHCS director to modify any process or  
            methodology in this bill to the extent necessary to comply  
            with federal law or the STCs, but only if the modification is  
            consistent with the goals of this bill.

          13)Requires the DHCS director develop a methodology by which  
            payments under Medi-Cal 2020 are reduced if the amount of FFP  
            is reduced due to the application of penalties in the STC, the  
            enforcement of the budget neutrality limit or other similar  
            occurrence.

          14)Permits DHCS to claim FFP for expenditures associated with  
            designated state health programs (DSHP) identified in the  
            STCs.

          15)Continues the continuously appropriated Demonstration DSH  
            Fund and Public Hospital Investment, Improvement and Incentive  
            Fund, and establishes the continuously appropriated Global  
            Payment Program Special Fund and the WPC Pilot Special Fund in  
            the State Treasury. 

          16)Requires DHCS to conduct or arrange to have conducted any  
            study, report, assessment, evaluation or other similar  
            demonstration project activity required under the STCs.

          17)Requires DHCS to conduct or arrange to have conducted the  
            PRIME program evaluation, the DTI evaluation, the WPC pilot  
            program, and two evaluations of the GPP required by the STCs.

          18)Would take effect immediately as an urgency statute

           FISCAL  
          EFFECT  :  This bill has not been analyzed by a fiscal committee.

           COMMENTS  :
          1)Author's statement. According to the author, this bill is  
            needed to provide the statutory framework for implementation  
            of "Medi-Cal 2020." While the STCs outline the programmatic  
            and financing elements of Medi-Cal 2020, state law changes are  
            required, particularly related to hospital financing. This  








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            bill is needed to continue existing Medi-Cal FFS payments to  
            DPHs, to change how federal DSH funds are provided to DPHs  
            consistent with the STCs under the GPP, to continue DSH  
            payments to private and DMPHs, to implement the expanded  
            provisions of PRIME, to appropriate funds for the  
            waiver-related provisions, to enable data sharing as part of  
            WPC projects, and to codify the provisions of the STCs  
            establishing the DTI and the access assessments. In addition,  
            this bill would grant flexibility to DHCS to implement  
            Medi-Cal 2020 without using the regular contracting and  
            regulatory processes due to waiver timelines, and would  
            require notification to the Legislature regarding  
            waiver-related activities. 

          2)Federal Section 1115 Medicaid Waivers. Section 1115 of the  
            Social Security Act authorizes the federal Secretary of Health  
            and Human Services to allow states to receive federal Medicaid  
            matching funds without complying with all of the federal  
            Medicaid rules. Traditionally designed as research and  
            demonstration programs to test innovative program improvements  
            and to facilitate coverage expansions to populations not  
            otherwise eligible for Medicaid, waivers are also used to  
            allow states to change how services are delivered, and to  
            change how services are reimbursed. In addition, under Section  
            1115, states are allowed to use federal Medicaid funds in ways  
            that are not otherwise allowed under federal law and  
            regulation (referred to expenditure authority for "costs not  
            otherwise matchable" or CNOM). 

          Section 1115 waivers are approved at the discretion of the  
            Secretary of HHS through negotiations between a state and CMS  
            for projects that the Secretary determines promote Medicaid  
            program objectives. Section 1115 waivers are generally  
            approved for a five-year period and then must be renewed.  
            Although not required by statute or regulation, longstanding  
            federal administrative policy has required waivers to be  
            "budget neutral" for the federal government, meaning that  
            federal spending under a waiver must not be more than  
            projected federal spending in the state without the waiver.

          3)California's 2010 Bridge to Reform Section 1115 Waiver.  
            California's 2010 Section 1115 "California Bridge to Reform  
            Demonstration" Waiver was a five-year demonstration of health  
            care reform initiatives that was projected to provide an  
            additional $10 billion in federal funds over the lifetime of  








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            the waiver. The waiver prepared the state for successful  
            implementation of health care reform through an early  
            expansion of Medicaid, and tested innovations in health care  
            support for safety net providers. The Bridge to Reform was a  
            five year waiver, which began November 1, 2010 and expired  
            October 31, 2015 (although parts were extended until December  
            31, 2015). California also operates its Medi-Cal managed care  
            delivery system under this federal waiver. The Bridge to  
            Reform Waiver enabled California to:  

             a)   Implement an early expansion of Medicaid to low-income  
               adults without minor children under ACA through the Low  
               Income Health Program, which enrolled 650,000 individuals;   

             b)   Require the mandatory enrollment of SPDs into Medi-Cal  
               managed care plans in specified counties;  
             c)   Provide federal funding for delivery system reform and  
               uncompensated care in designated public hospital systems  
               (county and University of California hospitals) through the  
               DSRIP and SNCP;   
             d)   Provided federal funding for DSHP;  and, 
             e)   Operate its Medi-Cal managed care program,  
               Community-Based Adult Services program, and seven county  
               Coordinated Care Initiative (under the Initiative,  
               individuals dually eligible for Medicare and Medi-Cal  
               receive their Medi-Cal and Medicare benefits through one  
               health plan), Drug Medi-Cal Organized Delivery Systems  
               (Drug Medi-Cal ODS), uncompensated care for Indian Health  
               Services, and full scope coverage of pregnant women with  
               incomes between 109-138% of the federal poverty level.

          1)Medi-Cal 2020 waiver. On December 30, 2015, DHCS received CMS  
            approval of "California Medi-Cal 2020 Demonstration" (Medi-Cal  
            2020). The five year waiver begins January 1, 2016 and ends  
            December 31, 2020. Medi-Cal 2020 is anticipated to provide  
            $6.2 billion in federal funds over the five years of the  
            waiver. The details of Medi-Cal 2020 are in the 300+ page STCs  
            and related attachments agreed to by the state and CMS.  
            Federal funding by waiver program component is as follows:

                 PRIME               $3.732 billion
                 Global Payment Program$236 million* and **
                 Dental Transformation Initiative$375 million
                 Designated State Health Programs$375 million
                  Whole Person Care        $1.5 billion  __ 








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                 Total                    $6.21 billion

            * GPP does not include the DSH component of funding. DSH  
            funding over the 5 years of the waiver is projected to be  
            $10.830 billion total funds ($5.915 billion federal funds).
            ** For GPP, initial federal funding only accounts for the  
            first year of the GPP (DY 11) as funding in subsequent years  
            is based on a study on DPH uncompensated care.

            In addition to the program areas and federal funding under  
            Medi-Cal 2020, the federal government waives specified federal  
            Medicaid provisions, including the following:

             a)   Freedom of Choice:
                  i.        To enable California to require participants  
                    to receive benefits through certain providers and to  
                    permit California to require that individuals receive  
                    benefits through managed care providers who could not  
                    otherwise be required to enroll in managed care. No  
                    waiver of freedom of choice is authorized for family  
                    planning providers.
          
             b)   DSH requirements: 
                  i.        To exempt California from making DSH payments,  
                    in accordance with federal Medicaid law to a hospital  
                    which qualifies as a DSH during any year for which the  
                    Public Health Care System with which the DSH is  
                    affiliated receives payment pursuant to the GPP. 

             a)   Statewideness: 
                  i.        To enable California to operate the  
                    demonstration on a county-by-county basis and to  
                    provide Medi-Cal managed care plans only in certain  
                    geographic areas. 
                  ii.       To enable California to provide Drug Medi-Cal  
                    ODS services to individuals on a geographically  
                    limited basis. 
                  iii.      To enable California to authorize WPC pilots  
                    and to provide WPC services to individuals on a  
                    geographically limited basis. 
                  iv.       To enable California to authorize DTI program  
                    pilots and to provide DTI services to individuals on a  
                    geographically limited basis.
          
             a)   Amount, Duration, and Scope of Services and  








          SB 815 (Hernandez)                                 Page 15 of ?
          
          
               Comparability 
                  i.        To enable California to provide different  
                    benefits for low-income pregnant women between 109% up  
                    to and including 138% of the Federal Poverty Level, as  
                    compared to other pregnant women in the same  
                    eligibility group. 
                  ii.       To enable California to authorize WPC pilots  
                    which may make available certain services, supports or  
                    interventions to certain high-risk, vulnerable  
                    populations targeted under an approved WPC pilot  
                    program that are not otherwise available to all  
                    beneficiaries in the same eligibility group. 
                  iii.      To enable California to provide certain  
                    services, supports and other interventions to eligible  
                    individuals with substance use disorders under the  
                    Drug Medi-Cal ODS program that are not otherwise  
                    available to all beneficiaries in the same eligibility  
                    group. 
                  iv.       To enable California to provide certain  
                    services, supports and other interventions to eligible  
                    individuals under the DTI program that are not  
                    otherwise available to all beneficiaries in the same  
                    eligibility group.

          1)DSH. Medicaid DSH payments are federally required Medicaid  
            payments that states make to hospitals that serve a high  
            proportion of Medicaid and other low-income patients. DSH  
            payments supplement regular Medicaid payments for hospital  
            services and are intended to improve the financial stability  
            of safety-net hospitals by offsetting uncompensated care costs  
            for Medicaid and uninsured patients. Each state's annual DSH  
            allotment is calculated by federal law. DSH payments are  
            limited by the annual federal DSH allotments to each state.

            Because hospitals were anticipated to have reduced  
            uncompensated care as a result of the federal Affordable Care  
            Act (ACA), the ACA proposed to reduce federal DSH funds.  
            Beginning in federal fiscal year 2014, the ACA proposed to  
            dramatically decrease the amount of funding that will be  
            provided under both DSH programs, based on the premise that  
            the ACA coverage expansions will result in fewer individuals  
            receiving uncompensated care. Under the ACA, the federal  
            Secretary of DHHS is required to develop a methodology that  
            will reduce the DSH payments by $14.1 billion during the  
            period 2014 to 2019, pursuant to a schedule set out in the  








          SB 815 (Hernandez)                                 Page 16 of ?
          
          
            ACA. These reductions increase over time, and by 2019  
            represent an approximate 50% reduction over baseline  
            projections. These reductions have been delayed multiple times  
            and are currently scheduled to begin in FY 2018. California  
            anticipates receiving $1.2 billion in federal DSH funds in  
            2015-16.

            Under this bill, and consistent with the previous legislation  
            implementing the 2010 waiver, DHCS will "run the DSH list" to  
            determine which hospitals are eligible for federal DSH funds.  
            In 2014-15, the threshold for DSH eligibility is a 40.3%  
            Medi-Cal utilization rate (MUR) or higher, or a low-income  
            utilization rate (county indigent, charity care and Medi-Cal)  
            of 25% (the 25% LIUR is in statute and applies each year while  
            the MUR varies year-to-year). In the 2014-15 fiscal year,  
            there were 140 hospitals that were DSH-eligible, plus 3 UC  
            hospitals (at UCSF and 2 at UCLA) that were made DSH-eligible  
            by statute implementing the waiver. Under existing law dating  
            back to 1994-95, the state had a "rake off" of DSH funds to  
            achieve budget savings. The current rake off amount in statute  
            is $85 million, but the "rake off" was suspended in the  
            legislation implementing the 2005 and 2010 waivers, and  
            continues to be suspended in this bill. 

            Private hospitals that are DSH eligible do not receive DSH  
            funds. Instead, they receive "virtual DSH" (also referred to  
            as "DSH replacement payments") which is the same amount of  
            funding they would have received from DSH funds, except the  
            additional funds are funded by state General Funds and  
            "regular" federal Medicaid matching funds (instead of being  
            funded from the capped federal DSH allotment). DMPHs receive  
            DSH funds, with the state GF providing the matching funds used  
            to draw down federal funds. These requirements apply in the  
            previous waiver and continue in this bill.

            Under Medi-Cal 2020, the five UC DPHs will continue to receive  
            DSH funds as they did in the prior waiver, using CPEs to draw  
            down the funds for costs below 100% of their costs, and IGTs  
            to drawn down DSH funds for their amounts between 100-175% of  
            their costs. Consistent with the previous waiver, this bill  
            makes all UC hospitals DSH-eligible who might not otherwise be  
            DSH-eligible. The amount of DSH funds UC is eligible to  
            receive under this bill system wide is capped at between 26.2%  
            and 21.8% after amounts for DMPHs are made, depending upon the  
            state fiscal year. DHCS is required to consult with UC prior  








          SB 815 (Hernandez)                                 Page 17 of ?
          
          
            to making interim and final DSH payments, and to make any  
            adjustments to the payment distributions requested by UC so  
            long as the aggregate net effect of the adjustments is zero.

            County DPHs will now longer receive DSH funds as they did in  
            the prior waiver. Instead, county DPHs will receive DSH funds  
            under the new GPP, described below.

          2)GPP. The GPP is a new feature of Medi-Cal 2020. Under GPP, a  
            statewide pool of funding for the remaining uninsured would be  
            established by combining federal DSH funding (which is limited  
            to hospitals under federal law) for county DPHs and some level  
            of federal uncompensated care pool funding (the SNCP was a  
            funding component of the previous waiver for the uninsured).  
            Under the GPP, each individual public hospital system would  
            receive a "global budget" for the remaining uninsured from the  
            overall GPP pool based on annual threshold amount determined  
            through baseline analysis of historical/projected  
            volume/cost/mix of services to the uninsured. The GPP would  
            integrate and reform Medicaid DSH and uncompensated care pool  
            funding by moving away from a cost-based payment methodology  
            restricted to mostly hospital settings to a more "risk-based"  
            and/or "bundled" payment structure. 

            GPP would encourage public hospital systems to provide greater  
            primary and preventive services, as well as alternative  
            modalities such as phone visits, group visits, telemedicine,  
            and other electronic consultations with the goal of improving  
            the health of the remaining uninsured through coordination of  
            care. DHCS would establish individual public hospital "global  
            budgets" for remaining uninsured for each DPH from the overall  
            pool based on annual threshold amount determined through  
            baseline analysis of historical/projected volume/cost/mix of  
            services to the uninsured. Achievement of threshold service  
            targets would be done on a "points" system with a base level  
            of points required for each system to earn their full global  
            budget. The threshold amounts for each PHCS will initially be  
            constructed using the volume and cost of services occurring in  
            participating providers, and will use the most recent complete  
            state fiscal year data. Funding would be claimed on a  
            quarterly basis, with the DPHs providing the necessary IGTs  
            for the non-federal share. Partial funding would be available  
            based on partial achievement of the "points" target. Funding  
            for the GPP is expected to decline over the duration of the  
            waiver due to the scheduled reduction in federal DSH funds.  








          SB 815 (Hernandez)                                 Page 18 of ?
          
          
            The amount of funding for the prior SNCP is unknown after the  
            initial year and will be determined based on an assessment of  
            DPH uninsured costs. DHCS received approval for the GPP points  
            systems attachments to the STCs on March 21, 2016.

            As a condition of participation in the GPP, each DPH or  
            affiliated governmental agency or entity, must agrees to  
            provide IGTs necessary to meet the nonfederal share  
            obligation. This bill establishes different IGT transfer  
            amounts for each DPH under a methodology agreed to by the  
            DPHs. The reason for the different IGT transfer amounts is to  
            take into account hospital systems with high Medi-Cal losses.  
            The GPP is for the uninsured and it allows for care in a  
            non-hospital setting. However, because the point system is for  
            care to the uninsured and it uses DSH funds (which, under  
            federal law, are for hospital Medi-Cal and uninsured  
            shortfalls), the point system would disadvantage hospitals  
            with heavy Medi-Cal hospital loses. The second reason for the  
            different IGFT transfer amounts is the single standardized  
            point system used in the GPP is regardless of cost variation  
            among DPHs, and it results in a disadvantage to DPH systems in  
            higher cost areas as DPHs in lower-cost areas could meet their  
            threshold by providing relatively fewer services than would  
            otherwise be required.

          3)PRIME. PRIME is a continuation and expansion on the DSRIP from  
            the 2010 waiver aimed to improve the care delivery in public  
            hospital systems. PRIME participating entities consist of DPHs  
            and DMPHs. DMPHs did not receive funds from DSRIP under the  
            2010 waiver. There are 21 DPHs that operate 17 health and  
            hospital systems, with one system comprised of four hospitals  
            in Los Angeles County. DPHs are located in mostly urban areas  
            in Northern, Central and Southern California. These hospitals  
            range in size from approximately 160 to 600 beds. DPHs are  
            similar in that they are academic teaching centers providing a  
            broad range of inpatient and outpatient services including  
            specialty care. More than 50% of patients served across these  
            health and hospital systems are Medi-Cal beneficiaries or  
            uninsured. DPHs provide 30% of all hospital-based care to the  
            Medi-Cal population in the state and operate more than half of  
            the state's level one trauma centers and more than two-thirds  
            of its burn centers. There are 40 DMPHs spanning 19 counties  
            across California. DMPHs are heterogeneous, varying  
            significantly in size (from approximately three to 500 beds)  
            and in the range of services provided. 








          SB 815 (Hernandez)                                 Page 19 of ?
          
          

          PRIME entities can earn incentive payments based on the  
            achievement of specified benchmarks across various metrics In  
            addition, PRIME requires the achievement of set targets in  
            three domains (Outpatient Delivery System Transformation,  
            Targeted High-Risk or High Cost, Populations, Resource  
            Utilization Efficiency) for moving toward APM for DPHs over  
            the course of the Waiver. DPHs must participate in all three  
            domains, while DMPHs must participate in only one domain.  
            Within the first two domains, DPHs are required to participate  
            in certain elements (for example, integration of physical and  
            behavioral health, ambulatory care redesign for primary care  
            and specialty care). The non-federal share of funding for  
            PRIME will be provided by DPHs/DMPHs through IGTs. Reporting  
            and payments will be made on a semi-annual basis, and PRIME  
            entities can achieve partial payment for partial achievement.  
            Annual federal funding available by waiver demonstration year  
            (DY) for DPH and DMPHs is shown below:


                                         DPHs           DMPHs 

                DY 11 (Jan 2016 - June 2016)       $700 million $100  
          million 
               DY 12 (July 2016 - June 2017)           $700 million $100  
          million 
               DY 13 (July 2017 - June 2018)           $700 million $100  
          million 
               DY 14 (July 2018 - June 2019)           $630 million $90  
          million 
                DY 15 (July 2019 - June 2020)           $535.5 million$76.5  
          million
                5 Year Total                            $3.2 billion$466.6  
          million

            A goal of the waiver is to move participating DPH PRIME  
            providers toward a value-based payment structure when  
            receiving payments for Medi-Cal managed care beneficiaries. A  
            new feature in Medi-Cal 2020 is the establishment of APM  
            targets for DPHs in the aggregate that, if not met, result in  
            financial penalties. The waiver establishes four ways for  
            payments to be counted towards the APM thresholds, and the  
            target percentages are based on the number of Medi-Cal managed  
            care beneficiaries assigned to DPHs where all of, or a portion  
            of, their care is paid for under a contracted APM: 








          SB 815 (Hernandez)                                 Page 20 of ?
          
          

          50% by January 2018 (DY 13) 
                                                                                         55% by January 2019 (DY 14) 
               60% by end of waiver (DY 15) 

            Five % of DPH PRIME funding at risk in DY14 (July 2018-June  
            2019) and DY15 (July 2019-June 2020) is tied to the  
            achievement of the APM targets. The APM targets do not apply  
            to DMPHs.

          4)DTI. The DTI is a new feature of Medi-Cal 2020. It is funded  
            at $750 million total funds ($375 million in federal funds)  
            generated from federal waiver funding drawn down for  
            Designated State Health Programs. Of this amount, $10 million  
            in total funds is contingent upon the state meeting statewide  
            metrics. DTI consists of four domain areas as follows:

             a)   Domain 1: Increase Preventive Services Utilization for  
               Children. The goal of this domain is to increase statewide  
               proportion of children ages 20 and under enrolled in  
               Medi-Cal who receive a preventive dental service by 10  
               percentage points over a five-year period (the 2014 rate  
               for children was 37.84%). Incentive payments will be made  
               annually to providers for utilization and provider  
               participation and will be used to determine the subsequent  
               year's threshold. Semi-annual incentive payments will be  
               made to dental provider service locations that provide  
               preventative services to an increased number of Medi-Cal  
               children, as compared to the DHCS-determined baseline.  
               Incentive payments will be made to the service office  
               locations for rendered preventive services once they have  
               met the DHCS-established goal. As of September 2015, there  
               were 5,370 service office locations in California that  
               participated in Denti-Cal.

             b)   Domain 2: Caries Risk Assessment and Disease Management.  
               The goal of this domain is to diagnose early childhood  
               caries (cavities) by utilizing Caries Risk Assessments  
               (CRA) to treat caries as a chronic disease for children  
               ages six and under. The CRA would be a model that  
               proactively prevents and mitigates oral disease through the  
               delivery of preventative services in lieu of more invasive  
               and costly procedures (restorative services). Children will  
               have treatment plans prescribed based on caries risk level.  
               DHCS will use a baseline year with statewide data for the  








          SB 815 (Hernandez)                                 Page 21 of ?
          
          
               most recent state fiscal year preceding implementation of  
               the domain. DHCS will track and report the following  
               measures: 

                    i.          Number of, and percentage change in,  
                      restorative services; 
                    ii.         Number of, and percentage change in,  
                      preventive dental services; 
                    iii.        Utilization of CRA CDT codes and reduction  
                      of caries risk levels (not available in the baseline  
                      year prior to the waiver implementation); 
                    iv.         Change in use of emergency rooms for  
                      dental-related reasons among the targeted children  
                      for this domain; and,
                    v.          Change in number and proportion of  
                      children receiving dental surgery under general  
                      anesthesia. 

               Dentists must opt-in by completing a DHCS recognized  
               training program. Treatment plans and associated procedures  
               will be carried out as follows, over a 12 month period, as  
               follows: 

                    i.          "high risk" children will be authorized to  
                      visit four times; 
                    ii.         "moderate risk" children will be  
                      authorized to visit three times; and,
                    iii.        "low risk" children will be authorized to  
                      visit two times.

               Incentive payments will be made to providers for successful  
               completion of caries treatment plan and improvement in  
               "elevated risk" levels. 

             a)   Domain 3: Increase Continuity of Care. The goal of this  
               domain is to increase continuity of care for beneficiaries  
               ages 20 and under for two, three, four, five, and six  
               continuous periods. DHCS will establish a baseline year  
               will be based on data from the most recent complete state  
               fiscal year using claims data to determine the number of  
               beneficiaries who received an examination each year from  
               the same service office location for two, three, four,  
               five, and six year continuous periods. Incentive payments  
               will be available to service office locations that provide  
               examinations to an enrolled Medi-Cal child for two, three,  








          SB 815 (Hernandez)                                 Page 22 of ?
          
          
               four, five, and six continuous periods. The incentive  
               payment will be an annual flat payment for providing  
               continuity of care to the beneficiary.

             b)   Domain 4: Local Dental Pilot Programs (LDPPs). LDPPS  
               will address one or more of the three domains through  
               alternative programs, potentially using strategies focused  
               on rural areas including local case management initiatives  
               and education partnerships. DHCS will solicit proposals  
               once at the beginning of the demonstration and will review,  
               approve, and make payments for LDPPs in accordance with the  
               requirements stipulated in the waiver. A maximum of 15  
               LDPPs will be approved, and no more than 25% of the total  
               funding in the DTI pool can be used for LDPPs. The specific  
               strategies, target populations, payment methodologies, and  
               participating entities will be proposed by the entity  
               submitting the application for participation and included  
               in the submission to DHCS. Each pilot application must  
               designate a responsible county, Tribe, Indian Health  
               Program, UC or CSU campus as the entity that will  
               coordinate the pilot. 

          1)WPC. WPC is a new feature of Medi-Cal 2020. WPC is essentially  
            a grant program over the five years of the waiver. The  
            overarching goal of the WPC pilots is the coordination of  
            health, behavioral health, and social services, as applicable,  
            in a patient-centered manner with the goals of improved  
            beneficiary health and well-being through more efficient and  
            effective use of resources. WPC pilots will provide an option  
            to participating entities to receive support to integrate care  
            for beneficiaries who are high-risk and high-utilizers of  
            multiple systems and continue to have poor health outcomes.  
            WPC pilots will include collaboration between two or more  
            public entities (e.g. county mental health plans and local  
            housing authorities), at least one Medi-Cal managed care  
            health plan, and other community entities with the goal of  
            improving health outcomes for the WPC population. Program  
            strategies would include increasing integration, data sharing  
            and coordination among county agencies, health plans,  
            providers, and other entities within the participating county  
            or counties that serve high-risk, high-utilizing beneficiaries  
            and develop an infrastructure that will reduce inappropriate  
            emergency and inpatient utilization, increase coordination and  
            appropriate access to care and increase collaboration and  
            integration among the entities participating in the WPC Pilots  








          SB 815 (Hernandez)                                 Page 23 of ?
          
          
            over the long term. The WPC target populations, include, but  
            are not limited to individuals:

             a)   With repeated incidents of avoidable emergency use,  
               hospital admissions, or nursing facility placement; 
             b)   With two or more chronic conditions; 
             c)   With mental health and/or substance use disorders; 
             d)   Who are currently experiencing homelessness; and/or, 
             e)   Who are at risk of homelessness, including individuals  
               who will experience homelessness upon release from  
               institutions (e.g. hospital, skilled nursing facility,  
               rehabilitation facility, jail/prison, etc.)

            To test interventions that achieve these improved health  
            outcomes and cost savings, WPC Pilots may focus on Medi-Cal  
            beneficiaries with a demonstrated medical need for housing and  
            supportive services. These Pilots would ensure that the  
            entities collaborating and participating in the Pilot would  
            include local housing authorities, community-based  
            organizations, and others serving the homeless population. WPC  
            pilots with a focus on housing may include interventions such  
            as tenancy-based care management services and county housing  
            pools. 

            Up to $300 million in federal funding is available annually  
            for WPC. No single WPC pilot will be awarded more than 30% of  
            total available funding unless additional funds are available  
            after all initial awards are made. The non-federal share of  
            funds used to draw down federal funding is through IGTs.  

            The STCs establish an early implementation schedule for WPC.  
            DHCS is required to publish a WPC pilot application process,  
            detailed timeliness and selection criteria by April 1, 2016,  
            or within 90 days following CMS approval of WPC Pilot  
            attachments, whichever is later. WPC lead entities must submit  
            WPC Pilot applications to DHCS by May 15, 2016, or 45 days  
            after DHCS issues the WPC Pilot application process (whichever  
            is later). DHCS must complete its review of the application  
            within 60 days of submission, and will respond to the WPC  
            Pilot Lead Entity in writing with any questions, concerns or  
            problems identified. Within 30 days after submission of final  
            responses to questions about the application, DHCS will take  
            action on the application and promptly notify the applicant  
            and CMS of that decision. 









          SB 815 (Hernandez)                                 Page 24 of ?
          
          
          1)Designated State Health Programs. This bill permits DHCS to  
            claim FFP for expenditures associated with DSHPs identified in  
            the STCs. The state was able to draw down federal funds in the  
            previous waivers to offset GF expenditures. The DSHPs in the  
            waiver are as follows:

             a)   California Children Services (CCS) 
             b)   Genetically Handicapped Persons Program (GHPP) 
             c)   Medically Indigent Adult Long Term Care (MIALTC) 
             d)   Breast & Cervical Cancer Treatment Program (BCCTP) 
             e)   AIDS Drug Assistance Program (ADAP) 
             f)   Department of Developmental Services (DDS) 
             g)   Prostate Cancer Treatment Program (PCTP) 
             h)   Song Brown Health Care Workforce Training Program 
             i)   Steven M. Thompson Physician Corp Loan Repayment Program  

             j)   Mental Health Loan Assumption Program 

            Any FFP claimed is required to be used to offset applicable GF  
            expenditures. DSHP funds will be used to fund Dental  
            Transformation Initiative FFP claiming, not to exceed $375  
            million over five years. 

          1)Waiver required reports, assessments and analyses. The Waiver  
            also contains several independent analyses of the Medi-Cal  
            program and evaluations of the Waiver programs, including:

             a)   Medi-Cal Managed Care Access Assessment; 
             b)   Uncompensated Care Assessments for California hospitals  
               (one due in 2016 and one due one in 2017); 
             c)   GPP Evaluations (2 required); 
             d)   PRIME Evaluation; and, 
             e)   Report on CCS pilots

            This bill requires DHCS to conduct or arrange to have  
            conducted any study, report, assessment, evaluation or other  
            similar demonstration project activity required under the  
            STCs, and grants DHCS expedited contracting authority by  
            allowing DHCS to enter into exclusive or nonexclusive  
            contracts or amend existing contracts on a bid or negotiated  
            basis, and by exempting these contracts from specified  
            provisions of the Public Contract Code and DGS review. This  
            bill codifies the one of the evaluations (the Medi-Cal Managed  
            Care Access Assessment). 









          SB 815 (Hernandez)                                 Page 25 of ?
          
          
            Two foundations are funding the 2016 uncompensated care  
            assessment, which is due May 15, 2016 and is focused on DPHs.  
            This report is significant in that it will be used by CMS to  
            determine the appropriate level of Uncompensated Care Pool  
            funding of those providers in years two through five of the  
            demonstration (this pool of funding and DSH are the two fund  
            sources for the GPP). This report will review the impact of  
            the uncompensated care pool on those providers who participate  
            in the uncompensated care pool with respect to: uncompensated  
            care provided, Medicaid provider payment rates, Medicaid  
            beneficiary access, and the role of managed care plans in  
            managing care. CMS will provide a formal determination of the  
            funding levels for demonstration years two through five within  
            60 days of receipt of the complete report. 

          1)The next waiver post-Medi-Cal 2020. The funding in this waiver  
            is reduced from the 2010 waiver. DHCS and the public hospitals  
            both report CMS' desire to standardize waivers across the  
            states and CMS' view that waiver funding should be reduced  
            and/or eliminated due to the coverage expansions enacted by  
            the federal ACA. The most recent waiver was approved the day  
            before the expiration of the prior waiver, which, because it  
            occurred when the Legislature was not in session, necessitated  
            legislation (SB 36 (Hernandez and De Leon), Chapter 759,  
            Statutes of 2015) allowing DHCS to continue the operation of,  
            and the authorities provided under the prior waiver. This bill  
            contains language similar to SB 36 allowing DHCS to extend the  
            hospital methodologies payment in this waiver consistent with  
            federal requirements and after consultation with affected  
            entities. In addition, this bill contains language authorizing  
            DHCS to work to develop successor payment methodologies that  
            would continue to support entities participating in Medi-Cal  
            2020 following its expiration that further the goals of this  
            bill and the STCs.

          2)Related legislation. AB 1568 (Bonta and Atkins) is identical  
            to this bill. AB 1568 is scheduled to be heard in the Assembly  
            Health Committee on April 26, 2016.

          3)Prior legislation.
             a)   SB 36 (Hernandez and De Leon, Chapter 759, Statutes of  
               2015) authorized DHCS to request one or more temporary  
               waiver extensions to continue the operation of, and the  
               authorities provided under, the current "California Bridge  
               to Reform Demonstration," the state's Section 1115 Medicaid  








          SB 815 (Hernandez)                                 Page 26 of ?
          
          
               waiver. Requires DHCS to extend and apply the existing  
               hospital payment methodologies and allocations on a state  
               fiscal year, annual, partial year, or other basis, to the  
               extent permitted under any approved temporary waiver  
               extension, an approved subsequent waiver, or as otherwise  
               permitted under federal Medicaid law.

             b)   AB 1066 (John A. Pérez, Chapter 86, Statutes of 2011),  
               made further statutory changes to implement the Bridge to  
               Reform for funding DPHs.  AB 1066 continued the FFS  
               cost-based reimbursement for DPHs, with those hospitals  
               providing the required federal match using their own funds  
               through CPEs. In addition, AB 1066 established under the  
               waiver a new distribution methodology for DSH and SNCP  
               funds to DPHs, as specified.

             c)   AB 342 (John A. Pérez, Chapter 723, Statutes of 2010),  
               enacted the LIHP to provide health care benefits to  
               uninsured adults up to 200% of the FPL, at county option  
               through a Medi-Cal waiver demonstration project.

             d)   SB 208 (Steinberg, Chapter 714, Statutes of 2010),  
               implemented provisions of the 2010 Section 1115 waiver  
               including establishing the Public Hospital Investment,  
               Improvement and Incentive Fund (known as DRSIP) consisting  
               of IGTs from counties or other specified governmental  
               entities, to be matched with federal funds and to be used  
               for investment, improvement and incentive payments for DPHs  
               and the affiliated governmental entities (counties and UC);  
               authorized DHCS to require the mandatory enrollment of SPDs  
               in a Medi-Cal managed care plan commencing on the later of  
               either June 1, 2011, or obtaining federal approval; and  
               requires DHCS to implement pilot projects to provide  
               coordinated care to children in CCS and to persons who are  
               dually eligible for Medi-Cal and Medicare.

             e)   SB 1100 (Perata, Chapter 560, Statutes of 2005), enacted  
               the statutory framework for implementing a five-year waiver  
               of federal Medicaid requirements that provides federal  
               Medicaid funding under the terms of the waiver to pay DPHs,  
               private, and district hospitals for services provided to  
               Medi-Cal and uninsured patients. 

          4)Support. This bill is supported by hospitals and consumer and  
            labor groups, which write in support of the $6.2 billion in  








          SB 815 (Hernandez)                                 Page 27 of ?
          
          
            federal funds and the new waiver funding components, including  
            PRIME, GPP and WPC. Public and district hospitals write in  
            support of PRIME, arguing the incentive funding provided by  
            PRIME will provide opportunity for public hospitals to put  
            into place needed programs to allow California to continue its  
            drive toward quality, improved outcomes and accountability in  
            safety net systems. The California Association of Public  
            Hospitals and Health Systems (CAPH) writes in support that  
            this bill will leverage California's coverage expansion with  
            significant payment reforms and delivery system improvements  
            for public health care systems.

            Western Center on Law & Poverty (WCLP) writes in support and  
            requests amendments on the following: (a) that the access  
            assessment include a geographic assessment of the network that  
            examines how far patients have to go to access core  
            specialists and what transportation assistance and support the  
            plans provide to get patients to remote providers, and an  
            amendment to report languages spoken by the provider's office;  
            (b) to require DHCS to issue a final proposed point system for  
            the GPP to stakeholder for comments before finalizing it; (c)  
            to clarify that GPP systems may determine the scope, type and  
            extent to which services are available to the extent they are  
            consistent with the STCs but also to require that a patient's  
            services needs are met; (d) to make mandatory (instead of  
            optional) the WPC strategies of increasing access to housing  
            and supportive services for serving the homeless population;  
            and (e) to include a requirement that DHCS share such guidance  
            issued by DHCS with stakeholders prior to issuing it and  
            provide a chance for input.

          5)Policy issues.
             a)   Need for urgency bill. This bill contains an urgency  
               clause. DHCS has indicated it would like to have this bill  
               enacted by June 2016 as several aspects of the work DHCS is  
               required to conduct under the Medi-Cal 2020 waiver cannot  
               be started or fully implemented without legislative  
               authority. For example, the waiver-required access  
               assessment must be conducted by the DHCS External Quality  
               Review organization. A contract amendment with this entity  
               is needed to do so, and this bill contains the authority so  
               DHCS can move forward on this assessment.  In addition,  
               DHCS requires other contracting resources for other  
               evaluations and technical assistance, which cannot occur  
               until DHCS has the legislative authority, and a delay in  








          SB 815 (Hernandez)                                 Page 28 of ?
          
          
               DHCS' ability to contract impedes and delays DHCS' ability  
               to implement the various components of the waiver.   
               Finally, DHCS indicates that, although it believes the  
               waiver extension legislation from last year provided DHCS  
               the ability to make payments under GPP and PRIME, it is  
               possible that that interpretation could be challenged and  
               without this payment authority, DPHs would have severe cash  
               flow issues.

             b)   Contracting obligation on DPHs. Under the PRIME  
               provisions of the STCs and this bill, DPHs are required to  
               contract with at least one Medi-Cal managed care plan in  
               the service area where the plan operates using an APM  
               methodology as part of their APM methodology by January 1,  
               2018. If a DPH system is unable to meet the requirement and  
               can demonstrate that it has made a good faith effort to  
               contract with a Medi-Cal managed care plan in the service  
               area that it operates in or a gap in contracting period  
               occurs, DHCS has the discretion to waive this requirement.

             One of the issues faced by patients in Medi-Cal managed care  
               plans is UC hospitals do not always contract with Medi-Cal  
               managed care plans, or they limit their contracting to  
               tertiary services or to letters of agreement for individual  
               patients. The contracting obligation in this bill and the  
               STCs is narrow in that the requirement that DPHs contract  
               only applies to one plan, and is limited to the service  
               area where they operate. However, this narrow waiver  
               requirement effectively means UC hospitals in urban  
               locations (UC hospitals are in San Diego, Irvine, San  
               Francisco, Sacramento and Los Angeles) may not be  
               accessible to patients served by patients enrolled in the  
               other Medi-Cal plan in two-plan model counties, or to  
               beneficiaries in rural or inland Medi-Cal managed care  
               plans. Medi-Cal 2020 provides a benefit to UC hospitals in  
               that it continues to make two of their hospitals (UCSF and  
               UCLA) DSH-eligible who would not otherwise be DSH eligible,  
               as shown below:

                                   DSH Medicaid                       DSH  
                                   Low-Income
                                    Utilization Rate                         
                                   Utilization Rate 

                Minimum DSH Eligibility            40.3%*25%








          SB 815 (Hernandez)                                 Page 29 of ?
          
          
               UCLA/Ronald Reagan            20.8%     10.8% 
               UCLA/Santa Monica                  12.8%     13% 
               UCSF                               26%       16.1% 

               *For 2014-15

               In addition, Medi-Cal 2020 enables UC to receive cost-based  
                 reimbursement in FFS Medi-Cal, and by making federal  
               funding available for quality improvement through PRIME.  
               However, UC also puts up the state match (through CPEs and  
               IGTs) to draw down federal Medicaid funds, which saves the  
               state GF, and UC argues it has sicker patient population  
               because of the specialized services it provides, and UC  
               uses its hospitals to help support its medical schools due  
               to insufficient state support. Should the requirement that  
               DPHs contract with Medi-Cal managed care plans be applied  
               more broadly beyond one Medi-Cal managed care plan in that  
               plan's area to include the other Medi-Cal managed care plan  
               in the county and Medi-Cal managed care plans serving  
               patients in inland and rural areas who use UC hospitals for  
               specialized care?

           SUPPORT AND OPPOSITION :
          Support:  Antelope Valley Hospital
          Association of California Healthcare Districts
                    Bear Valley Community Healthcare District
                    California Association of Public Hospitals
                    California Hospital Association
                    California Primary Care Association
                    California State Association of Counties
                    California State Council of the Service Employees  
                    International Union
                    Coalinga Regional Medical Center
                    County Health Executives Association of California
                    County of San Bernardino 
                    District Hospital Leadership Forum
                    El Camino Hospital
                    Health Access California
                    Kern Valley Healthcare District
                    Mammoth Hospital
                    Marin General Hospital
                    Mayers Memorial District Hospital
                    Northern Inyo Hospital
                    Oak Valley Hospital District 
                    Palo Verde Hospital








          SB 815 (Hernandez)                                 Page 30 of ?
          
          
                    Palomar Health
                    Pioneers Memorial Healthcare District
                    Plumas District Hospitals
                    Salinas Valley Memorial Healthcare System
                    San Bernardino Mountains Community Hospital District
                    San Gorgonio Memorial Hospital
                    Santa Clara County Board of Supervisors
                    San Joaquin General Hospital
                    Seneca Healthcare District
                    Tahoe Forest Hospital District
                    Tri-City Medical Center
                    University of California
                    Urban Counties of California
                    Ventura County Board of Supervisors
                    Washington Hospital Healthcare System
                    Western Center on Law & Poverty
          
          Oppose:   None received

                                      -- END --