BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SB 815| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: SB 815 Author: Hernandez (D) and De León (D) Amended: 5/3/16 Vote: 27 - Urgency SENATE HEALTH COMMITTEE: 8-0, 4/27/16 AYES: Hernandez, Nguyen, Mitchell, Monning, Nielsen, Pan, Roth, Wolk NO VOTE RECORDED: Hall SENATE APPROPRIATIONS COMMITTEE: 7-0, 5/27/16 AYES: Lara, Bates, Beall, Hill, McGuire, Mendoza, Nielsen SUBJECT: Medi-Cal: demonstration project SOURCE: Author DIGEST: This bill 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 program, 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. ANALYSIS: Existing law establishes a Medicaid Section 1115 demonstration project under the Medi-Cal program until October SB 815 Page 2 31, 2015, known as California's Bridge to Reform, to implement specified objectives. 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. This bill: 1) Requires the Department of Health Care Services (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 fee-for-service (FFS) payment methodologies for DPHs from the previous waiver, whereby DPHs receive cost-based reimbursement with county certified public expenditures used to draw down federal Medicaid matching funds, and which require DPHs to receive supplemental reimbursements for the costs incurred for physician and non-physician services provided to Medi-Cal beneficiaries, 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 "DSH replacement payments" funded by General Fund (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 an uncompensated care pool (referred to as the Safety Net Care Pool under the previous waiver) to be used for a new Global Payment Program (GPP). SB 815 Page 3 4) 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. 5) Requires DPH 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. 6) Requires the nonfederal share of payment under GPP to be funded by intergovernmental transfers (IGTs). 7) Requires DHCS to establish and operate the Public Hospital Redesign and Incentives in Medi-Cal (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. PRIME is the successor to the Delivery System Reform Incentive Program from the previous waiver. 8) Makes participating PRIME entities eligible to earn incentive payments by undertaking projects set forth in the STCs for which there are required metrics. 9) 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. Requires the nonfederal share of PRIME payments to consist of voluntary IGTs. 10)Requires PRIME entities 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 SB 815 Page 4 action to approve or disapprove each plan. 11)Requires DHCS to establish and operate the Whole Person Care (WPC) pilot program to allow for development of WPC pilots focused on target populations of high-risk, high-utilizing Medi-Cal beneficiaries in local geographic areas. 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. 12)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. 13)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. 14)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. 15)Permits the sharing of health information, records, and SB 815 Page 5 other data with and among WPC lead entities, and allows WPC 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. 16)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 services, and improve health outcomes. 17)Requires the nonfederal share of any payments under the WPC pilot program to consist of voluntary IGTs of funds. 18)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. 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. 19)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. 20)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. Permits DHCS to SB 815 Page 6 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. 21)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 review. 22)Requires DHCS to seek any federal approval as necessary to 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. 23)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. 24)Requires the DHCS director to 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. 25)Permits DHCS to claim FFP for expenditures associated with designated state health programs (DSHP) identified in the STCs. 26)Continues the continuously appropriated Demonstration DSH Fund and Public Hospital Investment, Improvement and Incentive Fund, and establishes two new continuously appropriated funds. SB 815 Page 7 27)Requires DHCS to conduct or arrange to have conducted any study, report, assessment, evaluation or other similar demonstration project activity required under the STCs. 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. 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 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 grants flexibility to DHCS to implement Medi-Cal 2020 without using the regular contracting and regulatory processes due to waiver timelines, and requires notification to the Legislature regarding waiver-related activities. FISCAL EFFECT: Appropriation: Yes Fiscal Com.:YesLocal: No According to the Senate Appropriations Committee, over the course of the five-year waiver period, the state will be able to access at least $6.2 billion in additional federal funding that the state would not be eligible for without the waiver. The state is eligible for the additional funding under the waiver for two primary reasons. First, the state's continuing use of Medi-Cal managed care reduces costs relative to the alternative FFS system. The federal government will allow the state to use a portion of those projected savings for waiver programs. Second, the federal government will allow the state draw down federal matching funds for certain "state only" health care programs SB 815 Page 8 that are not currently eligible for federal funding. The GF savings from receiving those additional federal funds will be redirected to a specific waiver program. The following are the major elements of Medi-Cal 2020. Note that the funding amounts are for the five-year waiver period, unless otherwise noted. PRIME - $3.7 billion (federal funds). The PRIME program authorizes federal matching funds to make incentive payments to DPHs and DMPHs in order to improve care delivery and strengthen their ability to take on risk-based payments. GPP- at least $236 million (federal funds). The GPP restructures the distribution of federal funding for uncompensated care. This includes DSH funding, to DPHs (excluding UC hospitals) in order to incentivize improvements in care delivery and provision of care in appropriate settings. Medi-Cal 2020 maintains the DSH funding methodology for other hospitals, with DSH funding for UC hospitals capped by fiscal year. The $236 million in federal funding is only for the first year of the waiver. Additional funding in subsequent years will be determined based on future uncompensated care. Also, the figures above do not include existing DSH funding of about $5.9 billion in federal funds over the waiver period. DTI - $375 million (federal funds). The DTI permits incentive payments to qualified dental providers to improve dental care and utilization among children enrolled in Medi-Cal. The state share of funding for this program is provided through the redirection of existing GF support for specific state only health care programs which will be eligible for federal matching funds under the waiver. DSHP - $375 million (federal funds). The waiver authorizes the state to access federal matching funds for several existing health care programs that are currently funded only with state and local funds. By making these programs eligible for federal matching funds, the waiver frees up state funding to support the DTI and to draw down federal matching funds. WPC - $1.5 billion (federal funds). This program allows SB 815 Page 9 participating lead entities (primarily counties) to claim federal matching funds for efforts to coordinate health, behavioral health, and social services for high-risk Medi-Cal beneficiaries who are high utilizers of health care services. Federal matching funds will be available for a variety of social services and supports that are not eligible for federal matching funds absent the waiver. DHCS has requested additional administrative funding to oversee Medi-Cal 2020 of $34 million over the five-year waiver period, including $11 million in the Budget Year (GF and federal funds). SUPPORT: (Verified5/27/16) 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 Palomar Health Pioneers Memorial Healthcare District Plumas District Hospitals Salinas Valley Memorial Healthcare System San Bernardino Mountains Community Hospital District San Gorgonio Memorial Hospital SB 815 Page 10 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 OPPOSITION: (Verified5/27/16) None received Prepared by:Scott Bain / HEALTH / (916) 651-4111 5/28/16 16:45:51 **** END ****