BILL ANALYSIS                                                                                                                                                                                                    Ó






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          |SENATE RULES COMMITTEE            |                        SB 815|
          |Office of Senate Floor Analyses   |                              |
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                                   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  








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          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).









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           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  







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             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  







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             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  







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             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. 









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           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  







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          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  







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            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







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          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


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