BILL ANALYSIS Ó
SB 815
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Date of Hearing: June 8, 2016
ASSEMBLY COMMITTEE ON HEALTH
Jim Wood, Chair
SB
815 (Hernandez and De León) - As Amended June 2, 2016
SENATE VOTE: 39-0
SUBJECT: Medi-Cal: demonstration project.
SUMMARY: Enacts the Global Payment Program (GPP), and the
Public Hospital Redesign and Incentives in Medi-Cal (PRIME)
components of the Medi-Cal 2020 Demonstration Project Act
(Medi-Cal 2020/Demonstration Project), administered by the
Department of Health Care Services (DHCS) which implements the
Special Terms and Conditions (STCs) approved by the federal
Centers for Medicare and Medicaid Services (CMS). Codifies the
access assessment requirement under the STCs. Specifically,
this bill:
General Provisions
1)Requires the STCs to prevail in the event of a conflict with
this bill.
2)Authorizes DHCS to implement, interpret, or make specific this
bill or the STCs through all-county letters, plan letters,
provider bulletins, or other actions without regulatory
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action. Requires DHCS to inform specified committees of the
Legislature when this action is taken.
3)Exempts contracts entered into by DHCS for purposes of this
bill from the Public Contract Code and approval by Department
of General Services (DGS).
4)Requires DHCS to seek any federal approval to implement this
bill and conduct any study or activity required under the
STCs. Implements this bill only if necessary federal
approvals and federal financial participation (FFP) are
available.
5)Authorizes the Director of DHCS to modify any process or
methodology if necessary to comply with federal law or the
STCs if the modification is consistent with the goals of the
demonstration project. Requires, if the modification is
consistent with the goals of this bill or would alter the
level of support for affected participating entities, the
modification will not be made and requires the Director to
execute a declaration stating that this determination has been
made. Specifies posting and notification requirements for the
declaration.
6)Provides that in the event of a determination that the amount
of FFP available under the demonstration project is reduced
due to the application of penalties set forth in the STCs, the
enforcement of the demonstration project's budget neutrality
limit or other similar, occurrence, DHCS is required to
develop the methodology by which payments under the
demonstration project are to be reduced, as specified.
7)Authorizes DHCS to develop potential successor payment
methodologies that could continue to support entities
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participating in the demonstration project, as specified.
Requires DHCS to consult with entities participating in
developing successor payment methodology. Authorizes an
extension of the payment methodologies through demonstration
year 16 or to subsequent time periods, as specified.
8)Authorizes DHCS to claim FFP for expenditures associated with
the designated state health programs (DSHP), as specified.
Provides that any FFP claimed under DSHP shall be used to
offset applicable General Fund (GF) expenditures.
Global Payment Program
1)Requires DHCS to implement the GPP to support participating
public health care systems (systems) that provide health care
services for the uninsured. States that GPP systems receive
global payments based on the health care they provide to the
uninsured, in lieu of traditional disproportionate share
hospital (DSH) payments and safety net care pool payments
(SNCP), as specified.
2)Requires systems to receive GPP payments calculated using an
innovative value-based point methodology that incorporates
measures of value for the patient in conjunction with the
recognition of costs. Requires a system, to receive the full
amount of GPP payments, to provide a threshold level of
services measured through a point methodology, as specified,
and based on the GPP system's historical volume, cost, and mix
of services. Specifies that this payment methodology is
intended to support GPP systems that continue to provide
services to the uninsured, while incentivizing the GPP systems
to shift the overall delivery of services for the uninsured to
provide more cost-effective, higher value care.
3)Requires DHCS to implement and oversee the GPP pursuant to the
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STCs, to maximize the amount of FFP available to participating
systems.
4)Defines a GPP system as a system consisting of a designated
public hospital (DPH), but excluding hospitals operated by the
University of California (UC), and its affiliated and
contracted providers. Authorizes multiple DPHs operated by a
single legal entity to belong to the same GPP system, as
specified.
5)Requires DHCS to determine the GPP's aggregate annual limit,
which is the maximum amount of funding available under the GPP
and which is the sum components of the following:
a) A portion of the federal disproportionate share
allotment shall be included as a component of the aggregate
annual limit for each GPP program year, as specified; and,
b) The aggregate annual limit amount shall also include the
amount authorized under the demonstration project for the
uncompensated care component of the GPP, as specified.
6)Requires DHCS to do the following:
a) Develop a methodology for valuing health care services
and activities provided to the uninsured that achieves the
goals of the GPP. Requires the points assigned to a
particular service or activity to be the same across all
GPP systems. Specifies when points may be increased or
decreased;
b) For each GPP system, perform a baseline analysis for
each GPP system's historical volume, cost, and mix of
services to the uninsured to establish an annual threshold
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for the GPP;
c) Determine a pro rata allocation percentage for each GPP
system, as specified;
d) Determine an annual budget the GPP system will receive
if it achieves its threshold;
e) Specify the formula for the GPP system's annual budget;
f) Adjust and recalculate each GPP systems' annual
threshold and annual budget if there is a change in the
aggregate annual limit;
g) Specify a reporting schedule for GPP systems to submit
an interim yearend report and a final reconciliation
report, as specified; and,
h) Claim FFP for GPP payments using intergovernmental
transfers (IGTs), as specified.
7)Specifies the calculation of the GPP funding payable to each
GPP system, including a methodology to redistribute unearned
GPP subject to fund availability and the STCs.
8)Specifies the manner and timeframes of payments to GPP
systems, but no payment can be delayed beyond 21 days after
all the necessary IGTs have been made.
9)States that the GPP provides a source of funding to support
health care activities and services available to the
uninsured, and not to be construed to constitute or offer
health care coverage for individuals receiving services.
Provides that the GPP payments are not paid on behalf of
specific individuals and allows GPP systems to determine the
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scope, type and extent of available services, consistent with
the STCs.
10)Requires the nonfederal share of any payments under the GPP
to consist of voluntary IGT of funds provided by DPH or
affiliated governmental agencies or entities, as specified.
Requires DHCS, if FFP is not available or results in
recoupment of payments already made, to return any IGT to the
transferring entities, as specified.
11)Establishes the GPP Special Fund (Fund) to consist of moneys
that a DPH or affiliated governmental agency or entity elects
to transfer to DHCS for deposit into the Fund as a condition
of participation in the GPP. Provides that moneys derived
from these IGTs must be used as a source of the nonfederal
share of GPP payments. Specifies distribution of the Fund.
12)Provides that as a condition of participation in the GPP,
each DPH or affiliated governmental entity agrees to provide
IGT of funds necessary to meet the nonfederal share
obligation, as specified. Considers IGT of funds to be
voluntary and prohibits the use of the GF monies to fund the
nonfederal share of any GPP payment.
13)Specifies how DHCS should determine the IGT amount for each
GPP system, including the initial transfer amount that is
calculated partly with the use of a GPP system-specific IGT
factor for each GPP system, as specified.
14)Authorizes DHCS to initiate audits of GPP systems' data
submissions and reports, and to request supporting
documentation. Requires DHCS audits to be conducted within 22
months of the ends of the applicable GPP program year to allow
for the appropriate finalization of payments to the
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participating GPP system, but subject to recoupment if it is
later determined that FFP is not available for any portion of
the applicable systems.
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Public Hospital Redesign and Incentives in Medi-Cal
1)Requires participating PRIME entities to earn incentive
payments by undertaking projects set forth in the STCs, for
which there are required project metrics and targets.
Specifies a minimum number of required projects for each DPH
system.
2)Requires DHCS to provide participating PRIME entities the
opportunity to earn the maximum amount of funds authorized for
the PRIME program under the demonstration project. Under the
demonstration project, funding is available for the DPH
systems and the district and municipal public hospitals
(DMPHs) through two separate pools. Authorizes up to $1.4
billion annually for the DPH systems pool, and up to $200
million is authorized annually for the DMPH pool, during the
first three years of the demonstration project, with
reductions to such amounts in the fourth and fifth years.
Provides that unless authorized by the STCs, the funding that
is authorized for each respective pool is only available to
participating PRIME entities within that pool.
3)Requires PRIME payments to be incentive payments, and not
payments for services otherwise reimbursable under the
Medi-Cal, nor direct reimbursement for expenditures incurred
by participating PRIME entities in implementing reforms.
Prohibits PRIME incentive payments from offsetting payment
amounts otherwise payable by the Medi-Cal program, or to and
by Medi-Cal managed care plans for services provided to
Medi-Cal beneficiaries, or otherwise supplant provider
payments payable to PRIME entities.
4)Requires, within 30 days following federal approval of the
protocols setting forth the PRIME projects, metrics, and
funding mechanics, each participating PRIME entity to submit a
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five-year PRIME project plan containing the specific elements
required in the STCs. Requires DHCS to review all five-year
PRIME project plans and take action within 60 days to approve
or disapprove each five-year PRIME project plan.
5)Authorizes PRIME entities to modify projects or metrics in
their five-year PRIME project plan, to the extent authorized
under the demonstration project and approved by DHCS.
6)Requires each PRIME entity to submit reports to DHCS twice a
year demonstrating progress toward required metric targets.
Provides that the submission of project reports constitutes a
request for payment.
7)Establishes the Public Hospital Investment, Improvement, and
Incentive Fund which is continuously appropriated.
8)Establishes requirements for the disbursement timeframe for
PRIME payments, incentive payments and aggregate annual
amounts, as specified.
9)Provides that the PRIME incentive payments are intended to
support DPHs to change care and delivery and strengthen those
systems' ability to participate under an alternative payment
methodology (APM). Requires DHCS to issue an all-plan letter
to Medi-Cal managed care plans that will promote and encourage
positive system transformation.
10)Requires DPH to contract with at least one Medi-Cal managed
care plan in the service area where they operate using an APM
methodology by January 1, 2018.
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Access Assessment
1)Requires DHCS to amend its contract with the external quality
review organization (EQRO) currently under contract with DHCS
and approved by CMS to complete an access assessment within 90
days of the effective date of this bill.
2)Requires the assessment to do all of the following:
a) Evaluate primary, core specialty, and facility access to
care for managed care beneficiaries based on current health
plan network adequacy requirements, as specified;
b) Consider State Fair Hearing and Independent Medical
Review decisions, and grievances, and appeals or complaints
data; and,
c) Report on the number of providers accepting new
beneficiaries.
3)Requires DHCS to establish an advisory committee to provide
input into the structure of the access assessment. Requires
the EQRO to work with DHCS to establish the advisory
committee, as specified.
4)Requires the advisory committee to include one or more
representatives of the following stakeholders: consumer
advocacy organizations, provider associations, health plans
and health plan associations, and legislative staff.
Specifies functions of the advisory committee.
5)Requires the EQRO to produce and establish an initial draft
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and a final access assessment report that includes a
comparison of health plan network adequacy compliance across
different lines of business. Requires DHCS to post the
initial draft for a 30-day public comment period, as
specified, and to be posted no later than 10 months after CMS
approves the assessment design. Requires DHCS to submit the
final access assessment report to CMS no later than 90 days
after the initial draft report is posted for public comment.
6)Requires the assessment to do all of the following:
a) Measure health plan compliance with network adequacy
requirements, as specified;
b) Review encounter data, including data from subcapitated
plans;
c) Review compliance with network adequacy requirements, as
specified;
d) Review and report applicable network adequacy
requirements of the proposed or final Notice of Proposed
Rulemaking, as specified;
e) Determine health plan compliance with network adequacy,
as specified; and,
f) Measure managed care plan compliance with network
adequacy requirements, as specified, accounting for
geographic differences, previously approved alternate
network access standards, access to in-network providers
and out-of-network providers, the entire network of
providers available to beneficiaries, and other modalities
used for accessing care, including telemedicine.
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7)Provides that this bill becomes operative only if AB 1568
(Bonta) is enacted and takes effect before January 1, 2017.
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EXISTING LAW:
1)Establishes the Medi-Cal program, which is administered by
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 DPHs (UC and county hospitals), and for federal DSH,
payments to private hospitals (referred to as "DSH replacement
payments") and nondesignated public hospitals (NDPHs) through
October 1, 2015. These provisions:
a) Make DPHs eligible for cost-based fee-for-service (FFS)
Medicaid funding using county certified public expenditures
(CPEs) as the federal match, instead of state GF. 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 IGTs to draw down federal DSH funds;
c) Provide DSH payments to eligible NDPHs (primarily
district hospitals) meeting DSH eligibility criteria, using
the GF 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 GF as the fund source;
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e) Make DPHs eligible for payments from the federally
funded 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.
4)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.
5)Requires the Department of Managed Health Care (DMHC) to
develop and adopt regulations to ensure that health plan
enrollees have access to health care services in a timely
manner, and requires DMHC to develop indicators of timeliness
and consider the following:
a) Waiting times for appointments with physicians and
specialists;
b) Timeliness of care in an episode of illness, including
timeliness to referrals; and,
c) Waiting time to speak to a physician, registered nurse,
or other qualified health professional.
6)Requires contracts between health plans and health care
providers to assure compliance with the timely access
standards developed by DMHC. Requires the contracts to
require reporting by health care providers to health plans and
by health plans to DMHC to ensure compliance with the
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standards.
7)Requires health plans to report annually to DMHC on compliance
with the timely access standards.
8)Requires DHCS to conduct annual medical audits of each
Medi-Cal managed care plan unless the Director of DHCS
determines there is good cause for additional reviews.
Requires the reviews to use the standards and criteria
established pursuant to the Knox-Keene Health Care Service
Plan Act of 1975 or Insurance Code, as appropriate.
FISCAL EFFECT: 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 to draw down federal matching funds for certain "state
only" health care programs 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.
1)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
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strengthen their ability to take on risk-based payments.
2)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.
3)Dental Transformation Initiative (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.
4)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.
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5)Whole Person Care (WPC) - $1.5 billion (federal funds). This
program allows 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).
COMMENTS:
1)PURPOSE OF THIS BILL. According to the author, this bill is
needed to provide the statutory framework for the
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, and to codify the provisions of the
STCs requiring a Medi-Cal managed care access assessment. 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)BACKGROUND. This bill is the companion measure of AB 1568
(Bonta), currently pending in the Senate Health Committee.
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The Medi-Cal 2020 waiver includes four major components: GPP,
PRIME, WPC, and DTI. This bill contains the provisions
implementing the GPP and PRIME and the access assessment
requirements while AB 1568 enacts the provisions of WPC and
DTI, including all the required evaluations of the four
components of the waiver.
a) Medicaid Waivers. Under a Medicaid waiver, the federal
government waives certain Medicaid requirements to give
states the flexibility to operate their Medicaid programs
(Medi-Cal in California) and allow states to test new
approaches and demonstration projects to improve care.
Section 1115 of the Social Security Act authorizes the
federal government to grant Medicaid waivers.
To obtain a waiver, a state negotiates with CMS about which
Medicaid provisions might be waived, what innovations the
state is proposing, and how the state plans to achieve
budget neutrality (a requirement that waivers cannot cost
the federal government more with the waiver than without
the waiver). The negotiations are memorialized in the STCs
which constitute a contract between CMS and the state. In
addition, the state adopts authorizing legislation to
implement the waiver.
b) History of California's Recent Medicaid Waivers. Apart
from the Medi-Cal 2020 Waiver, California has negotiated
two other waivers with CMS - the 2005 Medi-Cal Waiver and
the 2010 Bridge to Reform Waiver. The 2005 waiver
delineated the methods for hospitals to be paid for care to
Medi-Cal and uninsured patients. It established a SNCP for
public hospitals which subsidized uncompensated care costs
for uninsured individuals. The 2005 Waiver also provided
federal funds to expand coverage to childless adults under
a Coverage Initiative project which has provided financial
support to 10 counties.
The 2010 Bridge to Reform Waiver was a five-year
demonstration of health care reform initiatives that was
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projected to provide an additional $10 billion in federal
funds over the lifetime of the waiver. The major
components of the Bridge to Reform Waiver include:
i) Establishing Low-Income Health Programs (LIHP) which
allow counties to draw down federal matching dollars to
provide coverage to childless adults if they meet certain
requirements;
ii) Requiring mandatory enrollment of SPDs on Medi-Cal
into Medi-Cal managed care plans;
iii) Requiring DHCS to establish organized health care
delivery pilot models for children with special health
care needs who are eligible for both California
Children's Services and Medi-Cal; and,
iv) Continuing the SNCP to provide funding for public
hospitals, a DSRIP, state health care programs, as well
as the Health Care Coverage Initiative. The 2010 waiver
also implemented a global payment demonstration project
for hospitals.
3)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 annual federal DSH allotments to each state.
Because hospitals were anticipated to have reduced
uncompensated care as a result of the federal Patient
Protection and Affordable Care Act (ACA), the ACA reduced
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federal DSH funds. Beginning in federal fiscal year (FY)
2014, the ACA proposed to dramatically decrease the amount of
funding that will be provided under DSH, based on the premise
that the ACA coverage expansions will result in fewer
individuals receiving uncompensated care. Under the ACA, the
federal Secretary of the Department of Health and Human
Services is required to develop a methodology that will reduce
the DSH payments by $14.1 billion during the period of 2014 to
2019, pursuant to a schedule set out in the 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 FY 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 FY 2014-15, the threshold for DSH eligibility is a 40.3%
Medi-Cal utilization rate (MUR) or higher, or a low-income
utilization rate (LIUR), (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 FY 2014-15, there
were 140 hospitals that were DSH-eligible, plus three UC
hospitals (one at UCSF and two 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 GFs and "regular" federal
Medicaid matching funds (instead of being funded from the
capped federal DSH allotment). DMPHs receive DSH funds, with
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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 UCLA and UCSF hospitals DSH-eligible who would not
otherwise be DSH eligible. The amount of DSH funds UC is
eligible to receive under this bill systemwide 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 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 no longer receive DSH funds as they did in
the prior waiver. Instead, county DPHs will receive DSH funds
under the new GPP, described in 5) below.
4)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 a hospital under federal law) for county DPHs and some
level of federal SNCP funding (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 SNCP 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
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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 public health care
system 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, and 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.
As a condition of participation in the GPP, each DPH or
affiliated governmental agency or entity must agree 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 non-hospital setting.
However, because the points are only for the uninsured and DSH
is also intended for Medi-Cal, it disadvantages DPHs that have
substantial Medi-Cal hospital losses. The second reason for
the different IGT 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
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threshold by providing relatively fewer services than would
otherwise be required.
5)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 operating 17 health
and hospital systems, with one system comprised of four
hospitals in Los Angeles. 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.
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 APMs 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
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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)$700million $100 million
DY 12 (July 2016 - June
2017)$700million $100 million
DY 13 (July 2017 - June
2018)$700million $100 million
DY 14 (July 2018 - June
2019)$630million$90 million
DY 15 (July 2019 - June
2020)$535.5million $76.5 million
------------------------------------------------------------
-------------------
Five Year Total $3.2 billion $466.6million
A goal of the waiver is to move participating DPH PRIME
providers toward a value-based payment structure when
receiving payments for 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:
a) DY 13 - 50% by January 2018;
b) DY 14 - 55% by January 2019;
c) DY 15 - 60% by end of waiver.
Five percent of DPH PRIME funding at risk in DY14 (July
2018-June 2019) and DY15 (July 2019-June 2020) is tied to the
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achievement of the APM targets. The APM targets do not apply
to DMPHs.
6)DSHPs. 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. Any FFP claimed is required to be
used to offset applicable GF expenditures. DSHP funds will be
used to fund DTI FFP, not to exceed $375 million over five
years. The DSHPs in the waiver are as follows:
a) California Children Services (CCS);
b) Genetically Handicapped Persons Program;
c) Medically Indigent Adult Long Term Care;
d) Breast & Cervical Cancer Treatment Program;
e) AIDS Drug Assistance Program;
f) Department of Developmental Services;
g) Prostate Cancer Treatment Program;
h) Song Brown Health Care Workforce Training Program;
i) Steven M. Thompson Physician Corp Loan Repayment
Program; and,
j) Mental Health Loan Assumption Program
7)SUPPORT. The Association of California Healthcare Districts
(ACHD), the District Hospital Leadership Forum, and other
district hospitals, support all of the elements of Medi-Cal
2020, especially PRIME. ACHD points out that Medi-Cal 2020 is
the first time that DMPHs will participate in PRIME. District
hospitals will begin transformation work, improve outcomes,
and increase efficiencies over the next five years of the
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waiver. Almost all of the DMPHs submitted PRIME applications
with the goal of delivering high-quality care to Medi-Cal
beneficiaries. The California Association of Public Hospitals
indicates that the four components of Medi-Cal 2020 can
improve the state's health care services, and as a result,
improve the health of Medi-Cal and the remaining uninsured
populations in California. The waiver also challenges and
supports public health care systems' efforts to become models
of integrated care that are of high value, high quality,
patient-centered, efficient and equitable, with great patient
experience, and a demonstrated ability to improve health care
and the health status of populations. The California State
Association of Counties points out that the Medi-Cal 2020
Waiver renewal is a strong and ambitious blueprint for
building on the success of the Medi-Cal program and its
continued transformation. The waiver provides opportunities
to strengthen and improve public hospitals and care
coordination within counties and across systems.
Western Center on Law & Poverty 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;
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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.
8)RELATED LEGISLATION. AB 1568 contains the Medi-Cal 2020
provisions relating to the WPC, DTI, and the evaluations
required under the STCs of Medi-Cal 2020. AB 1568 is pending
is Senate Health Committee.
9)PREVIOUS LEGISLATION
a) SB 36 authorizes 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
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,
makes further statutory changes to implement the Bridge to
Reform for funding DPHs. AB 1066 continued under the 2010
waiver 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
establishes 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,
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enacts 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,
implements provisions of the 2010 Section 1115 waiver
including establishing DSRIP, 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);
authorizes 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 the CCS and to persons who
are dually eligible for Medi-Cal and Medicare.
e) SB 1100 (Perata), Chapter 560, Statutes of 2005, enacts
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.
10)AUTHOR'S PROPOSED AMENDMENTS. 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
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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:
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DSH Medicaid
DSH Low-Income
Utilization Rate
Utilization Rate
Minimum DSH Eligibility 40.3% *25%
UCLA/Ronald Reagan 20.8% 10.8%
UCLA/Santa Monica 12.8% 13%
UCSF 26% 16.1%
*For 2014-15
To collect data on the extent and scope of designated
public hospital contracting with Medi-Cal managed care
plans and to encourage contracting, the author has proposed
the following language:
3) (A) Designated public hospital systems shall
contract with at least one Medi-Cal managed care plan
in the service area where they operate using an APM
methodology by January 1, 2018. If a designated public
hospital system is unable to meet this 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, the department has the
discretion to waive this requirement.
(B) Each designated public hospital system shall
report to the department, in a format determined by
THE department, in consultation with designated public
hospital systems, a summary of the contracting
arrangement the designated public hospital system has
with Medi-Cal managed care plans, and the scope of
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services covered under the contract.
(C) It is the intent of the Legislature to encourage
contracting between designated public hospital systems
and multiple Medi-Cal managed care plans so that
Medi-Cal members have access to medically necessary
and appropriate covered services.
REGISTERED SUPPORT / OPPOSITION:
Support
Antelope Valley Hospital
Association of California Healthcare Districts
Bear Valley Community Healthcare District
California Association of Public Hospitals and Health Systems
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
Contra Costa County Board of Supervisors
County Behavioral Health Directors Association
County Health Executives Association of California
County of San Bernardino
District Hospital Leadership Forum
El Camino Hospital
Health Access California
Kern County Hospital Authority
Kern Valley Healthcare District
Mammoth Hospital
Marin General Hospital
Mayers Memorial Hospital District
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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
Santa Clara County Board of Supervisors
San Joaquin General Hospital
Seneca Healthcare 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
None on file.
Analysis Prepared by:Rosielyn Pulmano / HEALTH / (916)
319-2097
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