BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SB 815| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- UNFINISHED BUSINESS Bill No: SB 815 Author: Hernandez (D) and De León (D) Amended: 6/9/16 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 SENATE FLOOR: 39-0, 5/31/16 AYES: Allen, Anderson, Bates, Beall, Berryhill, Block, Cannella, De León, Fuller, Gaines, Galgiani, Glazer, Hall, Hancock, Hernandez, Hertzberg, Hill, Hueso, Huff, Jackson, Lara, Leno, Leyva, Liu, McGuire, Mendoza, Mitchell, Monning, Moorlach, Morrell, Nguyen, Nielsen, Pan, Pavley, Roth, Stone, Vidak, Wieckowski, Wolk NO VOTE RECORDED: Runner ASSEMBLY FLOOR: 79-0, 6/23/16 (Consent) - See last page for vote SUBJECT: Medi-Cal: demonstration project SOURCE: Author DIGEST: This bill enacts the statutory provisions of Medi-Cal 2020, the states 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, SB 815 Page 2 the Global Payment Program for county designated public hospitals, and the access assessment required under the Special Terms of Conditions of Medi-Cal 2020. Assembly Amendments delete provisions establishing the Whole Person Care (WPC) and Dental Transformation Initiative (DTI), which are contained in AB 1568 (Bonta and Atkins), which is a companion bill to this measure, and make the measures contingent upon each other. In addition, the Assembly amendments add a requirement that designated public hospital systems (DPHs are University of California and county hospitals) report a summary of the contracting arrangement the DPHs has with Medi-Cal managed care plans and the scope of services covered under the contract, and add legislative intent language to encourage contracting between the two parties. ANALYSIS Existing law 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. Provides for payments under the state's Bridge to Reform waiver to DPHs, 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. SB 815 Page 3 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). 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. SB 815 Page 4 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 SB 815 Page 5 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 action to approve or disapprove each plan. 11)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. 12)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. 13)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. SB 815 Page 6 14)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. 15)Permits DHCS to claim FFP for expenditures associated with designated state health programs (DSHP) identified in the STCs. 16)Continues the continuously appropriated Demonstration DSH Fund and Public Hospital Investment, Improvement and Incentive Fund, and establishes two new continuously appropriated funds. 17)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 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 SB 815 Page 7 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 establishing the Medi-Cal managed care access assessment. 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 FISCAL EFFECT: Appropriation: Yes Fiscal Com.:YesLocal: No According to the Assembly Appropriations Committee: 1)DHCS has requested administrative resources through an April 2016 Spring Finance Letter totaling $33.6 million for waiver implementation over its five-year lifetime, $14 million of the total is for contract costs, and $10.8 million of which is requested for 2016-17. Funding will pay for implementation, monitoring, oversight, evaluation and assessment, technical assistance, program development, and related activities (GF/federal). The funding request is the cost to implement the entire waiver, but only certain elements of the waiver are included in this bill. Other provisions are implemented in AB 1568 (Bonta), a companion bill. 2)Federal matching funds available by waiver program component are as follows: PRIME $3.73 billion GPP $236 million* DTI $375 million** SB 815 Page 8 DSHPs $375 million WPC $1.5 billion** -------------------------------------- Total $6.2 billion *The $236 million for GPP only represents additional waiver funding; it does not include the existing federal DSH component of GPP funding. Federal DSH funding over the five-year life of the waiver is projected to be about $5.8 billion. In addition, only the first year of federal funding for GPP is shown here. Funding in subsequent years is based on a study of uncompensated care. **DTI and WPC are implemented in AB 1568 (Bonta). SUPPORT: (Verified6/23/16) 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 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 SB 815 Page 9 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 OPPOSITION: (Verified6/23/16) None received ARGUMENTS IN SUPPORT: This bill is supported by hospitals and consumer and labor groups, which write in support of the $6.2 billion in federal funds and the new waiver funding components, including PRIME and GPP. 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. ASSEMBLY FLOOR: 79-0, 6/23/16 AYES: Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth SB 815 Page 10 Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte, Olsen, Patterson, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Rendon NO VOTE RECORDED: O'Donnell Prepared by:Scott Bain / HEALTH / (916) 651-4111 6/24/16 14:33:56 **** END ****