BILL ANALYSIS
SENATE HEALTH
COMMITTEE ANALYSIS
Senator Sheila J. Kuehl, Chair
BILL NO: AB 158
A
AUTHOR: Ma
B
AMENDED: January 24, 2008
HEARING DATE: May 7, 2008
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FISCAL: Appropriations
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CONSULTANT:
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Dunstan/cjt
SUBJECT
Medi-Cal: benefits for nondisabled persons infected with
hepatitis B
SUMMARY
Expands Medi-Cal eligibility to persons with chronic
hepatitis B infections who are not currently disabled, but
who would qualify for benefits if disabled, and requires
that such an eligibility expansion be contingent upon
federal approval.
CHANGES TO EXISTING LAW
Existing federal law:
Existing federal law establishes the Medicaid program,
which provides comprehensive health care coverage to
low-income eligible individuals and families, including
children, the aged, the blind, the disabled, and pregnant
women, through a program that reimburses states for
Medicaid programs in the individual states. Existing
federal law allows states to apply to the federal
government for waivers of certain provisions of federal
Medicaid law.
Continued---
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Existing state law:
Existing state law establishes the Medi-Cal program, which
provides comprehensive health coverage to low-income
eligible individuals and families, including children, the
aged, the blind, the disabled, and pregnant women, through
a program of shared costs with the federal government.
Existing state law requires the Department of Health Care
Services (DHCS) to administer the Medi-Cal program.
Existing state law requires DHCS to establish a statewide
program to expand eligibility for Medi-Cal benefits to
persons with HIV who are not disabled, but who would be
eligible for Medi-Cal, if they were disabled.
This bill:
This bill requires the Department of Health Care Services
(DHCS) to expand Medi-Cal eligibility to any person with
chronic hepatitis B infection, and would otherwise qualify
for Medi-Cal, if the person was disabled. This bill would
require that this expansion begin on July 1, 2009, or the
date that all necessary federal waivers have been obtained,
whichever is later.
This bill would require DHCS to enroll beneficiaries made
eligible in this bill on a first-come, first-served basis,
subject to an allocation mechanism that would be developed
by DHCS. This bill would also require those beneficiaries
to select a Medi-Cal managed care plan in counties in which
such a plan is available. This bill would allow DHCS to
suspend the required enrollment in managed care if the cost
neutrality requirements and enrollment goals of this bill
can be achieved without requiring mandatory enrollment.
This bill would require DHCS to ensure that specified
standards are met in implementing this bill, including
compliance with all federal and state laws that apply to
Medi-Cal managed care, compliance with licensure, and other
requirements under the Knox-Keene Act. All participating
primary care case management plans would be required to
comply with applicable laws pertaining to these plans and
maintain grievance and appeal procedures. This bill would
require DHCS to set capitation rates for services provided
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pursuant to this bill, and specifies that capitation rates
may not exceed 95 percent of the Medi-Cal fee-for-service
costs for individuals with chronic hepatitis B infection.
This bill would require DHCS to seek a federal waiver to
implement the expansion. The bill would require DHCS to
meet federal revenue neutrality requirements associated
with such a waiver through savings generated by the
voluntary enrollment of currently eligible Medi-Cal
beneficiaries, who are disabled as a result of hepatitis B,
into Medi-Cal managed care. This bill would require DHCS
to engage in specified outreach activities to encourage
this enrollment. This bill would also prevent DHCS from
enrolling any new beneficiaries made eligible under the
provisions of this bill unless savings are generated from
enrollment into managed care of existing Medi-Cal
beneficiaries who are disabled as a result of hepatitis B.
This bill would allow DHCS to implement other means of
meeting federal neutrality requirements. This bill would
require DHCS to implement this bill by means of an
all-county letter or similar instruction. This bill would
require that DHCS implement the bill only if federal
matching funds are available. This bill would also state
legislative intent regarding the purpose of this bill.
FISCAL IMPACT
According to the Assembly Appropriations Committee
analysis, this bill would result in increased annual costs
of at least $1 million (50 percent from the general fund)
if 200 individuals with chronic hepatitis B infection
become eligible for Medi-Cal pursuant to this bill. The
analysis also states that there would be unknown offsetting
savings to the extent newly eligible or current enrollees
elect Medi-Cal managed care, which is only available in
certain counties.
BACKGROUND AND DISCUSSION
According to the author, the intent of the bill is to
provide treatment to individuals with chronic hepatitis B
infections, which is a severe chronic disease that affects
a portion of those who are infected with hepatitis B. The
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author notes that hepatitis B is extremely infectious and
can be transmitted from mother to newborn at birth, through
unprotected sexual intercourse, or through injections
contaminated by infected blood. The author cites recent
statistics showing that chronic hepatitis B affects nearly
280,000 Californians, and is the leading cause of liver
cancer and of the need for liver transplants in California.
The author argues that this is an important health issue,
as most chronically infected persons do not even know that
they are infected with hepatitis B until long after the
infection has been established. The author notes that
patients can benefit from treatment to stop the progression
of chronic liver disease, and such treatment can reduce the
probability of future disability. The author notes that
currently, individuals infected with hepatitis B are not
eligible for Medi-Cal benefits unless they are disabled.
However, if infected individuals develop liver disease or
liver cancer and become disabled, these more severely ill
individuals are eligible for Medi-Cal benefits under the
federal Supplemental Security Income (SSI) for the Aged,
Blind, and Disabled Program. The author notes that the
cost of treatment becomes much higher when these
individuals are disabled.
Hepatitis B
Hepatitis B is a liver disease caused by the hepatitis B
virus. The virus is most commonly spread through
unprotected sexual intercourse; from mother to child at the
time of delivery; by contaminated drug injecting equipment,
or through needle stick injuries.
Hepatitis B infection does not usually require treatment
because most adults clear the infection spontaneously.
However, a small proportion of those infected can become
chronically infected and have a significant risk of
developing cirrhosis of the liver or liver cancer. It is
this small group for whom early antiviral treatment may be
necessary to reduce the risks associated with the
progression of the disease. The FDA has approved six drugs
to be used for chronic hepatitis B. These drugs do not,
however, provide a complete cure, but do significantly
decrease the risk of liver damage from the hepatitis B
virus by slowing down the reproduction of the virus, or
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stopping it all together.
Currently, a low-income person who develops chronic
hepatitis B, but who is not considered aged, blind, or
disabled, is not eligible for Medi-Cal merely on the basis
of the diagnosis of the chronic hepatitis B infection. A
chronic hepatitis B infection can eventually render a
person disabled, but usually only if the disease has not
been treated.
Prior legislation
AB 2197 (Koretz), Chapter 684 of 2001, requires DHCS to
expand eligibility for Medi-Cal benefits to persons with
HIV who are not disabled, but who, if disabled, would
qualify for Medi-Cal benefits. According to DHCS, it has
not implemented AB 2197, because they cannot gain federal
approval. On April 4, 2007, the AIDS Healthcare Foundation
filed a lawsuit in Los Angeles County Superior Court,
alleging that DHCS has failed to comply with the
requirements contained in AB 2197.
Arguments in support
Supporters argue that nondisabled persons with hepatitis B
should be covered under the Medi-Cal program because, under
the current system of allowing these cases to go untreated,
the cost of treatment, once the disease has progressed, is
much higher. Supporters also note that such delay
unnecessarily increases the suffering associated with the
disease and the chance that patients will succumb.
Arguments in opposition
DHCS opposes AB 158 and questions whether it can meet the
federally required cost neutrality requirements through
voluntary enrollment of current Medi-Cal beneficiaries with
hepatitis B into managed care. They are also concerned
that AB 158 does not contain resources for conducting the
necessary outreach to encourage current Medi-Cal
beneficiaries to enroll in managed care. DHCS also notes
that the federal government has taken into consideration
the savings from enrolling Medi-Cal beneficiaries in
managed care under the hospital waiver, and it is highly
unlikely that the federal government would allow the same
savings to be counted under another waiver. DHCS also
expresses concern about potential costs, as they are unsure
how many persons could become eligible as a result of this
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bill.
COMMENTS AND QUESTIONS
1. Determining appropriate rates for Medi-Cal managed care
plans is difficult. Federal law requires that plans be
paid an actuarially sound rate, but does not provide
specific guidance on how that should be done. When
Medi-Cal managed care began in California, the plans were
paid a rate based on historic Medi-Cal fee-for-service
rates. This approach by DHCS has been subject to a great
deal of criticism including by the Legislative Analyst's
Office in their review of the 2004-05 budget. In addition,
the Senate Budget Subcommittee on Health and Human Services
has documented a number of concerns regarding DHCS rate
setting. AB 158 uses fee-for-service rates as a starting
point for determining the managed care rate. A recommended
amendment would be to eliminate that approach and require
DHCS to report to the Legislature on how rates are set.
Suggested amendment
Page 4, lines 22-26
(e) The department shall establish capitation rates to be
paid to Medi-Cal managed care plans for services provided
pursuant to this section. These capitation rates shall not
exceed 95 percent of the fee-for-service equivalent costs
to the Medi-Cal program for medical services for persons
with chronic hepatitis B infection. The department shall
report to the appropriate policy and fiscal committees of
the Legislature on the specific methodology used to develop
the capitation rates. The methodology used by the
department shall ensure that rates are actuarially sound,
based on data specific to people with chronic hepatitis B
infection, and comply with Section 438.6(c) of Title 42 of
the Code of Federal Regulations.
Technical amendments
Page 2, line 26-29
(b) Any person eligible for benefits pursuant to
subdivision (a), and seeking enrollment in Medi-Cal
pursuant to this article shall be enrolled on a
first-come-first-served basis pursuant to an allocation
mechanism that shall be developed by the department and
used to ensure the revenue neutrality conditions are met.
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Page 3 beginning line 9
(3) Health care service plans participating in the
Medi-Cal
managed care program shall comply with the applicable
sections of the
Knox-Keene Health Care Service Plan Act of 1975 (Chapter
2.2
(commencing with Section 1340) of Division 2 of the Health
and Safety
Code), including, but not limited to, Sections 1367 and
1374.16 of the Health and Safety
Code and the regulations adopted pursuant to Section
1374.16 of the
Health and Safety Code.
PRIOR ACTIONS
Assembly Floor: 52-22
Assembly Appropriations: 11-5
Assembly Health: 15-2
POSITIONS
Support: American Cancer Society
American Federation of State, County and Municipal
Employees (AFSCME)
American Liver Foundation
Asian Health Services
Asian and Pacific Islander Wellness Center
Catholic Healthcare West
North East Medical Services
San Francisco Community Clinic Consortium
San Francisco Medical Society
Service Employees International Union
Two individuals
Oppose: Department of Health Care Services
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