BILL ANALYSIS
AB 342
Page 1
Date of Hearing: April 21, 2009
ASSEMBLY COMMITTEE ON HEALTH
Dave Jones, Chair
AB 342 (Bass and Jones) - As Amended: April 13, 2009
SUBJECT : Medi-Cal: demonstration project waiver.
SUMMARY : Requires the Department of Health Care Services
(DHCS) to submit a waiver application to the federal government
for a demonstration project that, among other provisions,
maximizes opportunities to expand coverage to eligible but
uninsured populations. Specifically, this bill :
1)Requires DHCS to submit an application to the federal Centers
for Medicare and Medicaid Services (CMS) for a waiver to
implement a demonstration project that does all of the
following:
a) Strengthens California's health care safety net, which
includes disproportionate share hospitals, for low-income
and vulnerable Californians;
b) Maximizes opportunities to expand coverage to eligible,
but uninsured populations;
c) Optimizes opportunities to increase federal financial
participation and maximizes financial resources to address
uncompensated care;
d) Promotes long-term, efficient, and effective use of
state and local funds; and,
e) Improves health care outcomes.
2)Requires DHCS, in developing the waiver application, to
consult with interested stakeholders and the Legislature.
3)Requires DHCS to determine the form of waiver most appropriate
to achieve the purposes in 1) above.
4)Requires DHCS to submit the waiver application to CMS by a
date that ensures that the waiver is approved by September 1,
2010.
AB 342
Page 2
5)Requires DHCS to only implement the demonstration project upon
enactment of subsequent statutory authorization if CMS
approves the waiver.
EXISTING LAW :
1)Establishes the Medi-Cal program, administered by DHCS, and
under which qualified low-income persons receive health care
benefits.
2)Authorizes, under federal law, the waiving of specified
Medicaid (Medi-Cal in California) requirements for
demonstration projects, for care delivered through primary
care case-management system or to provide home- or
community-based services.
FISCAL EFFECT : This bill has not been analyzed by a fiscal
committee.
COMMENTS :
1)PURPOSE OF THIS BILL . According to the author, this bill is
one of two companion bills (SB 208 (Steinberg) is the other)
that will ultimately include the statutory provisions
necessary to implement a new federal waiver. California
currently has several waivers, including a Medi-Cal
Hospital/Uninsured Care waiver (hospital financing waiver),
which will expire in August 2010. The hospital financing
waiver and implementing legislation for that waiver (SB 1100
(Perata), Chapter 560, Statutes of 2005) instituted a number
of changes to how the state reimburses hospitals. Given that
the current hospital financing waiver is expiring, a new
waiver must be negotiated and established by next year, and,
depending upon the type and scope of waiver pursued by the
Schwarzenegger Administration, it will require an authorizing
statute in order to implement its provisions. The author,
Senate President Pro Tem Steinberg, and Governor
Schwarzenegger are currently working with stakeholders to
fashion a new federal waiver.
The author indicates a waiver renewal is an opportunity to ask
the federal government to provide the state flexibility and to
seek federal funding for demonstration projects that achieve
federal budget neutrality. The author continues, the state
will embark upon a fairly comprehensive waiver proposal that
seeks to accomplish the following goals: a) Strengthen
AB 342
Page 3
California's frayed and overburdened safety net that provides
most of the services to the uninsured and low-income; b)
Maximize federal financial participation and federal resources
for uncompensated care; c) Promote stability and more
efficiency in state and local health care funding; and, d)
Promote quality and value in health care services and
outcomes. The author indicates a comprehensive stakeholder
process is beginning, and technical assistance is being
provided to the Legislature and the Administration for
purposes of meeting these goals while at the same time
achieving federal approval. The author anticipates that a
more detailed proposal will be available in June, and
anticipates this measure will return to the Assembly Health
Committee for discussion and analysis.
2)BACKGROUND . According to a 2000 report entitled "Medicaid
Waivers: California's Use of a Federal Option," when
California wants to make significant changes to Medi-Cal, it
must either: a) amend its State Medicaid Plan (the State's
contract with the federal government); or, b) receive a
Medicaid waiver from portions of the federal Medicaid law from
the U.S. Department of Health and Human Services. Two
sections of the Social Security Act, Sections 1915 and 1115,
allow states to apply to the federal government to obtain an
exemption from particular Medicaid statutes. These two
sections permit two types of Medicaid waivers:
a) Program Waivers: These waivers, authorized under
Section 1915(b) or 1915(c) of the Social Security Act,
allow exemptions from provisions of federal Medicaid law to
permit the use of managed care or home- and community-based
care.
b) Research and Demonstration Waivers: Section 1115 allows
the waiver of a broader scope of Medicaid laws for the
purpose of experimentation or testing pilot programs.
The criteria used by the federal government for approval of
Medicaid waivers are generally based upon federal policy
interpretation and application of Medicaid law and
regulations, rather than being based solely on the law. The
most significant requirement for most waivers is that of
cost-effectiveness or budget neutrality, which is a
requirement that the proposed changes not cost the federal
government more than the expected Medicaid costs for the
AB 342
Page 4
traditional Medicaid population under the same time period.
For 1915 waivers the term for this requirement is
"cost-effectiveness" and for 1115 waivers it is "budget
neutrality," and it is the responsibility of the Office of
Management and Budget (OMB) to review waivers for
cost-effectiveness or budget neutrality, respectively.
Current Medi-Cal waivers are programs that provide additional
services to specific groups of individuals, limit services to
specific geographic areas of the state, and provide medical
coverage to individuals who may not otherwise be eligible
under federal Medicaid rules. According to DHCS' Web site, as
of August 2008, California had 16 Medicaid waivers, including
the hospital financing waiver, waivers to require the
mandatory enrollment of individuals in managed care plans,
waiver programs that provide home- and community-based
services, family planning services, and specialty mental
health services.
3)RELATED LEGISLATION . This bill is similar to SB 208
(Steinberg), which is currently awaiting hearing in the
Senate.
REGISTERED SUPPORT / OPPOSITION :
Support
None on file.
Opposition
None on file.
Analysis Prepared by : Scott Bain / HEALTH / (916) 319-2097