BILL ANALYSIS
AB 342
Page 1
ASSEMBLY THIRD READING
AB 342 (Bass and Jones)
As Amended April 13, 2009
Majority vote
HEALTH 18-0 APPROPRIATIONS 11-0
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|Ayes:|Jones, Fletcher, Adams , |Ayes:|De Leon, Ammiano, Charles |
| |Ammiano, Block, Carter, | |Calderon, |
| |Conway, De La Torre, De | |Davis, Fuentes, Hall, John |
| |Leon, Emmerson, Hall, | |A. Perez, Price, Skinner, |
| |Hayashi, Hernandez, | |Solorio, Torlakson |
| |Bonnie Lowenthal, | | |
| |Nava, V. Manuel Perez, | | |
| |Salas, | | |
| |Audra Strickland | | |
|-----+--------------------------+-----+---------------------------|
| | | | |
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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 requires DHCS:
1)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,
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e) Improves health care outcomes.
2)In developing the waiver application, to consult with
interested stakeholders and the Legislature.
3)To determine the form of waiver most appropriate to achieve
the purposes in 1) above.
4)To submit the waiver application to CMS by a date that ensures
that the waiver is approved by September 1, 2010.
5)To only implement the demonstration project upon enactment of
subsequent statutory authorization if CMS approves the waiver.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, unknown staffing costs, unlikely less than $50,000 to
DHCS to consult with the Legislature and stakeholders, establish
parameters of the new waiver, and garner final CMS approval.
COMMENTS : 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 Tempore 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: 1) Strengthen California's
frayed and overburdened safety net that provides most of the
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services to the uninsured and low-income; 2) Maximize federal
financial participation and federal resources for uncompensated
care; 3) Promote stability and more efficiency in state and
local health care funding; and, 4) 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.
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:
1)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.
2)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 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
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"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.
Analysis Prepared by : Scott Bain / HEALTH / (916) 319-2097
FN: 0000586