BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 342|
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THIRD READING
Bill No: AB 342
Author: John A. Perez (D), et al
Amended: 10/6/10 in Senate
Vote: 27 - Urgency
PRIOR VOTES NOT RELEVANT
SUBJECT : Medi-Cal: demonstration project waivers
SOURCE : Author
DIGEST : This bill revises and recasts provisions
pertaining to the local Coverage Expansion and Enrollment
Demonstration (CEED) projects.
Senate Floor Amendments of 10/6/10 delete several
provisions of the bill, recast and revise other provisions,
and double-joint the bill to SB 208 (Steinberg).
ANALYSIS : Existing federal law:
1. Establishes the Medicaid program to provide
comprehensive health benefits to low-income persons.
2. Establishes the federal Medicaid Disproportionate Share
Hospital (DSH) program to provide financial assistance
to hospitals that serve large numbers of Medicaid and
uninsured patients.
3. Provides that states may be granted waivers of federal
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law to implement demonstration projects in their
Medicaid programs.
4. Authorizes states to use benchmark plans in Medicaid,
which allow the state more flexibility in determining
benefits and cost sharing.
5. Establishes the federal Medicare program, which provides
health care benefits to persons 65 years of age and
older and to disabled persons.
6. Provides that the Medicare program can grant waivers of
federal law for demonstration projects.
7. Establishes that the federal government will provide a
match for the Medicaid program, termed the federal
medical assistance percentage (FMAP), which varies by
state and territory according to a specified formula.
Pursuant to the federal Patient Protection and
Affordable Care Act (Public Law 111-148), establishes
Medicaid eligibility for childless low-income adults and
provides enhanced FMAP for this expansion population,
beginning January 1, 2014.
Existing state law:
1. Establishes the Medi-Cal program, the state's Medicaid
program, which is administered by DHCS, and which
provides comprehensive health benefits to low-income
children; their parents or caretaker relatives; pregnant
women; elderly, blind or disabled persons; nursing home
residents and refugees.
2. Creates a demonstration project on hospital financing to
implement a five-year federal Medicaid waiver for
support of public hospitals that serve uninsured
patients and patients whose health care services are
covered by Medi-Cal.
3. Defines a designated public hospital to be one of 22
hospitals specifically named in the statute implementing
the federal waiver.
4. Creates the Safety Net Care Pool (SNCP) containing the
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federal funds available under the demonstration project
to ensure continued government support for the provision
of health care services to uninsured populations.
5. Establishes methods for administering the federal (DSH)
program payments, and a mechanism that DHCS must use to
allocate the payments to designated public hospitals.
6. Requires that matching funds for SNCP and DSH payments
come from the certified public expenditures and/or
intergovernmental transfers from designated public
hospitals or the governmental entities with which they
are affiliated.
7. Establishes the Health Care Coverage Initiative and
provides that it shall operate pursuant to the special
terms and conditions of California's Section 1115
demonstration project on hospital financing in the
Medi-Cal program.
8. Provides that coverage initiatives shall expand health
care coverage to low-income, uninsured residents of 10
selected counties for federal fiscal years 2007-08
through 2009-10.
9. Authorizes DHCS to contract, on a bid or nonbid basis,
with any qualified individual, organization, or entity
to provide services to, arrange for, or case manage, the
care of Medi-Cal beneficiaries.
10.Permits the contract to be exclusive or nonexclusive,
statewide or on a more limited geographic basis and
requires that the contracts include specified
provisions.
11.Defines a Medi-Cal managed care plan as any entity that
enters into one of several types of contracts with DHCS
including county organized health systems (COHS),
geographic managed care plans and local initiatives.
12.Requires DHCS to evaluate and determine the readiness of
managed care plans prior to geographic expansion of
Medi-Cal managed care.
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13.Requires enrollment of seniors and persons with
disabilities into Medi-Cal managed care plans to be
voluntary, except in COHS counties where the enrollment
of seniors and persons with disabilities (SPDs) is
mandatory.
14.Requires counties to provide medical services for the
medically indigent.
15.Requires DHCS to submit a Medi-Cal Waiver or
Demonstration Project to the federal government in order
to strengthen California's health care safety net,
including disproportionate share hospitals; reduce the
number of uninsured Californians; increase federal
financial participation; improve health care quality and
outcomes; and, promote home and community based care.
16.Requires the waiver to include Medi-Cal restructuring
proposals in order for the program to better serve the
most vulnerable beneficiaries, including SPDs, children
with significant medical needs, and people with
behavioral health conditions.
17.Establishes that the goals of restructuring care for
these populations include increased access to better
coordinated and integrated care for these populations,
improved health outcomes, and reduction in the long-term
growth of the Medi-Cal program.
18.Requires DHCS to submit a waiver proposal to the federal
Centers for Medicare and Medicaid Services (CMS) by a
date that allows sufficient time for the waiver to be
approved by no later than the later of either September
1, 2010, or the conclusion of the current Medi-Cal
Hospital (1115) waiver.
19.Authorizes this waiver to seek authority to enroll
beneficiaries into specified organized delivery systems,
such as managed care, enhanced primary care case
management or a medical home model.
20.Requires the waiver to include processes, and criteria,
by which DHCS will evaluate and grant exemptions, on an
individual basis, from any mandatory enrollment of
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beneficiaries into managed care.
21.Requires the Department of Managed Health Care (DMHC) to
enforce the Knox-Keene Act by overseeing the licensing
of plans and ensuring managed care plans compliance with
state law and regulations.
22.Provides that services provided by California Children's
Services (CCS) are not incorporated into Medi-Cal
managed care contracts.
This bill is the vehicle for the waiver mentioned above,
along with SB 208 (Steinberg/Alquist). These bills provide
a statutory framework for DHCS to receive and begin
implementation of the waiver. Several provisions of the
waiver, including the hospital financing provisions, are
being negotiated with the federal Centers for Medicare and
Medicaid Services and will need to be addressed in
follow-up legislation.
This bill:
1. Defines a "CEED project" as a local Coverage Expansion
and Enrollment Demonstration project, as authorized by
the bill.
2. Specifies an entity that is eligible to implement a CEED
as a county, city and county, consortium of counties, or
a health authority.
3. Requires DHCS, by March 1, 2011, or 180 days after
federal approval of the demonstration project, whichever
occurs later, to authorize local CEED projects.
4. Requires CEED projects to provide scheduled health care
services to uninsured adults 19 to 64 who are not
otherwise eligible for Medicare or Medi-Cal, with
incomes up to 133 percent of the federal poverty level.
Additionally authorize CEED projects to provide services
to individuals with incomes between 134 percent and 200
percent of the FPL, to the extent federal funds are
available.
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5. Establishes a process and timeline for DHCS to notify
eligible entities of the opportunity to elect to
implement a CEED project and to process applications.
6. Provides that approval of a CEED project may be
effective retroactively, if consistent with the terms
and conditions of the demonstration project, as
specified.
7. Allows an eligible entity that operates a Health Care
Coverage Initiative project, and that elects to continue
funding the program, to continue operating the project,
to the extent permitted by the terms and conditions of
the demonstration project, as specified.
8. Provides that CEED projects shall not be considered to
be entitlement programs.
9. Requires each CEED project to establish an income
eligibility standard for an individual to enroll in a
CEED project, which shall be between 0 and 133 percent
of the federal poverty level. Allows a CEED project to
limit the number of individuals enrolled, to the extent
permitted by the terms and conditions of the
demonstration project.
10.Provides that participating entities shall be exempt
from the licensing and approval requirements that apply
to health care service plans and to Medi-Cal managed
care plans.
11.Establishes a process for allocating federal funding
among CEED projects that have agreed to provide the
nonfederal share of funding to cover individuals with
incomes between 134 percent and 200 percent of the
federal poverty level, in the event there is a limit on
the federal funds that are available, or that different
program requirements apply from those that apply to
individuals with incomes under 133 percent of the FPL.
Provides that the process that is established must
ensure the continuation of funding for existing Health
Care Coverage Initiative projects, as specified.
12.Requires DHCS to approve a CEED project that is proposed
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by an eligible entity that voluntarily agrees to provide
the nonfederal share of funding for the project and that
includes required elements pertaining to eligibility and
enrollment procedures, assignment of individuals to a
medical home, required services, provider networks,
outreach and enrollment, and quality measurement and
monitoring, as specified.
13.Defines a "medical home", to which eligible individuals
would be assigned, as a single provider, facility, or
health care team that maintains the individual's medical
information and coordinates health care services for the
individual, and meets other specified elements. Allows
DHCS to alter the elements as necessary to secure
increased federal financial participation for services
provided in conjunction with a medical home.
14.Requires DHCS to determine actuarially sound per
enrollee capitation rates for CEED projects that are
based on utilization and cost data specific to the
enrolled population. Requires DHCS to include risk
corridors to allow for adjustments in rates if the
actual cost or utilization of a CEED project exceeds the
projected cost. Requires rates to be determined
annually and paid quarterly, and to be adjusted and
reconciled on an ongoing basis, as specified.
15.Allows DHCS to develop additional payment mechanisms
that provide for incentive payments to CEED projects
that meet designated performance criteria.
16.Provides that funding for CEED projects shall be based
on the following factors:
A. The amount of funding the participating entity
voluntarily provides for the nonfederal share of CEED
project expenditures;
B. Limitations imposed by the terms and conditions
of the demonstration project;
C. The availability of funds for services to
individuals with incomes between 134 percent and 200
percent of the federal poverty level; and
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D. Whether funding would result in the reduction of
other payments under the demonstration project.
17.Specifies alternative mechanisms by which a
participating entity may provide the nonfederal funds
for its CEED project, and the procedures by which DHCS
shall make payments to CEED projects, as specified.
Establishes the CEED Project Fund in the State Treasury,
to receive funds transferred by participating entities
that opt to provide the nonfederal funds in this manner.
18.Provides that if a participating entity and DHCS cannot
reach an agreement as to an appropriate rate to be paid
per enrollee in the CEED project, the project shall be
reimbursed on a cost basis, as specified.
19.Provides that participating entities that operate a CEED
project directly or through a contract with another
entity shall be entitled to federal funds that are
available for administrative expenditures.
20.Requires eligible entities to reimburse the state for
the nonfederal share of staffing or administrative costs
directly attributable to the cost of administering the
entity's CEED project.
21.Allows DHCS to seek federal or private funds or enter
into a partnership with an independent, nonprofit group
or foundation, academic institution, or governmental
entity to evaluate the funded CEED projects.
22.Requires DHCS, prior to issuing all-county letters, plan
letters, or provider bulletins for purposes of
implementing provisions pertaining to CEED projects, to
notify and consult with stakeholders.
23.Exempts the application form used by DHCS, and
agreements between DHCS and participating entities, from
public contracting provisions.
Note:This bill shall become operative only if SB 208
(Steinberg) is enacted.
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Existing law, SB 1100 (Perata and Ducheny), Chapter 560,
Statutes of 2005, creates a hospital funding demonstration
project to implement a five-year Section 1115 Medicaid
waiver to support public hospitals, including the five
University of California medical centers and county clinics
that serve Medicaid and uninsured patients. Section 1115
waivers are approved for an initial five years and may be
subsequently renewed for three years. Federal law requires
Section 1115 waivers to be budget neutral over their
five-year lifetimes.
Under the current waiver, public hospitals have access to
over $1 billion in federal DSH funds for uncompensated care
provided to Medi-Cal and uninsured patients. Public
hospitals are able to access SNCP funding through a
certified public expenditures (CPE) process. The SNCP is
capped at $766 million annually. The SNCP allotment
includes $180 million in the last three years of the waiver
to implement the health care coverage initiatives. Since
one of the stated goals is to continue and expand the SNCP,
the waiver funding could be expected to be of similar
magnitude.
The waiver provides federal matching funds to CPEs for
health care services provided by public hospitals. For
example, if a hospital performs a procedure for $1, the
federal government would pay $0.50. While there are no
state General Fund monies involved in the public hospitals'
CPE reimbursement process, there is limited use of
intergovernmental transfers (IGTs), or a combination of
local and state General Fund moneys, to draw down federal
matching funds for the disproportionate share hospital
(DSH) Fund. Each safety-net hospital receives a baseline
amount of funding annually and may receive an additional
amount of stabilization funding from the SNCP. Private
hospitals negotiate individual rates of reimbursement with
the California Medical Assistance Commission (CMAC) and
receive supplemental DSH-like payments - funds meant to
defray uncompensated costs of treating Medicaid and
uninsured patients - from the General Fund and federal
funds. As noted above in the health care coverage
initiative expansion, CPEs and IGTs will continue to be
funding mechanisms in the proposed waiver.
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Background
In June 2010, DHCS released its 1115 waiver application and
submitted it to CMS. It outlines six goals that the state
would like to accomplish through the waiver.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: No
CTW:nl 10/7/10 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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