BILL ANALYSIS
AB 1037
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Date of Hearing: May 13, 2009
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
AB 1037 (Lowenthal) - As Amended: April 15, 2009
Policy Committee: Health Vote:16-1
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill requires the California Department of Health Care
Services (DHCS) to develop a pilot project in San Bernardino and
Riverside counties for the mandatory enrollment of Medi-Cal
seniors and persons with disabilities (SPDs) into managed care
by January 1, 1011. Specifically, this bill:
1)Requires DHCS to assign individuals who fail to select either
fee-for-service (FFS) or a Medi-Cal managed care plan (MCMC)
to be assigned to MCMC. Authorizes beneficiaries to opt out of
MCMC at any time.
2)Requires DHCS to develop an implementation plan by July 1,
2011. Requires DHCS to establish criteria, performance
standards, and indicators to ensure MCMC plans meet the
multiple and complex needs of SPDs and comply with
requirements established by this bill.
3)Authorizes DHCS to require MCMC plans to submit specified
financial and utilization data and requires capitation rates
to meet the restorative and health maintenance needs of SPDs.
Requires DHCS to provide MCMC plans with an opportunity to
review and comment on the rates and rate development
methodology and to respond within specified timeframes.
Requires DHCS to review and update rates annually to reflect
cost and utilization.
4)Establishes numerous other requirements for participating
health plans and DHCS with regard to implementation,
programming, financing, and evaluation.
FISCAL EFFECT
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1)Annual costs to the DHCS during the SPD pilot program of
$300,000 (50% GF) to $500,000 (50% GF) to provide pilot
implementation, oversight, and evaluation of the mandatory
enrollment of SPDs in two large California counties.
2)Unknown, potentially significant savings to the extent a shift
from a FFS environment to a MCMC plan increases care
coordination and controls costs. In 2005 the Legislative
Analyst's Office estimated a statewide effort of shifting
enrollees from FFS to MCMC, would result in almost $90 million
GF savings annually. This bill addresses only a portion of any
statewide estimate.
3)A more recent estimate prepared by a private firm on behalf of
Molina Health Care (the MCMC plan in San Bernardino and
Riverside counties and a supporter of this bill) indicates
annual savings of between $14 million GF and $22 million with
50,000 SPDs new enrollments in MCMC. The mandatory enrollment
into managed care of these beneficiaries will generate new
revenues for Molina, the commercial managed care plan in these
two counties.
COMMENTS
1)Rationale . This bill is sponsored by the Partners in Care
Foundation, a national not-for-profit promoting various
strategies related to geriatric care management, health
promotion, chronic disease management, and end-of-life care.
This bill is supported by managed care organizations as well
as some provider groups. Statewide, the SPD beneficiaries
addressed in this bill are only 20% of the Medi-Cal caseload,
but account for more than half of statewide expenditures. SPD
costs are shared fairly equally between beneficiaries who are
elderly and those who are disabled. According to the author,
sponsor, and numerous and diverse research and policy
analyses, managed care for the SPD population may offer
increased health access, continuity and coordination of care,
and better health outcomes over the longer term. This bill
provides a specific opportunity for California to evaluate the
quality, access, and cost outcomes under this pilot program.
2)Medi-Cal Managed Care . There are 7 million Medi-Cal
beneficiaries statewide. The program is delivered in two major
formats, FFS and MCMC. Under FFS providers are paid on a per
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service basis, while MCMC providers are paid a monthly
predetermined rate, regardless of the health services
provided. Currently more than half of Medi-Cal beneficiaries
are enrolled in MCMC because enrollment for children and
non-disabled adults is mandatory in many parts of California.
There are three main Medi-Cal managed care models in
California: county operated health systems (COHS), geographic
managed care, and the two-plan model. There are currently five
COHS that provide services to Medi-Cal beneficiaries in eight
California counties. There are 12 two-plan counties in which
DHCS contracts with only two managed care plans, usually one
the local initiative, and one commercial plan.
San Bernardino and Riverside counties are two-plan counties with
the local initiative and the commercial plan, Molina Health
Care. Children and families in these counties are
automatically enrolled in managed care and SPDs are enrolled
on a voluntary basis. Under current law, 5% of San Bernardino
county's 220,000 Medi-Cal beneficiaries are SPDs enrolled in
managed care. Similarly, in Riverside county 5% of the 190,000
MCMC beneficiaries are SPDs. This bill increases the number of
SPDs in managed care significantly.
3)Concerns . This bill is opposed and opposed unless amended by a
number of labor, advocacy, and provider groups. Service
Employees International Union (SEIU) opposes this bill unless
it is amended due to several concerns. SEIU indicates if this
bill generates savings, Medi-Cal beneficiaries will be denied
care. If the bill provides adequately funded services, it will
increase state spending. In addition, SEIU is concerned that
In-Home Supportive Services and nursing home care are not
excluded from AB 1037 and that this bill erodes local and
county health safety net services by moving a substantial
number of SPD beneficiaries away from public clinics and
hospitals. Public and other hospitals providing indigent
health services share the concern about the erosion of the
safety net. The Western Center on Law and Poverty opposes the
mandatory enrollment of SPD into managed care and the short
timeline established in this bill.
4)Related Legislation . SB 1322 (Negrete McLeod) in 2008 was a
voluntary managed care pilot of SPD enrollment in San
Bernardino and Riverside counties. SB 1322 was held on the
Suspense File of the Senate Appropriations Committee.
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Analysis Prepared by : Mary Ader / APPR. / (916) 319-2081