BILL ANALYSIS
SENATE HEALTH
COMMITTEE ANALYSIS
Senator Elaine K. Alquist, Chair
BILL NO: AB 1076
A
AUTHOR: Jones
B
AMENDED: June 1, 2009
HEARING DATE: July 15, 2009
1
CONSULTANT:
0
Dunstan/cjt
7
6
SUBJECT
Medi-Cal: chronic disease
SUMMARY
Requires the Department of Health Care Services (DHCS) to
expand the Medical Case Management (MCM) Program to include
Medi-Cal beneficiaries who have two or more chronic
conditions and have used the hospital emergency department
(ED) four or more times in the previous twelve months, and
specifies the type of services which must be included in
case management services. Requires the Medi-Cal disease
management benefit to include the designation of a primary
care provider as a patient's medical home.
CHANGES TO EXISTING LAW
Existing federal law:
Establishes the Medicaid program to provide comprehensive
health benefits to low-income persons through a program
that reimburses states for Medicaid programs in the
individual states.
Existing state law:
Establishes the Medi-Cal program as California's Medicaid
program, administered by the Department of Health Care
Continued---
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Services (DHCS), which provides comprehensive health care
coverage for low-income individuals and their families;
pregnant women; elderly, blind, or disabled persons;
nursing home residents; and refugees who meet specified
eligibility criteria.
Authorizes DHCS, where it is expected to be cost-effective,
in conducting Medi-Cal acute care inpatient hospital
utilization control, to establish a program of aggressive
case management of elective, nonemergency acute care
hospital admissions for the purpose of reducing both the
numbers and duration of acute care hospital stays by
Medi-Cal beneficiaries. This program is known as the MCM
program.
Requires DHCS to apply for a waiver of federal law to test
the efficacy of providing a disease management benefit to
Medi-Cal beneficiaries. Requires the disease management
waiver benefit established to include the use of
evidence-based practice guidelines, supporting adherence to
care plans;providing patient education, monitoring, and
healthy lifestyle changes.
This bill:
Requires the director of DHCS to expand the MCM program to
include Medi-Cal beneficiaries who meet all of the
following conditions:
Have two or more chronic conditions, including
substance abuse disorders and mental health
conditions;
Are not enrolled in a managed care plan;
Are not eligible for Medicare benefits;
Have received ED services on four or more occasions
in the previous twelve months; and,
Are currently seeking care for a condition that
could have been prevented with timely primary care
access and case management.
Expands the services required in MCM to include, but not be
limited to: coordinating services to ensure continuity of
care; establishing links to health care professionals; and,
community social services resources that would assist in
stabilizing the target population, and expediting the
authorization of medically necessary services.
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Requires the existing Medi-Cal disease management benefit
to include the designation of a primary care provider as a
patient's medical home.
FISCAL IMPACT
According to the Assembly Appropriations Committee analysis
there would be significant annual savings of between $4 and
$8 million (50 percent General Fund) to the extent MCM
improves access to care, increases the provision of
preventive care, and reduces costs by shifting health care
to more appropriate care settings. Earlier estimates by
DHCS in 2001-02 and 2002-03 assumed savings of more than
$400,000 per year per nurse case manager in the MCM
program.
The committee analysis also forecasted annual increased
costs of between $1 and $2 million (25 percent General
Fund) to DHCS to expand the MCM program. This estimate
assumes 1,000 to 2,000 additional MCM enrollees as a result
of the expanded scope of this bill. The committee analysis
noted that an estimate of a similar bill last year (SB
1738), would have provided savings of $12.5 million (50
percent General Fund).
BACKGROUND AND DISCUSSION
According to the author, this is a two-part bill that seeks
to improve access to medically necessary services, to
better coordinate care and to provide care in a more
cost-effective setting by reducing the use of hospital EDs.
By expanding the MCM program, the author states patients
with chronic conditions who frequently use the hospital ED
will have assistance with care coordination that links them
to health care providers and community social services,
thereby reducing preventable hospitalizations and frequent
inappropriate emergency room visits. By requiring the
primary care provider be included in the benefits provided
under the current Disease Management Waiver, the author
argues this bill would benefit Medi-Cal beneficiaries in
the fee-for-service (FFS) program by establishing a medical
home that would integrate the current disease management
benefit with the person's primary care provider. The
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author points to a DHCS statement that several states are
using medical homes and targeted case management to
increase health outcomes and reduce avoidable ED visits and
inpatient hospital stays. The author also notes that the
success of six pilot programs designed to test new models
of care for "frequent users" of hospital EDs resulted in
reduced avoidable use of ED services, decreased inpatient
hospital utilization, and connected participants to
housing, income benefits, health insurance, and a primary
care home.
Background
Medi-Cal provides coverage to nearly 6.7 million
Californians, roughly half of whom are enrolled in FFS and
the other half in Medi-Cal managed care which provides
coverage through public and private health plans. FFS
Medi-Cal includes approximately 380,000 individuals who are
seniors or persons with disabilities (SPDs). SPDs have the
greatest health care needs of any eligibility group served
by Medi-Cal, and account for the highest per capita
spending in Medi-Cal. Sixty-eight percent of SPDs have
more than one chronic condition, twenty-eight percent have
a mental health diagnosis and sixteen percent have
diabetes. The average annual cost in Medi-Cal for SPDs is
$8,200 per year. Among the SPD population, approximately
20,300 individuals were identified by DHCS as having five
or more ED visits, and the cost of their care was 3.3 times
more expensive than care for other beneficiaries within
this target population.
Chronic disease management
Disease management is used to describe a wide range of
approaches designed to identify patients with potentially
costly health conditions and encourage adherence to
recommended treatment plans and self-care strategies.
Traditional disease management programs focus on a defined
population of members with a specific health condition such
as diabetes or asthma. By comparison, case management
programs target members with a wide array of health
conditions and risks, including multiple chronic
conditions, and establish care plans that are customized to
the needs of individual patients.
DHCS has established a program of aggressive medical case
management of elective non-emergency acute care hospital
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admissions for the purpose of reducing the number and
duration of acute care hospital stays by Medi-Cal
beneficiaries. MCM is voluntary for enrollees and is a
non-disease-specific program in FFS Medi-Cal.
Beneficiaries considered for MCM services include
individuals who have been identified as having a
catastrophic or chronic illness and who often have multiple
diagnoses that have or may result in serious complications.
DHCS indicates the typical case profile of a MCM patient
is someone who has a medical condition which would have
resulted in multiple hospital admissions without the MCM's
case management services. Beneficiaries who are dually
eligible for Medicare and Medi-Cal or who are enrolled in a
Medi-Cal managed care plan are not eligible for MCM
services.
MCM case managers are registered nurses who are employed by
the state and who coordinate and authorize outpatient
services to help expedite a Medi-Cal beneficiary's hospital
discharge to a private residence or maintain them in a
home-care setting. The current MCM program focuses on
beneficiaries who are already hospitalized and provides
utilization review and direct work with hospitals, home
health agencies, physicians, and other Medi-Cal providers
to ensure the appropriate and expedited authorization of
medically necessary services.
The health budget trailer bill of 2003 (AB 1762 (Committee
on Budget, Chapter 230, Statutes of 2003) established a
disease management benefit and authorized DHCS to seek a
federal waiver to test its effectiveness through a pilot
project. Eligibility for the disease management benefit is
limited to those persons who are eligible for the Medi-Cal
Program as SPDs, or those persons over 21 years of age who
are not enrolled in a Medi-Cal managed care plan, or are
ineligible for Medicare, and who are determined by the DHCS
to be at risk of, or diagnosed with, select chronic
diseases, including advanced atherosclerotic disease
syndromes, congestive heart failure, and diabetes.
Under the pilot project, DHCS contracts with two separate
vendors. McKesson Health Solutions provides disease
management services in Alameda County (3,370 enrollees as
of March 31, 2009) and portions of Los Angeles County
(14,125 enrollees as of March 31, 2009) under a three-year
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$4 million per year contract. The McKesson contract is in
its second year of operation. Positive Health Care (PHC)
is a disease management program for Medi-Cal beneficiaries
who have been diagnosed with HIV or AIDS. PHC has a
three-year $4 million per year contract and began
enrollment in March 2009.
As required by AB 1762, DHCS is required to evaluate the
effectiveness of the disease management programs and has
contracted with the UCLA Center for Health Policy Research
to evaluate the following outcomes as compared to a control
group in non-pilot counties:
Financial: provision of services as a cost neutral
or cost savings benefit;
Beneficiaries: improved health outcomes;
Organizational: provider satisfaction,
effectiveness of community case workers, nurse triage
line, and an outbound calling system; and,
Clinical: vendor collected scores of a diabetic
measure, access to medications and a measurement used
to compare health plan performance.
The first year results from the UCLA evaluation are
expected this month.
DHCS states that the disease management program was
introduced as a stand-alone intervention, and other states
are finding that other strategies magnify the effect of
disease management. The other strategies cited by DHCS
include a reliable medical home as a coordination partner,
better integration of disease management with other
providers and care systems through formalized working
relationships, and data sharing between disease management,
primary care providers, specialists, and mental health
providers.
Use of hospital emergency services
Hospital emergency departments and inpatient services are
inundated with large numbers of patients, many of whom have
complex, unmet needs that are not effectively or
efficiently dealt with in high-cost, acute care settings.
A subset of these patients are "frequent users" who are
defined as those who are often chronically ill, under- or
uninsured individuals who repeatedly use emergency rooms
and hospitals for medical crises that could be prevented
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with more appropriate ongoing care. They often have
multiple risk factors, such as mental illness, substance
use disorders, and homelessness, and they lack social
support, which affects their ability to get continuous,
coordinated care.
The California Endowment and the California HealthCare
Foundation launched a joint project to examine frequent
users of health services. This initiative is a five-year,
$10 million joint effort focused on promoting a system of
care that addresses patients' needs, improves outcomes, and
decreases unnecessary use of emergency rooms and avoidable
hospital stays. The initiative has supported approaches
that address the complex and multiple needs of frequent
user patients -- for example, medical, mental health,
housing, alcohol or substance abuse treatment -- through
multidisciplinary care, data sharing, adoption of best
practices, and engagement of patients in the most
appropriate setting.
The initiative has funded six demonstration projects in
different areas across California An evaluation of the six
pilot programs was carried out by the Lewin Group, who
found the six programs funded showed evidence of a
reduction in avoidable use of ED services, a reduction in
inpatient hospital utilization, and an increased connection
of clients to housing, income benefits, health insurance,
and a primary care home. Overall, the programs yielded
statistically significant reductions in ED utilization (30
percent) and hospital charges (17 percent). For those
enrolled in the program for two years, the average
emergency department costs, for both inpatient and
outpatient, dropped from almost $60,000 annually to less
than $20,000.
Administration initiatives
In his May Revision to his proposed 2008-09 budget,
Governor Schwarzenegger signaled an interest in making
improvements to the FFS Medi-Cal. The May Revision stated
that slowing the rate of growth in health care expenditures
is an essential component of efforts to restore the state's
fiscal balance and to achieve coverage for all
Californians, noting that the Medi-Cal program is the
largest purchaser of health care in California. It was
also noted that a disproportionate share of Medi-Cal
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spending is concentrated among a small segment of
enrollees, the majority of whom have complex chronic
medical conditions, coupled with additional conditions,
including behavioral health conditions, and that
emphasizing prevention and increased use of primary care
services offers the promise of better health outcomes and
slower rates of growth in costs. The Administration
concluded that it is committed to working with the
Legislature and stakeholders to identify enhancements to
the Medi-Cal FFS system that improve health outcomes and
slows the overall rate of cost growth.
Related bills
AB 1542 (Committee on Health) would encourage health care
providers and patients to partner in a patient-centered
medical home that promotes access to high-quality,
comprehensive care. This bill is pending in Senate Health
Committee.
Prior legislation
SB 1738 (Steinberg) of 2008 would have required DHCS, by
July 1, 2009, to establish, in consultation with specified
stakeholders, the Frequent Users of Health Care Pilot
Program. This bill was vetoed by Governor Schwarzenegger
who stated that he could not sign the bill in the current
fiscal environment but noted that he supported the
concepts, in particular a statewide proposal promoting
primary care and comprehensive coordinated care management.
SB 750 (Soto) Chapter 23, Statutes of 2006, would have
authorized DHCS to require any health care plan that is an
Acute Long-Term Care Integration contractor to develop
performance objectives, and a program related to wellness
behaviors and disease management. SB 750 was subsequently
changed to a different subject.
AB 1736 (Levine) of 2005 would have required DHCS to
conduct a demonstration testing of the chronic care model
of providing disease management services in community
clinics and health center and public hospital settings.
This bill was vetoed by Governor Schwarzenegger on the
grounds that it is duplicative of current DHCS efforts and
would impose significant costs on the program.
AB 1762 (Committee on Budget), Chapter 230, Statutes of
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2003, was the health budget trailer bill for the 2003-2004
budget. Among its other provisions, it required DHCS to
apply for a federal waiver to offer disease management
services in Medi-Cal.
Arguments in support
The Corporation for Supportive Housing (CSH), a national
non-profit dedicated to preventing and ending homelessness,
writes that it supports this bill out of its experience
with the frequent users initiative. CSH writes this bill
would allow California to receive federal matching funds
for Medi-Cal reimbursement for services like case
management and care coordination for individuals who visit
the EDs frequently and experience psychosocial barriers to
appropriate health care. CSH states a significant
percentage of individuals who EDs identify as frequent
users are Medi-Cal beneficiaries, and though these
beneficiaries incur disproportionately high costs for
emergency room and inpatient care, Medi-Cal restricts
reimbursement for multidisciplinary services, even though
studies indicate that these services significantly decrease
expensive ED visits and hospital stays. CSH states that
programs that currently provide these services have created
positive outcomes, including reduced homelessness, improved
health outcomes, decreased substance abuse, and less stress
on EDs. Additionally, CSH argues that data shows that this
bill would be cost neutral or better to the state, even in
the first year of implementation, due to resulting
decreases in hospital costs.
The Western Center on Law & Poverty (WCLP) argues that this
bill will meet the needs of the chronically ill in Medi-Cal
by providing them with a range of case management services
both with the formal medical world and with social services
resources. They argue that disabled Medi-Cal beneficiaries
with mental health conditions and/or a substance abuse
condition needs a medical home and to understand how the
health care structure is organized so they can develop
relationships with a primary care doctor and relevant
specialists instead of relying on the emergency room. WCLP
states this bill can help vulnerable low-income populations
achieve a more stable quality of life and limit Medi-Cal
expenditures.
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PRIOR ACTIONS
Assembly Floor: 78-0
Assembly Appropriations:17-0
Assembly Health: 19-0
COMMENTS
1. Fiscal benefits may be deferred.
Both through the May Revise of last year and through the
Governor's veto message of SB 1738, the administration
has stated it wants to improve health outcomes and slow
the rate of cost growth in the program. One
consideration for the Legislature is that any net savings
from expanding the MCM Program and Disease Management
Waiver Program, or in a different approach that is put
forth by the Administration, would probably not be
realized until the following budget year because such
programs often require up-front spending that offset
potential savings in the short run. However, if the
proposals produce savings in the long term by reducing
hospitalization and other expensive medical services, a
long-term investment in such efforts may nonetheless make
sense on fiscal grounds.
2. DHCS disease management programs are already being
implemented.
The bill requires the existing disease management pilot
programs of DHCS to incorporate the use of a medical
home. These projects are already being implemented and
the initial evaluation of one portion of the pilot is to
be released soon. This new requirement would not impact
these pilot projects as they do include the use of a
primary care provider as a medical home. However, it
would be more appropriate to amend the requirements when
the evaluation is completed and the state is ready to
consider moving ahead with a larger program. There may
be many other desirable attributes that should be
considered besides providing a medical home.
3. Technical amendments.
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Page 3, beginning line 33
(f) In undertaking this Disease Management Waiver, the
director may enter into contracts for the purpose of
directly providing Disease Management Waiver services.
The requirement of the designation of a primary care
provider as a patient's medical home, pursuant to
subdivision (a) shall apply to any contract entered into
or renewed after January 1, 2010.
Page 5, line 13, insert
(g) Any expansion pursuant to subdivision (d) shall be
implemented only to the extent that funds are
appropriated or otherwise available for that purpose.
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POSITIONS
Support: American Federation of State, County and
Municipal Employees
AstraZeneca
Corporation for Supportive Housing
Western Center on Law and Poverty
Oppose: None received
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