BILL ANALYSIS
AB 2025
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Date of Hearing: May 4, 2010
ASSEMBLY COMMITTEE ON HEALTH
William W. Monning, Chair
AB 2025 (De La Torre) - As Introduced: February 17, 2010
SUBJECT : Medi-Cal: demonstration project.
SUMMARY : Requires, by September 1, 2010, the Department of
Health Care Services (DHCS) to submit proposed State Plan
Amendments to the federal Centers for Medicare and Medicaid
Services (CMS) as necessary to continue implementation of the
Medi-Cal Hospital/Uninsured Care Demonstration Project Act.
EXISTING LAW :
1)Establishes Medi-Cal, administered by DHCS, to provide
comprehensive health care services and long-term care to
pregnant women, children, and people who are aged, blind, and
disabled.
2)Federal law requires benefits to be offered to all
beneficiaries in a comparable fashion and each beneficiary
must have a choice of provider, but authorizes states to apply
for waivers.
3)Establishes the Medi-Cal Hospital Care and Uninsured Care
Demonstration Project and provides for funding for public,
district, and Disproportionate Share Providers (DSH) private
hospitals during the period of the waiver.
4)Creates the Selective Provider Contracting Program (SPCP),
administered by the California Medical Assistance Commission,
which is a competitive contracting program that negotiates
payment for Medi-Cal in-patient hospital rates for
beneficiaries not enrolled in managed care plans
5)Establishes standards and supplemental payment programs for
hospitals that qualify as DSH of low-income patients.
FISCAL EFFECT : This bill has not been analyzed by a fiscal
committee.
COMMENTS :
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1)PURPOSE OF THIS BILL . According to the author, this bill is
intended to be a vehicle for the hospital financing provisions
of the new waiver pursued by the Administration. The author
states that the purpose of this bill is to ensure that
hospitals continue to receive supplemental payments in the
Medi-Cal program such as DSH payment adjustments.
2)SECTION 1115 HOSPITAL/UNINSURED DEMONSTRATION WAIVER . In
2005, the State of California sought a five year federal
Medi-Cal Hospital/Uninsured Care Demonstration Project waiver.
The waiver was under the authority of Section 1115(a) of the
Social Security Act. The implementing legislation was enacted
by SB 1100 (Perata), Chapter 560, Statutes of 2005, which
enacts the restructuring of the hospital financing.
The waiver also created the Safety Net Care Pool (SNCP) to pay
for services to the uninsured and for unreimbursed Medi-Cal
expenditures delivered through public hospitals, other
governmental entities, and state-funded programs. A portion
of these funds was contingent on implementation of a Health
Care Coverage Initiative (HCCI) pilot program. In October
2007 (CMS) approved the state's proposal for HCCI.
3)HOSPITAL FINANCING . The 2005 Medi-Cal Hospital/Uninsured Care
Demonstration Project Act made fundamental changes in Medi-Cal
hospital financing. Reimbursement for Medi-Cal per diem for
the 22 University of California and county hospitals (DPHs) is
now based on certified public expenditures (CPEs), rather than
General Fund. Other significant changes include:
a) Combining multiple funding sources to establish a
baseline funding as of 2004-05 and establishing a
methodology to make specified adjustments;
b) Eliminating most Intergovernmental Transfer funding and
replacing it with CPEs as a nonfederal source of payment to
public hospitals for Medi-Cal and uninsured patients;
c) Establishing a new mix of payment sources for public
hospitals including, CPEs, federal DSH allotments and SNCP
funds;
d) Eliminating DSH payments to private hospitals and
establishing alternative funding known as the "DSH Swap;"
e) Establishing "stabilization" funding in addition to
baseline funding for all eligible public, private, and
district hospitals; and,
f) Establishing grants to "distressed hospitals" as
specified.
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4)SECTION 1115 WAIVERS . Section 1115 of the Social Security Act
authorizes the federal Secretary of Health and Human Services
to allow states to receive federal Medicaid matching funds
without complying with all of the federal Medicaid rules.
Traditionally designed as research and demonstration programs
to test innovative program improvements and to facilitate
coverage expansions to populations not otherwise eligible,
they are also used to modify benefits structures and financing
mechanisms. CMS generally requires "budget neutrality" so
that the federal spending would be no more than it would have
been in the absence of the waiver. This requirement is
particularly onerous for California due to the frugality of
the Medi-Cal Program. For instance, California spent $4,528
per beneficiary in 2006. This is 25% less than the national
average and ranks least among the ten largest states. Much of
the savings is a result of the SPCP contracting program which
has saved billions in federal funds. In addition, until 2009,
California traditionally ranked among states with the least
generous federal sharing ratio. For all these reasons,
California has already cost the federal government less per
beneficiary than most states but has not yet been able to
capitalize on this in the budget neutrality discussions.
5)WAIVER RENEWAL PROCESS . Enacted as part of the 2009-10
budget, AB 6 X4(Evans), Chapter 6, Statutes of 2009, Fourth
Extraordinary Session of 2009, requires the state to apply for
a new waiver to be approved no later than the conclusion of
the current 1115 hospital waiver. As mandated by AB 6 X4, the
State of California prepared a concept paper to submit to CMS
requesting a Comprehensive Section 1115 waiver to replace the
current Medi-Cal hospital/uninsured waiver on December 16,
2009. AB 6 X4 also requires the administration to convene a
stakeholder committee to advise on preparation of the
implementation plan. The stakeholder committee is required to
include persons with disabilities, seniors, and
representatives of legal services agencies that serve clients
in the affected populations, health plans, specialty care
providers, physicians, hospitals, county government, and
labor. In compliance with this requirement, a Stakeholder
Advisory Group was appointed on December 31, 2009 and met on
January 7, 2010 and March 10, 2010. The Stakeholder Advisory
Group has been sub-divided into Technical Workgroups to
provide technical support to DHCS on the following aspects:
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a) Implementation plan for mandatory enrollment of seniors
and persons with disabilities in managed care where
feasible or an alternative system where managed care is not
appropriate;
b) Implementation plan with respect to children with
special health care needs;
c) Implementation plan by rethinking the current systems of
care and defining models to pilot and test different
strategies to integrate primary care and behavioral health
services, including substance abuse, in Medi-Cal;
d) Development of the Section 1115 Comprehensive
Waiver/Demonstration Project implementation plan for
coverage of uninsured; and,
e) Implementation plan for enrollment of Dual Eligible
individuals (those eligible for both Medicare and Medi-Cal)
in an organized system of care that more fully integrates
Medicare and Medi-Cal benefits and financing and ways to
provide more effective delivery of Home and Community Based
Services;
The Director of DHCS has reported that DHCS is working to
complete a draft implementation plan by early May so that
it can be discussed in depth at the next Stakeholder
Advisory Committee meeting on May 13, 2010. There has been
no equivalent public process with regard to the hospital
financing aspect of the hospital/uninsured waiver.
6)RELATED LEGISLATION .
a) AB 342 (Bass) requires DHCS to submit a waiver request
to implement a demonstration project to improve Medi-Cal
and conditions the waiver upon subsequent statutory
enactment. AB 342 is in the Senate Health Committee.
b) SB 208 (Steinberg and Alquist) is identical to AB 342.
SB 208 is in the Assembly Health Committee
7)PRIOR LEGISLATION :
a) AB 6 X4 ( Evans) requires the state to apply for a
Health Care Coordination, Improvement, and Long-Term Care
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Cost Containment Waiver or Demonstration Project to be
approved no later than the conclusion of the current 1115
Medi-Cal Hospital/Uninsured Care waiver, including
enrolling beneficiaries in mandatory managed care.
b) AB 752 (Dymally), Chapter 544 Statutes of 2007, allows
DHCS to continue distributing stabilization funding to
designated public hospitals for the three remaining project
years of the Medi-Cal Hospital/Uninsured Hospital Care
Demonstration Project Act and sets forth a distribution
methodology for stabilization funding that may be available
in 2007-08 and subsequent project years for public
hospital.
c) AB 1920 (Chan), Chapter 270, Statutes of 2006, extends
for a second year, the methodology for distributing
stabilization funding to DPHs and makes other clarifying
changes with respect to payments for DPHs.
d) SB 1520 (Ducheny), Chapter 665, Statutes of 2006,
revises SB 1100 by requiring DHCS to adjust, at the request
of the governmental entity, Medicaid payment distributions
to DPHs that are part of a hospital system licensed to the
same governmental entity, prior to distributing those
payments.
e) SB 1448 (Kuehl), Chapter 76, Statutes of 2006,
establishes the Health Care Coverage Initiative under
California's Section 1115 Medicaid hospital/uninsured care
demonstration project waiver.
f) SB 1100 (Perata), Chapter 560, Statutes of 2005,
establishes the Act, which serves as the statutory
framework for implementing a five-year waiver of federal
Medicaid requirements that provide federal Medicaid funding
under the terms of the waiver to pay certain public,
private, and district hospitals for services provided to
Medi-Cal and uninsured patients.
8)TECHNICAL AMENDMENT. In order to further the author's intent,
the following amendment should be adopted:
(2) To the extent necessary to continue the implementation of
this article, the department shall submit, by September 1,
2010, to the federal Centers for Medicare and Medicaid
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Services proposed amendments to the Medi-Cal state plan an
application for a waiver.
REGISTERED SUPPORT / OPPOSITION :
Support
None on file.
Opposition
None on file.
Analysis Prepared by : Marjorie Swartz / HEALTH / (916)
319-2097