BILL ANALYSIS
AB 2025
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Date of Hearing: May 19, 2010
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 2025 (De La Torre) - As Amended: May 11, 2010
Policy Committee: Health Vote:12-5
Urgency: Yes State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill requires the California Department of Health Care
Services to submit a waiver application to the federal Centers
for Medicare and Medicaid Services (CMS) to continue and expand
the state's Section 1115 Medi-Cal waiver.
Section 1115 of the Social Security Act allows states to receive
federal Medicaid funding without meeting typical federal funding
requirements. Under current law, a five-year Medi-Cal waiver
codified by SB 1100 (Perata), Chapter 560, Statutes of 2005,
ends September 1, 2010. This bill is a placeholder for changes
related to a new five-year waiver.
FISCAL EFFECT
1)Budget neutrality, a waiver concept, means the federal
government cannot approve a California Section 1115 waiver
proposal that results in a higher level of federal spending
than otherwise would have been the case. The current waiver
includes more than $3 billion in annual federal spending. The
new waiver will include significantly more federal funding by
expanding the scope of patients and settings in which the
waiver programming will be implemented.
Establishing budget neutrality requires comparing costs under
the proposed waiver over a five-year period and the spending
trend line without waiver changes. The assumptions and
underlying analytical methodologies are negotiated between the
state and the federal government. Budget neutrality does not
need to be established for each year, but over the duration of
the waiver.
AB 2025
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2)The draft waiver implementation plan recently submitted to the
federal government has been organized around four patient
populations. These groups are both vulnerable, due to
significant health issues, and they account for a significant
share of Medi-Cal expenditures. The four groups are 1) seniors
and persons with disabilities 2) children with special health
needs 3) adults with behavioral and substance abuse issues 4)
and individuals enrolled in both Medi-Cal and Medicare. The
new waiver will be broader in focus than the current waiver
which is primarily focused on inpatient hospital funding.
3)Federal health reform requirements contained in the Patient
Protection and Affordable Care Act (PL-111-148), paired with
waiver coverage expansion opportunities, have also been a
focus of waiver renewal efforts. Effective coverage expansions
will help California maximize enhanced federal funding
opportunities.
Federal health reform requires major Medi-Cal, expansion
including up to 2 million more adults being added to the
caseload in 2014. The new Section 1115 waiver will help
California ramp-up efforts to enroll low-income, indigent
adults in the waiver by aligning eligibility, benefits, and
cost sharing requirements.
4)The waiver renewal process and implementation of the pending
five-year waiver generates major workload for DHCS. Some
recent planning efforts have been supported by philanthropic
stakeholders.
COMMENTS
1)Rationale . This bill requires, to the extent necessary,
submission of an application to the federal government to
extend and expand California's Section 1115 Medi-Cal waiver.
2)Federal Medicaid Waivers . Waivers allow states to use federal
Medicaid funding in ways that do not conform to existing
federal standards. The broadest source of federal waiver
authority is Section 1115 of the Social Security Act, which
allows CMS to approve research and demonstration projects. The
federal government has used Section 1115 waivers, like the one
currently finishing in California, to expand health coverage
without increasing federal support.
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3)The Current Medi-Cal Hospital Financing Waiver . In 2005 a
California waiver agreement with the federal government
restructured the way Medi-Cal funding is used to fund
inpatient hospital services. SB 1100 (Perata), Chapter 560,
Statutes of 2005 implemented the related waiver changes in
state law until the fall of 2010. The hospital waiver replaced
a funding system that had been in place for 15 years. As a
part of the waiver agreement, the federal government sought to
greatly reduce the use of intergovernmental transfers (IGTs),
which involve transfers of public funding from one level of
government to another (eg: from a county to the state) or from
one state entity to another (eg: from a public university
teaching hospital to the state Medi-Cal program). The 2005
waiver and SB 1100 replaced IGT funding mechanisms with a
series of capped and uncapped funding sources matched either
via certified public expenditures (CPE) or with state General
Fund.
4)Related Legislation . AB X4 6 (Evans), Chapter 6, Statutes of
2009 requires DHCS to apply for a waiver renewal and provides
various authority to the department to maximize federal
funding, pursue related federal claims, and restructure
Medi-Cal programming in order to establish a new waiver. This
bill, AB 2025, appears to require action by DHCS that is
redundant with regard to requirements and authority provided
by AB X4 6.
AB 342 (Bass), pending in the Senate Health Committee, requires
DHCS to submit an application to the federal government
related to the waiver.
SB 208 (Steinberg), pending in the Assembly Health Committee,
requires DHCS to submit an application to the federal
government related to the waiver.
Analysis Prepared by : Mary Ader / APPR. / (916) 319-2081