BILL ANALYSIS
SENATE HEALTH
COMMITTEE ANALYSIS
Senator Elaine K. Alquist, Chair
BILL NO: SB 56
S
AUTHOR: Alquist
B
AMENDED: April 2, 2009
HEARING DATE: April 22, 2009
5
CONSULTANT:
6
Hansel/sh
SUBJECT
California Health Benefits Service Program
SUMMARY
Establishes, within the Department of Health Care Services,
the California Health Benefits Service Program to authorize
and facilitate the creation of joint ventures among public
health coverage programs, including existing publicly
operated Medi-Cal managed care plans and the County Medical
Services Program (CMSP), to provide health coverage to
uninsured persons and health insurance purchasers,
including individuals, employers and other health plan
sponsors.
CHANGES TO EXISTING LAW
Existing law:
Provides for regulation of health plans by DMHC under the
Knox-Keene Act and sets requirements for health plans
pertaining to the provision of mandatory basic services;
financial stability; availability and accessibility of
providers; review of provider contracts; cost sharing; and
consumer disclosure and grievance requirements.
Establishes the Medi-Cal program, administered by DHCS,
Continued---
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which provides comprehensive health benefits to low-income
children up to age 21, their parents or caretaker
relatives, pregnant women, elderly, blind or disabled
persons, nursing home residents, and refugees who meet
specified eligibility criteria.
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. Permits the contract to be
exclusive or nonexclusive, statewide or on a more limited
geographic basis, and requires that the contracts include
specified provisions.
Authorizes a county or counties to establish a special
commission or authority, for the delivery of Medi-Cal
services, and to negotiate an exclusive contract with the
California Medical Assistance Commission (CMAC) to provide
or arrange for health care services under the Medi-Cal
program. These programs are referred to as
county-organized health systems (COHS).
Provides, through regulations, for the delivery of Medi-Cal
services in designated counties through two prepaid health
plans, one of which is referred to as a "local initiative,"
which is organized by a county government or by county
governments, or stakeholders, in a region designated by the
DHCS director.
Establishes the CMSP, under which counties with population
under 300,000, and other counties, as specified, may
contract with DHCS to provide health care services to
medically indigent adults, as specified.
Establishes the Joint Exercise of Powers Act, which permits
two or more public agencies to enter into agreements to
jointly exercise any power common to the contracting
parties.
This bill:
Establishes the California Health Benefits Service Program
(CHBSP) within DHCS for the purpose of expanding
cost-effective public health coverage options to the
uninsured and purchasers of health insurance, including
individuals, families, employers, and other health plan
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sponsors.
Requires CHBSP to:
Identify statutory, regulatory, or financial barriers or
incentives that should be addressed to facilitate the
establishment and maintenance of one or more joint
ventures between health plans that contract with, or are
governed, owned, or operated by, a county board of
supervisors, a county special commission, a
county-organized health system (COHS), a county health
authority, or the County Medical Services Program (CMSP).
Identify in particular statutory, regulatory, or
financial barriers or incentives that should be addressed
before joint ventures may be formed, or existing health
plans or CMSP may expand to serve other geographic areas,
for the purposes of providing public health care services
in counties where there is not a local initiative or
county-organized health plan.
Report its initial findings to the committees of
jurisdiction in the Senate and the Assembly by November
1, 2010.
Provide technical assistance to local health care
delivery entities, including local initiatives, COHS, and
CMSP, to support joint ventures and efforts by these
entities to serve other geographic areas and specified
populations, or to contract with providers to provide
health care services in counties where there is not a
local initiative or county-organized health plan.
Authorizes health plans governed, owned or operated by a
county board of supervisors, a county special commission, a
county organized health system or county health authority
currently authorized by law, or CMSP, to form joint
ventures to create integrated networks or public health
plans that pool risk and share networks.
Provides that no more than two joint ventures shall be
established until the time the CHBSP has submitted its
initial findings regarding barriers to the formation of
such ventures.
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Requires joint ventures that are formed pursuant to the
bill to seek to contract with designated public hospitals,
county health clinics, community health centers, and other
traditional safety net providers.
Requires all joint ventures to seek and obtain licensure as
a health care service plan under the Knox-Keene Health Care
Service Plan Act of 1975 (Knox-Keene) prior to commencing
enrollment. Authorizes the Director of the Department of
Managed Health Care (DMHC) to provide regulatory and
program flexibilities to facilitate the licensing of joint
ventures created under this bill as health plans, provided
they meet essential financial, capacity, and consumer
protections of Knox-Keene.
Authorizes DHCS to enter into contracts with joint ventures
to provide medical services to specific populations, as
determined by the program.
Establishes a CHBSP stakeholder committee consisting of 10
members as follows:
Six members appointed by the Director of DHCS, including
two representatives of local initiatives, a
representative of COHS, a representative of CMSP, a
representative of health care providers, and a
representative of employers;
Two members appointed by the Senate Rules Committee,
including a labor representative and a representative of
health care consumers; and
Two members appointed by the Speaker of the Assembly
including a representative of local initiatives and a
representative of organized labor.
Requires DHCS, on or before November 1, 2010, and annually
thereafter, to update the committees of jurisdiction in the
Senate and Assembly on implementation of this bill and to
make recommendations, as specified, on changes necessary to
implement this bill.
Provides that its provisions shall not be construed as
prohibiting any other licensed Knox-Keene health plan from
entering into joint ventures or contracts with DHCS to
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provide services in counties in which there is
not a Medi-Cal managed health plan contracting with DHCS.
Provides that no public funds shall be used to implement
the CHBS and the CHBS stakeholder committee established by
this bill. Requires DHCS to implement the CHBS and to
convene the stakeholder committee only upon a determination
made by the Department of Finance that private donations in
an amount sufficient to fully support these duties and
activities have been deposited with the state.
Expresses the intent of the Legislature to enact
comprehensive reforms in the state's health care delivery
system by 2012, as specified.
FISCAL IMPACT
According to the Assembly Appropriations Committee analysis
of SB 973 (Simitian), which contained provisions very
similar to those in SB 56:
(1) One-time fee-supported special fund costs to DMHC of
$200,000 to $500,000 to license two to five joint ventures
created pursuant to this bill.
(2) One-time costs of $100,000, offset by private
donations, to DHCS to establish the stakeholder group and
report to the Legislature.
(3) Unknown annual costs to DHCS in the range of $100,000
for the operation of CHBSP, offset by private donations.
Costs would be determined by the level of interest and
activity at the local level related to this bill.
BACKGROUND AND DISCUSSION
According to the author, this bill takes a step toward
making cost-effective health coverage more readily
available by facilitating the creation of regional public
health insurance plans to provide a cost-effective
alternative to private health insurance plans. The regions
to be served by these plans would be flexible, and could
encompass one or more counties, or the entire state.
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The author argues that although local initiatives and
county organized health systems are technically allowed to
form joint ventures, they face a variety of financial and
legal barriers that can be very costly to address, and that
the tools and technical assistance that would be provided
by the CHBSP would reduce these costs and barriers.
The author notes that coverage plans that would be
facilitated by SB 56 would operate on a level playing field
with commercial health plans, and would negotiate payment
rates with providers and be subject to the same health plan
licensing requirements as commercial plans. Further, all
costs to establish and implement the CHBSP would be covered
by private funds.
Local coverage plans and programs
California currently utilizes three managed care delivery
models to provide health care to specified Medi-Cal
beneficiaries in 23 counties, representing approximately
half of the total Medi-Cal enrollees statewide.
COHS are managed care plans that are operated by a
governing board appointed by a county board of
supervisors that contract to provide services to Med-Cal
beneficiaries in certain designated counties. Currently
five COHS provide services to Medi-Cal beneficiaries in
nine California counties: Monterey, Napa, Orange, San
Luis Obispo, San Mateo, Santa Barbara, Santa Cruz,
Solano, and Yolo.
In nine designated "Two-Plan" counties, services to
Medi-Cal beneficiaries are provided through contracts
with a commercial plan selected through competitive
bidding and a local initiative plan which provides
services through networks that include county hospitals,
community clinics, and other safety net providers.
Current local initiative plans are the Alameda Alliance
for Health, Contra Costa Health Plan, Health Plan of San
Joaquin, Inland Empire Health Plan, Kern Family Health
Care, L.A. Care Health Plan, San Francisco Health Plan,
and Santa Clara Family Health Plan.
In Geographic Managed Care (GMC) counties, currently
limited to Sacramento and San Diego counties, services to
Medi-Cal beneficiaries are provided by competing
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commercial health plans.
The CMSP provides medical care services in 34 smaller
counties to indigent adults 18-64 years of age with incomes
at or below 200 percent of the federal poverty level (FPL)
who are not eligible for Medi-Cal and who are U.S. citizens
or legal residents. Individuals with incomes above 200
percent of the FPL may be eligible with a share of cost.
Prior legislation:
SB 973 (Simitian) and SB 1622 (Simitian) of 2007-2008,
Contained provisions that were substantially similar to
this bill. SB 973 was vetoed by the Governor, who stated
that he agreed with the concept of the bill, but stated
that he could not support the bill as a piecemeal approach
to health care reform. SB 1622 was held in the Senate
Appropriations Committee.
ABX1 1 (Nunez) of 2007-2008, As part of its comprehensive
health care reforms, contained provisions that were
substantially similar to this bill. Died in the Senate
Health Committee.
AB 417 (Blakeslee), Chapter 266, Statutes of 2007, expands
the service area of the Santa Barbara Regional Health
Authority, a COHS, to include areas contiguous to the
county, contingent on approval by the other county boards
of supervisors.
AB 2918 (Wolk), Chapter 905, Statutes of 2006, authorizes
COHS to provide health care services to individuals or
groups in the service area, other than Medi-Cal and
Medicare beneficiaries, including, but not limited to,
public agencies, private businesses, and uninsured or
indigent persons.
AB 2755 (Lee), Chapter 642,, Statutes of 2004, provides
that a county health authority established to provide
services to Medi-Cal beneficiaries may provide services to
Medicare patients and to private businesses if it is in
compliance with the requirements of the Knox-Keene Act.
Arguments in support
The American Federation of State, County, and Municipal
Employees (AFSCME) states that SB 56 will provide consumers
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and employers with better choices when it comes to
purchasing health insurance coverage, and will provide
major savings and benefits to consumers and employers over
time. AFSCME states that the bill will provide access to
good value, comprehensive coverage choices for both
uninsured and underinsured residents, and for small
employers, who have limited resources to pay for health
insurance coverage for their workers. Finally, AFSCME
states that SB 56 will provide a competitive check on the
private health coverage market.
Health Access writes that by building on the existing local
initiative plans and county organized health systems, which
are tied to county boundaries, SB 56 will provide more
viable coverage options for Californians who live in one
county and work in another. Health Access also notes that
the ventures that will be facilitated by the bill will
include in its network, and thereby support, county
hospitals, community clinics, and other safety net
providers.
The Service Employees International Union notes that local
initiative plans in many areas of the state have been
sources of innovation in expanding coverage, for example,
with the universal kids coverage program in Santa Clara
County and the Healthy San Francisco program. The local
initiative plans have also been involved in efforts to
provide health coverage to home care and child care workers
in some counties.
COMMENTS
1. Conflicting language regarding creation of ventures
while findings of CHBSP are pending. The bill authorizes
the creation of up to two joint ventures before the CHBSP
submits its findings by November 1, 2010, regarding
statutory, regulatory, and financial barriers to the
formation of joint ventures. However, on page 4, lines 25
- 33, the bill also requires the CHBSP to identify barriers
that should be addressed before any joint ventures may be
formed. A recommended amendment would be to delete the
latter provisions, to allow up to two joint ventures to go
forward pending the findings of the CHBSP.
Strike lines 25 - 33 on page 4:
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(2) Identify statutory, regulatory, or financial barriers
or incentives that should be addressed before joint
ventures among these health plans may be formed, or
existing health plans or the County Medical Services
Program may expand to serve other geographic areas, for the
purposes of providing public health care services in
counties
where there is not a local initiative or county-organized
health plan that contracts with the State Department of
Health Care Services or the County Medical Services
Program, participating in these joint ventures.
POSITIONS
Support: American Federation of State, County and
Municipal Employees (sponsor)
California Communities United Institute
California Labor Federation
Congress of California Seniors
Consumers Union
Health Access, California
Sailors' Union of the Pacific
Service Employees International Union
United Nurses Associations of California/Union of
Health Care Professionals
Oppose: None received