BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
56 (Alquist)
Hearing Date: 1/21/2010 Amended: 1/11/2010
Consultant: Katie Johnson Policy Vote: Health 7-4
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BILL SUMMARY: SB 56 would authorize and facilitate the creation
of joint ventures among publicly owned and operated health
coverage programs, such as County Organized Health Systems and
local initiatives, to provide health care coverage to uninsured
individuals and purchasers of health insurance.
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Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12 2012-13 Fund
DMHC licensing up to $200 ongoing costs unknown,Special*
of one joint venture but potentially in the
hundreds of thousands of
dollars
DMHC licensing fee (up to $25)ongoing revenues
unknown,Special*
revenue per joint venture but not sufficient
to cover
DMHC licensing costs
*Managed Care Fund
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STAFF COMMENTS: SUSPENSE FILE.
Existing law creates various public health benefits programs
administered by the Department of Health Care Services (DHCS),
the Managed Risk Medical Insurance Board (MRMIB), and various
local entities, including County-Organized Health Systems (COHS)
and local initiatives (LIs). Existing law, the Knox-Keene Health
Care Service Plan Act of 1975 (Knox-Keene Act) provides for the
licensing and regulation of health care coverage plans by the
Department of Managed Health Care (DMHC) and sets requirements
on health care coverage plans pertaining to the mandatory
provision of specified basic services, financial stability,
adequacy of provider networks, and cost-sharing. Existing law
also provides for the regulation of health insurers by the
California Department of Insurance (CDI).
Existing law provides for three types of managed health care
delivery to Medi-Cal beneficiaries in California: the Two-Plan
model, COHS, and geographic managed care (GMC).
1) The Two-Plan model, where the county contracts with a
public, non-profit local initiative, created by the county,
and a commercial plan, selected through a competitive
bidding process. California's 8 LIs contract with their
counties to provide health care coverage for California's
Medi-Cal and Healthy Families populations. They are Alameda
Alliance for Health, Contra Costa Health Plan,
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SB 56 (Alquist)
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. Several of
the LIs have expanded to offer coverage to In Home Supportive
Services (IHSS) workers, children who are not eligible for
other state-sponsored health care coverage, and Medicare
beneficiaries.
2) A COHS, where the county board of supervisors appoints a
governing board to operate the system. There are 5 COHS that
operate in Orange, Merced, Monterey, Santa Cruz, San Mateo,
Napa, Yolo, Solano, Sonoma, San Luis Obispo, and Santa Barbara
counties.
3) The GMC model, currently limited to San Diego and Sacramento
counties, where competing commercial health care plans provide
services.
Additionally, existing law provides for the County Medical
Services Program (CMSP) that provides coverage for adults
between the ages of 18 and 64 with incomes at or below 200
percent of the federal poverty level (FLP) in 34 counties.
Individuals with incomes above 200 percent of the FPL may be
eligible for coverage with a share of cost.
This bill would permit health plans that are governed, owned, or
operated by a county board of supervisors, a county special
commission, a COHS, or a county health authority, or CMSP, to
form joint ventures to create integrated networks of public
health plans that pool risks, share networks, or jointly offer
health plans to individuals and groups. This bill would require
the participating health plans, in forming a joint venture, to
seek contracts with designated public hospitals and other local
safety net providers.
This bill would require joint ventures created pursuant to the
authority in this bill to meet the requirements of the
Knox-Keene Act. If DMHC determines that these joint ventures,
now expressly permitted by state law, constitute new entities
that would require licensure to meet the requirements of the
Knox-Keene Act, then DMHC could need a range of resources from
minimal funds to up to approximately $200,000 in special funds
to license each joint venture. If more than one joint venture
applied for licensure each year, then the costs would increase
accordingly. Out year costs are unknown, but could range from
minimal to hundreds of thousands of dollars annually depending
on the degree of necessary oversight by DMHC. DMHC would incur
costs only if these local plans decide to enter into joint
ventures and if the department determines that they would need
additional staff to license them. DMHC may request reimbursement
from license applicants of up to $25,000, but it is possible
that the costs of licensing would exceed that number.
Alternatively, it is possible that DMHC would determine that it
would not need to license the joint ventures and oversight costs
would be minimal. DMHC's regulatory activities are funded by
annual assessments on health care service plans.
It is unclear how an LI and a COHS, each under a separate
license, would create a joint venture with shared governance and
networks while still retaining their current licenses
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SB 56 (Alquist)
will impact this fiscal analysis. LI and COHS, as county-owned
entities, have the joint powers authority afforded public
entities and could already have the statutory authority to form
these ventures.
SB 973 (Simitian) and SB 1622 (Simitian) of 2007-2008 contained
provisions similar to this bill. SB 973 was vetoed by the
Governor, who said that he agreed with the concept of the bill,
but could not support such a piecemeal approach to health care
reform. SB 1622 was held in the Senate Appropriations Committee.
AB X1 1 (Nunez) of 2008 also contained similar provisions. It
died in the Senate Health Committee. This bill retains
provisions that relate to the creation of joint ventures by COHS
and LIs, but does not require the formation of a stakeholder
committee or a program within DHCS to facilitate their creation.
It also does not require the joint ventures to be licensed as
health care service plans by DMHC, as the previous bills did.