BILL ANALYSIS
SB 56
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Date of Hearing: June 15, 2010
ASSEMBLY COMMITTEE ON HEALTH
William W. Monning, Chair
SB 56 (Alquist) - As Amended: June 3, 2010
SENATE VOTE : 21-12
SUBJECT : Health plans: joint ventures.
SUMMARY : Permits a health plan that is governed, owned, or
operated by a county board of supervisors, a county special
commission, a county-organized health system (COHS), or a county
health authority, or the County Medical Services Program (CMSP),
to form joint ventures for the joint or coordinated offering of
health plans to individuals and groups. Specifically, this
bill :
1)Permits a health plan that is governed, owned, or operated by
a county board of supervisors, a county special commission, a
COHS, or a county health authority, or the CMSP, to form joint
ventures for the joint or coordinated offering of health plans
to individuals and groups.
2)Permits the joint ventures to consist of either:
a) Contractual relationships entered into in order to pool
risk or share networks, or both; or,
b) Contractual relationships entered into in order to
provide for the joint offering or marketing of health plans
to individuals and groups.
3)Requires participating health plans, in forming joint
ventures, to seek to contract with designated public
hospitals, county health clinics, community health centers,
and other traditional safety net providers.
4)Requires joint ventures to meet all the requirements of the
Knox-Keene Health Care Service Plan Act of 1975 (Knox-Keene
Act).
EXISTING LAW
1)Provides for regulation of health plans by the Department of
Managed Health Care (DMHC) under the Knox-Keene Act and sets
requirements for health plans pertaining to the provision of
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mandatory basic services; financial stability; availability
and accessibility of providers; review of provider contracts;
cost sharing; and, consumer disclosure and grievance
requirements.
2)Establishes the Medi-Cal Program, administered by the
Department of Health Care Services (DHCS), 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.
3)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.
4)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 to provide or arrange
for health care services under the Medi-Cal Program. These
programs are referred to as COHS.
5)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.
6)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.
7)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.
FISCAL EFFECT : According to the Senate Appropriations
Committee analysis:
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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
COMMENTS :
1)PURPOSE OF THIS BILL . According to the author, due to the
economic downturn, hundreds of thousands of Californians are
joining the ranks of the uninsured or are looking to publicly
financed programs for their health coverage. Compared to
persons with health coverage, the uninsured are less likely to
have a regular source of care, are likely to delay seeing a
doctor, and are less likely to receive preventive health care
services. Based on recent data collected by the Kaiser Family
Foundation and other entities, health care costs continue to
rise at a faster rate than general inflation and than average
wage growth. The author states that there is a lack of
affordable health coverage options particularly for low-income
uninsured populations. Because of the cost-effective provider
networks these plans use, and their very low levels of
overhead, the local health plans have the potential to be a
viable coverage alternative for the uninsured, a population
they don't currently serve. By clarifying their ability to
form joint ventures to serve the uninsured, the author asserts
that this bill will tap into the potential these plans offer
for providing cost-effective coverage.
2)LOCAL COVERAGE . According to DHCS, as of December 2009,
managed care served about 3.8 million Medi-Cal beneficiaries
in 25 counties (representing 52% of the total Medi-Cal
population). In California, there are three models of managed
care:
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a) In the COHS model counties, DHCS contracts with a health
plan created by the County Board of Supervisors. Local
government, health care providers, community groups and
Medi-Cal beneficiaries all can give input in creating the
health plan. In a COHS county, everyone is in the same
managed care plan. COHS serve about 811,500 beneficiaries
through five health plans in 11 counties: Merced, Monterey,
Napa, Orange, San Mateo, San Luis Obispo, Santa Barbara,
Santa Cruz, Solano, Sonoma, and Yolo. Ventura's program is
in formation, and is expected to be implemented between
October 2010 and January 2011.
b) In most Two-Plan model counties, there is a "Local
Initiative" (LI) and a "commercial plan" (CP). DHCS
contracts with both plans. Local government, community
groups and health care providers all can give input in
creating the LI. The LI is designed to meet the needs and
concerns of the community. The CP is a private insurance
plan that also provides care for Medi-Cal beneficiaries.
Two-Plan serves about 2.6 million beneficiaries in 12
counties: Alameda, Contra Costa, Fresno, Kern, Los Angeles,
Riverside, San Bernardino, San Francisco, San Joaquin,
Santa Clara, Stanislaus, and Tulare.
c) In GMC counties, DHCS contracts with several commercial
plans. This provides several choices for beneficiaries, so
the health plans may want to try different ways to deliver
care to members. GMC serves about 387,000 beneficiaries in
two counties: Sacramento and San Diego.
CMSP provides medical care services in 34 primarily rural
counties to indigent adults 21-64 years of age with incomes at
or below 200% of the federal poverty level (FPL) who are not
eligible for Medi-Cal and who are U.S. citizens or legal
residents.
3)PRIOR LEGISLATION . SB 973 (Simitian) of 2007 and SB 1622
(Simitian) of 2008 would have created the California Health
Benefits Service Program, within DHCS, to facilitate the
creation of joint ventures between public health coverage
plans for the purpose of expanding public health coverage
options, and authorize locally run public health plans to
enter into joint ventures in order to pool risk and share
provider networks. SB 973 was vetoed by the Governor, who
stated that he agreed with the concept, but that he could not
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support the bill as a piecemeal approach to health care
reform. SB 1622 was held in the Senate Appropriations
Committee.
AB 1 X1 (Nunez) of 2007-2008, as part of its comprehensive
health care reforms, contained provisions that were
substantially similar to SB 973 and SB 1622. AB 1 X1 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.
REGISTERED SUPPORT / OPPOSITION :
Support
American Federation of State, County and Municipal Employees,
AFL-CIO
California Communities United Institute
California Labor Federation
California Nurses Association
California Teachers Association
Consumers Union
Health Access California
Local Health Plans of California
Sailors' Union of the Pacific
Service Employees International Union
United Nurses Associations of California/Union of Health Care
Professionals
Opposition
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None on file.
Analysis Prepared by : Melanie Moreno / HEALTH / (916)
319-2097