BILL ANALYSIS
SB 208
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Date of Hearing: August 4, 2010
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
SB 208 (Steinberg) - As Amended: August 2, 2010
Policy Committee: Health Vote:13-0
Urgency: Yes State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill establishes parameters to implement a Medi-Cal waiver
under Section 1115 of the federal Social Security Act. Section
1115 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.
Specifically, this bill:
1)Authorizes the California Department of Health Care Services
(DHCS) to phase-in mandatory enrollment of seniors and people
with disabilities (SPDs) into a Medi-Cal managed care plan or
county alternative organized system of care after obtaining
federal approval or after February 1, 2011, whichever is
later. This bill establishes parameters related to alternative
delivery systems, enrollment and outreach, health plan
readiness, access to and continuity of care, data and
reporting, payment rates, sanctions, and enforcement.
2)Requires DHCS to seek federal approval to establish pilot
programs to deliver health care services to individuals
eligible for both Medi-Cal and Medicare (dual eligibles).
Requires DHCS to identify program models by April 1, 2011 and
to develop timelines related financing, monitoring, and
evaluating pilot projects.
3)Requires DHCS to establish local Coverage Expansion and
Enrollment Demonstration (CEED) projects after September 1,
2010, but not later than January 1, 2011, or 180 days after
federal approval is received. The CEED projects are required
to provide health care benefits for uninsured adults age 19 to
64 with income up to 200% of the federal poverty level (FPL)
who are not eligible for Medi-Cal or Medicare.
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4)Requires DHCS to establish, by January 1, 2012, alternative
health care delivery models for youth enrolled in the
California Children's Services (CCS) program via contracts on
a bid or negotiated basis and requires capitated or risk-based
contracts to be actuarially sound. Authorizes the use of
statewide contracts.
FISCAL EFFECT
1)DHCS staffing costs . The governor proposed increased staffing
of $9.5 million ($4.1 million GF) in DHCS for 56 positions for
waiver implementation in the 2010-11 budget. The waiver
generates significant workload for DHCS. The Budget Conference
Committee recently adopted a compromise to provide 39
positions with a $1.6 million GF cost.
2)Waiver federal funding . California has recently submitted the
waiver proposal to the federal government with a $10 billion
request for federal funds based on budget neutrality estimates
over the five-year waiver period. The waiver request is
currently under review. 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.
Establishing budget neutrality requires comparing costs under
the proposed waiver over a five-year period and the spending
trend line without waiver changes.
3)Health reform enhanced federal funding . By establishing
statewide enrollment of low-income adults up to 200% of FPL,
this bill helps position California to maximize enhanced
funding opportunities available in 2014. California will
receive 100% federal funding for 2014, 2015, and 2016 for up
to two million new Medi-Cal beneficiaries with incomes up to
133% FPL. Between 2017 and 2020, federal funding support drops
from 100% to 90% of total costs.
COMMENTS
1)Rationale . This bill enacts state law changes to enable
California to proceed with renewal of a five-year Section 1115
waiver under federal law. Section 1115 of the Social Security
Act allows Centers for Medicare and Medicaid Services (CMS) to
approve innovative research and demonstration projects. The
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federal government uses these waivers to expand health
coverage without increasing federal support. According to the
author, this bill creates numerous opportunities to test
innovative approaches, expand coverage to low-income
Californians, improve delivery of care, and prepare California
for implementation of federal health reform.
2)Renewal of the Medi-Cal Waiver will be broader in focus than
the current waiver, which is primarily focused on inpatient
hospital and indigent health funding. Waivers can encompass a
relatively small portion of the Medi-Cal program or the entire
program. The waiver renewal for 2010-2015 covers a broad
funding and programmatic landscape and provides a focus for
California to establish a bridge to a major Medi-Cal expansion
under federal health reform, the Patient Protection and
Affordable Care Act (PL-111-148). The new waiver focuses on
specified patient populations, including the uninsured, those
with significant health needs, and those who account for
significant portions of Medi-Cal spending.
3)Recent Amendments make changes related to increase
implementation specificity, modify timelines, and address
concerns of stakeholders.
4)Mandatory Enrollment into Managed Care . This bill authorizes
the DHCS to establish the mandatory enrollment of specified
seniors and persons with disabilities into new and existing
managed care plans. The bill authorizes counties not operating
a County Organized Health System to establish a county
alternative to enroll seniors and persons with disabilities.
Under current law, California utilizes three managed care
delivery models to provide health care to about half of the
total Medi-Cal enrollees statewide. These models are:
a) The County Organized Health System (COHS) model (800,000
enrollees in 11 counties),
b) The Two-Plan model (2.6 million enrollees in 12
counties)
c) Geographic Managed Care (400,000 enrollees in 2
counties)
5)Dual Eligibles . This bill establishes pilot projects to
evaluate models of integrating health care and finance
approaches for beneficiaries enrolled in both Medi-Cal and
Medicare. Known as dual eligibles, these individuals are among
the most vulnerable of populations. They are low-income, in
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poor health, and have considerable health care needs.
Nationally, dual eligibles account for 25 % of total Medicare
spending and 46 % of Medicaid spending. Medi-Cal spending in
California on 1.1 million dual eligibles was $8 billion in
2007-08, or 25 % of total Medi-Cal expenditures. In 2007,
Medi-Cal spending on long term care for this patient
population was $3.2 billion, or 75 % of total Medi-Cal long
term care costs. Total Medi-Cal and Medicare spending on dual
eligibles was $21 billion.
6)Coverage Expansion and Enrollment Demonstration Project . As a
part of the current waiver, 10 counties have been provided
$180 million in federal funding for each of the past three
years to expand health coverage to indigent adults. The 10
programs certify their local expenditures to claim federal
Medicaid funds. This bill authorizes a statewide expansion of
this approach to enroll insured adults up to 200% FPL.
According to research, uninsured adults with incomes at or
below 200% FPL are a diverse group, but include many poor and
sick individuals for whom coverage is currently unavailable.
7)The California Children's Services program provides a range of
medical services, including in-patient hospital stays to
children from low-income families (less than $40,000 per year)
with major medical conditions such as congenital heart disease
and sickle cell anemia. Children receive services in one of
three enrollment pathways: (a) CCS-Medi-Cal in which 130,000
children are enrolled, (b) CCS-Healthy Families in which
26,000 children are enrolled, and (c) CCS-only in which 20,000
children are enrolled.
8)Concerns . Numerous groups have positions of support in
concept, support if amended, oppose unless amended, and
concerned. Concerns vary. For example, consumer groups would
like to see stronger patient protections. Certain provider
groups seek stability in the public safety net. Private
hospitals would like to see an expanded financing role in the
pending waiver. Insurers have concerns with specific network
and reporting requirements.
9)Related Legislation . AB 342 (J. Perez), pending in the Senate,
is identical to SB 208.
SB 1100 (Perata), Chapter 560, Statutes of 2005 implemented
Section 1115 waiver change for the current waiver that expires
this fall. The current waiver includes more than $3 billion in
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annual federal spending and replaced a funding system that had
been in place for 15 years. The new waiver, addressed in SB
208, will include significantly more federal funding by
expanding the scope of patients and settings in which the
waiver programming will be implemented.
Analysis Prepared by : Mary Ader / APPR. / (916) 319-2081