BILL ANALYSIS
SB 208
Page 1
SENATE THIRD READING
SB 208 (Steinberg and Alquist)
As Amended August 2, 2010
2/3 vote. Urgency
SENATE VOTE :38-0
HEALTH 13-0 APPROPRIATIONS 12-0
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|Ayes:|Monning, Ammiano, Carter, |Ayes:|Fuentes, Bradford, |
| |De La Torre, De Leon, | |Huffman, Coto, Davis, De |
| |Eng, Hayashi, Hernandez, | |Leon, Gatto, Hall, |
| |Jones, Bonnie Lowenthal, | |Skinner, Solorio, |
| |Nava, V. Manuel Perez, | |Torlakson, Torrico |
| |Salas | | |
| | | | |
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SUMMARY : Enacts statutory changes necessary for the Department
of Health Care Services (DHCS) and counties to implement a
proposed Section 1115 Comprehensive Demonstration Project Waiver
(Section 1115 Waiver) in the Medi-Cal Program. Specifically,
this bill :
1)Establishes local coverage expansion and enrollment
demonstration (CEED) projects to provide health care benefits
for uninsured adults age 19 to 24 with income up to 200% of
the federal poverty level (FPL) and who are not otherwise
eligible for Medi-Cal or Medicare as a transition to full
implementation of the federal Patient Protection and
Affordable Care Act (PPACA) (Public Law 111-148).
2)Requires CEED projects to include the designation of a medical
home, the assignment of eligible individuals to a primary care
provider, a provider network that includes participation by
public and private providers and to offer to contract with
licensed primary care clinics that meet the medical home
standard.
3)Requires comprehensive implementation of PPACA for the
population targeted by the CEEDS on or after January 1, 2014.
4)Authorizes DHCS to phase in mandatory enrollment of seniors
and people with disabilities (SPDs) into a Medi-Cal managed
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care plan or county alternative organized system of care,
commencing the later of February 1, 2011, or obtaining federal
approval.
5)Authorizes any county that is not operating a County Organized
Health System (COHS) to develop a county alternative model of
care as an alternative choice to the Local Initiative or
Commercial Plan for seniors and people with disabilities.
6)Establishes a methodology for the assignment of beneficiaries
who do not choose a plan that is based on utilizations
history, plan quality and the inclusion of safety net
providers; establishes a stakeholder workgroup to advise on
the development of quality data submission standards and
establishes penalties for plan noncompliance.
7)Provides that the terms and conditions of Centers for Medicare
and Medicaid Services (CMS) approved demonstration project
shall control in the event of a conflict and in such event
requires DHCS to identify the specific provision and provide
notice to the Legislature.
8)Requires DHCS to seek federal approval for a Medicare,
Medicaid, or combination, demonstration project or waiver for
persons who are Medi-Cal and Medicare eligible (dual eligible)
in up to four counties. Authorizes DHCS to require dual
eligibles to be assigned as mandatory enrollees as part of the
pilot project.
9)Requires DHCS to establish, by January 1, 2012, organized
health care delivery models for children eligible for CCS and
Medi-Cal that shall include at least on of the following:
a) An enhanced primary care case management;
b) A provider-based accountable care organization;
c) A specialty health care plan; or,
d) A Medi-Cal managed care plan that includes payment and
coverage for CCS-eligible conditions.
10) Authorizes DHCS to require mandatory enrollment of CCS
eligible children.
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FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1)DHCS staffing costs. The governor proposed increased staffing
of $9.5 million ($4.1 million General Fund (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% 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 : According to the author, this bill is one of two
companion bills (AB 342 (John A. Perez and Monning) is the
other) that will ultimately include the statutory provisions
necessary to implement a new federal waiver. California is
currently operating under the Medi-Cal Hospital/Uninsured Care
waiver (hospital financing waiver) which will expire in August
2010. The hospital financing waiver and implementing
legislation for that waiver (SB 1100 (Perata), Chapter 560,
Statutes of 2005) instituted a number of changes to how the
state reimburses hospitals. The current hospital financing
waiver also established the Health Care Coverage Initiatives
(HCCIs) to provide health coverage to indigent adults in ten
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pilot counties. Given that the current hospital financing
waiver is expiring, a new waiver must be negotiated and
established by September 1, 2010, and will require implementing
legislation. This bill is a synthesis of the trailer bill
submitted by the Governor at the May revision, legislative
revisions and input from stakeholders.
In addition to the substantial increase in the amount of federal
funding requested, DHCS is proposing a more comprehensive
restructuring of Medi-Cal than in the current waiver. PPACA
requires states, by January 1, 2014, to cover all childless
adults under age 65 with family incomes up to 133% FPL in their
Medicaid program and to offer subsidized coverage through a
statewide insurance exchange. States have the option of early
implementation as long as the plan doesn't provide coverage to
people at higher incomes than those who are not covered.
California's proposal is to allow an incremental approach by
expanding on the existing HCCIs and allowing all counties to
participate. The individual county expansions will be dependent
on the availability of county funding. Specifically, the state
is proposing to treat coverage for the newly eligible (up to
133% of FPL) as a new optional eligibility group under PPACA and
the 133-200% of FPL would be funded out of the Safety Net Care
Pool (SNCP). The state is requesting blanket waivers from such
requirements as state wideness, comparability, and freedom of
choice in order to implement this approach. However, the state
acknowledges that statewide uniformity will be required by 2014.
The Section 1115 Waiver proposal and this bill also seek to
implement pilot projects in up to four counties to test dual
integration in COHS and other managed care plans that operate
both Medi-Cal managed care and Medicare Special Needs Plans.
In the 2005 waiver CMS set aside a portion of the SNCP funding
contingent on a Medi-Cal expansion of mandatory enrollment in
managed care to SPDs. Except for COHS, this provision of the
2005 waiver was never enacted. This bill requires mandatory
enrollment of SPDs into existing managed care plans but also
plan envisions a county developed alternative as an additional
choice in the two-plan and the geographic managed care counties.
According to the CMS waiver submission, under this model the
county may contract with the State to develop and administer a
unique model of organized care and would be subject to essential
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standards and performance measures and may be required to obtain
Knox-Keene Health Care Service Plan Act of 1975 licensure
depending on the structure. DHCS is anticipating that counties
will propose organizational structures that reflect and meet
unique local needs and circumstances.
In 2005, the state of California sought a five year federal
waiver as a Medicaid demonstration project under the authority
of Section 1115(a) of the Social Security Act. Under this
waiver, hospital financing was fundamentally restructured. The
non-federal share of Medi-Cal funds for 22 county and University
of California hospitals known as Designated Public Hospitals was
shifted from State General Funds to CPEs. The waiver also
created the SNCP to pay for services to the uninsured and for
unreimbursed Medi-Cal expenditures delivered through public
hospitals, other governmental entities and state-funded
programs. Federal authority to continue this financing
structure expires September 1, 2010. DHCS is in the process of
negotiating a new waiver, but the specific terms and conditions
have not yet been finalized.
Analysis Prepared by : Marjorie Swartz / HEALTH / (916)
319-2097 FN:
0006025