BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
311 (Alquist)
Hearing Date: 5/28/2009 Amended: 5/20/2009
Consultant: Katie Johnson Policy Vote: Health 11-0
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BILL SUMMARY: SB 311 would require the Managed Risk Medical
Insurance Board (MRMIB) to provide dental-only coverage to
children eligible for the Healthy Families Program, California's
version of the federal Children's Health Insurance Program
(CHIP), but who are currently covered by private health
insurance that does not cover dental care.
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Fiscal Impact (in thousands)
Major Provisions 2009-10 2010-11 2011-12 Fund
Prospective payment unknown, but potentially up toGeneral/*
system implementation tens of millions of dollars
Federal
and administration
*The costs of the Healthy Families Program are shared as
follows:
35% General Fund, 65% Federal Funds
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STAFF COMMENTS: SUSPENSE FILE.
Existing federal law establishes the CHIP, a program that
provides matching funds to states to provide low-cost health
care coverage to low-income children. The state is responsible
for furnishing 35 percent of the cost of providing this care
with General Funds and the federal government matches that
expenditure with the other 65 percent of the cost.
Existing state law establishes the Healthy Families Program
(Healthy Families), which is California's version of CHIP.
Healthy Families provides low-cost health insurance that
includes health, dental and vision benefits, to children who do
not have other insurance, do not qualify for free Medi-Cal
benefits, and are in families at or below 250 percent of the
federal poverty level (FPL). Healthy Families is funded by the
state General Fund, federal funds, and specified premiums paid
by enrollees. Existing law provides for MRMIB, the state entity
that administers Healthy Families. It is likely that enrollees
in the dental-only coverage provided for in this bill would
similarly contribute subscriber premiums to offset some of the
program's expenses.
In February 2009, President Obama signed the Children's Health
Insurance Program Reauthorization Act of 2009 (CHIPRA). CHIPRA
provides for enhanced federal funding for states and
opportunities for bonus payments, requires states to make
various changes to their CHIPs, and offers several options to
increase coverage for low-income children, including dental-only
coverage, which this bill addresses. CHIP is administered
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SB 311 (Alquist)
by the federal Centers for Medicare and Medicaid (CMS). Since
CMS has yet to issue guidance to states to aid in CHIPRA
implementation, this bill's January 1, 2010, effective date may
be premature. Federal financial participation, or federal
funding, for this dental-only coverage would be contingent upon
CMS approval of the state's proposed implementation plan, which
the state would develop pursuant to CMS guidance.
This bill would require MRMIB to provide dental-only coverage to
children covered by a group health plan or employer-sponsored
coverage that does not provide dental benefits or that meets
specified cost sharing requirements, who would otherwise be
eligible for Healthy Families.
This bill would state legislative intent to implement key
elements of CHIPRA, as specified. It is likely that this bill
would be amended as it moves through the Legislative process,
since the dental-only option is only one of the many provisions
of CHIPRA.
This bill would permit MRMIB to adopt, and one-time readopt,
regulations which would be deemed emergency regulations.
This bill provides that these provisions would be implemented
only if and to the extent that federal financial participation
is available and that the Legislature appropriate funds for this
purpose.
The cost of implementing a dental-only coverage option under
Healthy Families is unknown, but is estimated to be in the low
millions in the first year of implementation, and up to over $30
million annually in total funds as enrollment increases to
upwards of 75 percent of eligible enrollees.
Staff notes that the May 20, 2009, amendments delete the
requirement that MRMIB implement dental-only coverage for
covered children without dental coverage who would otherwise be
eligible for Healthy Families and would instead require MRMIB to
apply the Medicaid prospective payment system to services
provided under Healthy Families by federally qualified health
centers (FQHCs) and rural health clinics as required by CHIPRA.
This prospective payment system, which amounts to reimbursing
FQHCs and rural clinics based on a facility's cost to provide
services to Medi-Cal patients, could cost the state tens of
millions of dollars annually. If the state does not implement
this prospective payment system by January 1, 2011, which would
require statutory authority, noncompliance could potentially
jeopardize the receipt of matching federal funds for Healthy
Families in an amount of approximately $700 million annually.
The prospective payment system is one of several requirements
that states must comply with to continue to receive federal
matching funds under CHIPRA. Those requirements requiring state
statute changes are subject to a January 1, 2011, deadline.