BILL ANALYSIS
SENATE HEALTH
COMMITTEE ANALYSIS
Senator Elaine K. Alquist, Chair
BILL NO: SB 966
S
AUTHOR: Alquist
B
AMENDED: As Introduced
HEARING DATE: April 21, 2010
9
CONSULTANT:
6
Dunstan/cjt
6
SUBJECT
Medi-Cal: medical homes
SUMMARY
Directs the Department of Health Care Services (DHCS) to
establish a definition of medical home, consistent with
specified guidelines and establish a timetable for Medi-Cal
managed care plans to provide beneficiaries with a medical
home.
CHANGES TO EXISTING LAW
Existing federal law:
Establishes the Medicaid program to provide comprehensive
health benefits to specified groups of low-income persons.
Existing state law:
Establishes the Medi-Cal program, the state's Medicaid
program, administered by DHCS, which provides comprehensive
health benefits to low-income children; their parents or
caretaker relatives; pregnant women; elderly, blind or
disabled persons; nursing home residents and refugees.
Defines the health care benefits that are to be offered by
the Medi-Cal program.
Authorizes DHCS to contract, on a bid or nonbid basis, with
any qualified individual, organization, or entity to
Continued---
STAFF ANALYSIS OF SENATE BILL 966 (Alquist) Page 2
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. Defines a Medi-Cal managed care plan
as any entity that enters into one of several types of
contracts with DHCS including county organized health
systems (COHS), geographic managed care plans and local
initiatives. Existing law requires enrollment of seniors
and persons with disabilities into Medi-Cal managed care
plans to be voluntary, except in COHS counties.
Establishes the Health Care Coverage Initiative (coverage
initiative) and provides that it shall operate pursuant to
the special Terms and Conditions of California's Section
1115 Demonstration Waiver on hospital financing. Defines a
medical home as a "single provider or facility that
maintains all of an individual's medical information" for
the purposes of the Health Care Coverage Initiative, a
demonstration project which uses federal funds from the
Safety Net Care Pool to fund programs to expand health care
coverage to low-income, uninsured residents of ten selected
counties for fiscal year (FY) 2007-08 through FY 2009-10.
This bill:
Requires DHCS to develop a definition of medical homes that
is consistent with the 2008 Physician Practice
Connections-Patient Centered Medical Home Standards and
Guidelines established by the National Committee for
Quality Assurance. Requires DHCS to establish a timetable
for Medi-Cal managed care plans to provide beneficiaries
with a medical home. Grants DHCS an exemption from the
administrative practices act related to the development of
regulations and allows implementation by all-county letters
or similar instructions.
FISCAL IMPACT
This bill has not been analyzed by a fiscal committee.
BACKGROUND AND DISCUSSION
The author argues that given that health care costs are
spiraling, emergency rooms are overcrowded, and that higher
quality and lower cost can be achieved through coordinated
STAFF ANALYSIS OF SENATE BILL 966 (Alquist) Page 3
care, it makes sense for Medi-Cal managed care to define
and adopt a medical home model. The author further argues
that the medical home model is essential to comprehensively
serve a patient's health care needs with the highest
standards and that medical homes will encourage wellness
and preventative care. In addition, she notes medical
homes are going to be an integral component of a strategy
for improving the way we deliver services to the
chronically ill. The author notes that a great deal of
discussion is being focused on medical homes within the
context of developing a new Medicaid waiver, but that those
already enrolled in managed care are not being included in
these discussions. She argues that one of the advantages
of this bill is that it does build on the existing
organized delivery systems that are already in place.
Background on medical homes
Many states have adopted medical home legislation and
programs, mostly for Medicaid and Children's Health
Insurance Program (CHIP) enrollees. Some states, such as
Iowa, Oregon, Pennsylvania and Vermont, also allow or
encourage private sector participation. Community Care of
North Carolina, the state's Medicaid program, is a working
example of a patient centered medical home. The goals of
the program are to improve the care of the Medicaid
population, control costs, develop community-based networks
to manage care of populations in partnership with the
state, and fully develop the medical home model. The
program has demonstrated excellent quality and cost
outcomes through disease management, evidence-based
clinical practice, and an emphasis on a physician-led team
approach. Two evaluations of this program indicate it
saved the State of North Carolina $195 to $215 million in
2003 and between $230 and $260 million in 2004 when
compared to historical fee-for-service.
In a 2008 report to the United States (U.S.) Congress, the
federal Medicare Payment Advisory Commission recommended
that Congress establish a budget-neutral payment increase
for primary care services furnished by primary-care-focused
practitioners (defined as those whose specialty designation
is defined as primary care or whose pattern of claims meets
a minimum threshold of furnishing primary care services).
The commission also recommended that Congress initiate a
Medicare medical home pilot project, with stringent
specified criteria and a physician pay-for-performance
STAFF ANALYSIS OF SENATE BILL 966 (Alquist) Page 4
program.
According to a 2007 Commonwealth Fund report, "Closing the
Divide: How Medical Homes Promote Equity in Health Care,"
when adults have health insurance coverage and a medical
home, racial and ethnic disparities in access and quality
tend to disappear. The analysis, based on a Commonwealth
Fund national survey, reveals that linking minority
patients to a medical home can help them better manage
chronic conditions and obtain critical preventive care.
The issue of medical homes is being closely examined in the
effort by the administration, legislature and stakeholders
to fashion a new Medicaid Section 1115 waiver. Because a
hospital waiver renewal is a once-in-a-five-year
opportunity to ask the federal government to provide the
state flexibility and to seek federal funding for
demonstration projects that achieve federal budget
neutrality, the state will embark upon a fairly
comprehensive waiver proposal. The discussions about
medical homes, however, has focused on specified high cost
enrollees such as seniors and persons with disabilities and
those populations that are currently mandated to enroll in
managed care, specifically families.
Senate Health Committee held a hearing entitled,
"Redesigning California's Medi-Cal Program: Examining the
Potential for Cost Savings and Program Improvements." The
focus was on the DHCS concept paper for the Medicaid
Section 1115 waiver, which emphasized possible changes for
the SPD population. A number of the witnesses at the
hearing testified about medical homes and the usefulness in
controlling costs and improving care with in Medicaid
programs. DHCS testified that they want to see a medical
home concept instituted that built on the delivery of
services by the existing managed care plans.
Enactment of federal health care reform has given a boost
to medical homes. Among the major provisions of the
legislation that relate broadly to the issue of medical
homes:
o State option to provide health home for those with
chronic diseases.
o Increased payments to primary care physicians in
Medicaid.
o Grants for training in family medicine, general
STAFF ANALYSIS OF SENATE BILL 966 (Alquist) Page 5
internal medicine, general pediatrics and physician
assistantship.
o Creates a medical home pilot in Medicare for
physicians who elect to make their practice a medical
home.
o Establishes a 5-year pilot program to evaluate
medical home models for beneficiaries including
medically fragile children and provided $1.2 billion
for increased federal matching of administrative
costs.
Medi-Cal managed care
Medi-Cal provides coverage to nearly 6.7 million
Californians, roughly half of whom are enrolled in FFS and
the other half in Medi-Cal managed care which provides
coverage through public and private health plans.
Under the traditional Medi-Cal fee-for-service program,
providers are reimbursed for every service they provide and
assume no financial risk. Under Medi-Cal managed care,
DHCS reimburses health care plans on a "capitated" basis,
which is a set payment per enrolled person, per month,
regardless of the number of services, if any, a Medi-Cal
beneficiary receives. The health plans that contract with
the state on a capitated basis assume financial risk, in
that it may cost them more or less money than the capitated
amount paid to them to deliver the necessary care.
Medi-Cal managed care plans operate in 22 of the state's 58
counties, generally urban counties with larger populations.
Approximately 48 percent of Medi-Cal beneficiaries are
enrolled in managed care. The great majority are families
with seniors and persons with disabilities (SPDs) making up
a small portion of the enrollees, about 9 percent. There
are three types of Medi-Cal managed care plans:
o COHS Plans. Under this model, there is one health
plan run by a public agency and governed by an
independent board that includes local representatives.
COHS plans operate in nine counties.
o Geographic Managed Care Plan (GMC). The GMC system
allows Medi-Cal beneficiaries to choose one of many
commercial HMOs operating in a county. GMC is limited
to two counties
STAFF ANALYSIS OF SENATE BILL 966 (Alquist) Page 6
o The Two-Plan Model. DHS contracts with only two
managed care plans. Generally, one is locally
developed and operated and is known as an LI, while
the second is a commercial health plan. Twelve
counties are in the two-plan model.
Most families and children residing in Medi-Cal managed
care counties are enrolled in managed care on a mandatory
basis. Under mandatory enrollment, beneficiaries in
counties with a choice of plans are free to choose a plan
or, if they do not make a choice, DHCS will automatically
assign them based on several criteria. The SPD population
in those same counties has the option of participating in
fee-for-service or managed care. SPDs have generally chosen
fee-for-service when given a choice. The exceptions are
the nine COHS counties, where nearly all Medi-Cal
beneficiaries are required to receive their care from a
COHS plan. Only about 16 percent of SPDs are in managed
care, including those in COHS counties.
Medi-Cal managed care plans are currently regulated by both
DHCS and the Department of Managed Health Care. Medi-Cal
managed care plans must comply with the Knox-Keene Act
which focuses on the accessibility and adequacy of health
plan provider networks; internal quality systems; health
plan financial solvency; consumer rights and disclosure
requirements; and, complaint resolution, including
complaints related to the adequacy of the care provided.
Medi-Cal managed care regulations have many similar
provisions to the Knox-Keene Act, but go beyond those
requirements to focus on Medi-Cal enrollment procedures,
scope of services, contractual reporting requirements,
financial performance, capitation payments, member billing,
and the handling of beneficiary grievances in the context
of Medi-Cal benefits and eligibility. There is significant
overlap between the two regulatory frameworks, including
two consumer hotlines and grievance processes.
Related bills
AB 1542 (Committee on Health) defines a patient-centered
medical home (PCMH) as an approach to providing health care
that fosters partnerships among the patient and health
professionals to promote coordinated care, ensure quality
and access to care, and to improve health. This bill is in
Senate Health Committee.
STAFF ANALYSIS OF SENATE BILL 966 (Alquist) Page 7
SB 771 (Alquist), pending in the Senate, would require a
health care service plan or a health insurer, or a medical
group that contracts with a plan, that uses a
pay-for-performance system for the payment of providers to
provide a differential payment to providers who provide
patients with a patient-centered medical home. SB 771 was
subsequently amended to a different subject.
Prior legislation
AB 131 (Committee on Budget), Chapter 80, Statutes of 2005,
requires DHCS to evaluate the readiness of a Medi-Cal
managed care plan to commence operations to expand the
geographic areas they cover, and also requires DHCS to
provide to the fiscal and policy committees of the
Legislature quarterly updates, regarding activities to
improve the Medi-Cal managed care program and to expand to
new counties, as directed by the Budget Act of 2005.
Arguments in support
The Western Center on Law and Poverty argues for a robust
definition of medical home in the Medi-Cal program. They
state that the current Medi-Cal managed care contracts that
we have seen do not have a sufficient definition of care
coordination or medical home. They argue that a definition
of medical home should require that providers meet specific
standards and that these standards should include, among
others, specific care coordination requirements, community
linkages to social services or a regional network of
community based specialty and social service providers,
access to or experience with serving underserved
communities and limited case-management to client ratios.
Western Center also argues that beneficiaries should have
access to a medical home whether they receive care in
fee-for-service Medi-Cal or Medi-Cal managed care.
Arguments in opposition
The California Association for Nurse Practitioners opposes
the bill because they are concerned that the NCQA
guidelines are overly physician centric and do not provide
adequate involvement of non-physician clinicians. They
point out that nurse practitioners are advance practice
registered nurses who have additional education and
training in diagnosis and management of medical conditions
and are authorized to perform health care services beyond
those of a registered nurse. They argue that a patient
centered care model, envisioned by SB 966, must be
STAFF ANALYSIS OF SENATE BILL 966 (Alquist) Page 8
inclusive of all state licensed primary care providers.
They argue that the involvement of non-physician providers
in the health care delivery system will be more important
than ever given the recent enactment of federal health care
reform which will lead to more Californian's accessing
health care services which will stretch the state's
physician network well beyond its current capacity.
POSITIONS
Support: Western Center on Law & Poverty
Oppose: California Association for Nurse Practitioners
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