BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
AB 301 (Pan)
Hearing Date: 6/27/2011 Amended: 6/23/2011
Consultant: Katie Johnson Policy Vote: Health 9-0
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BILL SUMMARY: AB 301 would prohibit, until July 1, 2016,
California Children's Services (CCS) program covered services
from being incorporated into Medi-Cal managed care contracts,
except for contracts within specified county organized health
systems and regional health authorities.
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Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13 2013-14 Fund
CCS carve-out Continuation of current*
General/**
sunset extension expenditure levels Federal
*See Staff Comments.
**CCS and Medi-Cal services are shared 50 percent General Fund,
50 percent federal funds.
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STAFF COMMENTS: This bill may meet the criteria for referral to
the Suspense File.
This bill would extend the sunset date on what is known as the
"CCS carve-out" from January 1, 2012, to July 1, 2016. Existing
law, created by SB 1371 (Bergeson), Chapter 917, Statutes of
1994, and extended by several policy and budget bills,
prohibits, until January 1, 2012, CCS covered services from
being incorporated into Medi-Cal managed care organization (MCO)
contracts. The most recent extension from August 1, 2008, to
January 1, 2012, was made by AB 2379 (Chan), Chapter 333,
Statutes of 2006. There are three types of MCO plans: Two-Plan,
Geographic Managed Care (GMC), and County Organized Health
Systems (COHS). Existing statute exempts COHS and Regional
Health Authority in the following counties from this prohibition
where the services are "carved-in": San Mateo, Santa Barbara,
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Solano, Yolo, Marin, and Napa.
Fiscal Effect of Carve-Out
If the carve-out were to sunset, it would be at DHCS' option to
either continue or to end the carve-out. DHCS states that it
would continue the carve-out until the results of the evaluation
of the 2010 federal waiver CCS pilot projects, addressed below,
is completed and analyzed and a CCS redesign has been discussed
in consultation with stakeholders.
There are three possible fiscal effects:
1) There would be no new cost above current expenditure
levels if this bill were to be moved forward, since it
would continue existing practice.
2) If this bill were to not move forward, there could be no
new cost above current expenditure levels, since DHCS
intends to continue the existing carve-out/carve-in system
and would likely choose to do so until the CCS pilot
projects evaluation is complete.
3) If this bill were to not move forward, contrary to their
stated intent, DHCS could decide to end or change the
current system, given their authority to set CCS program
guidelines and to negotiate the benefits available under
MCO contracts. It is unclear what DHCS would choose to
implement in lieu of the existing carve-out/carve-in
structure. It is also unclear what could prompt them to
deviate from their intent of continuing the system.
Thus, there could be potential costs, cost avoidance, or no
fiscal impact depending on the structure of the CCS program that
DHCS could develop when compared to extending the carve-out
sunset. The most likely outcome is that the effect of extending
the carve-out sunset would be the same as not extending the
sunset-no change in the delivery of CCS services because the
department's intent is the same as this bill's. However, since
DHCS would have the authority to alter the way CCS services are
delivered without this bill, extending the carve-out through
this bill could reduce some state-level financial flexibility
and potentially result in a cost if the department were to
choose to implement cost-containment measures instead of
continuing the carve-out when compared to maintaining the
current funding level.
The state and federal government share Medi-Cal/CCS costs at a
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ratio of 50 percent General Fund and 50 percent federal funds
almost exclusively on a fee-for-service basis. The carve-out
makes it so that a MCO, with the exception of a COHS that
chooses to carve CCS in, is not at financial risk for managing a
child's CCS health care needs. In both carved-in and carved-out
counties, the county CCS program authorizes the provision of CCS
services. The difference is that provider payment is part of the
MCO's capitated per member per month payment in carved-in
counties whereas Medi-Cal pays paneled providers on a
fee-for-service basis for services rendered to children in
carved-out counties and in counties in the fee-for-service
system.
CCS Background
Effectively, the carve-out results in a bifurcated health care
delivery system where a child's non-CCS medical needs are
coordinated through a MCO and their CCS-related medical needs
are coordinated by the CCS program.
CCS, originally established in 1927, provides health care
services, including diagnostic, treatment, dental, medical case
management, physical therapy and occupational therapy services,
to children from birth up to 21 years of age with CCS-eligible
medical conditions. Eligible medical conditions are defined in
state regulation and consist of both specific chronic and
episodic conditions including prematurity, hearing loss, cystic
fibrosis, cancer, congenital heart disease, and traumatic
injuries. A child is eligible if he or she is a Medi-Cal
beneficiary (Medi-Cal/CCS), a Healthy Families Program
subscriber (Healthy Families/CCS), or is ineligible for Medi-Cal
and Healthy Families, but who's family adjusted gross income is
less than $40,000 (CCS-only), and individuals whose families'
spend more than 20 percent of their income on treatment for the
CCS-eligible condition. Eligibility determination varies by
county, but is either determined by county medical staff or by
the state regional office staff.
For FY 2011-2012, according to the May 2011 Estimate, the
estimated Medi-Cal/CCS caseload is 78 percent of the total CCS
enrollment, or 141,825 Medi-Cal/CCS out of a total CCS
enrollment of 182,384. These children are served by a network of
CCS-paneled specialty and subspecialty providers, hospitals and
special care centers; CCS paneled providers are also Medi-Cal
providers. Physicians who treat children with CCS conditions are
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paid 39.7 percent more than the standard Medi-Cal
fee-for-service rate, per state regulation. Comprehensive
medical case management services are provided for all children
enrolled in the program.
Waiver Pilot Projects
In an effort to address the bifurcated case management system
for CCS enrollees, SB 208 (Steinberg), Chapter 714, Statutes of
2010, as part of the 2010 Bridge to Reform Section 1115(a)
Medicaid Demonstration waiver (federal 2010 waiver) requires the
Department of Health Care Services (DHCS) to establish models of
organized health care delivery systems for children eligible for
CCS by January 1, 2012, and permits them to require individuals
to enroll in the programs. DHCS released a request for proposal
in May 2011. Proposals are due July 15, 2011, and the pilots are
expected to commence in January 2012. Applicants may choose the
following for the structure of their pilot programs:
(1) An enhanced primary care case management program.
(2) A provider-based accountable care organization.
(3) A specialty health care plan.
(4) A Medi-Cal managed care plan that includes payment and
coverage for CCS-eligible conditions.
The department is required to conduct an evaluation of the pilot
projects, in consultation with stakeholders, to assess the
effectiveness of each model in improving the delivery of health
care services for children who are eligible for CCS. This bill
states that it is the Legislature's intent to continue the
carve-out until the evaluation is completed. As noted above,
this is also DHCS' intent.
The evaluation process is required to begin simultaneously with
the development and implementation of the model delivery systems
to compare the care provided to, and outcomes of, children
enrolled in the models with those not enrolled in the models.
The evaluation shall include, at a minimum, an assessment of all
of the following:
(A) The types of services and expenditures for services.
(B) Improvement in the coordination of care for children.
(C) Improvement in the quality of care.
(D) Improvement in the value of care provided.
(E) The rate of growth of expenditures.
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(F) Parent satisfaction.