BILL ANALYSIS �
AB 2002
Page 1
Date of Hearing: April 24, 2012
ASSEMBLY COMMITTEE ON HEALTH
William W. Monning, Chair
AB 2002 (Cedillo) - As Amended: April 17, 2012
SUBJECT : Medi-Cal: managed care plan assignment: safety net
provider.
SUMMARY : Defines "safety net provider" for the purpose of
determining which Medi-Cal managed care (MCMC) plan a
beneficiary will be assigned to if they do not choose a plan.
Specifically, this bill :
1)Defines a safety net provider as any of the following:
a) A federally qualified health center (FQHC);
b) A federally designated rural health clinic (RHC);
c) A licensed nonprofit community or free clinic;
d) A satellite or intermittent site of a licensed nonprofit
community or free clinic;
e) A licensed Indian or tribal clinic exempt from
licensure;
f) A freestanding county clinic or clinic associated with a
disproportionate share hospital (DSH);
g) A medical group, independent practice association (IPA),
physician office, or clinic with more than 10 physicians
that has a Medi-Cal or medically indigent encounter rate of
at least 50% of total patients served in a calendar year,
based on claims or encounter data; or,
h) A medical practice of 10 or fewer physicians in which at
least 30% of the patients served in a calendar year are
enrolled in Medi-Cal.
EXISTING LAW :
1)Establishes the federal Medicaid Program, (Medi-Cal in
California), administered by the Department of Health Care
Services (DHCS), to provide comprehensive health care services
and long-term care to pregnant women, children, and people who
are aged, blind, and disabled.
2)Authorizes DHCS to contract, on a bid or nonbid basis, with
any qualified individual, organization, or entity to provide
services to, arrange for, or case manage, the care of Medi-Cal
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enrollees and requires, under federal law, that the rate paid
to the entity be actuarially sound.
3)Defines a MCMC plan as any entity that enters into one of
several types of contracts with DHCS including County
Organized Health System (COHS), geographic managed care (GMC)
plans, commercial plans, and Local Initiatives (LI).
4)Requires children, families, seniors and persons with
disabilities (SPDs), who are not also eligible for Medicare,
to enroll in a MCMC plan in counties with a COHS, GMC or the
two-plan model( a commercial plan (CP) and an LI).
FISCAL EFFECT : This bill has not been analyzed by a fiscal
committee.
COMMENTS :
1)PURPOSE OF THIS BILL . According to the author, this bill
would help create a level playing field for all primary care
providers in the Medi-Cal program by adding two additional
categories of providers, based on patient encounter data, to
the definition of "safety net provider." Specifically, a
medical practice of more than 10 would be considered a "safety
net provider" if the annual patient encounters are 50%
Medi-Cal, uninsured and/or low-income. A smaller practice, 10
or less, would be considered a "safety net provider" if the
patient encounters are at least 30% Medi-Cal. According to
the author, this bill would reward those private providers who
are dedicated to serving the Medi-Cal and uninsured population
at a time when access to care for these patients is critical.
The author explains that DHCS has a process in place, entitled
the "default assignment algorithm," to encourage MCMC plans to
contract with safety net providers and encourage patients to
seek care from these clinics and hospitals. Under this
process, MCMC plans earn points for assigning members to DSH
and primary care physicians who are safety net providers. The
author asserts that the current system encourages plans to
contract with safety net providers over private providers.
According to the author, private providers continually
struggle because the current system leaves them with the
inability to balance low Medi-Cal reimbursements. The author
argues that a revised definition that fairly incorporates all
providers who serve a significant amount of Medi-Cal and
uninsured patients is necessary to ensure quality service to
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all Medi-Cal patients.
2)MCMC . Currently there are about 3.5 million Medi-Cal families,
children, and SPDs in 16 counties who are required to enroll
in a MCMC plan but have a choice of plan. In the 14
"Two-Plan" counties, there is usually a choice between the LI
and a CP. DHCS contracts with both plans. The LI is supposed
to be designed to meet the needs and concerns of the
community. The CP is a private insurance plan that also
provides care for Medi-Cal beneficiaries. The Two-Plan model
serves about three million beneficiaries. Two counties,
Sacramento and San Diego, have a GMC model serving about
500,000 enrollees. In GMC counties, the Medi-Cal enrollee may
choose among several CPs that contract with DHCS.
Medi-Cal enrollees choose a plan at the time they become
eligible or if they have been converted from a fee-for-service
(FFS) category to a mandatory enrollment category. If a
Medi-Cal eligible person is required to enroll in MCMC and
does not choose a plan, they are assigned by default according
to a formula developed by DHCS. If the enrollee is converting
from FFS, before applying the formula, DHCS attempts to link
the enrollee with the plan that includes the existing primary
care provider in its network. Traditionally between 30% and
40% make a plan choice. In June 2011, DHCS began a year long
process of mandatory enrollment of all SPDs in the Two-Plan
and GMC counties. Prior to that, the mandatory population was
primarily pregnant women, families and children. Based on
data from the SPD enrollment, approximately 40% choose a plan;
approximately 14% are default enrolled to a plan that has a
relationship with their identified primary care provider; 19%
are default enrolled using the algorithm because the provider
is linked to both plans; and, 27% are default enrolled because
there is either no link or no data.
3)DEFAULT ALGORITHM . The current auto assignment default
algorithm is based on a mix of quality and safety net
measures. The quality measures are based on a plan's
Healthcare Effectiveness Data and Information Set (HEDIS)
which measures in six areas: adolescent well-care visits;
cervical cancer screening; childhood immunization rates;
prenatal and postpartum care; well child visits; and,
comprehensive diabetes care. The plans are assigned points
based on their current HEDIS scores and for improvement. Two
safety net measures are used: the percentage of hospital
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discharges at DSH facilities; and, the percentage of members
assigned to primary care providers who are safety net
providers. Safety net providers are defined as FQHCs, RHCs,
Indian or Tribal Clinics, non-profit community, or free
clinics licensed as primary care clinics or clinics affiliated
with DSH facilities. Plans are compared to each other or to
the county average in a GMC county and awarded points based on
their score and points based on improvement. The relative
scores are translated into a percentage of the default
assignments for each plan.
4)HISTORIC BACKGROUND. In 1993 DHCS (then the Department of
Health Services) developed a strategic plan to implement the
planned expansion of MCMC. The plan envisioned a choice
between a CP that would be similar to what was available in
the commercial market and one that was locally developed with
the County Board of Supervisors having the right of first
refusal as the entity responsible for creating the LI. In
order to ensure the financial viability of the newly created
LI and a stable volume of business to support the
participating traditional and safety net providers, DHCS set
minimum and maximum enrollment levels. The concern was that
the transition to managed care could result in a substantial
shift of Medi-Cal revenues away from traditional and safety
net providers who were frequently the only source of primary
care for the medically underserved populations. In order to
protect these traditional sources of care, a LI was required
to include all traditional and safety net providers that
agreed to the terms and conditions set for other similar
providers in its network and the LI was guaranteed an
enrollment of approximately 60% to 70% based on the current
safety net utilizations. The CP was encouraged to include
traditional and safety net providers in its network in the
initial bidding process, which was one factor used to weigh
competing proposals.
Over time, the minimum and maximum enrollment levels concept
developed into the default algorithm. Initially the algorithm
was based solely on use of safety net providers. Along with
the elimination of minimum and maximum enrollment guarantees,
the concept of "traditional providers" versus "safety net
providers" disappeared. Traditional providers were those who
historically delivered services to Medi-Cal beneficiaries and
included for-profit or non-publicly owned providers as well as
government-owned, community health centers such as FQHCs and
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public and university hospitals. The primary reason was that
it was more difficult to define these entities and utilize
them in an algorithm using objective and verifiable standards,
unlike determining whether an entity was an FQHC or a DSH
hospital. This bill resurrects this notion to some degree by
trying to define an outpatient provider who has taken on the
responsibility for providing services to a disproportionate
number of Medi-Cal beneficiaries. There are some key
differences. Even though the original plan recognized the
protection of both types of providers, safety net providers
were given more preference because they were also providers of
charity care, were responsible for the uninsured and their
financial viability was essential to preserve this
infrastructure. This is also recognized in the definition of
"safety net provider" adopted by regulation which is "any
provider of comprehensive primary care or acute care hospital
inpatient services that provides these services to a
significant total number of Medi-Cal and charity/or medically
indigent patients in relation to the total number of patients
served by the provider." Secondly, the new generation of
private safety net providers captured by this bill is
frequently organized into large medical groups or IPAs that
are financially able to take risk or are clinics owned and
operated by a plan and are no longer a single physician or a
small medical group that lacked the financial and
infrastructure support of a large medical group. Finally,
even though the Medi-Cal reimbursement rate in California is
considered below average, there are now more sources of
payment for low-income populations, such as the Healthy
Families Program (HFP) and hospital provider fees.
DHCS notified GMC and Two-Plan model plans by means of an All
Plan Letter in 2003 that it intended to modify the default
assignment formula to recognize the relative quality
performance of each plan as measured by HEDIS and that it
intended, over the next year to work with external
stakeholders to develop the specific details and anticipated
implementation in 2005. According to DHCS, this Auto
Assignment Incentive Program was implemented in 2005 (Year
one) with five HEDIS measures. Additional HEDIS measures were
added in year three and year six, but one was dropped in year
six as well. DHCS originally capped the percentage change in
total assignments to a plan at 10% to avoid a disruptive
transition. In 2008, the cap was changed to 20%, but no plan
has ever had a change that would have exceeded this cap.
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5)BUDGET PROPOSAL. In fiscal year (FY) 2012-13 DHCS is
proposing to require Medi-Cal enrollees in the Family or SPD
aid code who do not choose a plan to be defaulted into a plan
based on default ratios which consider health plan cost in
addition to quality of care and safety net population factors.
Savings would be recognized by rewarding plans with lower
costs with additional default enrollment. The assumed savings
is $2.4 million in General Funds for FY 2012-13 and $5.8
million in FY 2013-14. DHCS has not submitted trailer bill
language and does not believe that statutory authority is
required.
6)SUPPORT . Molina Healthcare of California, in support of this
bill, states this bill creates a fair definition of safety net
provider for the purposes of the MCMC default assignment
algorithm. According to this supporter and others, the
current definition fails to recognize private providers who
make a significant contribution to the safety net. These
supporters assert this bill would reward those providers who
have made an important investment in this program as we move
forward toward federal health care reform and a period of
significant new demands on the delivery system. Molina
Healthcare further points out it that it serves only
beneficiaries of government-sponsored programs, including
Medi-Cal, HFP and Medicare. In addition, its affiliate,
American Family Care (AFC), owns and operates 18 clinics in
four counties that service patients in these government health
care programs. According to Molina Healthcare, Molina/AFC's
primary care clinics are an integral part of the delivery
system in the communities that they serve and are running bus
lines that provide transportation to their patients as well as
the community. Molina states that they, along with other
health plans in Medi-Cal, contract with a number of physician
offices and medical groups that are similarly committed to
serving the Medi-Cal population. Molina and others argue in
support that these providers should be recognized for that
commitment and the current policy fails to do this. According
to Molina, it has been publicly reported that health plans in
the Medi-Cal program favor physician who qualify under the
current definition by assigning more new patients to the them,
which in turn gives these providers much-needed volume to make
up for the lower reimbursement rates in government programs.
Molina and other supporters argue the definition of safety net
provider has economic impacts on providers that will affect
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their ability to participate in the program in the future and
make the kinds of investments and facility improvements demand
by expansions to SPDs and dual-eligible beneficiaries. The
Sacramento Family Medical Centers also in support, reports
that it is an independent community based primary care
organization composed of 23 providers and serves 28,000 which
is more than all the Sacramento FQHCs in Sacramento combined.
Because they provide such a significant amount of safety net
care, their dedication to these beneficiaries should be
equitably recognized.
Also in support, SynerMed, states that 70% of its approximately
600,000 members belong to Medi-Cal, HFP, and Healthy Kids
managed care programs. Another 10% belong to Medicare managed
care programs. According to SynerMed, its core mission is to
provide accountable and coordinated care to beneficiaries of
various government sponsored programs. SynerMed further
points out that the current definition of "safety-net"
excludes the private physician practice which, despite
attributing more than 50% of their business to
government-sponsored programs, do not fall within the
parameters of the definition. SynerMed argues that failure to
recognize these providers as safety net providers result in
negative economic impacts at a time when access to care,
particularly from financially solvent risk-bearing
organizations, is critical to maintaining the Medi-Cal (and
safety-net) delivery system. MedPOINT, also in support,
provides the following statistics in support of its assertion
that it should be considered a "safety net provider." Out of
its 485,000 members, over 435, 000 are Medi-Cal enrollees,
26,000 are HFP, 3,500 are Medicare, only 13,500 are commercial
and the remainder is a mix of Healthy Kids, Access for Infants
and Mothers Program and Point of Service. MedPOINT's members
come from the following Medi-Cal plans, Blue Cross, Care 1st,
CHP, Health Net, Inland Empire Health Plan, LA Care, and
Molina. MedPOINT argues that its management is committed to
providing high quality health care to the Medi-Cal population
and that this dedication should be recognized through
inclusion of their physician practice into the safety net
provider definition.
The California Association of Physician Groups (CAPG) states
that the California physician groups under the delegated model
have provided coordinated patient care for over two decades.
According to CAPG, hospital stays are one of the top cost
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drivers in the Medi-Cal system. CAPG, citing the California
HealthCare Foundation (CHCF) Almanac, states that the
comparison of preventable hospitalizations per 100,000 people
among a safety-net population versus a commercial population
was more than two-to one. CAPG also citing CHCF, states that
a 2010 study showed there were 921 preventable
hospitalizations of safety net patients for every 337
non-safety net patients in California. CAPG claims that its
member groups have managed to keep avoidable Medicare senior
hospital admission below 220 per 1,000 annually as compared to
the national average of 360 days. According to CAPG, its
member groups accomplish this through better coordination of
patient care, by building an infrastructure within the
physician groups to monitor at-risk patients and intervene
before a condition requires admission. CAPG also states in
support that with as many as two million additional
Californians moving into MCMC care over the next two years,
the need to expand the medical home and coordinated care
network for safety net patients has never been greater.
Private Essential Access Community Hospitals (PEACH), also in
support writes that they are advocating for the inclusion of
clinics associated with private DSH hospitals because of their
important role as safety net providers. According to PEACH,
when compared to public and children's DSH hospital
counterparts, California's community safety net hospitals
provide nearly half (47%) of all care to Medi-Cal patients and
more than half (52%) of all emergency care. All PEACH Members
are DSH and, on average, PEACH member hospitals have a patient
base that is 70% uninsured and government sponsored.
Additionally, private DSH hospitals provide 44% of their care
to SPD patients. Private DSH hospitals also provide nearly a
third (32%) of the state's care to medically vulnerable
Supplemental Security Income (or SSI) patients, about 80% of
whom are dual eligible.
7)OPPOSITION . SEIU California writes in opposition that this
bill could hurt county hospitals by changing the formula for
default enrollment in MCMC. According to SEIU, this bill
could have the consequences of starving county hospitals of
badly needed funds, diverting them instead to Molina health
plans. According to this opposition, we may need to change
the formula for default enrollment in MCMC, but if we do so,
we need to do it in a way that preserves funding for basic
services and the safety net. According to SEIU, the
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consequences of this plan throughout the county system are
insufficiently thought through.
8)OPPOSE UNLESS AMENDED . The Local Health Plans of California
(LHPC) writes that safety net providers are absolutely
indispensable partners in serving this low-income and
otherwise medically underserved population. LHPC, further
states that they appreciate efforts to recognize new groups of
providers that are indeed safety net providers and contract
with plans to serve a significant proportion of the Medi-Cal
population. In addition to traditional safety net providers,
there are private medical groups and IPAs which contract with
plans and serve a significant proportion of the underserved
population in relation to their total patient population.
LHPC believes it is fair and appropriate to recognize the
important and growing role these physician groups play in
serving the MCMC population, which is expected to grow
dramatically in the coming years. These groups are an
increasingly critical part of the safety net. However, LHPC
is opposed to provisions in this bill that would allow a
commercial MCMC plan, such as Molina, to count its own medical
clinics as its "safety net" providers for the purposes of the
default algorithm. LHPC argues that like all other MCMC
plans, Molina plays an important role in serving a
traditionally underserved population. However, unlike other
health plans, Molina also has its own affiliated medical
clinics. According to LHPC these medical clinics are distinct
from almost all other types of safety net providers in that
they are wholly owned by the health plan and serve that plan's
members almost exclusively. Thus, LHPC argues, counting
Molina's clinics as "safety net providers" would dilute the
pool of total "safety net" providers to sole benefit of Molina
- and the detriment of all other traditional safety net
providers and health plans. LHPC opposes unless amended
because this bill would allow Molina to artificially pad its
total number of safety net providers in the default algorithm
and increase its default enrollment - without actually
contracting with any additional traditional safety net
providers.
To address this issue, LHPC is requesting the following
amendment to subdivision (g) of proposed Section 14093.12 of
Welfare and Institutions Code be amended as follows:
(g) a medical group, independent practice, association,
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physician office, or clinic with more than 10 physicians that
has a Medi-Cal or medically indigent encounter rate of at
least 50 percent of total patients served in a calendar year;
based on claims or counter data. However, a clinic that is
controlled by, under common control with, or in control of a
managed care health plan that contracts with the department
for the provision of services under this chapter shall not be
considered a safety net provider for the purposes of this
section. The term "control" shall have the same meaning as
set forth in subdivision (d) of Section 1300.45 of Title 28
the California Code of Regulations.
9)TECHNICAL AMENDMENT . The author has agreed to the following
technical amendment to correct the reference for DSH
hospitals:
f) A freestanding county clinic or clinic associated with a
disproportionate share hospital that has been determined to
meet the definition in either subparagraph (d), (f) or (j) of
Section 14166.1 .
10)RELATED LEGISLATION . AB 1553 (Monning) establishes
requirements and a process by which a Medi-Cal-eligible
person, except in a COHS county, can request an exemption from
mandatory enrollment in a MCMC. AB 1553 is pending in the
Assembly Health Committee.
REGISTERED SUPPORT / OPPOSITION :
Support
Molina Healthcare of California (sponsor)
Arnold Greenberg, MD, Inc.
California Association of Physician Groups
California Medical Association
California Podiatric Medical Association
California Teamsters Public Affairs Council
Employee Health Systems Medical Group, Inc.
Greater Sacramento Pediatrics Assoc. Inc.
MedPOINT Management
Private Essential Access Community Hospitals
Sacramento Family Medical Centers
SynerMed
Opposition
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SEIU California
Analysis Prepared by : Marjorie Swartz / HEALTH / (916)
319-2097