BILL ANALYSIS Ó
AB 2096
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Date of Hearing: April 24, 2012
ASSEMBLY COMMITTEE ON HEALTH
William W. Monning, Chair
AB 2096 (V. Manuel Perez) - As Amended: April 18, 2012
SUBJECT : Public health care: Medi-Cal: district hospitals.
SUMMARY : Requires the Department of Health Care Services (DHCS)
to implement by July 1, 2013, with respect to district
hospitals, an existing Intergovernmental Transfer (IGT) Program
relating to increased funding for Medi-cal managed care services
provided by designated and nondesignated public hospital and
makes various findings and declarations with regard to district
hospitals. Specifically, this bill :
1)Sets a deadline of July 1, 2103 for DHCs to implement the IGT
program for district hospitals and requires consultation with
district hospital representatives.
2)Requires DHCS to request additional federal funding, available
after the budget neutrality calculation required under the
Section 1115(a) Medicaid Demonstration Waiver " A Bridge to
Reform", and to make the funding available to district
hospitals in an amount proportionate to the amount of
uncompensated care provided by those hospitals. Requires the
funds to be accessed utilizing certified public expenditures
(CPEs).
3)Requires DHCS to encourage Low Income Health Program (LIHP)
contractors to allow district hospitals to utilize CPEs or
IGTs or both to access federal funds for reimbursement for
services provided to LIHP eligible patients regardless of
whether the patients are part of the LIHP contractor's
network.
4)Makes various findings and declarations with regard to the
preservation of and financial challenges facing district
hospitals and expressing intent to include district hospitals
in all future endeavors that seek increased federal funding
for public hospitals that treat the uninsured and
undersinsured.
EXISTING LAW :
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Establishes, under federal law, the Medicaid Program (Medi-Cal
in California, administered by DHCS) to provide comprehensive
health care services and long-term care to low income
populations such as pregnant women, children, and seniors and
people with disabilities.
Defines, under federal law, the UPL for hospital reimbursement
as the reasonable estimate of what Medicare would pay to all
hospitals within a class.
4) Authorizes DHCS to contract with qualified individuals,
entities, or organizations to provide services to, arrange for,
or case manage, the care of Medi-Cal beneficiaries, including
hospital inpatient services.
5) Defines a MCMC plan as any entity that enters into one of
several types of contracts with DHCS including county organized
health systems, geographic managed care plans, and local
initiatives.
6) Requires, under federal law, payments to MCMC plans to be set
at a capitation rate that is actuarially sound.
7) Authorizes local entities to establish, pursuant to a Section
1115(a) Medicaid waiver, the LIHP MCE to provide health care
services to low-income childless adults as a voluntary program
funded with local governmental expenditures and matched with
fede
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FISCAL EFFECT : >
COMMENTS :
1)PURPOSE OF THIS BILL . >
2)BACKGROUND . In November 20101, California received federal
approval for a new five year Section 1115 Medi-Cal
Demonstration/Pilot Project Waiver, entitled "A Bridge to
Reform." Section 1115 of the Social Security Act authorizes
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the federal Secretary of Health and Human Services to allow
states to receive federal Medicaid matching funds without
complying with all of the federal Medicaid rules.
Traditionally designed as research and demonstration programs
to test innovative program improvements and to facilitate
coverage expansions to populations not otherwise eligible,
they are also used to modify benefits structures and financing
mechanisms. This waiver is a renewal of the Hospital
Financing /Uninsured Waiver that was approved in 2005 and
included a continuation of the hospital financing provisions
from the 2005 waiver but with modifications to the allocation
of DSH funds and the Safety Net Care Pool funds. The 2010
waiver also included a new DSRIP fund that is tied to
achievement of specific milestones.
This 2010 Replacement Waiver is intended as a bridge to
implementation of the Patient Protection and Affordable Care
Act (ACA) which requires states to include childless adults,
under age 65, who are not otherwise eligible for Medi-Cal or
Medicare with incomes up to 133% of the federal poverty level
(FPL) in its Medicaid program. Building on the Health Care
Coverage Initiative (HCCI) model from the 2005 waiver, the
2010 waiver establishes the LIHP for this population and
expands it statewide at the option of a county option or other
local entity. A local entity that chooses to participate will
use CPEs as the matching funds. The Special Terms and
Conditions (STCs) that accompanied the waiver approval
provided that this locally-based coverage is a bridge to the
more significant coverage that is effective in 2014 and CMS
considers this transition a MCE. As such, CMS imposed a
number of Medicaid requirements in the STCs but allowed for
flexibility within the parameters of a Medicaid demonstration
project
3)Budget Neutrality . Section 1115(a) Medicaid waivers allow
states to have flexibility with regard to many of the usual
Medicaid requirements as long as there is "budget neutrality"
so that the federal spending would be no more than it would
have been in the absence of the waiver. SB 208 and the 2010
Section 1115(a) authorized DHCS to implement a mandatory
enrollment of SPDs into MCMC plans and established an IGT
mechanism in order for DPHs to continue to receive federal
matching funds for services provided to this population
through managed care plans. In order to assure that these
payments do not jeopardize the budget neutrality limit, DPH
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hospitals have agreed to forgo $160 million in payments
through this process. As part of this agreement, this bill
provides for direct grants to these hospitals and allows them
to participate in the supplemental payments that are made to
MCMC plans for hospital inpatient services from fee revenue.
4)IGTs . The 2005 hospital waiver was also a response to the
increasing federal scrutiny by CMS of IGTs. IGTs are
transfers of public funds from one level of government to
another. California relied on IGTs as the nonfederal share
for various supplemental payment programs such as the Private
Supplemental Payment Program and DSH payments and to backfill
General Fund in the Medi-Cal Program. Under the terms of the
2005 hospital waiver, the use of IGTs as the non-federal share
for these payments was severely restricted. However SB 208
(Steinberg), Chapter 714, Statutes of 2010, SB 90, AB 113, and
the 2010 Medi-Cal Bridge to Reform waiver have expanded use of
IGTs. For instance, SB 90 authorized the use of IGTs for
supplemental payments through MCMC plans for both NDPH and
DPH. AB 113 implemented an IGT program for NDPHs regardless
of whether they contracted through the SPCP program. IGTs are
also used as the nonfederal share of payments made to DPHs for
SPDs who are enrolled into MCMC plans.
5)SUPPORT . >
6)OPPOSITION . >
7)RELATED LEGISLATION . >
8)PREVIOUS LEGISLATION .
a) AB 1066 (John A. Pérez), Chapter >, Statutes of
2011enacted technical and conforming statutory changes
necessary to implement the Special Terms and Conditions
(STC) required by the federal Centers for Medicaid and
Medicare Services (CMS) in the approval of the Section 1115
Medi-Cal Demonstration Project entitled "California's
Bridge to Reform," approved on Nov 2, 2010.
b) AB 342 (John A. Pérez), Chapter 723, Statutes of 2010
enacted the LIHP and Coverage Expansion and Enrollment
Projects to provide health care benefits to uninsured
adults up to 200% of the FPL, at county option through a
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Medi-Cal waiver demonstration project.
c) SB 208 (Steinberg), Chapter 714, Statutes of 2010,
implemented provisions of the 2010 Section 1115 replacement
waiver including establishing the Public Hospital
Investment, Improvement and Incentive Fund consisting of
IGTS from counties or other specified governmental
entities, to be matched with federal funds and to be used
for investment, improvement and incentive payments for
designated public hospitals and the affiliated governmental
entities (Counties and UC), authorized DHCS to require the
mandatory enrollment of seniors and people with
disabilities in an MCMC plan commencing the later of either
June 1, 2011 or obtaining federal approval and required
DHCS to implement pilot projects to provide coordinated
care to children in the California Children's Service and
to persons who are eligible for Medi-Cal and Medicare
REGISTERED SUPPORT / OPPOSITION :
Support
District Hospital Leadership Forum (sponsor)
Alameda Hospital
Antelope Valley Hospital
Association of California Healthcare Districts
Coalinga Regional Medical Center
Hazel Hawkins Memorial Hospital
Lompoc Valley Medical Center
Marin General Hospital
Mountains Community Hospital
Palomar Health
Pioneers Memorial Hospital
Salinas Valley Memorial Healthcare System
San Bernardino Mountains Community Hospital District
Tri-City Medical Center>
Opposition
Alameda County Medical Center
California Association of Public Hospitals and Health Systems
California State Association of Counties
City and County of San Francisco
Contra Costa County
Los Angeles County Board of Supervisors
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Monterey County
Riverside County
San Francisco Department of Public Health
San Mateo County
Santa Clara County Board of Supervisors
University of California
Ventura County>
Analysis Prepared by : Marjorie Swartz / HEALTH / (916)
319-2097