BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
AB 2266 (Mitchell) - Medi-Cal: Enhanced health homes.
Amended: June 25, 2012 Policy Vote: Health 7-2
Urgency: No Mandate: No
Hearing Date: August 16, 2012
Consultant: Brendan McCarthy
SUSPENSE FILE.
Bill Summary: AB 2266 requires the Department of Health Care
Services to establish a program to provide specified health home
services, with the intent of reducing avoidable hospitalization
or use of emergency medical services.
Fiscal Impact:
One-time administrative costs likely in the hundreds of
thousands of dollars to develop program guidelines,
determine eligibility standards, adopt a Medicaid State Plan
Amendment, and select providers. The Department has about
$650,000 in available federal planning grant funding that
may be used for these costs.
Ongoing costs likely in the hundreds of thousands to
millions of dollars to oversee and administer the program.
The bill requires that all costs to implement the program be
funded with non-state public funds or private funds for the
first eight quarters of implementation. After the first
eight quarters, should the Department elect to continue
implementation of the program, administrative costs would be
funded at the standard federal financial participation rate
(50 percent General Fund, 50 percent federal funds).
One-time costs in the low millions of dollars to perform an
evaluation of program outcomes during the first eight
quarters. The Department indicates that prior program
evaluations similar in scope have cost between $1 million
and $5 million. The bill specifies that the Department is
only required to complete the evaluation if federal
financial participation is available and if non-state public
funds or private funds are available.
AB 2266 (Mitchell)
Page 1
The long-term program costs are unknown, but likely to be
cost-neutral to the state. Under the health home option in
federal law, enhanced federal financial participation at 90
percent is available for the first eight quarters of program
implementation - increasing state funding that can be used
for the program. On the other hand, federal law and guidance
requires health home programs to provide more intensive
services than are typically provided by Medi-Cal. The intent
of the bill is to both improve health outcomes for
participants and to reduce overall costs, by providing more
intensive primary care and support services while reducing
costly hospitalization and emergency medical services. Based
on other programs similar in nature, including the Frequent
Users of Health Services Initiative, this is a reasonable
assumption. In addition, the bill requires the Department to
continue implementation of the program after the initial
eight quarters only if it finds that the avoided costs are
sufficient to fully fund the ongoing costs of
implementation.
Background: Under the federal Patient Protection and Affordable
Care Act (Affordable Care Act), states are authorized to
implement health home programs. Under federal law, health home
programs are required to provide specified services to target
populations that have serious chronic conditions (including
mental health conditions). The services provided under health
homes are more intensive than typical for state Medicaid
programs, and include intensive case management, transitional
care, patient and family support, and referral to social
services. In return for providing more intensive services,
states are eligible for enhanced federal financial participation
at 90 percent of costs for the first eight quarters of program
implementation.
The Department has been exploring the potential to implement a
health home program in the state. Work done by a consultant to
the Department identified several options for providing health
home services - for example through California Children's
Services Special Care Centers, county mental health plans,
managed care systems, and others.
Proposed Law: AB 2266 would require the Department of Health
Care Services to develop and implement a health home program.
AB 2266 (Mitchell)
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Specific provision of the bill include:
A requirement that the Department design a health home
program and designate eligible providers.
A requirement that the Department submit a state plan
amendment to the federal government.
Defining the population eligible for health homes, based on
specified diagnoses (including mental health disorders,
substance abuse, chronic or life-threatening conditions, and
cognitive impairments) and indications of severity
(including frequent hospitalization, excessing use of
emergency services, chronic homelessness, and others).
Authorizing the Department to limit the program to certain
geographic areas and to use both managed care and
fee-for-service models.
Specifying the types of services that must be provided.
Requiring that the lead provider be either a community
clinic, a provider of mental health services, or a hospital.
A requirement that the Department prepare a program
evaluation, using non-state public funds, private funds, and
federal matching funds.
A requirement that the bill only be implemented to the
extent federal matching funds are available.
A requirement that for the first eight quarters, the
program be funded only with non-state public funds or
private funds.
A requirement that the Department continue implementation
of the program after the initial eight quarters if it finds
that the program results in avoided costs to Medi-Cal
sufficient to offset program costs.
Related Legislation: SB 393 (Hernandez) would define "patient
centered medical home" in statute, pursuant to the definition in
the Affordable Care Act. That bill is on the Assembly Floor.