BILL NUMBER: AB 2472	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Members Butler and Bonnie Lowenthal
   (Principal coauthor: Senator Price)

                        FEBRUARY 24, 2012

   An act to amend Section 14301.1 of the Welfare and Institutions
Code, relating to Medi-Cal.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 2472, as introduced, Butler. Medi-Cal: managed care.
   Existing law requires the State Department of Health Care Services
to pay capitation rates to health plans participating in the
Medi-Cal managed care program using actuarial methods and authorizes
the department to establish health-plan- and county-specific rates.
Existing law requires the department to utilize a county- and
model-specific rate methodology to develop Medi-Cal managed care
capitation rates for contracts entered into between the department
and any entity pursuant to specified provisions that govern certain
managed health care models.
   This bill would require the department to utilize fee-for-service
data in setting rates for an entity that has contracted with the
department as a primary care case management organization pursuant to
specified provisions of law, including provisions that authorize the
department to contract with primary care providers that serve
persons infected with human immunodeficiency virus (HIV), in the same
manner and for the same purposes as it used this data to establish
rates for other specified managed care health care models.
   The bill would make various findings and declarations relating to
the AIDS Healthcare Foundation.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  The Legislature finds and declares all of the
following:
   (a) The AIDS Healthcare Foundation (AHF) has been providing
services to people with HIV and AIDS since 1987 and opened its first
health care clinic in 1991.
   (b) AHF now has 12 health care clinics in California with 10 of
them in the Los Angeles metropolitan area. All of the clinics provide
coordinated, highly specialized care to Medi-Cal beneficiaries.
   (c) For many years, AHF has been classified as a primary care case
management organization under the Medi-Cal program and obtained a
Knox-Keene license in 2005 to accept capitated payments for all
services except inpatient care. Because AHF has been a uniquely
structured Medi-Cal managed care entity, the State Department of
Health Care Services annually has formulated a provider rate specific
to AHF. This rate has been set using a fee-for-service methodology
that is no longer used when calculating rates for Medi-Cal managed
care plans.
   (d) AHF has been a long-time advocate for managed care for persons
with disabilities, including chronic medical conditions like HIV and
AIDS. Given the state's continued expansion and enrollment of
special populations into managed care, AHF has amended its Knox-Keene
license and will be able to continue serving patients with HIV and
AIDS for a comprehensive set of benefits, including inpatient
hospitalization.
   (e) Through three unique managed care models, the Medi-Cal Program
contracts with several types of managed care organizations
throughout California. These plans include county organized health
systems, local initiatives, nonprofit health plans and commercial
health plans. All of these plans are licensed and regulated under the
Knox-Keene Act as well as having additional oversight and contract
requirements through the department. AHF is one of these licensed
managed care organizations contracting with the department.
   (f) Section 1903(m)(2)(A)(iii) of the federal Social Security Act
requires states, including California, to pay Medicaid health plan
rates that are actuarially sound. The Centers for Medicare and
Medicaid Services (CMS) has defined actuarial sound capitation rates
through regulation (42 C.F.R. 438.6) as rates that are (1) developed
in accordance with generally accepted actuarial principles and
practices; (2) appropriate for the populations to be covered and the
services to be furnished; and (3) certified as meeting applicable
regulatory requirements by qualified actuaries.
   (g) The department currently develops actuarially-based rates for
its Medi-Cal managed care plans by contract. These rates are annually
reviewed by the Legislature through the budget process to ensure
they assure appropriate payment for health care services to Medi-Cal
beneficiaries while also protecting state funds.
   (h) Given AHF's continued dedication to providing specialized
managed care services to Medi-Cal beneficiaries living with HIV and
AIDS and its recently-expanded capacity to include inpatient services
as part of its contract with the department, it is seeking to ensure
that its capitated rate is developed in the same manner as all other
Medi-Cal managed care plans.
   (i) It is the intent of the Legislature in enacting this
legislation that the department develop a new capitated rate for AHF
in the same manner as it currently develops rates for its other
contracting managed care plans.
  SEC. 2.  Section 14301.1 of the Welfare and Institutions Code is
amended to read:
   14301.1.  (a) For rates established on or after August 1, 2007,
the department shall pay capitation rates to health plans
participating in the Medi-Cal managed care program using actuarial
methods and may establish health-plan- and county-specific rates. The
department shall utilize a county- and model-specific rate
methodology to develop Medi-Cal managed care capitation rates for
contracts entered into between the department and any entity pursuant
to Article 2.7 (commencing with Section 14087.3), Article 2.8
(commencing with Section 14087.5), and Article 2.91 (commencing with
Section 14089) of Chapter 7 that includes, but is not limited to, all
of the following:
   (1) Health-plan-specific encounter and claims data.
   (2) Supplemental utilization and cost data submitted by the health
plans.
   (3) Fee-for-service data for the underlying county of operation or
other appropriate counties as deemed necessary by the department.
   (4) Department of Managed Health Care financial statement data
specific to Medi-Cal operations.
   (5) Other demographic factors, such as age, gender, or
diagnostic-based risk adjustments, as the department deems
appropriate.
   (b) To the extent that the department is unable to obtain
sufficient actual plan data, it may substitute plan model, similar
plan, or county-specific fee-for-service data.
   (c) The department shall develop rates that include administrative
costs, and may apply different administrative costs with respect to
separate aid code groups.
   (d) The department shall develop rates that shall include, but are
not limited to, assumptions for underwriting, return on investment,
risk, contingencies, changes in policy, and a detailed review of
health plan financial statements to validate and reconcile costs for
use in developing rates.
   (e) The department may develop rates that pay plans based on
performance incentives, including quality indicators, access to care,
and data submission.
   (f) The department may develop and adopt condition-specific
payment rates for health conditions, including, but not limited to,
childbirth delivery.
   (g) (1) Prior to finalizing Medi-Cal managed care capitation
rates, the department shall provide health plans with information on
how the rates were developed, including rate sheets for that specific
health plan, and provide the plans with the opportunity to provide
additional supplemental information.
   (2) For contracts entered into between the department and any
entity pursuant to Article 2.8 (commencing with Section 14087.5) of
Chapter 7, the department, by June 30 of each year, or, if the budget
has not passed by that date, no later than five working days after
the budget is signed, shall provide preliminary rates for the
upcoming fiscal year.
   (h) For the purposes of developing capitation rates through
implementation of this ratesetting methodology, Medi-Cal managed care
health plans shall provide the department with financial and
utilization data in a form and substance as deemed necessary by the
department to establish rates. This data shall be considered
proprietary and shall be exempt from disclosure as official
information pursuant to subdivision (k) of Section 6254 of the
Government Code as contained in the California Public Records Act
(Division 7 (commencing with Section 6250) of Title 1 of the
Government Code). 
   (i) This section shall apply to an entity that has contracted with
the department as a primary care case management organization
pursuant to Article 2.9 (commencing with Section 14088) of Chapter 7
and subsequently is licensed as a health care plan pursuant to
Chapter 2.2 (commencing with Section 1340) of Division 2 of the
Health and Safety Code. The department shall utilize fee-for-service
data in setting rates pursuant to this subdivision in the same manner
and for all the same purposes as it used this data to establish
rates for all categories of aid groupings for all health plans
operating pursuant to Article 2.7 (commencing with Section 14087.3),
Article 2.8 (commencing with Section 14087.5), and Article 2.91
(commencing with Section 14089) of Chapter 7.  
   (i) 
    (j)  The department shall report, upon request, to the
fiscal and policy committees of the respective houses of the
Legislature regarding implementation of this section. 
   (j) 
    (k)  Prior to October 1, 2011, the risk-adjusted
countywide capitation rate shall comprise no more than 20 percent of
the total capitation rate paid to each Medi-Cal managed care plan.