BILL ANALYSIS �
AB 2472
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Date of Hearing: April 10, 2012
ASSEMBLY COMMITTEE ON HEALTH
William W. Monning, Chair
AB 2472 (Butler and Bonnie Lowenthal) - As Introduced:
February 24, 2012
SUBJECT : Medi-Cal: managed care.
SUMMARY : Requires the Department of Health Care Services (DHCS)
to establish capitation rates for a primary care case management
(PCCM) organization, subsequently licensed as health care
service plan pursuant to the Knox-Keene Health Care Service Plan
Act of 1975 (Knox-Keene), in the same manner as rates are set
for any other Medi-Cal managed care (MCMC) plan for services to
MCMC enrollees. Makes legislative findings and declarations
regarding the AIDS Healthcare Foundation (AHF).
EXISTING LAW :
1)Establishes the federal Medicaid Program, Medi-Cal in
California, administered by 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
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 Systems (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 a
commercial plan and an LI (Two-Plan county).
5)Regulates health plans under Knox-Keene, administered by the
Department of Managed Health Care which establishes licensing
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standards for health plans.
FISCAL EFFECT : This bill has not been analyzed by a fiscal
committee.
COMMENTS :
1)PURPOSE OF THIS BILL . According to the sponsor, AHF, this
bill is to ensure that DHCS develops and pays a MCMC
capitation rate to AHF for its enrollees in the same manner
and using utilization data in the same fashion as all the
other MCMC plans. According to the author, AHF is amending
its Knox-Keene license to include inpatient hospitalization
and will soon be a fully licensed Knox-Keene plan providing a
comprehensive set of benefits. The author states that despite
this achievement, DHCS has advised AHF that it will continue
to set its managed care rate the same way it did when AHF was
a PCCM. According to the sponsor, the prior method was due to
the unique structure of AHF and was set using a methodology
that artificially caps the rate at a level equivalent to
fee-for-service (FFS). The author argues that AHF should be
treated similarly to the other two plans in Los Angeles which
are not artificially capped in this fashion.
2)BACKGROUND . According to AHF, it was founded in 1987, is
based in Los Angeles, and is one of the largest nonprofit
providers of care and treatment of people with HIV/AIDS in the
world with over 125,000 patients worldwide. AHF operates 10
health care clinics in the Los Angeles metropolitan area. All
the clinics provide coordinated, highly specialized care to
Medi-Cal beneficiaries. AHF states that it currently serves
approximately 750 Angelenos with HIV/AIDS in its MCMC plan.
For many years, AHF has been classified as a PCCM under
Medi-Cal and obtained a limited Knox-Keene license in 2005 to
accept capitated payments for all services except inpatient
care.
3)MCMC . Basic health care services in the Medi-Cal Program are
delivered either through MCMC or by FFS. Within MCMC there
are three different models: COHSs, GMCs, and the Two-Plan
Model. As of September 2011, the Two-Plan Model served about
3 million enrollees in 14 counties: Alameda, Contra Costa,
Fresno, Kern, Kings, Los Angeles, Madera, Riverside, San
Bernardino, San Francisco, San Joaquin, Santa Clara,
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Stanislaus, and Tulare. The GMC model served about 450,000
enrollees in two counties: Sacramento and San Diego. COHS
served about 885,000 enrollees through six health plans in 14
counties: Marin, Mendocino, Merced, Monterey, Napa, Orange,
San Mateo, San Luis Obispo, Santa Barbara, Santa Cruz, Solano,
Sonoma, Ventura, and Yolo.
Until June 2011, approximately half of all Medi-Cal eligible
persons in Two-Plan and GMC counties, primarily children,
pregnant women, and non-disabled parents, were required to
enroll in one of the MCMC plans offered in the county. SPDs
were allowed to voluntarily enroll in Two-Plan and GMC
counties and approximately 300,000 did enroll. In counties
with a COHS, the SPD population was mandated to enroll.
Effective November 2010, the 2010 Section 1115(a) Medi-Cal
Demonstration Waiver entitled "Bridge to Reform" authorized
DHCS to expand mandatory enrollment of all SPDs to the GMC and
Two-Plan counties, approximately 600,000 additional persons.
The conversion from FFS to MCMC for this SPD population began
in June 2011 and will be completed by July 1, 2012.
4)AHF ENROLLMENT . Prior to mandatory enrollment, DHCS operated
a number of small scale care management programs for specific
populations such as a Disease Management program for SPDs with
certain chronic diseases and a coordinated care management
program for persons who may be seriously ill and near the end
of life or have a serious mental illness. As part of this
effort, AHF had contracted with DHCS to operate a capitated
PCCM project in Los Angeles since April 1995 for people with
HIV/AIDS. AHF is in the process of obtaining a Knox-Keene
license in order to operate as a full risk managed care plan.
In implementing the mandatory enrollment of SPDs, additional
steps were required by the federal Centers for Medicare and
Medicaid Services (CMS) and the Legislature to provide for
continuity of care with existing providers. The SPD
population-compared to the families and children-consists of a
higher percentage of persons with chronic diseases, mental
illness, and disabling conditions. As a result, this
population has a much higher utilization of services, is
chronically ill, and more likely to be linked to a regular
provider. The enrollment process requires that if a person
does not choose a plan efforts are made to enroll the person
in the plan that contracts with the person's existing
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providers instead of random default. In addition, in Los
Angeles County only, any SPD who is eligible for the AHF PCCM
Project may select AHF or the successor Knox-Keene plan
instead of one of the two plans offered.
5)CAPITATION RATE . One of the distinguishing characteristics of
MCMC is that the plan is paid a capitated rate for each
enrollee and is at risk for the provision of all covered
health care services. Some costly or unpredictable services
may continue to be reimbursed directly by DHCS on a FFS basis,
such as Long-Term Care. Since the 2008 contract year, federal
law has required the capitation rate ranges to be actuarially
sound and developed in accordance with rate-setting guidelines
established by CMS. DHCS has contracted with Mercer
Consulting to develop a rate setting process by aid code that
has been approved by CMS. In addition each individual
contract must be approved by CMS. Aid codes are the
eligibility code used by the Medi-Cal system to classify a
person by category of eligibility. Managed care rates are set
for eight different aid codes including AIDS/Medi-Cal Only,
AIDS/Dual Eligible, Adult & Family, and Aged/Disabled Medi-Cal
Only. Mercer develops a rate range for each county and for
each plan that is based on enrollment, eligibility, claims
data, reimbursement level, benefit design, and financial data
and information. DHCS negotiates a specific per member per
month (PMPM) rate with each plan within the range.
AHF reports currently the PCCM payment for individuals with AIDS
and HIV is calculated by taking the FFS claims history from
Los Angeles County for services provided to individuals with
AIDS. DHCS creates a PMPM payment that is at or near the
level of what DHCS would have paid on a FFS basis. According
to AHF, the FFS rates are established by DHCS, but do not
reflect any cost inflation or utilization adjustments. AHF
argues that in many cases, these rates have not been adjusted
for years and no longer reflect an accurate basis for a
provider's actual costs in treating patients and providing
services. Prior to adopting the Mercer process, all plan
rates were capped at the "FFS equivalent." Even though AHF is
transitioning to a full risk MCMC plan, according to AHF, DHCS
is not planning to convert to the Mercer actuarial process to
set the rate. Without this bill, the rate will continue to be
set using the capped FFS-equivalent and therefore would not
reflect the true and appropriate costs of serving this
population.
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6)SUPPORT . AHF, sponsor of this bill, writes in support that
this bill will ensure that DHCS develops a new capitated rate
for AHF in the same manner currently used to develop rates for
the other contracting managed care plans. According to AHF,
the rates for all other managed care plans, like Health Net
and LA Care are developed by Mercer through a contract with
DHCS that requires the rates to be actuarially based and are
not artificially capped like the AHF rate. AHF states this
arbitrary decision to treat AHF differently from other plans
in Los Angeles County and elsewhere puts AHF at a disadvantage
relative to other plans serving people with HIV/AIDS. In
further support, AHF states, ironically, this would provide
fewer resources to the one Los Angeles County nonprofit
provider that is most uniquely situated to provide
comprehensive and effective managed care to people with
HIV/AIDS.
7)PREVIOUS LEGISLATION .
a) AB 1327 (Portantino) of 2011 would have required DHCS to
conduct a three-year pilot project to determine the
feasibility of developing a blended per-capita payment rate
for services provided to enrollees with HIV or AIDS in a
Medi-Cal PCCM and required DHCS to pay these rates to a
Medi-Cal PCCM plan or successor Knox-Keene plan for
beneficiaries with HIV or AIDS. AB 1327 died on suspense
in the Assembly Appropriations Committee.
b) SB 208 (Steinberg), Chapter 714, Statutes of 2010, among
other provisions, implemented the waiver provisions related
to mandatory enrollment of SPDs.
REGISTERED SUPPORT / OPPOSITION :
Support
AIDS Healthcare Foundation (sponsor)
Opposition
None on file.
Analysis Prepared by : Marjorie Swartz / HEALTH / (916)
319-2097
AB 2472
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