BILL ANALYSIS �
SB 301
Page 1
SENATE THIRD READING
SB 301 (DeSaulnier, et al.)
As Amended August 24, 2012
Majority vote
SENATE VOTE :Vote not relevant
ECONOMIC DEVELOPMENT (July 3, 2012) APPROPRIATIONS
(August 8, 2012)
(vote not relevant) (vote not relevant)
SUMMARY : Re-enacts for, a Medi-Cal managed care organization
(MCO) gross premium tax on health plans that expired on July 1,
2012, the proceeds of which are to be used to partially fund the
Healthy Families Program (HFP); sunsets the MCO tax on July 1,
2013; repeals the provisions of AB 1494 (Budget Committee),
Chapter 28, Statutes of 2012, a budget trailer bill that enacted
a transition of children in HFP to Medi-Cal, extends the sunset
on the Medi-Cal Quality Assurance Fee (QAF) on Skilled Nursing
Facilities (SNF) from August 1, 2013, until August 1, 2015, and
makes revisions to the methodology by which SNFs are reimbursed
in the Medi-Cal program. Specifically, this bill :
1)Re-enacts, until July 1, 2013, an MCO tax assessment on
Medi-Cal managed care (MCMC) plans to provide funds for
services to children in HFP.
2)Repeals the provisions of AB 1494 that transitions children in
the HFP to Medi-Cal.
3)Provides that savings from capping the professional liability
insurance cost category of the Medi-Cal reimbursement rates
for SNFs remain in the General Fund (GF) and are not
transferred to the SNF Quality and Accountability Special Fund
(QASP).
4)Defers payment of the QASP for one year and transfers the 1%
of the facilities reimbursement set-aside for QASP to the
General Fund (GF).
5)Authorizes the Department of Health Care Services (DHCS) to
identify alternative payment methodologies for the QASP, such
as including the supplemental payment in the rate. Such
alternative payment methodologies may not be implemented
without subsequent statutory changes.
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6)Requires the Department of Public Health (DPH) and DHCS to
regularly (and at least quarterly) meet with stakeholders to
plan for and implement the skilled nursing facility quality
improvement program.
7)Repeals the 2% SNF Medi-Cal rate reductions enacted for the
2012-13 rate year.
8)Provides for a 3% increase in the weighted average Medi-Cal
reimbursement rate for SNFs in 2013-14 and 2014-15.
9)Requires SNFs to meet resident's discharge planning and
referral needs or make referrals to a designated local contact
agency, requires an analysis of the appropriate sections of
specified data sets related to assessments of residents.
10)Requires DHCS and DPH to provide the Legislature an analysis
of nursing facility referrals of residents to local agencies
for community-based services.
EXISTING LAW :
1)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.
2)Authorizes, under federal Medicaid law, states to levy fees on
health care providers that are matched with federal funds
through the Medicaid program and paid out as supplemental
payments, if the fees are within specific parameters.
3)Requires insurers certificated by the California Department of
Insurance (insurers selling property insurance, life
insurance, casualty insurance, and specific types of
disability insurance, including health insurance) to pay a tax
based upon gross premiums received. Establishes in Section 28
of Article XIII of the California Constitution the gross
premiums tax at 2.35% of annual gross premiums as a tax that
is in lieu of all other taxes and licenses upon insurers and
their property, with certain specified exceptions (including
taxes upon real estate and Department of Motor Vehicles
license fees).
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4)Establishes HFP, administered by Managed Risk Medical
Insurance Board (MRMIB), to provide low-cost insurance,
including health, dental, and vision coverage, to children who
do not have health insurance, do not qualify for free Medi-Cal
and are in families at or below 250% of the federal poverty
level, and establishes monthly premium amounts that families
must pay for HFP coverage.
5)Transitions children in the HFP to Medi-Cal, by expanding
Medi-Cal to include targeted low-income children in four
phases beginning no sooner than January 1, 2013.
6)Imposes a Medi-Cal QAF on skilled nursing facilities and
intermediate care facilities for the developmentally disabled.
FISCAL EFFECT : Unknown. This bill, as amended, has not been
analyzed by a fiscal committee.
COMMENTS : Federal law authorizes states to levy fees on health
care providers if the fees are within specific parameters. Many
states (including California) fund a portion of their share of
Medicaid program costs through a fee on health care providers.
Forty-five states have Medicaid provider fees, including
twenty-two states with hospital provider fees. California
imposes provider fees on private hospitals, SNFs and
intermediate care facilities. AB 1422 (Bass), Chapter 157,
Statues of 2009, enacted a gross premium tax on MCMC plans in
place of the provider fee. To prevent states from only levying
an assessment on certain providers, federal law requires
provider fees to be "broad based" and uniformly imposed
throughout a class of providers.
Established through AB 1629 (Frommer), Chapter 875, Statutes of
2004, SNFs pay a QAF to the state, which enables the state to
increase federal financial participation in the Medi-Cal program
and increase rates to SNFs. The Legislature's goal in
increasing rates to SNFs was to increase the quality of care to
SNF patients through increased resources. The SNF QAF has
undergone a complex legislative history, as follows:
1)AB 1629 changed the methodology for calculating reimbursement
rates for freestanding SNF level-B and subacute units of those
freestanding SNFs and allowed DHCS to assess a QAF to provide
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a revenue stream to fund the higher payments under the new
reimbursement methodology. AB 1629 contains provisions, which
negate the entire statute should DHCS cease to assess the QAF
or cease to use the AB 1629 rate reimbursement methodology.
AB 1629 delayed a requirement to implement a rate methodology
from August 1, 2004, until August 1, 2005, and it allowed DHCS
to implement the legislation via provider bulletin, avoiding a
lengthy regulatory process.
2)AB 360 (Frommer), Chapter 508, Statutes of 2005, was a
technical cleanup measure to AB 1629. AB 360 exempted
pediatric subacute units and institutions for mental disease
from the QAF and from the facility-specific rate methodology.
3)AB 203 (Budget Committee), Chapter 188, Statutes of 2007,
extended AB 1629's sunset provision for an additional year to
July 31, 2009. Further, AB 203 extended for one year the
mandated report to the Legislature relative to SNF staffing
levels, staffing retention, worker wages and benefits, state
citations, and the extent to which SNF residents were able to
return to the community.
4)AB 5 X4 (Evans), Chapter 5, Statutes of 2009-10 Fourth
Extraordinary Session, changed the allowable increase for the
weighted average Medi-Cal reimbursement rates for the 2009-10
rate year from 5% to 0% over the weighted average Medi-Cal
reimbursement rate in effect for 2008-09 fiscal year. AB 5 X4
mandated that Medicare revenues received for routine and
ancillary services and Medicare revenue received for services
provided to residents under a Medicare managed care plan be
included in the calculation of the QAF for the 2009-10 rate
year by amending the definition of net revenue to gross
revenue, with the inclusion of Medicare revenues.
5)SB 853 (Arambula), Chapter 717, Statutes of 2010, extended the
sunset provision by one year and mandated the following
methodology changes: a) lifted the rate freeze for the
2010-11 rate year; b) issued a rate increase of up to 3.93%
over the weighted average for the 2010-11 rate year; c)
authorized DHCS to trend revenue data forward using
inflationary factors to increase the revenue base on which the
QAF is calculated; d) assessed the QAF on multilevel
facilities; and, e) established a quality and accountability
supplemental payment system that allows DHCS to issue
supplemental payments based upon quality measures.
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6)AB 97 (Budget Committee), Chapter 3, Statutes of 2011,
implemented a 10% payment reduction to SNFs and other
long-term care facilities effective June 1, 2011.
7)AB 19 X1 (Blumenfield), Chapter 4, Statutes of 2011-12 First
Extraordinary Session, extended the sunset provision by one
year and mandated the following methodology changes: a)
provided a rate increase of no more than 2.4% in 2012-13 rate
year (resulting from the difference between the 2.4% increase
and the actual rate increase from the 2011-12 rate year); b)
terminated the 10% reductions on August 1, 2012, for AB 1629
SNFs; c) held harmless facilities from rates that are less
than their rate that was on file as of May 31, 2011; d)
provided a one-time supplemental payment in the 2012-13 rate
year that is equivalent to the 10% reduction applied from June
1, 2011, to July 31, 2012, for Medi-Cal fee-for-service SNFs;
e) delayed until rate year 2012-13 the set-aside to the QASP
of 1% of the AB 1629 facilities reimbursement rate; and, f)
delayed implementation of the QASP for one year.
In the 2012-13 Budget, in order to achieve $56.6 million in GF
savings in 2012-13, DHCS proposed to delay payments under the
Quality/Accountability Payment Program to Freestanding Skilled
Nursing Facilities-level-B and subacute care units, also known
as AB 1629 facilities, until April 2014. The proposal also
authorized the 2012-13 rate for a facility to be up to 1% below
the rate on file May 31, 2011, and retain the 1% set aside of
the weighted average Medi-Cal reimbursement rate for GF savings
in the 2012-13 rate year. For the 2012-13 rate year only, the
savings from capping the professional liability insurance was
proposed to not be transferred to the Skilled Nursing Facility
Quality and Accountability Special Fund, and instead remain in
the GF. Finally, this proposal rescinded language that
authorized, but not required, a rate increase in 2012-13 up to
the difference between 2.4% and the rate increase provided in
2011-12. A compromise has been reached on these issues and this
bill reflects the results of the agreement. These provisions
are also currently in AB 1469 (Budget Committee), currently
pending in the Senate.
This bill also repeals the HFP to Medi-Cal transition that was
enacted as part of the 2012-13 Budget. Currently, the
transition is scheduled as follows:
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1)Phase 1 - Begins January 1, 2013, and includes about 415,000
children in an HFP health plan that matches a Medi-Cal health
plan.
2)Phase 2 - Begins April 1, 2013, and includes about 249,000
children in an HFP health plan that is a subcontractor of a
MCMC health plan.
3)Phase 3 - Begins August 1, 2013, and transitions about 173,000
children enrolled in an HFP plan that is not a MCMC plan and
does not contract or subcontract with a MCMC plan into a MCMC
plan in that county.
4)Phase 4 - Begins no earlier than September 1, 2013, and
transitions about 43,000 children in HFP residing in a county
that is not MCMC into the Medi-Cal fee-for-service delivery
system.
This bill was substantially amended in the Assembly and the
Senate-approved provisions of this bill were deleted. This
bill, as amended in the Assembly is inconsistent with Senate
actions. The subject matter of this bill, as amended, has not
been heard in an Assembly Policy Committee.
Analysis Prepared by : Marjorie Swartz / HEALTH / (916)
319-2097
FN: 0005648