BILL ANALYSIS �
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UNFINISHED BUSINESS
Bill No: SB 301
Author: DeSaulnier (D), et al.
Amended: 8/29/12
Vote: 21
SENATE VOTES NOT RELEVANT
ASSEMBLY FLOOR : Not relevant
SUBJECT : Medi-Cal
SOURCE : Author
DIGEST : This bill 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, extending 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.
Assembly Amendments delete the Senate version of the bill
relating to seismic safety and replaces it with the above
language.
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ANALYSIS :
Existing law:
1. Establishes, under federal law, the Medicaid Program
(Medi-Cal in California), administered by the Department
of Health Care Services (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 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).
4. Establishes HFP, administered by Managed Risk Medical
Insurance Board, 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.
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6. Imposes a Medi-Cal QAF on skilled nursing facilities and
intermediate care facilities for the developmentally
disabled.
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 GF.
5. Authorizes 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.
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
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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.
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 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
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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 (Assembly 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 5X4 (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 5X4 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 (Assembly 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 19X1 (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 (Assembly Budget Committee), currently pending in
the Senate.
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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:
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.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: Yes
DLW:m 8/31/12 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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