BILL ANALYSIS �
SENATE HEALTH
COMMITTEE ANALYSIS
Senator Ed Hernandez, O.D., Chair
BILL NO: SB 616
S
AUTHOR: DeSaulnier
B
AMENDED: March 22, 2011
HEARING DATE: April 13, 2011
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CONSULTANT:
1
Chan-Sawin/jl
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SUBJECT
Medi-Cal: federal grant for wellness incentives
SUMMARY
Directs the Department of Health Care Services (DHCS) to
pursue a federal grant for the purposes of providing
financial and nonfinancial incentives to Medi-Cal
beneficiaries who participate in prevention programs.
Requires DHCS, in the event that the state is awarded a
grant, to design, implement and report on the grant
program, as specified.
CHANGES TO EXISTING LAW
Existing federal law:
Establishes the federal Medicaid program, administered by
the federal Centers for Medicare and Medicaid Services
(CMS), to provide comprehensive health benefits to
specified groups of low-income persons.
Establishes the federal Patient Protection and Affordable
Care Act (PPACA) (Public Law 111-148) which, among other
things, directs CMS to award grants, pursuant to the
Medicaid Incentives for Prevention of Chronic Diseases
Program (MIPCDP), to selected states to fund state Medicaid
programs that provides financial and nonfinancial
Continued---
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incentives to beneficiaries who participate in prevention
programs and demonstrate changes in health risk and
outcomes including, but not limited to, the adoption of
healthy behaviors, as specified.
Existing state law:
Establishes the Medi-Cal program, the state's Medicaid
program, administered by DHCS, under which basic health
care services are provided to qualified low-income persons.
This bill:
Directs DHCS to pursue a MIPCDP grant for the purposes of
offering incentives to Medi-Cal enrollees who adopt healthy
behaviors and habits.
Requires DHCS to submit a notice of intent to apply and a
complete grant application, as specified.
In the event that the state is awarded such a federal
MIPCDP grant, requires the department to do all of the
following:
Apply annually for incremental funding.
Design and implement a program, that operates for a
minimum of three years, to provide financial and
nonfinancial incentives to Medi-Cal beneficiaries of
all ages who participate in prevention programs and
demonstrate changes in health risk and outcomes, as
specified.
Ensure that the program is comprehensive,
evidence-based, widely available, and easily
accessible. Specifies that the program must use
relevant evidence-based research and resources, as
specified.
Engage in an outreach and education campaign
targeting Medi-Cal beneficiaries and participating
providers.
Work collaboratively to develop the program,
incorporate stakeholders in the process, conduct a
state-level evaluation, and fulfill federal reporting
requirements.
Requires DHCS to also develop and implement a system to:
Track beneficiary participation and validate
changes in health risk and outcomes with clinical
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data, as specified.
Establish standards and health status targets to
the extent practicable, and measure the degree to
which the standards and targets are met.
Evaluate the effectiveness of the program and
provide evaluations to the United States (US)
Secretary of Health and Human Services and the
relevant fiscal and policy committees of the
Legislature.
Report on processes developed and lessons learned
from the program to the US Secretary of Health and
Human Services and the relevant fiscal and policy
committees of the Legislature.
Report on preventive services as part of required
reporting on quality measures for Medicaid managed
care programs.
Sunsets reporting requirements to the Legislature on
January 1, 2016.
Allows DHCS to enter into arrangements with Medi-Cal
providers, community-based organizations, faith-based
organizations, public-private partnerships, Indian tribes,
or similar entities or organizations to carry out the
program.
Exempts, to the extent allowed under federal law, any
incentives provided through this program to a Medi-Cal
beneficiary from being included in calculations for
determining the beneficiary's eligibility for, or amount
of, benefits under Medi-Cal or any other program funded
with federal funds.
Makes various legislative findings and declarations.
FISCAL IMPACT
This bill has not been analyzed by a fiscal committee.
BACKGROUND AND DISCUSSION
According to the author, rising health care costs are an
unsustainable growing component of the state budget. A 2007
California HealthCare Foundation survey on chronic conditions of
Californians found that over one-third of Californians (36
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percent) have a chronic health condition such as asthma, cancer,
diabetes, hypertension, or congestive heart failure. According
to the Centers for Disease Control and Prevention, chronic
diseases are responsible for 7 out of 10 deaths, and represent
70 percent of all health care costs nationwide. Many chronic
diseases are preventable and/or can be managed through early
diagnosis and ongoing treatment, and numerous efforts are
underway to encourage healthier behaviors and create healthier
environments.
The author argues that, unless the need for health care is
reduced by significantly improving the health of Californians,
it will be difficult, if not impossible, to bring health care
costs under control. SB 616 directs DHCS to pursue federal
Medicaid wellness grants to prevent disease and promote health
by offering incentives to Medi-Cal enrollees who adopt healthy
behaviors and habits and requires the program to be designed and
uniquely suited to address the needs of Medi-Cal beneficiaries.
The author believes that this bill could help position
California as national model for public health interventions and
prevention and wellness programs.
Wellness Incentives
Unhealthy behaviors, such as smoking, poor diet, and
sedentary lifestyles, account for as much as 40 percent of
premature deaths in the US. Although behavioral
interventions have the potential to improve health,
behavior change is difficult, especially over the long
term. Many people have difficulty changing health
behaviors because it requires trade-offs between immediate
consumption and delayed and often intangible health
benefits.
Wellness incentives are believed to provide people with
immediate and tangible feedback that helps make it easier
for them to do in the short-term what is in their long-term
best interest. Interventions that address the behavioral
or social circumstances that influence participation in
preventive health services and/or otherwise have a positive
impact on outcomes of preventive health services may
contribute to improving health and decrease growth in
health care expenditures.
Many health plans and employers now not only provide access
to wellness programs, but also offer incentives for
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participation. In a recent national poll, 91 percent of
employers believed that they could reduce their health care
costs by influencing employees to adopt healthier
lifestyles. Incentives are framed as rewards or penalties
and may take the form of prizes, cash, or the waiver of
payment obligations. However, there is limited
independently evaluated research that shows that varying
the cost of employer sponsored insurance will have an
impact on health outcomes, and what research exists is
mixed. More controversially, some employers have begun
penalizing employees financially or taking other adverse
action on the basis of health risks, such as smoking and
obesity.
A 2010 Health Affairs literature review conducted across
studies of various worksite wellness program concluded
that, "averaging across all programs in which they were
reported, the interventions produced $358 in savings
through reduced health costs per employee per year, while
costing the employer $144 per employee per year? for every
dollar spent �on worksite wellness], $3.37 was saved."
However, limited quantitative evidence exists on the
long-term efficacy of various wellness incentive programs.
Some success has been shown for smoking cessation or for
improving participation rates in some kinds of wellness
programs. There is very little empirical evidence that
financial rewards can result in sustained weight loss.
Concerns continue to be raised that penalties tied to
health outcomes may place certain populations at a
disadvantage, especially those that face environmental or
socioeconomic barriers to changing their lifestyle or
health status. These challenges include child or elder care
obligations, unsafe walking/biking trails, limited access
to recreational facilities, the need to hold a second or
third job, and limited access to healthy, affordable foods.
Unfortunately, it is often the low-income or least-educated
employees who face these obstacles and disproportionately
suffer health disparities. Studies have also found that
obesity, hypertension, and high cholesterol have a genetic
predisposition and are strongly connected with age.
Therefore, premiums tied to health metrics may penalize
individuals for factors they simply cannot control.
Federal Medicaid Incentives for Prevention of Chronic
Diseases Grant
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Section 4108 of PPACA authorizes CMS to award grants to
states to provide incentives to Medicaid beneficiaries who
participate in prevention programs and to demonstrate
changes in health risk and outcomes including the adoption
of healthy behaviors. On February 23, 2011, CMS released
the solicitation for the Federal Medicaid Incentives for
Prevention of Chronic Diseases grants. Under this grant
program, CMS will award a maximum of 10 states, with each
state awarded around $5-10 million over the grant period of
August, 1, 2011 through December 31, 2015. Notices of
intent to apply are due April 4, 2011, and the final grant
application is due May 2, 2011.
Through these grants, the state can provide "financial and
nonfinancial incentives to Medi-Cal beneficiaries of all
ages who participate in prevention programs." An
application by a state for a grant under the program must
address at least one of the following prevention goals:
tobacco cessation, controlling or reducing weight, lowering
cholesterol, lowering blood pressure, and avoiding the
onset of diabetes or in the case of a diabetic, improving
the management of the condition.
DHCS proposed wellness incentive program
The department has publicly indicated their intent to
pursue a grant to implement a wellness incentive program
aimed at reducing smoking rates among Medi-Cal
beneficiaries while examining the effectiveness of
patient-based incentives in helping to achieve this goal.
DHCS indicates that while smoking rates, in general, have
declined dramatically in California, rates remain high in
certain vulnerable patients such as persons with diabetes
and other chronic conditions.
The primary intervention proposed by DHCS is the
internationally recognized, California Smokers' Helpline
1-800-NO-BUTTS, a free statewide smoking cessation service.
The program will have a particular focus on beneficiaries
with diabetes and other chronic conditions. However, all
Medi-Cal beneficiaries that smoke will be encouraged to
participate. The California Diabetes Control Program,
which has an established provider and patient outreach
network, will connect Medi-Cal members that smoke to the
Helpline. DHCS intends to coordinate outreach with, and
will be delivered through, both managed care and
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fee-for-service components of the Medi-Cal Program.
DHCS intends to test various modest monetary or similar
incentives (to be determined) for their effectiveness at
increasing utilization of the Helpline and obtaining higher
cessation rates compared to a control group. DHCS has also
indicated that a Medi-Cal beneficiary's participation in
the intervention, the incentives, and the evaluation study
will be voluntary. The incentives will not include
penalties, and incentives will be linked to participation
rather than outcomes. DHCS believes patient protection
will be assured by obtaining proper review of procedures
and protocols with approval by an authorized institutional
review board, obtaining of informed consent, and ongoing
monitoring of the study to watch for potential adverse
outcomes.
The California Smokers' Helpline
California has a strong history of public health prevention
programs, including one of the nation's leading tobacco
control programs. However, certain California populations
remain at greater risk of tobacco use, disease, and death.
African American males continue to have the highest smoking
prevalence compared to their counterparts in all other
major race/ethnicity groups (21.3 percent compared to
ranges of 14.9 to 17.2 percent. African American and
non-Hispanic white females also have significantly higher
smoking prevalence rates (17.3 percent and 13.5 percent)
compared to Hispanic and Asian/Pacific Islander females
(7.1 percent and 5.5 percent). The most startling evidence
of disparity lies with smoking prevalence among the
low-income populations.
Established in 1992, the Helpline was the first statewide
"quitline" in the United States and offers self-help
materials, referral to local programs, and one-on-one,
telephone counseling to quit smoking. Services are
available in six languages (English, Spanish, Cantonese,
Mandarin, Korean, and Vietnamese) and specialized services
are also available for teens, pregnant women, and tobacco
chewers. The Helpline also provides information to friends
and family members of tobacco users. All Helpline services
are currently free of charge to anyone in California.
The Helpline services have been proven in clinical trials
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to double a smoker's chances of successfully quitting. Its
effectiveness has been demonstrated in numerous
peer-reviewed publications and over half of the Helpline's
clients are Medi-Cal beneficiaries. Since its inception in
1992, almost 400,000 Californians have received service
through the Helpline, which has daily call volume averaging
200 calls.
Related bills
AB 1083 (Monning) would, among other things, impose certain
conditions on wellness programs offered by a health plan or
insurer to a small employer, as specified. Also requires
those wellness programs to be approved by the Department of
Managed Health Care or the California Department of
Insurance, respectively. Set for hearing in the Assembly
Health Committee on April 26, 2011.
Prior legislation
AB 2042 (Feuer) of 2010, among other things, would have
limited rate and benefit changes in the individual health
insurance market to once per year. An earlier version of
the bill would have also banned plans and insurers from
lowering premiums more than once a year. The bill was
subsequently amended to allow plans to lower premium if it
does not otherwise alter cost sharing or any benefits and
if the reduction in premium is consistent with other
provisions of state and federal law. Vetoed by the
Governor.
ABX1-1 (Nunez) of 2007 would have enacted comprehensive
health care system reforms. Among other market reform
elements, ABX1 1 contained provisions intended to reduce
or offset a portion of the costs of health coverage, as
well as several new programs and initiatives related to
prevention and promotion of health and wellness, including
one provision that directed the DPH to provide technical
assistance to help employers integrate wellness policies
and programs into employee benefit plans and worksites.
Failed passage in the Senate Health Committee.
ABX1-2 (No Author) of 2007 contained the language from
Governor Schwarzenegger's health care reform proposal
which, among other things, had provisions intended to
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reduce or offset a portion of the costs of health insurance
coverage, as well as several new programs and initiatives
related to prevention and promotion of health and wellness.
Failed passage in the Assembly Health Committee.
AB 8 (Nunez) of 2007 was substantively similar to ABX1-1.
Vetoed by the Governor.
Arguments in Support if Amended
While California Pan Ethnic Health Network (CPEHN)
indicates support of SB 616 in concept, CPEHN raises
concerns that additional requirements are needed to ensure
that state-based wellness programs promote health equity,
and 1) do not worsen already serious racial, ethnic and
other disparities in health care services by charging a
higher share of cost to those beneficiaries with
disproportionately higher incidences of chronic conditions
such as diabetes and heart disease; 2) discriminate against
certain individuals by tying financial incentives or
discounts to health status (financial incentives should be
equally available to all participants), and 3) discriminate
against those who live in low-income communities where
opportunities to exercise and be physically active are
often not always safe, and where sugary drinks and fast
food are more available than healthy food choices.
COMMENTS
1.Relationship to federal law. Other than reporting
requirements to the policy and fiscal committees of the
state Legislature, this bill parallels provisions in
PPACA.
2.Requirements of this bill are uncodified. It is unclear
if this is the author's intent. The author may wish to
codify the language in Section 2 in the Welfare and
Institutions Code to ensure the language is established
in state law.
3.Suggested technical amendments:
(a) On page 5, line 29, insert "State" at the end
of the line.
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(b) On page 5, line 31, insert "State" at the end
of the line.
(c) On page 5, strike out lines 36-37 and insert:
"The reporting requirements in subparagraph (C) or
(D) of paragraph (6) of subdivision (c) to the
fiscal and policy committees of the State"
POSITIONS
Support: California Pan Ethnic Health Network (if amended)
Western Center on Law & Poverty (in concept)
Oppose: None on file.
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