BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
SB 616 (DeSaulnier)
Hearing Date: 5/26/2011 Amended: 4/26/2011
Consultant: Katie Johnson Policy Vote: Health 7-0
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BILL SUMMARY: SB 616 would require the Department of Health Care
Services (DHCS) to pursue a federal Medicaid Incentives for
Prevention of Chronic Diseases Program grant to offer incentives
to Medi-Cal beneficiaries who adopt healthy behaviors and
habits.
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Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13 2013-14 Fund
DHCS administration likely in the hundreds of thousands of
dollars Federal*
evaluation and reporting August 1, 2011 -
December 31, 2015
*A percentage of the total $12,500 million grant amount.
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STAFF COMMENTS: SUSPENSE FILE. AS PROPOSED TO BE AMENDED.
This bill would require DHCS to submit a notice of intent to
apply and to complete an application for a federal Medicaid
Incentives for Prevention of Chronic Diseases Program (Grant).
The Grant would be required to address at least one of the
following prevention goals:
1) Tobacco cessation;
2) Controlling or reducing weight;
3) Lowering cholesterol;
4) Lowering blood pressure;
5) Avoiding the onset of diabetes or improving the
management of the condition.
A solicitation for Grant applications was released February 23,
2011. A notice of intent to apply was due April 4, 2011, and the
application was due May 2, 2011.
If the federal government awards the department a grant, this
bill would require DHCS to apply annually for incremental
funding and design and implement a program that would operate
for at least three years. The program, in consultation with
stakeholders, would provide financial and nonfinancial
SB 616 (DeSaulnier)
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incentives to Medi-Cal beneficiaries of all ages who participate
in prevention programs and demonstrate changes in health risk
and outcomes, including the adoption of healthy behaviors. DHCS
would be required to ensure that the program is "comprehensive,
evidence-based, widely available, and easily accessible" and to
engage in an outreach and education campaign to make
beneficiaries and providers aware of the program.
The department would also be required to develop and implement a
system to:
1) Track Medi-Cal beneficiary participation and validate
changes in health risk and outcomes with clinical data;
2) Establish standards and health status targets for
program participants and measure the degree to which they
are met;
3) Evaluate the program's effectiveness and provide
evaluations to the federal government and to the relevant
policy and fiscal committees of the state Legislature.
The reporting requirements would become inoperative on January
1, 2016.
Existing federal law, section 4108 of the Patient Protection and
Affordable Care Act (Public Law 111-148), as amended by the
federal Health Care and Education Reconciliation Act of 2010
(Public Law 111-152), (ACA) permits states to apply for grants
to provide incentives to Medicaid beneficiaries of all ages who
participate in prevention programs and demonstrate changes in
health risk and outcomes, including the adoption of healthy
behaviors. The initiatives or programs are to be
"comprehensive, evidence-based, widely available, and easily
accessible." The programs must use relevant evidence-based
research and resources, including: the Guide to Community
Preventive Services; the Guide to Clinical Preventive Services;
and the National Registry of Evidence-Based Programs.
This bill's provisions mirror federal law and the solicitation
for Grant applications except for the requirement to report to
the appropriate policy and fiscal committees of the state
Legislature.
DHCS Action to Date
On April 29, 2011, DHCS submitted a Grant application to the
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federal government. DHCS requests $12.5 million over the
53-month Grant period in order to provide smoking cessation
services and small incentives to approximately 100,000
individuals. The program would target Medi-Cal beneficiaries who
are current smokers who also have diabetes and other chronic
conditions. It is estimated that 77,034 of the 502,411 Medi-Cal
beneficiaries with diabetes are smokers. The department intends
to utilize the existing California Smokers' Helpline (Helpline),
administered by the University of California, San Diego, and the
California Diabetes Program, administered by the California
Department of Public Health, to reach the target population. The
department would partner with the University of California,
California Medicaid Research Institute, to fiscally manage the
entities and with the University of California, San Francisco,
to produce a formal health economic evaluation of the program.
It is expected grant awards will be announced August 1, 2011,
and that that would be the effective date of the Grant period.
The Grant program would be implemented in both Medi-Cal's
fee-for-service and managed care delivery systems.
Funding
The federal grant solicitation information, released February
23, 2011, states that the federal government estimates that
there will be funding sufficient to support 10 state programs
with $5 million to $10 million for the entire Grant period,
August 1, 2011, to December 31, 2015 (53 months). Since federal
funds would be available until December 31, 2015, and not yet
beyond, there would be General Fund cost pressure to continue to
implement the program commencing January 1, 2016. To alleviate
the cost pressure, staff recommends that this bill be amended to
sunset its provisions January 1, 2016, and make the section
inoperative July 1, 2016, unless otherwise extended by another
Legislative action.
If California were to be granted the requested $12.5 million,
assuming the full 53 months Grant period, the state would have
$235,849 per month or $2.83 million available annually. State
administrative costs would be fully covered by federal funds up
to 15 percent of the grant award, or up to $1.875 million in
total, up to $424,528 annually, with a $12.5 million grant;
these duties could include funding for key staff, training,
outreach and marketing, information technology improvements
related to data collection reporting requirements, the proposed
economic analysis, and completion of survey requirements.
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If DHCS were to spend the maximum allowable on administration,
that would leave $10.6 million for direct incentives for
Medi-Cal enrollees and providers. Since DHCS' target number of
beneficiaries is 100,000 total, there would be $106.25 - $125
spent per beneficiary over the life of the Grant period; the
range shows a per beneficiary expenditure at 15 percent
administrative costs and 0 percent administrative costs,
respectively. DHCS' proposal states that Medi-Cal members would
be offered a $20 incentive to call the Helpline and complete the
intake protocol, as well as $10 for every relapse-prevention
call completed. If an individual relapses, they would be offered
re-enrollment and various subsequent monetary incentives of $5 -
$40 or a lottery-based incentive system.
For services only available through the Grant program that are
not otherwise reimbursable by Medi-Cal, the federal government
will provide 100 percent federal funds. Preventive services
currently available to Medi-Cal beneficiaries, without the
Grant, would continue to be reimbursed at California's federal
medical assistance percentage (FMAP) of 50 percent General Funds
and 50 percent federal funds.
Since telephone counseling is not yet a Medi-Cal state plan
service, but is meant to be the main preventive service provided
to all participants in this Grant program, a portion of the
federal funds made available by the Grant would go to providing
this service. The Helpline would be reimbursed for completed
calls; the counseling protocol provides for one pre-quit session
and five follow-up sessions.
Nicotine replacement therapies, including nicotine patches, are
currently allowable costs under Medi-Cal; the Grant proposal
would decrease the barrier to accessing nicotine patches-a 4
week supply would be available to eligible beneficiaries through
the Helpline. To the extent that this program achieves its goal
and increases the utilization of currently covered smoking
cessation services, there would be an increase in Medi-Cal costs
at a cost-sharing rate of 50 percent General Fund and 50 percent
federal funds. However, if the program successfully decreases
the number of smokers in Medi-Cal, then costs could be avoided
that would have otherwise been associated with a former smoker's
diabetes and other chronic conditions that are shown to be
correlated with smoking cessation. DHCS's proposed health
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economic evaluation would presumably analyze the cost
effectiveness of smoking cessation services and the bending of
the Medi-Cal cost curve.
The author's proposed amendments would delete the contents of
the bill except for the requirement on DHCS to evaluate the
program's effectiveness and report to the Legislature and
federal government, as specified. A portion of the federal
grant, in a likely amount of hundreds of thousands of dollars
annually in the DHCS administration budget for this program,
would pay for the evaluation and reporting requirements.