BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
SB 677 (Hernandez)
Hearing Date: 5/26/2011 Amended: 5/23/2011
Consultant: Katie Johnson Policy Vote: Health 6-3
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BILL SUMMARY: SB 677 would prohibit the Department of Health
Care Services from applying an assets or resources test when
determining eligibility for Medi-Cal or any Medi-Cal waiver, as
specified.
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Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13 2013-14 Fund
DHCS staff to $150 - $200 $300 -$400 up to
$300 - $400 General/*
promulgate regulations Federal
Significant changes to unknown, potentially major fiscal
effect General/**
Medi-Cal eligibility commencing January 1,
2014,Federal
determination methodology dependent on federal guidance
*Medi-Cal costs shared 50 percent General Funds and 50 percent
federal funds.
**See Staff Comments.
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STAFF COMMENTS: SUSPENSE FILE.
This bill would conform state Medi-Cal eligibility criteria to
several Medicaid eligibility provisions contained in Section
2002 of the Patient Protection and Affordable Care Act (Pub. L.
111-148), as amended by the federal Health Care and Education
Reconciliation Act of 2010 (Public Law 111-152) (ACA), and would
not go beyond the federal law. Like the corresponding federal
law, this bill's provisions would take effect January 1, 2014.
Specifically, this bill would:
1) Prohibit the use of an assets or resources test for
determining Medi-Cal eligibility, to the extent required by
federal law;
2) Require the Department of Health Care Services (DHCS) to
utilize modified adjusted gross income (MAGI) when
determining Medi-Cal eligibility, to the extent required by
federal law;
3) Establish income eligibility thresholds for populations
eligible for Medi-Cal using MAGI or the appropriate
household income that are not less than prior to the
enactment of the ACA;
SB 677 (Hernandez)
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4) Require DHCS to establish an equivalent income test that
ensures that no individual loses Medi-Cal eligibility due
to the transition from the prior eligibility determination
methodology to MAGI until the California Health Benefit
Exchange (Exchange) is fully operational; this is known as
the maintenance of effort (MOE);
5) Prohibit any income disregards except the 5 percent
income disregard provided for in the ACA; and,
6) Exempt specified categories of Medi-Cal beneficiaries.
The exempted populations would include individuals eligible for
Medicaid on a basis that does not require eligibility
determination of income by the state Medicaid agency (i.e.
children in foster care, Supplemental Security Income
recipients), individuals over 65 years of age, medically needy
individuals, individuals dually eligible for Medicaid and
Medicare, and individuals who qualify on the basis of being
blind or disabled.
Need for Federal Guidance
Although this bill specifically aligns with federal law, it is
still unclear how these provisions will/would affect
California's Medi-Cal income eligibility thresholds. Costs to
California will/would vary depending on 1) future guidance
issued by the federal Centers for Medicare and Medicaid Services
(CMS), and 2) how DHCS chooses to work with the federal
government in setting thresholds to meet the MOE requirements.
Subject to federal guidance and DHCS interpretation and
implementation, it appears that all individuals currently
eligible for Medi-Cal would remain eligible for Medi-Cal
commencing January 1, 2014, and thereafter. Depending on how the
state chooses to interpret and implement federal guidance, there
could be significant additional costs to the state in the
millions to hundreds of millions of dollars.
DHCS would need to either promulgate regulations or receive
statutory authority to implement the eligibility threshold
changes through all county letters or other forms of guidance.
Since these regulations would be complicated and would likely
engender significant public comment, the process could be
estimated to take 18 - 24 months to complete and potentially 2 -
4 staff to complete at a cost of approximately $300,000 -
$400,000 annually. Costs would be shared 50 percent General Fund
SB 677 (Hernandez)
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and 50 percent federal funds.
The state currently provides local assistance funding to
counties to pay for the eligibility determination of potential
Medi-Cal beneficiaries. To the extent that counties incur new
costs to implement the new eligibility methodology, the state
would likely be required to reimburse them. This would also
depend on how DHCS chooses to implement the requirements.
What MAGI Means for Medi-Cal
The ACA, in addition to the provisions described above and
contained in this bill, makes numerous changes to Medicaid law.
Commencing January 1, 2014, it expands Medicaid eligibility to
individuals with incomes at or below 133 percent of the federal
poverty level (FPL). Existing California law provides for
various income disregards across the Medi-Cal programs; these
income disregards currently make more individuals and families
eligible for Medi-Cal than without the income disregards. With
the 5 percent income disregard provided for in federal law and
in this bill, the upper income limit for Medicaid would
effectively be 138 percent FPL.
Federal law and this bill would prohibit other income disregards
other than the 5 percent described above. Thus, individuals
eligible for Medi-Cal due to existing California income
disregards could lose coverage commencing January 1, 2014. For
example, a family of two in the 1931(b) category would be
eligible for Medi-Cal up to 100 percent of FPL if eligibility
were based solely on income. Due to income disregards and
exemptions, this parent and child could have a family income of
up to 142 percent FPL because the family could deduct $90 of
earned income, $200 for child care, and $240 a month in
disability-based income.
However, since the ACA and this bill require the state to
establish income eligibility thresholds for populations to be
eligible for Medi-Cal using MAGI that are not less than the
effective that the income eligibility levels that applied prior
to the enactment of the ACA, California would likely need to
maintain higher levels of eligibility than the 138 percent FPL,
such as in the 142 percent FPL income eligibility level example
above.
This bill and federal law would require the state to maintain
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Medicaid eligibility after January 1, 2014, for individuals
eligible for Medicaid or a waiver prior to January 1, 2014,
until the Exchange was fully functional to ensure that
individuals would not lose coverage during the transition from
the previous eligibility criteria to MAGI and household income.
This is known as the MOE.
Additionally, this bill and federal law would also prohibit the
state from imposing any assets or resources test when
determining eligibility; some state programs currently utilize
asset tests and some do not. The elimination of the asset or
resources test would make more individuals eligible for Medi-Cal
and would simplify/decrease barriers to the application process.
Funding
Medi-Cal costs for existing categories of eligible individuals
would continue to be funded at California's federal medical
assistance percentage (FMAP): 50 percent General Fund and 50
percent federal funds. Commencing January 1, 2014, federal funds
will be available to cover the cost of providing health benefits
to newly eligible individuals, defined as individuals not
currently eligible for Medicaid, as follows:
A) 100 percent for calendar quarters 2014 - 2016;
B) 95 percent for calendar quarters in 2017;
C) 94 percent for calendar quarters in 2018;
D) 93 percent for calendar quarters in 2019; and,
E) 90 percent for calendar quarters in 2020 and thereafter.
Individuals affected by this bill would not be considered "newly
eligible," so funding for any additional costs would be shared
at California's normal FMAP.
The author's recent amendments would ensure that these
provisions only be enacted to the extent required by federal law
and would require DHCS to adopt regulations in accordance with
this bill. These amendments do not change the fiscal impact.