BILL ANALYSIS �
SB 677
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Date of Hearing: June 26, 2012
ASSEMBLY COMMITTEE ON HEALTH
William W. Monning, Chair
SB 677 (Ed Hernandez) - As Amended: May 23, 2011
SENATE VOTE : 24-13
SUBJECT : Medi-Cal: eligibility.
SUMMARY : Requires the Department of Health Care Services (DHCS)
to implement the provisions of the Patient Protection and
Affordable Care Act of 2010 (Public Law 111-48) as amended by
the federal Health Care and Education Reconciliation Act of 2010
(Public Law 111-152) (ACA) that apply the Modified Adjusted
Gross Income (MAGI) test without regard to a person's assets or
other resources as the income eligibility standard for Medi-Cal.
Specifically, this bill :
1)Prohibits the use of an assets or resources test for
determining eligibility for the Medi-Cal program, except for
seniors and person with disabilities (SPDs).
2)Requires DHCS to establish income thresholds to be used for
eligibility for the Medi-Cal program, including the imposition
of premiums and cost sharing, to apply to individuals and
families using the MAGI test as defined by reference to the
Internal Revenue Code.
3)Requires the income eligibility thresholds set pursuant to 2)
above to be no less than the effective income eligibility
levels that applied under Medi-Cal or under a Medi-Cal waiver
at the date the ACA was enacted
4)Requires DHCS to set an equivalent income test that ensures
that individuals who would have been eligible on the date the
ACA became effective do not lose coverage during the
transition to MAGI in order to comply with the maintenance of
effort requirements of the ACA.
5)Requires a 5% income disregard to be used when applying the
MAGI test to determine income eligibility.
6)Provides that this bill will become operative on January 1,
2014 and requires implementation only to the extent required
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by federal law.
7)Requires DHCS to adopt regulations to implement these
provisions.
EXISTING LAW :
1)Establishes the federal Medicaid Program (Medi-Cal in
California), administered by DHCS, to provide comprehensive
health care services and long-term care to pregnant women,
children, and people who are aged, blind, and disabled.
2)Requires, under federal law, the establishment of a health
benefit exchange (Exchange), to make qualified health plans
available to qualified individuals and qualified employers.
3)Requires, under federal law, by January 2014, that states
offer Medicaid coverage to all adults, under age 65, with
income up to 133% of the federal poverty level (FPL) and
authorizes a phase-in of early implementation.
4)Requires, under federal law and regulation that states adopt
tax MAGI rules to determine income in order to align with
rules for premium tax credits in the Exchange.
5)Requires, under federal law, by January 2014, that state
enrollment systems for persons eligible for health subsidy
programs meet specified standards.
FISCAL EFFECT : According to the Senate Appropriations
Committee:
Fiscal Impact (in thousands)
Major Provisions 2012-13 2013-14 2014-15 Fund
Developing regulations Up to $800 over two yearsGeneral
/ Federal *
Changes to Medi-Cal eligibility Unknown, potentially
significant costs General / Federal *
* 50% General Fund and 50% federal funds.
COMMENTS :
1)PURPOSE OF THIS BILL . According to the author, this bill is
needed to conform to the federal ACA requirement prohibiting
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use of an asset test and the requirement to use MAGI in
determining eligibility for Medi-Cal, except for certain
populations. These federal requirements help streamline the
complex Medi-Cal application process for individuals applying
for benefits in the program, and for workers administering the
eligibility determination process.
2)BACKGROUND . Under the ACA most U.S. citizens and legal
residents will be required to have health insurance beginning
in 2014. It is estimated that 4.7 million California children
and adults who were uninsured during some part of 2009 will be
eligible for health coverage under the ACA. DHCS estimates
that of these 2.1 million persons will be newly eligible for
Medi-Cal and approximately 1 million are currently eligible
but not enrolled. According to a Kaiser Family Foundation,
October 2010 Report, "Explaining Health Reform: Building
Enrollment Systems that Meet the Expectation of the Affordable
Care Act," Congress included strong provisions designed to
ensure that state enrollment policies and procedures and
supporting technology systems genuinely help individuals and
families enroll and stay covered, and also foster efficient
administration. The ACA also increases uniformity in income
rules for all health subsidy programs by streamlining
applications and eligibility rules, where possible. It does
this, in part, by expanding access to health insurance
coverage through improvements to the Medicaid and Children's
Health Insurance (CHIP) programs, the establishment of the
Exchanges, and the assurance of coordination between Medicaid,
CHIP, and Exchanges. The ACA also requires states to change
their Medicaid and State CHIP, �Healthy Families Program (HFP)
in California] eligibility rules in three fundamental ways: a)
states must change the way income is counted for the purpose
of determining eligibility; b) states must eliminate the asset
test for most populations; and, c) states must make a series
of changes intended to streamline and improve the process for
determining and maintaining eligibility for their public
programs.
Beginning in 2014, the ACA also extends Medicaid coverage to all
individuals between ages 19 and 64 with incomes up to 133% of
the federal poverty level, ($14,856 for an individual based on
the 2012 FPL) known as the "newly eligible" category. As part
of the simplification and streamlining and in place of a
multitude of existing income disregards and deductions, such
as child care costs or work expenses, a 5% across the board
disregard is applied bringing the MAGI level to 138% of FPL
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for Medi-Cal. Children are currently and will remain eligible
for either Medicaid or CHIP based on the eligibility standards
already in effect. New federal matching rates will provide
100% federal funding for the newly eligible individual
category for three years (calendar years 2014 - 2016),
gradually reduced to 90% in 2020, where it will remain
permanently. This bill and AB 43 (Monning), currently pending
in the Senate Appropriations Committee, are intended to be the
vehicles to make the necessary statutory changes to implement
these provisions.
3)MEDI-CAL ELIGIBLITY . Currently, there are many pathways
through which individual and families qualify for Medi-Cal.
According to DHCS, these pathways are called Medi-Cal programs
and these programs differ among themselves according to two
main components: a) The groups they cover ("covered groups");
and, b) their income and /or property requirements, if any.
Some coverage groups are mandatory under federal law and are
often referred to as the mandatory categories. Other groups
are covered at the option of the state. Currently federally
funded covered groups include women, infants, children, SPDs,
parents and caretaker relatives of children deprived by the
absence, death, or incapacity or unemployment of a principal
wage earner parent, and certain persons with specified medical
conditions such as tuberculosis or women under age 65 with
breast cancer or cervical cancer needing treatment. The ACA
divides these groups and the newly eligible into the MAGI and
non-MAGI categories. Within the MAGI category, it further
collapses various eligibility groups into five sub-groups: a)
parents and caretaker relatives; b pregnant women; c) children
up to 19 years of age; d) newly eligible low-income
individuals between the age of 19 and 65 and not covered under
any other program; and, e) the optional group with income
above 133% of MAGI.
The ACA exempts the following groups from the asset test and
MAGI provisions, thereby continuing to apply the current
income and asset rules:
a) Individuals eligible for Medicaid on a basis that does
not require a determination of income by the Medicaid state
agency (for example, foster care children, or individuals
receiving Supplemental Security Income �SSI]);
b) Individuals who have attained age 65;
c) Individuals who qualify for Medicaid on the basis of
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being blind or disabled without regard to whether the
individual is eligible for SSI;
d) Medically needy individuals; and,
e) Individuals dually eligible for Medicare and Medicaid.
4)FEDERAL REGULATIONS . On August 17, 2011 the Centers for
Medicare and Medicaid Services (CMS) issued proposed rules on
Medicaid and CHIP eligibility implementing the ACA. Following
the release, according to CMS, the federal Department of
Health and Human Services participated in listening sessions
across the country to hear comments and suggestions from a
diverse array of stakeholders. In addition, CMS held a
national eligibility conference attended by states and other
stakeholders and conducted numerous conference calls and
webinars to solicit public input. CMS also received hundreds
of comments on the proposed rule. When issuing the final rule
on March 16, 2012, CMS stated that while the final rule
maintains much of the framework laid out in the proposed rule,
it also includes improvements recommended by states,
consumers, consumer organizations, and the health care
provider community. The final rule provides additional
protections for consumers, as well as additional flexibilities
and options for states simplifying Medicaid and CHIP. The
final rule codifies the streamlining of income-based rules and
systems for processing Medicaid and CHIP applications and
renewals for most individuals. Eligibility, enrollment and
renewal processes will be modernized, building on successful
State efforts that are already underway. Specifically, the
rule:
a) Simplifies financial eligibility by relying on a single
MAGI standard for determining eligibility for most Medicaid
and CHIP enrollees (children and non-disabled adults under
age 65) and by consolidating eligibility categories into
four main groups - adults, children, parents, and pregnant
women.
b) Ensures that individuals eligible under the new
MAGI-based category will be promptly enrolled in Medicaid.
c) In response to public comment, clarifies that people
with disabilities or in need of long-term services and
supports may enroll in an existing Medicaid eligibility
category to ensure that they are quickly enrolled in
coverage that best meets their needs.
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d) Modernizes eligibility verification procedures to rely
primarily on electronic data sources while providing states
flexibility to determine the usefulness of available data
before requesting additional information from applicants,
and simplifying verification procedures for states through
the operation of a federal data services "Hub" that will
link states with federal data sources (e.g. Social Security
and Homeland Security).
e) Codifies current Medicaid policy so that eligibility is
renewed by first evaluating the information available
through existing data sources and limits renewals for the
people enrolled through the simplified, income-based rules
to once every 12 months unless the individual reports a
change or the agency has information to prompt a
reassessment of eligibility.
f) Confirms the importance of coordination across the
Exchanges, Medicaid, and CHIP to ensure the success of the
ACA in giving all Americans access to quality, affordable
health insurance.
g) In response to comments from states seeking additional
flexibility in eligibility determinations, the rule
provides two ways for Exchanges to perform
Medicaid-eligibility evaluations: the Exchange can
determine Medicaid eligibility based on the State's
Medicaid eligibility rules and also determine eligibility
for advance payment of premium tax credits; or the Exchange
can make a preliminary Medicaid eligibility assessment and
rely on the State Medicaid and CHIP agencies for a final
eligibility determination. Under either approach, timely
and coordinated eligibility determinations are maintained.
5)AB 1296 AND Eligibility Expansion Stakeholder WORKGROUPS. AB
1296 (Bonilla), Chapter 641, Statutes of 2011, enacted the
Health Care Reform Eligibility, Enrollment, and Retention
Planning Act, requires the California Health and Human
Services Agency (CHHSA), in consultation with DHCS, the
Managed Risk Medical Insurance Board, the Exchange, the
California Office of Systems Integration, counties, health
care service plans, consumer advocates, and other
stakeholders, to plan and develop standardized single,
accessible application forms and related renewal procedures
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for state health subsidy programs. A report must be provided
to the Legislature by July 1, 2012, on the policy and
statutory changes needed to develop and implement the proposed
system for health coverage. CHHSA and DHCS, in collaboration
with legislative staff, Western Center on Law and Poverty
(WCLP), and the California Welfare Directors Association have
organized the AB1296 and Eligibility Expansion Stakeholder
Meetings to consult key stakeholders on policy and other
issues central to eligibility, enrollment and retention in
subsidized health coverage programs. These activities are
intended to implement provisions of the ACA in California.
These meetings have been regularly occurring since April 2012
and are covering a variety of topics relating to implementing
this aspect of the ACA such as eligibility, health plan
selection, and application forms.
6)SUPPORT . WCLP writes in support that this bill would
implement those portions of the ACA eliminating the assets
test for most people on Medi-Cal and move to a new income
standard. According to WCLP, most people only qualify for
Medi-Cal if their assets or resources are below set amounts,
for example $3,000 for a couple for most Medi-Cal programs.
WCLP argues that this "assets test" requires that paperwork
verifications be submitted with an application, a burdensome
set of requirements for eligibility workers and applicants
alike. In addition, the assets test is a cumbersome and
costly component of determining eligibility but does little to
change who is eligible for Medi-Cal since most people with
incomes low enough to qualify for Medi-Cal have very few
assets anyway. WCLP also supports the other major change made
by this bill to move from the current welfare-based rules for
counting income and determining what constitutes a household
to the tax-based MAGI standard instituted by the ACA.
Supporters representing various local agencies, welfare
directors, and counties write that counties have long
supported efforts to simplify the Medi-Cal program, such as
elimination of the asset test. These supporters state that
program simplification increases program efficiency. They
further argue that reducing complicated eligibility tests at
the time when over a million Californians will become newly
eligible for Medi-Cal will assist with easing enrollment.
7)RELATED LEGISLATION .
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a) AB 43 (Monning) requires the DHCS to establish Medi-Cal
eligibility for any person under 65 years of age who meets
specified criteria and whose income does not exceed 133%
FPL. AB 43 is pending in the Senate Appropriations
Committee.
b) SB 1487 (Ed Hernandez) requires DHCS to extend Medi-Cal
eligibility to youth who were formerly in foster care and
who are under 26 years of age, subject to federal financial
participation being available and to the extent required by
federal law. SB 1487 also makes legislative findings and
declarations regarding the ACA, and states legislative
intent to ensure full implementation of the ACA and to
enact into state law any provision of the ACA that may be
struck down by the United States Supreme Court. SB 1487 was
held on the Senate Appropriations Committee suspense file.
8)PREVIOUS LEGISLATION . AB 1296, the Health Care Eligibility,
Enrollment, and Retention Act, requires CHHSA, in consultation
with other state departments and stakeholders, to undertake a
planning process to develop plans and procedures regarding
these provisions relating to enrollment in state health
programs and federal law. AB 1296 also requires that an
individual would have the option to apply for state health
programs through a variety of means.
REGISTERED SUPPORT / OPPOSITION :
Support
American Federation of State, County and Municipal Employees
(AFL-CIO)
California Mental Health Directors Association
California State Association of Counties
County Health Executives Association of California
County Welfare Directors Association
Latino Coalition for a Healthy California
National Association of Social Workers, California Chapter
Planned Parenthood Affiliates of California
Urban Counties Caucus
Western Center on Law & Poverty
Opposition
None on file.
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Analysis Prepared by : Marjorie Swartz / HEALTH / (916)
319-2097