BILL ANALYSIS �
SB 677
Page 1
SENATE THIRD READING
SB 677 (Ed Hernandez)
As Amended August 24, 2012
Majority vote
SENATE VOTE :24-13
HEALTH 13-6 APPROPRIATIONS 12-5
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|Ayes:|Monning, Ammiano, Atkins, |Ayes:|Gatto, Blumenfield, |
| |Bonilla, Eng, Gordon, | |Bradford, |
| |Hayashi, | |Charles Calderon, Campos, |
| |Roger Hern�ndez, Bonnie | |Davis, Fuentes, Hall, |
| |Lowenthal, Mitchell, Pan, | |Hill, Cedillo, Mitchell, |
| |V. Manuel P�rez, Williams | |Solorio |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Logue, Garrick, Mansoor, |Nays:|Harkey, Donnelly, |
| |Nestande, Silva, Smyth | |Nielsen, Norby, Wagner |
| | | | |
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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) relating to eligibility and benefits
in the Medi-Cal Program. Specifically, this bill :
1)Makes legislative findings and declarations regarding the
number of uninsured in California and the United States, the
Patent Protections and Affordable Care Act (ACA) and the
coverage expansions resulting from the ACA. States
legislative intent to ensure full implementation of the ACA,
including the Medi-Cal expansion for individuals with incomes
below 138% of the federal poverty level (FPL).
2)Commencing January 1, 2014, requires women enrolled in the
Access for Infants and Mothers (AIM) Program to be able to
remain in AIM until the end of the month following the 60th
day postpartum.
3)Expands the definition used in Medi-Cal of "pregnancy-related
services" to mean, at a minimum, all services required under
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Medi-Cal unless federal approval is granted after January 1,
2014, to provide fewer benefits during pregnancy.
4)Requires, effective January 1, 2014, and only to the extent
that federal financial participation is available, the
Department of Health Care Services (DHCS) to extend Medi-Cal
benefits to a former foster care adolescent until his or her
26th birthday. Require DHCS to develop and implement a
simplified redetermination form for this program, require
these former foster care children to return the form only if
information previously reported is no longer accurate.
Prohibit failure to return the form from constituting a basis
for termination of Medi-Cal eligibility. Require the
recipient to remain eligible if the form is returned as
undeliverable and the county is otherwise unable to establish
contact.
5)Prohibits, effective January 1, 2014, the use of an assets or
resources test for determining eligibility for the Medi-Cal
program, except for seniors and person with disabilities.
6)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 Modified Adjusted Gross Income (MAGI) test
as defined by reference to the Internal Revenue Code.
Requires DHCS to adopt an equivalent income level for each
group whose income level will be converted to be no less than
the dollar amount of all income, exemptions, exclusions, and
disregards in effect at the date the ACA was enacted.
7)Requires a 5% income disregard to be used when applying the
MAGI test to determine income eligibility.
8)Prohibits, effective January 1, 2104, a deprivation test under
the Medi-Cal category known as "1931(b)" (which provides
Medi-Cal eligibility for parents and children).
9)Modifies existing notices to Medi-Cal beneficiaries to address
the repeal of the semi-annual status reports and the new
provisions that beneficiaries may (instead of "shall") be
required to submit an annual reaffirmation form.
10)Effective January 1, 2014, requires county social services
departments to check federal databases for eligibility
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redetermination and to notify an individual whose eligibility
is renewed on that basis that he or she must inform the county
if the information is inaccurate, but is not required to sign
and return the notice. Require the county to make reasonable
efforts to minimize multiple notices and to consolidate all
related information.
11)Requires, effective January 1, 2014, the form a county sends,
if the county is unable to obtain information to predetermine
eligibility, to advise the individual to provide any necessary
information via the Internet, phone, mail, in person, or
through other commonly available means, and to sign the
renewal form. Prohibit counties from requesting information
from non-applicants necessary to make an eligibility
determination.
12)Requires, effective January 1, 2014, a redetermination form
to be determined as though the form was timely if it is
submitted within 90 days, instead of 30 days in existing law.
13)Requires, effective January 1, 2014, a county to consider
blindness as continuing until the reviewing physician
determines that a beneficiary's vision has improved beyond the
definition of blindness contained in the plan.
14)Requires, effective January 1, 2014, if a county has enough
information available to it to renew eligibility with respect
to all eligibility criteria, to begin a new 12-month
eligibility period.
15)Requires, effective January 1, 2014, counties, for
individuals determined ineligible for Medi-Cal, to determine
eligibility for other state health subsidy programs and comply
with specified procedures.
16)Requires, effective January 1, 2014, DHCS to provide
eligibility for Medi-Cal benefits to any person who meets the
eligibility requirements in a specified provision of federal
law that expands coverage to adults without minor children who
are not currently eligible and who have incomes at or below
133% of the FPL. Require individuals eligible under this
provision who are currently enrolled in a Low Income Health
Program (LIHP) to be transitioned to Medi-Cal in accordance
with the transition plan approved by the Centers for Medicare
and Medicaid Services, except that a LIHP enrollee is
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prohibited from being automatically enrolled into a health
plan without first being given the opportunity to select a
plan.
17)Requires DHCS to seek federal approval from the US Secretary
of Health and Human Services (HHS) to establish a benchmark
benefit package in Medi-Cal that includes the same benefits,
services, and coverage that is provided to all other
full-scope Medi-Cal enrollees, supplemented by the benefits,
services, and coverage included in the essential health
benefits benefit package adopted by the state and approved by
the HHS Secretary.
18)Requires, effective January 1, 2014, all state health subsidy
programs, including Medi-Cal to accept an individual's
attestation, without further documentation of age, date of
birth, family size, household income, state residence,
pregnancy, and any other applicable eligibility criteria, as
permitted by federal law.
19)Requires that a person who wishes to apply for a state health
subsidy program be allowed to file an application on his or
her own behalf, and have the right to be accompanied,
assisted, and represented in the application and renewal
process by an individual or organization of his or her own
choice. Permit, if an individual is unable to apply or renew
on his or her own behalf, the following individuals to file
the application for the applicant:
a) The individual's guardian, conservator, or executor;
b) A public agency representative; or,
c) The individual's legal counsel, relative, friend or
other spokesperson of his or her choice.
20)Requires that a person who wishes to challenge a decision
concerning his or her eligibility for or receipt of benefits
from a state health subsidy program to have the right to
represent himself or herself or to use legal counsel, a
relative, a friend, or other spokesperson of his or her
choice.
21)Sunsets, effective January 1, 2014, the requirement that
certain adult Medi-Cal beneficiaries file semiannual status
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reports.
22)Requires, effective January 1, 2014, to the extent required
by federal law or regulation, the eligibility of Medi-Cal
beneficiaries whose financial eligibility is determined using
MAGI, to be renewed once every 12 months, and no more
frequently than every 12 months.
23)Requires DHCS to adopt regulations to implement these
provisions.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1)One-time costs to DHCS to coordinate with the California
Health Benefit Exchange (Exchange) and the federal government,
analyze federal guidance and requirements, and adopt
regulations, of at least $400,000 (50% federal funds, 50%
General Fund).
2)Most costs the state will incur associated with the transition
to MAGI-based income eligibility methodology are required
under federal law, and not as a direct result of this bill.
The major component of the transition to this methodology is
information technology (IT) changes, including eligibility
system changes and interfaces with related systems.
The Exchange, in cooperation with DHCS, has awarded a $183
million contract to build a Web-based California Healthcare
Eligibility, Enrollment and Retention System (CalHEERS), which
will serve as the consolidated IT system for eligibility,
enrollment, and retention for the Exchange and MediCal. The
initial funding for this contract is from a federal grant
available for this purpose. One component of the system cost
is the implementation of the MAGI-based eligibility
determination system.
Once the system is in place, the contract also inc3)ludes $176
million for the continued development and initial operating
costs over about three and a half years (approximately $50
million per year). These costs will be allocated to the
Exchange, Medi-Cal, and any other programs that benefit from
the system, based on federal cost allocation rules that apply
to IT system development.
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Training county Medi-Cal eligibility workers and redesigning
work flow at eligibility offices, as well as provision of
outreach, education, and communication regarding the new MAGI
standards will also be required to implement the transition to
a MAGI-based system. The state is also likely to experience
administrative cost savings due to a simpler eligibility
determination process. However, the state will incur these
costs and savings as it complies with federal law even in
absence of this bill.
4)This bill contains the provisions analyzed above, but the
latest amendments have not been analyzed.
COMMENTS : This bill is part of a two-bill package to adopt the
provisions of the federal ACA relating to the expansion of
Medi-Cal and the new streamlined eligibility and enrollment
requirements such as the requirement to use MAGI in determining
eligibility for Medi-Cal, except for certain populations. These
federal requirements streamline the complex Medi-Cal application
process for individuals applying for benefits in the program,
and for workers administering the eligibility determination
process.
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,
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�Healthy Families Program in California] eligibility rules in
three fundamental ways: 1) states must change the way income is
counted for the purpose of determining eligibility; 2) states
must eliminate the asset test for most populations; and, 3)
states must make a series of changes intended to streamline and
improve the process for determining and maintaining eligibility
for their public programs. AB 1494 (Budget Committee), Chapter
28, Statutes of 2012, a budget trailer bill transitions all
children in the Healthy Families Program to Medi-Cal phased in
beginning no sooner than January 1, 2013, and ending no sooner
than September 1, 2013.
National Federation of Independent Business v. Sebelius. In
March of 2012, the United States Supreme Court held three days
of testimony on the constitutionality of two major provision of
the ACA arising out of two cases in the 11th Circuit Court of
Appeals, National Federation of Independent Business v.
Sebelius, and Florida v. Department of Health and Human Services
(2011) 11th Circuit Nos. 11-11021 & 11-11067. As passed , the
ACA required states to extend Medicaid coverage to all
individuals between ages 19 and 64 with incomes up to 133% of
the federal poverty level (FPL), �$14,856 for an individual
based on the 2012 FPL] known as the "newly eligible" category.
However, in National Federation of Independent Business v.
Sebelius, the Supreme Court agreed to consider the
constitutionality of two major provisions of the ACA: the
individual mandate and the Medicaid expansion. A majority of
the Court upheld the individual mandate. The Court found the
Medicaid expansion unconstitutionally coercive of states because
states did not have adequate notice to voluntarily consent and
the HHS Secretary could potentially withhold all of a state's
existing federal Medicaid funds for non-compliance. However, a
majority of the Court found that this issue was appropriately
remedied by circumscribing the HHS Secretary's enforcement
authority, thus leaving the Medicaid expansion intact in the
ACA.
The court also left the provisions that are related to
simplification and streamlining intact. 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 for Medi-Cal.
Children are currently and will remain eligible for either
Medicaid or CHIP based on the eligibility standards already in
effect. This bill and AB 43 (Monning), currently pending in the
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Senate, are intended to be the vehicles to make the necessary
statutory changes to implement these provisions.
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, requiring 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 for state health subsidy programs. A report
was due 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, the Western Center on Law and Poverty,
and the California Welfare Directors Association have organized
the AB 1296 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 were 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.
On August 16, 2012, Governor Brown submitted a letter to the
President pro Tempore of the Senate and the Speaker of the
Assembly informing them of his plan to call a special session in
the beginning of the next legislative session to continue this
important work of implementing the ACA. The Governor's letter
refers to the actions that California has taken to date and the
benefits of the ACA that have gone into effect. It also states
that many important issues and questions cannot be addressed or
answered without further guidance from the federal government
and additional analysis to understand the interrelationship of
the decisions we make.
Analysis Prepared by : Marjorie Swartz / HEALTH / (916)
319-2097
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