BILL ANALYSIS �
SB 1081
Page 1
Date of Hearing: June 12, 2012
ASSEMBLY COMMITTEE ON HEALTH
William W. Monning, Chair
SB 1081 (Fuller) - As Amended: May 7, 2012
SENATE VOTE : 37-0
SUBJECT : Public health care: Medi-Cal: demonstration projects.
SUMMARY : Authorizes nondesignated public hospitals (NDPH),
which are hospitals owned by a local health care district, to
operate a Low Income Health Program (LIHP) in a county that does
not have a designated public hospital and if the county does not
intend to operate a LIHP. Requires the NDPH to provide the
application to the county at the same time it is provided to the
Department of Health Care Services (DHCS) and further requires
DHCS to consider the application if the county does not indicate
within 30 days that it will proceed. States legislative intent
that any NDPH that submits an application initially establish a
local stakeholder advisory committee as specified. Contains an
urgency clause to ensure that the provisions of this bill go
into immediate effect upon enactment.
EXISTING LAW :
1)Establishes the Medi-Cal program, which is administered by
DHCS, to provide health care services and long-term care to
pregnant women, children and families, and seniors and people
with disabilities (SPDs).
2)Requires DHCS, pursuant to federal approval of a demonstration
project, to authorize local LIHPs to provide health care
services to eligible low-income individuals under certain
circumstances. LIHPs are established at local option, and are
authorized to cover individuals up to 200% of the federal
poverty level (FPL) (200% FPL is at or below $22,340 for an
individual in 2012).
3)Defines the entities authorized to operate an approved LIHP as
follows: a county, a city and county, a consortium of
counties serving a region of more than one county, or a health
authority.
FISCAL EFFECT : According to the Senate Appropriations
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Committee, unknown, but likely minor, state costs. All state
costs to be fully reimbursed by participating NDPHs. Additional
local government reimbursements of up to $2.7 million (federal
funds).
COMMENTS :
1)PURPOSE OF THIS BILL . According to the author, this bill is
needed in order to modify the special terms and conditions
(STCs) of the 2010 Section 1115 Medi-Cal Demonstration/Pilot
Project Waiver, entitled "A Bridge to Reform." (BTR) to allow
a public district hospital to become a Medicaid Coverage
Expansion (MCE)-LIHP contractor in counties that are both
without a county hospital or are not interested in becoming a
LIHP contractor. The author argues that expanding coverage to
more areas in California will ensure that the stated goals of
the MCE can be achieved throughout all of California without a
cost to the State General Fund (GF) allowing for additional
federal dollars to be received in California. The sponsors,
District Hospital Leadership Forum (DHLF), further state that
currently, while an NDPH can negotiate with a MCE-LIHP
contractor to participate in a LIHP network, they cannot
become an MCE-LIHP contractor. The waiver STCs and
implementing legislation specifically limit the LIHP
contractor applicant to either be a county, city and county,
health authority or consortium of counties serving a region.
According to the sponsor, these MCE-LIHP restrictions limit
California's ability to take full advantage of these uncapped
federal dollars. Public district hospitals are the only
public health care entities that cannot contract directly,
creating a barrier restricting the flow of these federal
dollars to California. There are circumstances where an NDPH
would like to be a LIHP network provider, but the county
chooses not to participate in the program, thus prohibiting
the district's ability to participate without being the
contractor.
2)BACKGROUND . On November 2, 2010, California received approval
for the BTR Section 1115 Medicaid Demonstration Waiver. Under
this demonstration, up to $7.7 billion in federal Medicaid
(Medi-Cal in California) matching funds will be available over
a five-year period to assist the State and counties in
implementing the health care coverage expansions that will
occur in 2014 under the Patient Protection and Affordable Care
Act. The BTR demonstration has three key components: LIHP,
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under which counties extend coverage to low-income adults
before 2014; delivery system reform incentive pool (DSRIP),
under which safety net providers prepare their delivery
systems for 2014; and, enrollment of SPDs currently eligible
for Medicaid into managed care plans.
AB 342 (John A. P�rez), Chapter 723, Statutes of 2010, and AB
1066 (John A. P�rez), Chapter 86, Statutes of 2011, contained
the statutory framework as set out in the waiver STCs
implementing the provisions relating to the LIHP. The 2005
Section 1115 Hospital Financing/Uninsured Waiver included $180
million in the third, fourth, and fifth years for the
development and implementation of Health Care Coverage
Initiative (HCCI) programs in 10 counties to expand services
to low-income uninsured adults not otherwise eligible for
Medi-Cal. The total enrollment was approximately 170,000
annually. The 2010 BTR Waiver builds on the HCCI model and
expands it statewide at county option. A county that chooses
to participate will use Certified Public Expenditures (CPEs)
as the matching funds. Under a CPE arrangement, government
entities certify their Medicaid expenditures to the state, and
the state then obtains federal reimbursement on the basis of
the certified expenditures.
3)SECTION 1115 Waiver . Section 1115 of the Social Security Act
(SSA) gives the Secretary of the federal Health and Human
Services authority to waive provisions of major health and
welfare programs authorized under the SSA, including certain
requirements of Medicaid and the Children's Health Insurance
Program (CHIP). Under Section 1115, the Secretary can allow
states to use federal Medicaid and CHIP funds in ways that are
not otherwise allowed under federal rules, as long as the
Secretary determines the initiative is a "research and
demonstration project" that "furthers the purposes" of the
program. The Secretary's waiver authority is very broad, but
there are some program elements the Secretary does not have
authority to waive, such as the federal matching payment
system for states. Although not set in statute or regulation,
under longstanding policy, waivers must be budget neutral for
the federal government to prevent increased federal spending
through demonstrations. This means that federal costs under a
waiver must not be more than federal costs would have been for
that state without the waiver. The federal government enforces
budget neutrality by establishing a cap on federal funds under
the waiver. If a waiver is approved, the Center for Medicare
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and Medicaid Services (CMS) issues an award letter to the
state, which lists the specific sections of the SSA, and
applicable regulations that are being waived or modified, as
well as the STCs of the approval. The approval also includes
the budget neutrality agreement. Waivers are initially
approved for a five-year period and then must be renewed to
continue operations.
4)LIHP . The STCs of the BTR waiver treat the LIHPs as a bridge
to the more significant coverage that is effective in 2014 and
considers this transition an MCE. As such, the STCs establish
various requirements in order to provide for a seamless
transition for enrollees in 2014. The LIHP is divided into
two components. The MCE covers adults with income up to 133%
FPL who will become Medi-Cal eligible in 2014. Counties are
also authorized to provide coverage under the LIHP to persons
with income up to 200% FPL as an expansion of the HCCI model,
but can only do so without imposing any limit on the lower
income MCE population.
The STCs allow for variations in the MCE and HCCI programs.
Basically the MCE is similar to Medi-Cal, whereas, HCCI is a
more limited program. For instance, the MCE benefit package
is more expansive and includes a limited mental health
benefit. Both programs require eligibility to be determined
by state or county employees. There is also no limit to the
amount of federal financial participation for the MCE
population and it is outside the budget neutrality
calculation, whereas the HCCIs are capped at $180 million per
year for the first three years of the BTR Demonstration. The
STCs state that in the LIHP program a "county" will be defined
as a county, a city and county, a consortium of counties
serving a region consisting of more than one county, a tribal
government, or a health authority.
As of March 2012, LIHP enrollment was 363,871. This includes
the enrollment in the ten legacy HCCI counties from the 2005
waiver. Originally voluntary letters of intent to participate
had been received from all 58 counties, the City of Pasadena,
and 12 California Rural Indian Health Board (CRIHB) programs
in 11 counties. Thirty-four of the counties are participating
through the County Medical Services Program (CMSP) which
provides medical and dental care to indigent adults in 34
small and rural counties but is administered through DHCS. As
of April 2012, in addition to the CMSP counties and the ten
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legacy counties, three additional counties have implemented
LIHPs. Seven counties have implementation dates between June
1, 2012 and August 1, 2012. Two counties, Fresno and San Luis
Obispo, have withdrawn their applications. Three applications
are pending (Tulare, Santa Barbara and CRIHB).
5)APPLICATION OF THIS BILL . According to the sponsor, this bill
is intended to apply to Tulare County. Tulare County has
engaged a consulting firm to determine whether a LIHP is
viable for the county or not. The report has not yet been
submitted to the county and the Board of Supervisors has not
yet noticed the item for the Board agenda. If the Board
decides not to move forward, the three NDPHs in the county
will submit an application. This bill states legislative
intent that the hospital initially establish a local
stakeholder committee comprised of health plans, community
health centers, consumers and other interested stakeholders to
provide input regarding the development, implementation, and
operation of the LIHP. This was added in response to concerns
raised by the community clinics and others that the hospital
district may have little or no prior experience providing
primary care services to the population that a LIHP would
serve.
With regard to Santa Barbara County, the sponsor believes that
the initial assessment is that the one NDPH doesn't treat
enough patients for it to be feasible for that hospital to run
an LIHP. There are NDPHs in Fresno but they have not
expressed an interest in facilitating the local LIHP. There
is no NDPH in San Luis Obispo and the bill would not apply to
CRIHB.
6)SUPPORT . The DHLF, sponsor of this bill, writes in support
that this bill allows a NDPH to become a LIHP contractor in
counties that are both without a county hospital and are not
interested in operating the LIHP. According to the support,
this will result in expanded coverage to more areas in
California which will ensure that the stated goals of the
coverage component of the waiver can be achieved without a
cost to the state General Fund. Health Access California
(HAC), also in support, states that due to political and
fiscal concerns, some counties have either delayed
implementation of the LIHP or decide not to move forward at
all. HAC further states that this bill allows an NDPH to
create and implement an LIHP and points out that some of these
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counties have extremely high rates of uninsured and poverty
and need these programs the most.
7)PREVIOUS LEGISLATION .
a) AB 1066 enacted technical and conforming statutory
changes necessary to conform to the STCs required by CMS in
the approval of the BTR Demonstration, including changing
the name of the LIHP from Coverage Expansion and Enrollment
Projects (CEEP) to MCE and HCCI.
b) AB 342 enacted the LIHP and the CEEP to provide health
care benefits to uninsured adults up to 200% FPL at county
option through a Medi-Cal waiver demonstration project.
c) SB 208 (Steinberg), Chapter 714, Statutes of 2010,
implemented provisions of the 2010 Section 1115 replacement
waiver including the DSRIP, authorized DHCS to require the
mandatory enrollment of SPDs in a Medi-Cal managed care
plan and required DHCS to implement pilot projects to
provide coordinated care to children in the California
Children's Services and to persons who are eligible for
Medi-Cal and Medicare.
REGISTERED SUPPORT / OPPOSITION :
Support
District Hospital Leadership Forum (sponsor)
Health Access California
Opposition
None on file.
Analysis Prepared by : Marjorie Swartz / HEALTH / (916)
319-2097