BILL ANALYSIS �
SENATE COMMITTEE ON HEALTH
Senator Ed Hernandez, O.D., Chair
BILL NO: SB 1517
AUTHOR: Wolk
AMENDED: April 9, 2012
HEARING DATE: April 18, 2012
CONSULTANT: Bain
SUBJECT : County medical service program: fees.
SUMMARY : Permits the County Medical Services Program (CMSP) to
use money from a loan of up to $30 million from the Department
of Finance (DOF) that is authorized under existing law to be
used for the CMSP Governing Board's expenses associated with the
Low Income Health Program (LIHP). Requires CMSP participation
fees paid by counties that are paid each fiscal year to the CMSP
Governing Board to be made in 10 equal payments (instead of 12
equal payments in existing law) or as otherwise specified by the
CMSP Governing Board.
Existing law:
1.Authorizes counties with a population of less than 300,000 in
the 1990 census or that contracted with the Department of
Health Services (now DHCS) during the 1990-91 fiscal year
under a specified provision of law to elect to participate in
the CMSP, for the purpose of providing health services to
eligible county residents. Counties that elect to participate
in the program may establish a CMSP Governing Board, and the
Governing Board is required to administer the CMSP.
2.Allows the DOF to authorize a loan of up to $30 million for
deposit into the CMSP account to ensure that there are
sufficient funds available to reimburse providers and counties
under CMSP.
3.Requires CMSP participation fees paid by counties to be paid
each fiscal year, as a condition of participating in CMSP to
the CMSP Governing Board in 12 equal monthly payments, or as
otherwise specified by the CMSP Governing Board.
4.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 percent of the
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federal poverty level (FPL) (200 percent of the FPL is at or
below $22,340 for an individual in 2012). LIHPs are in effect
until December 31, 2013, and no state General Fund (GF) moneys
can be used to fund LIHP services or any related local
administrative costs.
This bill:
1.Allows the $30 million loan that DOF can authorize for CMSP to
also be used for CMSP Governing Board expenses associated with
a LIHP operated by the Governing Board.
2.Requires CMSP participation fees paid by counties to be paid
each fiscal year to the CMSP Governing Board to be made in 10
equal payments (instead of 12 equal payments) during the
fiscal year, or as otherwise specified by the CMSP Governing
Board.
FISCAL EFFECT : This bill is keyed non-fiscal.
COMMENTS :
1.Author's statement. According to the author, due to the delay
of receiving federal Medicaid matching funds and the cycle of
payments under realignment, the LIHP established by the CMSP
Governing Board is in desperate need of funding. This bill
will enable the DOF to loan the CMSP Governing Board funding
for the payment of health care services.
2.Background on CMSP. CMSP was established in 1983, after the
Legislature transferred responsibility for providing health
services to low-income adults, referred to as medically
indigent adults (MIAs) from the state Medi-Cal program to the
counties. There are currently 34 primarily rural counties
electing to provide for care of the MIAs through CMSP that are
principally located in the northern and eastern portions of
California. CMSP provides medical care services to indigent
adults ages 18 to 64, with incomes at or below 200 percent of
the FPL (at or below $22,340 for an individual in 2012) who
are not eligible for Medi-Cal and who are county residents.
Individuals with incomes above 67 percent of the FPL up to 200
percent of the FPL (between $7,484 and $22,340 for an
individual in 2012) have a share of cost before CMSP coverage
begins. Individuals with incomes below 67 percent of the FPL
do not have a share of cost. Emergency services are provided
when the person's immigration status is not known. The average
monthly enrollment in CMSP at the end of 2011 was
approximately 62,000 individuals. The CMSP Governing Board,
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established through existing law, has responsibility for
setting program eligibility standards, defining the scope of
covered health care benefits, and determining payment rates
for health care providers delivering emergency and
non-emergency services to CMSP members. For 2011-12, CMSP
assumed expenditures of $363 million, revenues of $247 million
and a beginning year fund balance of $138 million.
In January 2012, the Governing Board established "Path2Health,"
a LIHP for the 34 counties in CMSP. On July 1, 2012, Yolo
County will join CMSP and participate in both CMSP and
Path2Health. As a LIHP, Path2Health provides broader coverage
than the prior CMSP benefit package and eliminates CMSP
eligibility restrictions, specifically, the asset test and the
share-of-cost requirement for individuals with incomes between
67 and 100 percent of the FPL. Path2Health also provides
expanded mental health and substance abuse counseling benefits
that were not previously covered by CMSP. Projected enrollment
in Path2Health and CMSP as a result of the eligibility changes
and enhanced awareness and outreach is projected to increase
by 28,000, for total combined enrollment of approximately
89,000 by the end of 2013.
3.Background on LIHPs. LIHPs are established at county option,
and services provided through LIHPs are not an entitlement.
LIHPs are authorized to cover low-income individuals 19 to 64
years of age, who are not pregnant, with family incomes at or
below 200 percent of the FPL (at or below $22,340 for an
individual in 2012), who are not eligible for the Medicare
Program, the Medi-Cal program, the Healthy Families Program,
or other third-party coverage, have satisfactory immigration
status, and meet county of residence requirements. Each LIHP
can establish an upper income limit for eligible individuals,
and can limit enrollment, subject to specified conditions,
including state approval. The state match used to draw down
federal Medicaid funds for LIHPs comes from local funds.
Existing law prohibits state GF moneys from being used to fund
LIHP services or any related administrative costs incurred by
counties. As of January 2012, total statewide LIHP enrollment
was 321,825 individuals.
DHCS indicates it has provided to the ten original LIHP
counties all of the federal transition period payments
allowable pursuant to the federal Special Terms and Conditions
(STCs) of the 2010 Section 1115 California Bridge to Reform
Medicaid Demonstration waiver. The STCs require that federal
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payments cannot continue until the federal claiming protocols
for LIHP health care services costs and administrative costs
are approved by the federal Centers for Medicare and Medicaid
Services (CMS). DHCS indicates CMS reviewed the draft
certified public expenditure claiming protocols and provided
comments which are currently under review by DHCS. DHCS
further indicates it has drafted the capitation rate claiming
protocol and will be submitting it to CMS this month. DHCS is
also currently drafting the claiming protocols for
administrative activities for the LIHP and is targeting
submittal to CMS this month. DHCS is striving to obtain CMS
approval of each of these protocols no later than June 30,
2012.
4.Support. This bill is sponsored by the CMSP Governing Board to
make two changes. First, this bill would codify the current
Governing Board practice of requiring fees to the CMSP
Governing Board to be made in 10 equal payments. Second, this
bill would help the CMSP Governing Board address cash flow
needs associated with Path2Health and CMSP so that timely
payments can be made to health care providers for services
provided to indigent adults under those two programs. The
sponsor states federal Medicaid matching funds for the LIHP
and the cycle of payments under realignment provide revenues
to CMSP five to eight months after expenditures are made. In
the absence of this loan authority, the sponsor states the
Governing Board will be required to seek loan financing solely
through the commercial financial markets, which will be time
consuming and potentially quite costly, depending on the
financial instruments that are utilized.
The sponsor states that, over a period of years prior to the
2008 recession, the Governing Board, through careful
management and changes to the CMSP health care delivery
system, built a contingency reserve of approximately $250
million to fund program costs in excess of revenues and to
address cash flow needs. However, since 2008, that contingency
reserve has been depleted due a 50 percent increase in CMSP
enrollment driven by the recession. Current projections show
the Board's contingency reserve will have a balance of
approximately $20 million by June 30, 2012. While the
Governing Board has sufficient total revenues (composed of
realignment revenues and federal Medicaid matching funds) to
support CMSP and Path2Health, the Governing Board faces a
timing problem with the receipt of the revenues versus when
payments for health care services are made. Because the
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contingency reserve has been depleted by recession-driven CMSP
enrollment growth, the Governing Board no longer has the
ability to utilize the reserve to fund this cash flow, and
borrowing will be required. This bill will assist the
Governing Board with this borrowing and specify that the
authority granted to the DOF applies not only to CMSP, but
also to a LIHP operated by the Governing Board.
SUPPORT AND OPPOSITION :
Support: County Medical Services Program Governing Board
(sponsor)
Oppose: None received.
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