BILL ANALYSIS �
SENATE COMMITTEE ON HEALTH
Senator Ed Hernandez, O.D., Chair
BILL NO: AB 1759
AUTHOR: Pan and Skinner
AMENDED: May 23, 2014
HEARING DATE: June 25, 2014
CONSULTANT: Bain
SUBJECT : Medi-Cal: reimbursement rates: care: independent
assessment.
SUMMARY : Requests the University of California to annually
conduct an independent assessment of Medi-Cal provider
reimbursement rates, access to care, and the quality of care
received in the Medi-Cal program. Requires the assessment to
reflect the variety of providers and services offered in the
Medi-Cal program. Creates a 16 member advisory committee
representing health care stakeholders, including, but not
limited to, patients, providers, public and private health
delivery systems, payers, and state officials.
Existing law:
1.Establishes the Medi-Cal program, administered by the
Department of Health Care Services (DHCS), under which
qualified low-income individuals receive health care services.
2.Requires payments to be reduced by 10 percent for Medi-Cal
fee-for-service (FFS) benefits for dates of service on and
after June 1, 2011. Requires payments to Medi-Cal managed care
plans to be reduced by the actuarial equivalent amount of the
10 percent payment reduction.
3.Requires the Director of the Department of Health Services
(DHS was the predecessor to DHCS) to annually review the
reimbursement levels for physician and dental services under
Medi-Cal, taking into account the following factors:
a. Annual cost increases for physicians as
reflected by the Consumer Price Index;
b. Physician reimbursement levels of Medicare,
Blue Shield, and other third-party payers;
c. Prevailing customary physician charges within
Continued---
AB 1759 | Page 2
the state and in various geographical areas;
d. Procedures reflected by the current Relative
Value Studies (RVS); and,
e. Characteristics of the current population of
Medi-Cal beneficiaries and the medical services
needed.
This bill:
1.Requests the University of California (UC) to annually conduct
an independent assessment of Medi-Cal provider reimbursement
rates, access to care, and the quality of care received in the
Medi-Cal program. Requires the assessment to reflect the
variety of providers and services offered in the Medi-Cal
program.
2.Creates an advisory committee, composed of 16 members
representing health care stakeholders, including, but not
limited to, patients, providers, public and private health
delivery systems, payers, and state officials.
3.Requires the Governor to appoint eight members to the advisory
committee, the Senate Rules Committee to appoint four members,
and the Assembly Speaker to appoint four members.
4.Requires members of the committee to be appointed for four
year terms, and each member to hold office until the
appointment and qualification of his or her successor or until
one year has elapsed since the expiration of the term for
which he or she was appointed, whichever occurs first.
5.Requires staggered initial appointments, as follows:
a. Of the initial members appointed by the Governor,
two serve a term of one year; two are required to serve
a term of two years; two serve a term of three years;
and, two serve a term of four years.
b. Of the initial members appointed by the Senate
Rules Committee; one serves a term of one year; one
serves a term of two years; one serves a term of three
years; and, one serves a term of four years.
c. Of the initial members appointed by the Assembly
Speaker, one serves a term of one year; one serves a
term of two years; one serves a term of three years;
and, one serves a term of four years.
AB 1759 | Page
3
6.Requires members of the committee to publicly report financial
and other potential conflicts of interest.
7.Requires the committee to establish an open process for the
conduct of its affairs that enables all health care
stakeholders to provide feedback on those affairs.
8.Requires the committee to meet periodically with UC and
provide input to UC on the required assessment.
9.Requires the DHCS director to annually review the findings and
recommendations of the assessment and suggest adjustments to
the reimbursement rates as necessary to ensure that quality
and access in the Medi-Cal FFS program and in Medi-Cal managed
care plans are adequate to meet applicable state and federal
standards.
10.Requires the findings and recommendations of the UC
independent assessment and the director's suggested
adjustments to provider reimbursement rates to be submitted to
the Legislature annually as part of the Governor's Budget.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1.Costs to UC of $900,000 General Fund for staff and consulting
services to annually assess the adequacy of Medi-Cal rates.
2. Unknown, significant General Fund cost pressure on Medi-Cal
rates, to the extent the state- sanctioned assessment
conducted pursuant to this bill finds rates should be
increased.
PRIOR VOTES :
Assembly Appropriations:12- 0
Assembly Floor: 79- 0
COMMENTS :
1.Author's statement. According to the author, a challenge
facing the Medi-Cal program is that the state's Medi-Cal
provider reimbursement rate setting process is neither data
driven nor evidence-based. The author argues there is no
systematic evaluation process to ensure that Medi-Cal
reimbursement rates are sufficient to ensure adequate access
AB 1759 | Page 4
to care and quality of care. Medi-Cal requires a systematic,
data-driven, and evidence-based process to establish Medi-Cal
rates and determine their impact on access and quality and to
ensure responsible stewardship of taxpayer dollars.
2.Federal Medicaid law, Medi-Cal rates and the Medi-Cal budget.
Medi-Cal reimbursement methodologies for services are subject
to state and federal law. Section 1902(a)(30)(A) of the
federal Social Security Act (Act) requires that states "assure
that payments are consistent with efficiency, economy and
quality of care and are sufficient to enlist enough providers
so that care and services are available under the plan at
least to the extent that such care and services are available
to the general population in the geographic area."
The 2014-15 DHCS budget assumes average monthly enrollment in
Medi-Cal of 11.5 million individuals, and total expenditures
of $90.6 billion ($17.4 billion General Fund). To achieve
budget savings in Medi-Cal during the state's recent fiscal
crisis, the state has three principle policy and fiscal
choices: (a) to reduce or restrict who is eligible for
Medi-Cal benefits; (b) to reduce the scope of benefits
provided in the program; and, (c) to reduce the payments to
health care providers and managed care plans for Medi-Cal
services. Federal law has prevented or limited the state's
ability to reduce eligibility, but the state previously
eliminated benefits in Medi-Cal, most notably adult dental
services (which were partially restored in May 2014). In
addition, the state has attempted several times to reduce
Medi-Cal payments to health plans, health facilities and
health care providers. However, some of these rate reductions
did not, and have not taken effect because of court
injunctions, while other reductions have expired by their own
terms and been replaced by different rate reductions.
Under AB 97 (Committee on Budget), Chapter 3, Statutes of 2011,
Medi-Cal provider rates were reduced by ten percent for dates
of services on and after June 1, 2011, subject to federal
approval, and federal financial participation. This rate
reduction was initially blocked by court action for many
providers, and other providers were exempt from the rate
reduction due to access concerns. However, the rate reduction
took effect for other providers in September 2013. DHCS also
exempted certain provider categories from the retroactive
application of the rate reduction. The recently passed budget
did not change the ten percent Medi-Cal rate reduction. A 2012
AB 1759 | Page
5
report by the California HealthCare Foundation (CHCF) found
that California's primary care rates were 43 percent of
Medicare rates, and ranked 48th amongst state Medicaid
programs. For all Medi-Cal services, California's rates were
51 percent of Medicare rates and ranked 47th amongst all state
Medicaid programs.
3.Survey of Medi-Cal beneficiaries. In May 2012, CHCF published
"Medi-Cal at a Crossroads: What Enrollees Says About the
Program." The CHCF survey found that 79 percent of enrollees
found it was easy and 18 percent found it difficult to find
primary care providers or dentists who accept Medi-Cal. For
specialists and counselors/therapists or other mental health
providers, access to providers was worse. Forty-three percent
found it was easy to access a specialist, 29 percent found it
difficult, and 27 percent were not sure. For mental health
providers, 32 percent said it was easy to find a mental health
provider, 19 percent said it was difficult and 46 percent were
not sure.
4.Support. This bill is supported by health care providers,
labor and consumer/patient advocacy groups, which argue this
bill will provide an objective and well-respected overview of
access in the post-Affordable Care Act Medi-Cal health
coverage environment. Supporters argue there is no formal
systematic process to ensure that Medi-Cal reimbursement rates
can sustain a viable health care workforce to serve Medi-Cal
beneficiaries, and an independent assessment will be helpful
in moving toward Medi-Cal reimbursement rates that are
sufficient to ensure access to and quality of care, and will
provide the Legislature with the leverage needed to secure
appropriate funding for Medi-Cal services.
5.Related legislation. SB 870 (Senate Budget and Fiscal Review
Committee) was signed by Governor Brown on June 20, 2014.
Among its provisions is uncodified legislative intent language
that requires DHCS to continue to monitor access to and
utilization of Medi-Cal services in the fee-for-service and
managed care settings during the 2014-15 fiscal year, in
conjunction with DHCS' federally approved plan to monitor
health care access for Medi-Cal beneficiaries and any other
methods deemed appropriate by the director. The language would
further require DHCS to use this information to evaluate
current reimbursement levels for Medi-Cal providers and to
make recommendations for targeted changes to the reductions in
AB 1759 | Page 6
reimbursement levels made pursuant to AB 97 (Committee on
Budget), Chapter 3, Statutes of 2011, to the extent DHCS finds
those changes appropriate.
6.Should the independent assessment be conducted by UC? UC is a
major Medi-Cal provider through its hospitals and clinics with
a significant financial stake in Medi-Cal reimbursement rates.
Given UC's dual role as an academic institution and a health
care provider, should UC be designated as the entity to
conduct the independent assessment of Medi-Cal provider
reimbursement rates, access to care, and quality of care?
An alternative approach to UC would be to have the DHCS' an
independent entity conduct an assessment of reimbursement
rates, access to care, and the quality of care, and to
designate an advisory board that would meet publicly to
provide sunshine and incorporate public input into the
assessment.
SUPPORT AND OPPOSITION :
Support: California Academy of Family Physicians (co-sponsor)
California Academy of Physician Assistants
California Chapter of the American College of
Emergency Physicians
California Coverage & Health Initiatives
California Medical Association
California Pan-Ethnic Health Network
California Primary Care Association
Children Now
Children's Defense Fund - CA
Children's Specialty Care Coalition
National Multiple Sclerosis Society - California
Action Network
PICO-CA
Planned Parenthood Affiliates of California
Planned Parenthood Affiliates of California
Health Access California
Service Employees International Union United
Healthcare Workers West
The Children's Partnership
United Ways of California
Oppose: None received
AB 1759 | Page
7
-- END --