BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
AB 1759 (Pan and Skinner) - Medi-Cal: reimbursement rates: care:
independent assessment.
Amended: July 1, 2014 Policy Vote: Health 8-0
Urgency: No Mandate: No
Hearing Date: August 4, 2014
Consultant: Brendan McCarthy
This bill meets the criteria for referral to the Suspense File.
Bill Summary: AB 1759 requires the Department of Health Care
Services to contract with an independent entity for an annual
assessment of Medi-Cal provider rates, access to care, and
quality of care.
Fiscal Impact:
Ongoing costs of about $1 million per year for an
independent assessment of Medi-Cal rates (General Fund and
federal funds).
Ongoing costs of about $500,000 per year for staff to
manage the contract, review the findings of the assessment
and make recommendations, and to support the required
advisory committee (General Fund and federal funds).
Background: Under state and federal law, the Department of
Health Care Services operates the Medi-Cal program, which
provides health care coverage to pregnant women, children and
their parents with low incomes, as well as blind, disabled, and
certain other populations. Pursuant to the federal Affordable
Care Act, California has opted to expand eligibility for
Medi-Cal up to 138 percent of the federal poverty level and to
include childless adults.
With the exception of certain populations (for example,
individuals eligible for limited scope Medi-Cal benefits or
individuals dually eligible for Medi-Cal and Medicare in most
counties), managed care is the primary system for providing
Medi-Cal benefits. The Department estimates that in 2014-15, 7.5
million Medi-Cal beneficiaries (73 percent of total enrollment)
will receive care through the managed care system.
AB 1759 (Pan and Skinner)
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Most Medi-Cal providers are subject to a 10 percent rate
reduction pursuant to AB 97 (Committee on Budget, Statutes of
2011). This rate reduction went into effect in September 2013.
(However, the Department has limited rate reductions for certain
provider classes, in order to ensure access to care.)
Proposed Law: AB 1759 requires the Department of Health Care
Services to contract with an independent entity for an annual
assessment of Medi-Cal provider rates, access to care, and
quality of care.
The bill would create an advisory committee, with specified
membership, to provide input to the Department on the selection
of the independent entity and to consult with the independent
entity on the assessment.
The bill would require the Department to review the findings of
the annual assessment and recommend any necessary changes to
Medi-Cal rates to ensure access and quality and to meet state
and federal standards.
Related Legislation: SB 870 (Committee on Budget and Fiscal
Review, Statutes of 2014), a budget trailer bill, includes
uncodified language requiring the Department to monitor access
to and utilization of Medi-Cal services, to evaluate current
provider rates, and potentially to make recommended changes to
those rates.
Staff Comments: In general, the rates paid by the Medi-Cal
program to health care providers are amongst the lowest paid by
any third party payer. Providers of health care services have
consistently argued that the rates paid by Medi-Cal are often
below the actual cost or providing care, particularly for
primary care providers. Whether the low rates paid by the
program have significantly reduced access to care by Medi-Cal
beneficiaries is not as clear. If the required assessment does
find that Medi-Cal provider rates are too low to ensure access
to quality health care, there would likely be significant
pressure on the Legislature to increase provider rates.
AB 1759 (Pan and Skinner)
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