BILL ANALYSIS �
AB 1805
Page 1
Date of Hearing: April 22, 2014
ASSEMBLY COMMITTEE ON HEALTH
Richard Pan, Chair
AB 1805 (Skinner and Pan) - As Amended: April 7, 2014
SUBJECT : Medi-Cal: reimbursement: provider payments.
SUMMARY : Requires the Department of Health Care Services (DHCS)
to disregard the 10% payment reductions for Medi-Cal providers,
to the maximum extent permitted by federal law and for the
maximum time period for which federal financial participation is
obtained. 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, administered by DHCS, under
which qualified low-income patients receive health care
benefits. Medi-Cal is California's version of the federal
Medicaid program in which funding is provide by both the state
and federal government.
2)Requires Medi-Cal provider payments and payments to Medi-Cal
managed care plans be reduced by 10% for dates of service on
and after June 1, 2011.
FISCAL EFFECT : This bill has not been analyzed by a fiscal
committee
COMMENTS :
1)PURPOSE OF THIS BILL. According to the authors, years of
persistent underfunding and reduced reimbursement rates have
resulted in a severe shortage of Medi-Cal providers. The
Medi-Cal expansion under the Patient Protection and Affordable
Care Act (ACA) threatens to make it even harder for enrollees
to find a provider as 1 to 2 million additional Californians
become eligible this year; this compounds the access issue
created by the transition of 900,000 children into Medi-Cal
from the Healthy Families program. The authors argues that as
a result, the one in five Californians who rely on the
Medi-Cal program for health insurance are often unable to get
medical services and must turn to hospital emergency rooms for
access to healthcare, demonstrating that these cuts have
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negatively impacted the health of all Californians. The
authors conclude although California had to balance its budget
in recent years by cutting Medi-Cal rates, there is now room
to restore funding to Medi-Cal.
2)BACKGROUND . Medi-Cal reimbursement rates are among the lowest
in the nation. According to the California Budget Project,
California's Medicaid payments to physicians in 2012 were the
third lowest in the nation. California spends over 30% less
per Medi-Cal beneficiary than the national average and the
least per beneficiary among the 10 largest states. Medi-Cal
payments frequently do not cover the costs of care delivery.
Low reimbursement rates can discourage providers from
accepting new Medi-Cal patients. Due to years of persistent
underfunding, there is now a serious shortage of practitioners
willing to accept new Medi-Cal patients. According to a
recent study, only 57% of office-based physicians in
California accept new Medi-Cal patients, the second lowest
rate in the nation. Consequently, many Medi-Cal patients do
not have timely access to a primary care provider.
3)BUDGET ACTIONS . The long running problem of low Medi-Cal
rates was exacerbated when the state attempted over the past
several years to reduce reimbursement rates to Medi-Cal
providers in efforts to reduce program spending and balance
the state budget. However, many of these reductions were
later blocked by courts or repealed and replaced by
alternative budgetary actions.
AB 97 (Committee on Budget), Chapter 3, Statutes of 2011,
mandated a 10% reduction in Medi-Cal provider fee-for-service
(FFS) rates and payments made to Medi-Cal managed care plans,
effective June 1, 2011. Additionally, payment rates for
skilled nursing facilities that are a distinct part of a
general acute care facility (DP-SNFs) were "rolled back" to
2008-09 payment rates and then further reduced by 10%.
Shortly afterwards, a district court blocked these cuts,
ruling that they would harm the millions of low-income
Californians who depend on Medi-Cal to receive health care.
In January 2013, a three judge panel of the federal Ninth
Circuit Court of Appeals ruled that the state could proceed
with rate cuts. Plaintiffs subsequently requested rehearing
of this case by the full Ninth District Court of Appeals but
this request was denied. The U.S. Supreme Court was then
asked to review the Ninth Circuit hearing but this petition
was also denied. The Governor announced this past January in
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his 2014-15 budget proposal that the state would not proceed
with retroactive collection of payment cuts but made clear the
state's intention to proceed with the mandated cuts moving
forward.
4)HEALTH CARE REFORM . The federal ACA significantly expands
Medicaid program (Medi-Cal in California) eligibility to cover
individuals up to 138% of the federal poverty level. There is
serious concern however about access to care and quality of
care for the 8.5 million Californians currently enrolled in
the program, as well as the additional 1 to 2 million
Californians now newly eligible under ACA provisions.
Increased primary care provider capacity is necessary to care
for this large influx of new Medi-Cal patients.
5)SUPPORT . According to supporters, this bill is an important
step in the right direction, providing an unmistakable signal
that the Medi-Cal program needs increased provider
participation, not less. Supporters note the rate cuts
enacted as part of the budget impact most of the provider
community including physicians, dentists, ambulance providers,
pharmacists, nursing homes, and others. They point to the
very low level of Medi-Cal reimbursement rates that often do
not even cover the costs of delivering care. Many note that
California spends over 30% less per beneficiary than the
national average and least per beneficiary among the ten
largest states. .
As Medi-Cal program enrollment expands substantially under
health care reform, supporters also argue that adequate
reimbursement will be necessary to ensure that new
beneficiaries have timely access to providers. They also note
that severe underfunding significantly diminishes the state's
capacity to ensure high quality of care. Supporters argue
without timely access to a primary care physician, care takes
place in the emergency department, the worse place imaginable
for cost control and quality of care. Supporters also argue
this bill would reduce the significant cost shift that occurs
as private insurance must pay more to cover the cost of the
underfunding of the Medi-Cal program. Supporters conclude
this bill will bolster provider participation in the Medi-Cal
program, reduce unnecessary costs, help to ensure high quality
care, and thus benefit both the state and California adults
and children who rely on Medi-Cal for medical services.
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6)RELATED LEGISLATION :
a) AB 1759 (Pan and Skinner) makes permanent the existing
temporary reimbursement rate increase for specified
Medi-Cal primary care providers, beginning January 1, 2015.
This bill is set for hearing on April 22, 2014 in this
Committee.
b) AB 900 (Alejo) would have eliminated scheduled Medi-Cal
payment reductions for DP-SNFs. AB 900 was held on the
Appropriations Committee suspense file.
c) SB 646 (Nielsen) was similar to AB 900 and was held in
the Senate Appropriations Committee.
d) SB 640 (Lara) would have required scheduled Medi-Cal
payment reductions not apply to Medi-Cal provider and
managed care health plans for services delivered after June
1, 2011. SB 640 was held on the suspense file of the
Senate Appropriations Committee.
7)PREVIOUS LEGISLATION
a) AB 5 X3 (Committee on Budget), Chapter 3, Statutes of
2007-08 Third Extraordinary Session, reduced Medi-Cal
provider FFS payments and payments to Medi-Cal managed care
plans by 10%, effective July 1, 2008. Also reduced
payments for specified non-Medi-Cal programs in a similar
manner and reduced non-contract Medi-Cal hospital payments
as specified. AB 5 X3 exempted specified providers from
payment reductions.
b) AB 1183 (Committee on Budget), Chapter 758, Statutes of
2008, rendered inoperative the AB 5 X3 rate reduction
provisions on February 28, 2009, and applied various
payment reductions to other providers.
c) AB 5 X4 (Evans), Chapter 5, Statutes of 2009-10 Fourth
Extraordinary Session, for specified providers, froze
Medi-Cal payment rates for services provided in the
2009-2010 rate year and beyond, by prohibiting
reimbursement rates from exceeding rates applicable in the
2008-09 rate year after the 5% reduction mandated by AB
1183.
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d) AB 97 requires the rate reductions required by AB 1183
and AB 5 X4 not be instituted for services delivered on or
after June 1, 2011 (with specified exceptions). Reduced
Medi-Cal provider FFS and managed care payments by 10%
effective June 1, 2011. Reduced payments for non-Medi-Cal
programs for services on and after June 1, 2011, with
exceptions. AB 97 was dependent upon federal approval and
specified that payment reductions would be collected
retroactively to June 1, 2011. Federal approval was
obtained October, 2011 and effectively voided the payment
reductions mandated in AB 1183 and AB 5 X4.
e) AB 102 (Committee on Budget), Chapter 29, Statutes of
2011, continued the 1% and 5% Medi-Cal reductions set to
expire effective June 1, 2011, until the reimbursement
reductions specified in AB 97 received federal approval, at
which time payments were to be collected retroactively back
to June 1, 2011.
REGISTERED SUPPORT / OPPOSITION :
Support
California Academy of Family Physicians (co-sponsor)
California Hospital Association (co-sponsor)
California Medical Association (co-sponsor)
United Healthcare Workers West Service Employees International
Union, CLC (co-sponsor)
AARP
AdvaMed
Ahwahnee Care Homes, Inc.
AIDS Healthcare Foundation
Alameda Health System
Alliance of Catholic Health Care
American Academy of Pediatrics, California District IX
American Congress of Obstetricians and Gynecologists
American Federation of State, County and Municipal Employees,
AFL-CIO
American Medical Response
Amyotrophic Lateral Sclerosis Association Golden West Chapter
Association of California Healthcare Districts
Barton Memorial Hospital Skilled Nursing Facility
California Ambulance Association
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California Association of Health Plans
California Association for Health Services at Home
California Association of Bioanalysts
California Association of Health Plans
California Association of Medical Product Suppliers
California Chapter of the American College of Cardiology
California Chapter of the American College of Emergency
Physicians
California Children's Hospital Association
California Clinical Laboratory Association
California Communities United Institute
California Dialysis Council
California Family Resource Association
California Healthcare Institute
California Herndon Pharmacy
California Medical Transportation Association
California Optometric Association
California Pan-Ethnic Health Network
California Primary Care Association
California Retailers Association
Central California Alliance for Health
City and County of San Francisco
Coalinga Regional Medical Center
Community Medical Centers
County of San Diego
Dignity Health
Eastern Plumas Health Care
Emanuel Medical Center
Health Access California
Integrated Healthcare Holdings, Inc.
Jewish Home of San Francisco
John C. Fremont Healthcare District
Kaiser Permanente
Kern Valley Healthcare District
Laguna Honda Hospital and Rehabilitation Center
Los Angeles Jewish Home
Mayers Memorial Hospital District
Mee Memorial Hospital
Motion Picture & Television Fund
Mountains Community Hospital
Oak Valley Hospital District
Ojai Valley Community Hospital
Palomar Health
Paramedics Plus
Planned Parenthood Advocacy Project Los Angeles County
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Planned Parenthood Affiliates of California
Planned Parenthood Mar Monte
Planned Parenthood of Orange and San Bernardino Counties
Planned Parenthood of Santa Barbara, Ventura & San Luis Obispo
Counties
Planned Parenthood of the Pacific Southwest
Planned Parenthood Pasadena and San Gabriel Valley
Planned Parenthood Shasta Pacific Action Fund
Private Essential Access Community Hospitals
Providence Health & Services, Southern California
Sacramento Women + Health Care Reform Coalition
San Benito Health Care District
Seneca Healthcare District
Senior Services Coalition
Sharp HealthCare
Six Rivers Planned Parenthood
Southern Humboldt Community Healthcare District
St. Mary's Medical Center
State Independent Living Council
Surprise Valley Health Care District
Tahoe Forest Hospital District
Tenet
Trinity Hospital
Opposition
None on file
Analysis Prepared by : Roger Dunstan / HEALTH / (916) 319-2097