BILL ANALYSIS                                                                                                                                                                                                    �




                   Senate Appropriations Committee Fiscal Summary
                            Senator Kevin de Le�n, Chair


          SB 1339 (Canella) - Medi-Cal: Drug Medi-Cal Program providers.
          
          Amended: April 29, 2014         Policy Vote: Health 8-0
          Urgency: No                     Mandate: No
          Hearing Date: May 23, 2014      Consultant: Brendan McCarthy
          
          SUSPENSE FILE. AS AMENDED.
          
          
          Bill Summary: SB 1339 would require the Department of Health  
          Care Services or a county to obtain a criminal background check  
          for the owner and medical director of a Drug Medi-Cal provider  
          prior to entering into a contract.

          Fiscal Impact (as approved on May 23, 2014): 
              One-time costs up to $140,000 for initial background checks  
              by the Department of Justice (private funds) and minor costs  
              ongoing. There are about 1,000 active Drug Medi-Cal  
              providers and the cost for a background check is $65. After  
              the initial round of background checks, ongoing costs to  
              perform background checks should be minor for new providers  
              or new medical directors.

              Likely administrative costs up to $75,000 in the first year  
              to coordinate background checks with Drug Medi-Cal providers  
              and the Department of Justice by the Department of Health  
              Care Services (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. Generally, the federal government  
          provides a 50 percent federal match for state Medi-Cal  
          expenditures. 

          The federal Affordable Care Act allows states to expand Medicaid  
          (Medi-Cal in California) eligibility to individuals with income  
          up to 138 percent of the federal poverty level. California has  
          opted to expand eligibility for Medi-Cal up to 138 percent of  
          the federal poverty level.  The Affordable Care Act provides a  
          significantly enhanced federal match for the expansion. Under  








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          the law, the federal government will pay for 100 percent of the  
          cost of the expansion in 2013-14 declining to a 90 percent  
          federal match in the 2020 federal fiscal year and thereafter.

          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. 

          Drug Medi-Cal, which is the package of benefits related to  
          substance use disorders, has been "carved out" of managed care.  
          Drug Medi-Cal is a benefit provided by the counties using  
          realignment funds. However, counties are only responsible for  
          the costs to provide the benefits that were authorized prior to  
          January 1, 2014. 

          Under current law, any provider to the fee-for-service Medi-Cal  
          program must enroll with the Department of Health Care Services,  
          whether the provider bills the state or a local government for  
          Medi-Cal services. The Department reviews the application for  
          enrollment, but only conducts criminal background checks on  
          providers deemed high risk (for example providers who have  
          previously been suspended from the program or who are in a  
          certain class of provider). In addition, a provider that wishes  
          to provide Drug Medi-Cal services in a county must contract with  
          either the county or the Department before providing services.

          Proposed Law: SB 1339 would require the Department of Health  
          Care Services or a county to obtain a criminal background check  
          for the owner and medical director of a prospective Drug  
          Medi-Cal provider prior to entering into a contract.

          The bill provides that a provider shall not be excluded from  
          participation in Medi-Cal solely based on the existence of a  
          criminal record by the owner or medical director.

          Related Legislation: 
              AB 1664 (Medina) would require Drug Medi-Cal providers to  
              be designated as high risk. That bill is pending in the  
              Assembly Appropriations Committee.
              AB 1967 (Pan) would require the Department to notify a  








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              county that contracts with a Drug Medi-Cal provider if the  
              Department has commenced an investigation of the that  
              provider. That bill is pending in the Assembly  
              Appropriations Committee.

          Committee amendments: require the subject of the background  
          check to pay for the background check.