AB 72

Page 3

SENATE RULES COMMITTEE
Office of Senate Floor Analyses
(916) 651-1520 Fax: (916) 327-4478 / AB 72

THIRD READING

Bill No: AB 72

Author: Bonta (D) and Atkins(D)

Introduced: 12/18/14

Vote: 27 - Urgency

SENATE HEALTH COMMITTEE: 9-0, 7/15/15

AYES: Hernandez, Nguyen, Hall, Mitchell, Monning, Nielsen, Pan, Roth, Wolk

SENATE APPROPRIATIONS COMMITTEE: 6-0, 8/17/15

AYES: Lara, Bates, Beall, Hill, Leyva, Mendoza

NO VOTE RECORDED: Nielsen

ASSEMBLY FLOOR: 78-0, 4/23/15 (Consent) - See last page for vote

SUBJECT: Medi-Cal: demonstration project

SOURCE: Author

DIGEST: This bill requires the Department of Health Care Services to submit an application to the federal Centers for Medicare and Medicaid Services for a waiver to implement a demonstration project that furthers the delivery of high-quality and cost-efficient care for Medi-Cal beneficiaries, ensures the long-term viability of the delivery system following the expansion of Medi-Cal eligibility under the federal Patient Protection and Affordable Care Act, and continues California’s momentum and successes in innovation achieved under the 2010 “Bridge to Reform” Waiver.

ANALYSIS:

Existing law:

1)  Establishes the Medi-Cal program, which is administered by the Department of Health Care Services (DHCS) and under which qualified low-income persons receive health care benefits.

2)  Establishes a demonstration project under the Medi-Cal program until October 31, 2015, to implement specified objectives, including better care coordination for Seniors and Persons with Disabilities (SPDs) and maximization of opportunities to reduce the number of uninsured individuals.

This bill:

1)  Requires DHCS to submit an application to the federal Centers for Medicare and Medicaid Services (CMS) for a waiver to implement a demonstration project that does all of the following:

a)  Furthers the delivery of high-quality and cost-efficient care for Medi-Cal beneficiaries;

b)  Ensures the long-term viability of the delivery system following the expansion of Medi-Cal eligibility under the federal Patient Protection and Affordable Care Act (ACA); and,

c)  Continues California’s momentum and successes in innovation achieved under the 2010 “Bridge to Reform” Waiver.

2)  Requires DHCS to consult with interested stakeholders and the Legislature in developing the waiver application.

3)  Contains an urgency clause that will make this bill effective upon enactment.

Comments

1)  Author’s statement. According to the author, this bill is one of two legislative vehicles to make the necessary statutory changes to implement a new Section 1115 Medicaid waiver as the 2010 California Bridge to Reform Waiver (Waiver) expires on October 31, 2015. The Waiver renewal is critical to the long–term fiscal sustainability of the Medi–Cal program and to California’s ability to continue to provide high quality health care to Medi-Cal beneficiaries. The goals of the Waiver are to continue to support ACA implementation, improve the health care quality and outcomes of the over 12 million individuals enrolled in Medi-Cal, and provide for the long–term fiscal stability of the Medi-Cal program through delivery system transformation. Specific strategies anticipated to be included in the waiver renewal include a federal-state shared savings initiative; housing and supportive services for vulnerable populations; various health plan and provider delivery system transformation and alignment incentive programs, including a new Delivery System Reform Incentive Program (DSRIP) at designated public hospitals and non–designated public hospitals; workforce development strategies to expand provider access and capacity; and safety net payment and delivery system transformation.

2)  Federal Section 1115 Waiver and Expenditure Authority. Medicaid, known as Medi-Cal in California, is a joint federal-state program to provide health coverage to low-income individuals. Section 1115 of the federal Social Security Act (Act) gives the Secretary of the Department of Health and Human Services (HHS) authority to waive provisions of major health and welfare programs authorized under the Act. This includes certain federal Medicaid requirements in any experimental pilot or demonstration project which, in the judgment of the Secretary, is likely to assist in promoting the objectives of Medicaid. In addition, Section 1115 also allows states to use federal Medicaid funds to reimburse for costs in ways that are not otherwise allowed under federal Medicaid law. Section 1115 waivers are approved at the discretion of the Secretary of HHS through negotiations between a state and CMS for projects that the Secretary determines promote Medicaid program objectives. Section 1115 waivers are generally approved for a five-year period and then must be renewed. Although not required by statute or regulation, longstanding federal administrative policy has required waivers to be “budget neutral” for the federal government, meaning that federal spending under a waiver must not be more than projected federal spending in the state without the waiver.

3)  Bridge to Reform Waiver. California’s existing Section 1115 “California Bridge to Reform Demonstration” Waiver is a five-year demonstration of health care reform initiatives that was projected to provide an additional $10 billion in federal funds over the lifetime of the waiver. The waiver prepared the state for successful implementation of health care reform through an early expansion of Medicaid, and tested innovations in health care support for safety net providers. California is currently in the fourth year of this waiver, which began November 1, 2010, and expires October 31, 2015. California also operates its Medi-Cal managed care delivery system under this federal waiver. The Bridge to Reform Waiver enabled California to:

a)  Implement an early expansion of Medicaid to low-income adults without minor children under the ACA through the Low Income Health Program, which enrolled 650,000 individuals;

b)  Require the mandatory enrollment of SPDs into Medi-Cal managed care plans in specified counties;

c)  Provide federal funding for delivery system reform and uncompensated care in designated public hospital systems (21 county and University of California hospitals) through the DSRIP and Safety Net Care Pool Uncompensated Care (SNCP);

d)  Provided federal funding for designated state health care programs and workforce development programs related to medically disadvantaged service areas; and,

e)  Operate its Medi-Cal managed care program, Community-Based Adult Services (CBAS) program, and seven county Coordinated Care Initiative (under the CCI, individuals dually eligible for Medicare and Medi-Cal receive their Medi-Cal and Medicare benefits through one health plan).

4)  DHCS Waiver Submission. On March 27, 2014, following several months of waiver-related stakeholder meetings, DHCS submitted an application to renew the state’s Section 1115 Waiver Demonstration entitled “Medi-Cal 2020: Key Concepts for Renewal” (Medi-Cal 2020). DHCS indicates the focus of the Waiver Renewal will be on continuing to drive the transformation of its Medi-Cal program, ensuring ongoing support for the safety net in California, and ensuring the long-term viability of the program and the Medicaid expansion. Existing 1115 Waiver authorities and programs that would continue under the next Waiver include the CCI, the CBAS waiver, managed care program, Indian Health Services uncompensated care, Designated State Health Programs, the pending Drug Medi-Cal Organized Delivery System program, and the provision of full scope benefits for pregnant women with incomes between 109 percent to 138 percent of the federal poverty level.

In addition to the continuation of existing waiver programs, DHCS will pursue a set of six, cross-cutting approaches that together will advance delivery system transformation in California as part of Medi-Cal waiver renewal:

a)  Managed Care Systems Transformation & Improvement Program – Joint incentive pools for Medi-Cal plans, behavioral health systems and providers to align incentives, improve health outcomes and reduce overall costs;

b)  Fee-for-Service (FFS) Transformation & Improvement Program - FFS incentives in dental and maternity care to expand access to dental services through targeted incentives to increase provider participation and incenting delivery of preventative services in lieu of more invasive and costly procedures;

c)  Public Safety Net System Transformation & Improvement Program – Funding for quality improvement for public hospitals, and expanding eligibility for this funding to the 40+ non-designated public hospitals;

d)  Workforce Development Program – Waiver funding to provide financial incentives to (1) health professionals who have not previously cared for Medi-Cal members, and to existing Medi-Cal providers who treat additional Medi-Cal beneficiaries, targeted to health professionals in geographic areas with the greatest need for Medi-Cal participating providers and to professions and specialties where recruiting is most challenging; (2) voluntary training opportunities to improve quality for non-clinical members of the care team to help those new to coverage navigate the health system through health education and other outreach efforts; and (3) incentives and programs to expand cross-training of providers in primary care, mental health, substance use disorder services, and long-term services and supports, and to support integration of multi-disciplinary teams across care settings;

e)  Increased Access to Housing and Supportive Services Program – The Waiver will provide tools to better coordinate care for the most vulnerable Medi-Cal members through policies, data analysis and measurement that facilitate access to supportive services that are also proven to reduce costs, including improved access to affordable housing;

f)  Whole Person Care Pilots – An option for enhanced model of regional partnerships requiring proposals for a geographic region, such as a county or group of counties, jointly pursued by the county and applicable Medi-Cal plans for that region whereby managed care plans, counties, and local partners would provide Whole-Person Care for target high need patients through collaborative leadership and systematic coordination with other public and private entities identified by the county. The pilot design would encourage innovation in delivery and financing strategies to improve health outcomes of target populations; and,

g)  Public Safety Net System Global Payment for the Remaining Uninsured – Moving disproportionate share hospital and SNCP funding into a global budget structure where care for the remaining uninsured would be provided within a global budget for all uninsured services, thus giving public hospital systems the incentive to provide more coordinated upstream care for the uninsured and reduce inappropriate utilization.

In support of California’s efforts to achieve the goals outlined above, DHCS seeks to test a new investment strategy in partnership with the federal government by initiating a federal-state shared savings model. California’s shared savings initiative would involve a reinvestment of federal funding in recognition of the savings that California’s Section 1115 demonstration initiatives generate to the benefit of both the state and the federal government. This reinvestment would provide the state with a portion of the federal savings that are generated through the demonstration to facilitate and augment continued Medi-Cal delivery system transformation. Under this initiative, California would be required to demonstrate that the federal savings generated under the waiver are substantial enough to permit California to retain a portion or percentage of that savings. The state would need to demonstrate that, even after reinvestment in the waiver strategies, the federal government will continue to realize savings. If the waiver strategies implemented through Medi-Cal 2020 do not result in the level of federal savings that is projected, California would be required to limit the spending on waiver reinvestment initiatives to ensure overall savings and budget neutrality.
The state’s waiver request in Medi-Cal 2020 is for $17.1 billion in federal funds over the five years of the waiver. The state’s waiver request is pending with the federal government.

Related Legislation

SB 36 (Hernandez and De Leon) is identical to this bill. SB 36 is scheduled to be heard in the Assembly Appropriations Committee on August 19, 2015.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

According to the Senate Appropriations Committee, no new administrative costs to DHCS are anticipated due to this bill. DHCS is currently in the process of developing a waiver application and has been engaged in planning and stakeholder discussions which will continue in 2015-16. Because DHCS is already undertaking these efforts, this bill will not impose new administrative duties on DHCS.

SUPPORT: (Verified 8/18/15)

American Federation of State, County and Municipal Employees

Association of California Health Care Districts

California Association of Physician Groups

California Association of Public Hospitals and Health Systems

California State Association of Counties

California State Council of the Service Employees International Union

Community Clinic Association of Los Angeles County

District Hospital Leadership Forum

Planned Parenthood Affiliates of California

University of California

OPPOSITION: (Verified 8/18/15)

None received

ARGUMENTS IN SUPPORT: The California Association of Physician Groups (CAPG) writes that it supports policy measures that encourage the implementation of the Triple Aim which include decreased cost, improved patient experience and development of population health management. CAPG writes the new “Medi-Cal 2020” waiver seeks approximately $17 billion in federal investment to further the achievements California has made in health care reform that a set of payment and delivery system transformation strategies. CAPG states it continues to support and participate in the waiver renewal stakeholder process.
The California State Association of Counties (CSAC) writes in support that DHCS’ Medi-Cal 2020 waiver renewal addresses the counties’ priorities, and introduces a new concept transforming California’s public safety net for the remaining uninsured by creating a global payment system. CSAC states the global payments offer a unique opportunity for California to serve as an incubator in testing new payment methods for delivering care to the uninsured and in transforming care away from high-cost settings (such as emergency rooms) towards primary care. CSAC argues these individual payments would allow each hospital system more certainty about its budget and how much in federal funds will be available.

ASSEMBLY FLOOR: 78-0, 4/23/15

AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Chang, Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Perea, Quirk, Rendon, Ridley-Thomas, Rodriguez, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Atkins

NO VOTE RECORDED: Campos, Salas

Prepared by: Scott Bain / HEALTH /

8/19/15 20:23:19

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