Existing law provides for the Medi-Cal program, which is administered by the State Department of Health Care Services, under which qualified low-income individuals receive health care services. The Medi-Cal program is, in part, governed and funded by federal Medicaid Program provisions. Existing law requires each county to establish a community child health and disability prevention program to include, among other things, health screening and evaluation services for all children that include immunizations and an assessment of immunization status.

This bill would require the State Department of Health Care Services to establish and administer the California Childhood Immunization Quality Improvement Fund (CCIQIF) program to improve childhood immunization rates, and would require the department to submit an application to the federal Centers for Medicare and Medicaid Services for a waiver to implement a 5-year demonstration project to implement the program. The bill would require the department to develop a plan for the collection and expenditure of CCIQIF moneys according to specified guidelines, including voluntary contributions from Medi-Cal managed care plans to be used for provider support payments and reward payments to Medi-Cal managed care plans, as specified. The bill would require the department to contract with specified researchers to develop and submit to the Legislature an evaluation of the effectiveness of the demonstration project. This bill would make these provisions inoperative on a specified date.

Existing law provides for the Medi-Cal program, which is administered by the State Department of Health Care Services, under which qualified low-income individuals receive health care services. The Medi-Cal program is, in part, governed and funded by federal Medicaid Program provisions. Existing law requires each county to establish a community child health and disability prevention program to include, among other things, health screening and evaluation services for all children that include immunizations and an assessment of immunization status.

This bill would state the intent of the Legislature to enact legislation to improve vaccination rates for persons 2 years of age in Medi-Cal managed care. require the State Department of Health Care Services to establish and administer the California Childhood Immunization Quality Improvement Fund (CCIQIF) program to improve childhood immunization rates, and would require the department to submit an application to the federal Centers for Medicare and Medicaid Services for a waiver to implement a 5-year demonstration project to implement the program. The bill would require the department to develop a plan for the collection and expenditure of CCIQIF moneys according to specified guidelines, including voluntary contributions from Medi-Cal managed care plans to be used for provider support payments and reward payments to Medi-Cal managed care plans, as specified. The bill would require the department to contract with specified researchers to develop and submit to the Legislature an evaluation of the effectiveness of the demonstration project. This bill would make these provisions inoperative on a specified date.

Existing law provides for the Medi-Cal program, which is administered by the State Department of Health Care Services, under which qualified low-income individuals receive health care services. The Medi-Cal program is, in part, governed and funded by federal Medicaid Program provisions. Existing law requires each county to establish a community child health and disability prevention program to include, among other things, health screening and evaluation services for all children that include immunizations and an assessment of immunization status.

This bill would state the intent of the Legislature to enact legislation to improve vaccination rates for persons 2 years of age in Medi-Cal managed care.

SENATE COMMITTEE ON APPROPRIATIONS

Senator Ricardo Lara, Chair

2015 - 2016 Regular Session

AB 1117 (Cristina Garcia) - Medi-Cal: vaccination rates

This bill meets the criteria for referral to the Suspense File.

Bill Summary:

AB 1117 would require the Department of Health Care Services to create a program to provide incentive payments to Medi-Cal managed care plans for fully vaccinated children. The incentive payments would be supported with voluntary donations by Medi-Cal managed care plans.

Fiscal Impact:

• One-time costs of $315,000 for the Department of Health Care Services to develop program rules and methodologies for distributing incentive payments, apply for federal approval to implement the program, and contract with an independent evaluator (General Fund and federal funds).

• One-time costs likely in the low hundreds of thousands for an independent evaluation of the program (private funds and federal funds).

• Ongoing administrative costs of $125,000 per year to administer the program and ensure the correct processing of incentive payments (private funds and federal funds).

• Ongoing costs up to $50 million per year to make incentive payments to Medi-Cal managed care plans for children who are currently fully vaccinated and additional incentive payments of about $4 million per year for each additional 5% increase in the rate of fully vaccinated children. There are about 540,000 children under age two enrolled in Medi-Cal managed care and currently 75% of two year olds have been fully vaccinated. The bill requires incentive payments of $125 to be made to Medi-Cal managed care plans per fully vaccinated child. The cost to provide incentive payments for children in managed care who are currently fully vaccinated would be about $50 million. To the extent that the bill successfully incentivizes managed care plans to increase vaccination rates, each increase in the vaccination rate of 5% would increase incentive payments by about $4 million.

The bill requires the program to be implemented to the extent that federal matching funds are available. Under federal law, voluntary contributions can be made to state Medicaid programs to support program activities. However, federal law generally prohibits “bona fide provider-related donations” from including provisions that hold donors harmless or a practice under which donations are returned to the donors. Under this bill, Medi-Cal managed care plans would be making donations that would be paid directly back to managed care plans, and plans that have the highest vaccination rates are most likely to be those plans making donations. Therefore, the program is not likely to meet federal requirements and federal matching funds may not be provided.

Background:

Under state and federal law, the Department of Health Care Services operates the Medi-Cal program, which provides health care coverage to low income individuals, families, and children. Medi-Cal provides coverage to childless adults and parents with household incomes up to 138% of the federal poverty level and to children with household incomes up to 266% of the federal poverty level. The federal government provides matching funds that vary from 50% to 90% of expenditures depending on the category of beneficiary.

Medi-Cal covers all recommended childhood vaccines. One of the quality measures used by the state to evaluate the performance of Medi-Cal managed care plans is the HEDIS measure system, which includes vaccination rates for children under age two. According to the most recent data, the statewide average rate for fully vaccinated children was about 75%.

The state does not currently use HEDIS or other performance measures to provide financial incentives to Medi-Cal managed care plans. However, in counties where there are more than one Medi-Cal managed care plan, the state does use certain performance measures to assign new managed care enrollees to higher scoring plans when the enrollee does not select a specific plan.

Proposed Law:

AB 1117 would require the Department of Health Care Services to create a program to provide incentive payments to Medi-Cal managed care plans for fully vaccinated children. The incentive payments would be supported with voluntary donations by Medi-Cal managed care plans.

Specific provisions of the bill would:

• Require the Department of Health Care services to develop an incentive program to improve childhood immunization rates;

• Require the Department to apply for federal approval to conduct the program and receive federal matching funds;

• Make the program operational for five years;

• Authorize the program to be financed by donations from Medi-Cal managed care plans and matching federal funds;

• Allocate 33% of program funds for Department administrative costs, training for providers, and other strategies to increase immunization rates;

• Allocate 67% of funds for $125 incentive payments to Medi-Cal managed care plans for each enrollee who receives all the recommended vaccinations by age two;

• Require at least 20% of incentive payments made to managed care plans to be passed through to providers;

• Require an independent evaluation of the program;

• Require the bill to be implemented only to the extent that federal funding is available;

• Sunset the bill upon a declaration of the Director of Health Care Services that the program has concluded.

Related Legislation:

SB 277 (Pan and Allen, Statutes of 2015) eliminates the personal belief exemption from the requirement that children entering school receive specified vaccinations.

Staff Comments:

As noted above, current federal law and regulation seem to prohibit the use of federal funds to match donations to Medicaid programs that will be returned to the donors. It would appear that the financing mechanism in this bill would not meet the necessary criteria for the receipt of federal matching funds.

-- END --

SENATE COMMITTEE ON HEALTH

Senator Ed Hernandez, O.D., Chair

BILL NO: AB 1117

SUBJECT: Medi-Cal: vaccination rates.

SUMMARY:

Requires the Department of Health Care Services (DHCS) to establish and administer the California Childhood Immunization Quality Improvement Fund (CCIQIF) program to improve childhood immunization rates as a waiver or demonstration project. Requires DHCS to allocate 33% of CCIQIF expenditures for use by DHCS for administrative staff, training, and other resources to support providers in employing strategies to improve immunization rates in their practices, and 66.7% of CCIQIF expenditures for $125 reward payments to Medi-Cal managed care plans for each enrollee who receives all recommended vaccinations by the time he or she reaches two years of age. Sunsets this bill on the date that the DHCS director executes a declaration stating that the demonstration project has concluded.

Existing law:

1. Establishes the Medi-Cal program, which is administered by DHCS, under which qualified low-income individuals receive health care services. Children up to age 19 are eligible for Medi-Cal in families with incomes up to 266% of the federal poverty level (at or below $52,641 annually for a family of 3 in 2015).

2. Provides, under federal Medicaid law, coverage of “early and periodic screening, diagnostic, and treatment services” (EPSDT) for individuals under age 21, which includes coverage for pediatric vaccines.

3. Requires DHCS to pay capitation rates to Medi-Cal managed care plans using actuarial methods. Permits DHCS to establish health-plan- and county-specific rates, and permits DHCS to pay plans based on performance incentives, including quality indicators, access to care, and data submission.

This bill:

1. Requires DHCS to establish and administer the CCIQIF program to improve childhood immunization rates.

2. Requires DHCS to submit an application to the federal Centers for Medicare and Medicaid Services (CMS) for a waiver or demonstration project to implement the CCIQIF program no later than 270 days after the operative date of this bill. Requires DHCS to determine the form of waiver most appropriate to achieve the purposes of this bill. Requires the demonstration project to operate for a period of five years.

3. Requires DHCS to develop a plan for the collection and expenditure of CCIQIF moneys according to all of the following guidelines:

   1. Permits the CCIQIF program to be financed through voluntary contributions from Medi-Cal managed care plans, which are required to be used to draw down federal financial participation (FFP) consistent with federal law;

   2. Requires DHCS to allocate 33.3% of CCIQIF expenditures for use by DHCS for administrative staff, training, and other resources to support providers in employing strategies to improve immunization rates in their practices, which may include patient reminders, promotion of colocation vaccination delivery with other services, and other strategies as specified. Requires the funds to also be used to pay for DHCS staffing and administrative costs directly attributable to implementing this bill, including costs related to developing and seeking federal approval for the CCIQIF and administering the fund ;

   3. Requires DHCS to allocate 66.7% of CCIQIF expenditures for reward payments to Medi-Cal managed care plans. Requires the rate of the reward to be $125 for each enrollee who receives all recommended vaccinations by the time he or she reaches two years of age, as determined by the Childhood Immunization Status measure of the Healthcare Effectiveness Data and Information Set (HEDIS);

   4. Requires at least 20% of the 66.7% of CCIQIF expenditures to be used for reward payments to be passed through to contracted providers based on the number of Medi-Cal enrollees who are under two years of age in each provider’s respective panel.

   5. Requires any unearned reward payment expenditures to roll over to the subsequent demonstration project year. Requires, if all reward payment expenditures are earned within a demonstration project year, no additional reward payments to be distributed until the next demonstration project year begins; and,

4. Requires DHCS, in developing the waiver or demonstration project application, to consult with interested stakeholders, including the Medi-Cal Children’s Health Advisory Panel and the Managed Care Advisory Workgroup, and to work with stakeholders to incorporate public comment into the waiver or demonstration project application.

5. Requires DHCS to contract with the University of California or any other researchers to develop and submit to the Legislature an evaluation of the effectiveness of the demonstration project using data collected from the first three years of the waiver period or demonstration project. Requires the evaluation to be submitted within the fourth year of the waiver period or demonstration project. Requires the evaluation, at a minimum, to include an assessment of the most effective administrative support strategies.

6. Requires the evaluation to be financed with no more than five percent of the total annual CCIQIF program expenditure dollars from the 66.7% of CCIFQI expenditures. Requires CCIQIF provider support expenditures to be reduced, commensurate with available funds, to offset the cost of the evaluation contract during the waiver or demonstration project year that the evaluation is commissioned.

7. Requires this bill to be implemented only if and to the extent that FFP is available and any necessary federal approvals have been obtained.

8. Sunsets this bill on the date that the Director of DHCS executes a declaration stating that the demonstration project has concluded, and repeals this bill six months after the date the declaration is executed.

9. Makes legislative findings and declarations regarding vaccine-preventable diseases, vaccine rates for California children between the ages of 19 to 35 months as compared to national rates, the number of two-year olds who are not fully immunized, the social and economic costs of ensuring each child receives the recommended schedule of vaccines. States legislative intent in implementing this bill to ensure that all possible steps are taken to ensure that two-year-old children who are enrolled in Medi-Cal managed care receive all recommended immunizations.

FISCAL EFFECT:

According to the Assembly Appropriations Committee:

1. DHCS would incur costs in the range of low hundreds of thousands of dollars (program revenues/federal funds), to develop and seek federal approval for a program. The annual administrative costs would be of a similar magnitude.

2. It is unclear precisely how much funding would be raised. A successful incentive program could be about $30 million per year (program revenues/federal funds), with $10 million allocated to provider support.

PRIOR VOTES:

COMMENTS:

1. Author’s statement. According to the author, Medi-Cal health plans and providers need greater investments and supports to provide the quality health care services that they are required to deliver to young children and that parents and taxpayers deserve. This bill would bring additional resources to the health care system to help improve California's relatively low vaccination rates for 2-year-olds, without impacting parents’ ability to make decisions about their children’s health care.

2. Background. Of the 12.4 million individuals expected to enroll in Medi-Cal in 2015-16, approximately 76% will be enrolled in Medi-Cal managed care plans. DHCS contracts with 23 full-service Medi-Cal managed care plans to provide health care services to Medi-Cal enrollees. Roughly half of California children are enrolled in Medi-Cal, including 644,927 Medi-Cal managed care plan members 2 years of age or younger as of January 1, 2015.
   
   CMS requires states, through their contracts with managed care plans, to measure and report on performance to assess the quality and appropriateness of care and services provided to members. DHCS implemented a monitoring system to provide an objective, comparative review of Medi-Cal managed care plans quality-of-care outcomes and performance measures called the External Accountability Set (EAS). DHCS designates performance measures annually, and requires Medi-Cal managed care plans to report on them.
   
   The DHCS 2013 EAS for the Medi-Cal managed care plans consisted of 15 performance measures with 32 distinct indicators providing information on access to care for women, adolescents, and children; use of imaging studies for low back pain; screening for diseases such as cervical cancer; weight assessment and counseling for nutrition and physical activity for children and adolescents; care provided to members with chronic diseases such as diabetes; hospital readmissions rates; and utilization of outpatient and emergency department care. DHCS based all selected performance measures for Medi-Cal on HEDIS, with the exception of an internally developed measure (All-Cause Readmissions).

3. Immunization Rates by Plans/Regions. The HEDIS data set is a nationally recognized and standardized set of performance measures used by consumers, employers, government agencies, legislators, advocates, and potential purchasers to assess the quality of care provided within a managed care plan’s Medicare, Medicaid, and commercial lines of business. One of the HEDIS measures used to assess Medi-Cal managed care plans is childhood immunization status for children under age two. That measure calculates the percentage of children identified as having the following vaccinations: four diphtheria, tetanus, and pertussis (DTaP); three inactivated poliovirus (IPV); one measles, mumps, and rubella (MMR); three Haemophilus influenza type B (HiB); three hepatitis B; one varicella -zoster virus (chicken pox or VZV); and four pneumococcal conjugate vaccinations on or before the child‘s second birthday.

The Medi-Cal managed care weighted average vaccination rate was 78.2% in 2012 and 77.25% in 2013. In measuring plan performance, Medi-Cal compares plans by region, so a plan that is in multiple regions receives a rate for each region (for example, Blue Cross is in 9 regions). In the 2013 rating, seven plan rates were above the high performance level in 2013 (the high performance level is HEDIS 2012 national Medicaid 90^th percentile) with vaccination rates above 82.84%. Four rates scored below the minimum performance level in 2012 (the minimum performance level is HEDIS 2012 national Medicaid 25th percentile) or a vaccination rate below 64.72%. National HEDIS figures for 2010-12 are as follows:

                                                                     2010                2011                2012

National Medicaid Average                69.40%            69.90%            70.64%

National Commercial Average            73.40%            75.10%            75.66%

4. Pay-for-Performance in Medi-Cal. DHCS has the authority under existing law to implement pay-for-performance in Medi-Cal managed care, but does not currently pay quality bonuses or otherwise have a pay-for-performance program for Medi-Cal managed care plans, with the exception of quality withholds for payments to Medi-Cal plans participating in the CalMediConnect demonstration pilot program for individuals dually eligible for Medicare and Medi-Cal. DHCS also does not provide incentive payments to outpatient health care providers in fee-for-service Medi-Cal for achieving quality benchmarks.
   
   DHCS does use plan performance to determine assignment rate of Medi-Cal beneficiaries who are required to enroll in a managed care plan but who do not affirmatively choose a plan (referred to as “auto assignment”). Auto assignment is based in part on plan performance on HEDIS measures and utilization of safety net providers in a plan’s network (specifically, the percentage of hospital discharges at a disproportionate share hospital for members residing within the county, and the percentage of members assigned to primary care providers who are safety net providers). As part of the state’s Section 1115 waiver renewal, DHCS is proposing to include pay-for-performance with its contracting health plans.

5. Related legislation. SB 277 (Pan and Allen), eliminates the personal belief exemption from the requirement that children receive specified vaccines for certain infectious diseases prior to being admitted to any public or private elementary or secondary school or day care center. SB 277 passed the Assembly Floor on June 25, 2015.

6. Support. This bill is sponsored by Children NOW to provide Medi-Cal health plans and health care providers with greater investments and supports to provide the quality health care services that they are required to deliver to young children and that parents and taxpayers deserve. Children NOW argues this bill would bring additional resources to the health care system to help improve California's relatively low vaccination rates for 2-year-olds, without impacting parents’ ability to make decisions about their children’s health care. Children NOW states vaccination rates for kids are not as high as they need to be, posing a risk for all children, as demonstrated by the 11,000+ cases of whooping cough in California in 2014 and the more recent measles outbreak. Children NOW states the social and direct economic costs of ensuring each child receives the CDC Advisory Committee for Immunization Practices’ recommended schedule of vaccines far outweighs the costs of not providing routine immunizations, as it is estimated that for every $1 spent on immunizations, as much as $29 can be saved in direct and indirect costs. Children NOW concludes this bill is similar to successful programs in other states to improve quality (in New York, Louisiana, and Maine), and would improve preventive care delivery for California children enrolled in Medi-Cal.

7. Policy Questions:

   1. What HEDIS measures should be used for pay-for-performance? HEDIS is a standardized set of performance measures used to provide health care purchasers, consumers, and others with a reliable comparison among health plans. The author indicates childhood immunizations should be the basis for reward payments because (1) childhood immunization is an area that has been consistently identified for improvement based on analysis of quality/HEDIS data by DHCS; (2) the low childhood immunization rates are an underlying risk and liability to the public health of the state, as experienced by recent measles and whooping cough outbreaks; and (3) incentives to better deliver childhood immunizations create a motivation for health plans and providers and result in better value for state health care dollars expended.
      
      There is considerable variation in health plan performance on a variety of HEDIS measures, and more variation on some measures than there currently is for 2 year old vaccination rates (the variation for child vaccination rates is 87.91% to 54.6%). For example, weight assessment and counseling for physical activity for children/adolescents varies from 94.11% to 30.41%, adolescent vaccinations vary from 89% to 51.46%, and medication management compliance for people with asthma varies from 79.80% to 31.72%. If DHCS is going to implement pay-for-performance in Medi-Cal managed care, should immunization rates for children under age 2 be the measure chosen? Should only one of the multiple HEDIS performance measures be used in pay-for-performance?
      
      

   2. Incentive payment amount. The incentive payment under this bill is $125 for each enrollee who receives all recommended vaccinations by the time he or she reaches age two. The author’s office indicates this reward amount was arrived at based on experiences in other states proven to change provider and plan behavior. The author indicated they mocked up different amounts, and $125 was the amount that rewarded plans with better vaccination rates. To provide a reward that is likely to change behavior, plans and providers have to be paid more than they are currently. However, the $125 amount is more than the monthly rate plans are paid to cover children in Medi-Cal (referred to as the “child only” rate). Is $125 the appropriate incentive payment amount?
      
      

   3. Can nongovernmental entities make voluntary contributions to draw down federal Medicaid matching funds? This bill authorizes the CCIQIF program to be financed through voluntary contributions from Medi-Cal managed care plans, which are required to be used to draw down FFP consistent with federal law. Non-public voluntary contributions can be matched with federal Medicaid funds only to the extent that such contributions are considered “bona fide provider-related donations.” Contributions from Medi-Cal managed care plans would be considered provider-related. However, a donation is not considered bona fide when it involves a hold harmless provision or practice under which donations are returned in full or in part to the provider. Donations occurring under these conditions will not be approved by CMS for federal matching funds. It is not clear if provider donations made by plans under this bill would be eligible for FFP or if the programs implemented in other states have relied on a similar financing mechanism.

SUPPORT AND OPPOSITION:

Support: Children Now (sponsor)

American Academy of Pediatrics, California
American Federation of State, County and Municipal Employees, AFL-CIO

California Academy of Family Physicians

California Children's Hospital Association

California Coverage and Health Initiatives

California Medical Association

California Pan-Ethnic Health Network

Children's Defense Fund California

Children's Specialty Care Coalition

Family Voices of California

First 5 Alameda County

First 5 Association of California

First 5 Santa Cruz County

Los Angeles Trust for Children's Health

March of Dimes California Chapter

St. John's Well Child and Family Center

The Children's Partnership

United Ways of California

Vision y Compromiso

Oppose: None received

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ASSEMBLY THIRD READING

ATR Bill Id:AB 1117

Author:(Cristina Garcia)

As Amended Ver:June 1, 2015

Majority vote

SUMMARY: Establishes a pilot program in Medi-Cal to reward Medi-Cal managed care organizations (MCOs) and providers for vaccinating children younger than two years of age. Specifically, this bill:

1. Directs the Department of Health Care Services (DHCS) to establish and administer the California Childhood Immunization Quality Improvement Fund (CCIQIF).

2. Requires DHCS to apply to the Federal Centers for Medicare and Medicaid Services for a waiver or demonstration project to implement the CCIQIF within 270 days of the enactment of this bill.

3. Requires DHCS to consult with stakeholders including the Medi-Cal Children’s Health Advisory Panel and the Managed Care Advisory workgroup.

4. Directs DHCS to finance the program with voluntary contributions from MCOs which must be used to draw down federal match for the program.

5. Provides the demonstration project shall be implemented only if federal financial participation is available and any necessary federal approvals have been obtained.

FISCAL EFFECT: According to the Assembly Appropriations Committee:

1. DHCS would incur costs in the range of low hundreds of thousands of dollars (program revenues/federal funds), to develop and seek federal approval for a program. The annual administrative costs would be of a similar magnitude.

2. It is unclear precisely how much funding would be raised. A successful incentive program could be about $30 million per year (program revenues/federal funds), with $10 million allocated to provider support.

COMMENTS: According to the author, Medi-Cal health plans and providers need greater investments and supports to provide the quality health care services that they are required to deliver to young children and that parents and taxpayers deserve. The author argues this bill would bring additional resources to the health care system to help improve California's relatively low vaccination rates for two-year-olds, without impacting parents' ability to make decisions about their children’s health care. The author notes there is no existing law to incentivize Medi-Cal managed care plans and providers to fully immunize two-year-olds, and as a result, Medi-Cal has been chronically plagued by low childhood immunization rates resulting in inefficient use of public monies and creating a serious public health risk, as demonstrated by the recent whooping cough and measles outbreaks.

According to the Centers for Disease Control and Prevention, vaccines contain the same antigens or parts of antigens that cause diseases, but the antigens in vaccines are either killed or greatly weakened. Vaccine antigens are not strong enough to cause disease, but they are strong enough to make the immune system produce antibodies against them. Memory cells prevent re-infection when they encounter that disease again in the future. Vaccines are responsible for the control of many infectious diseases that were once common around the world, including polio, measles, diphtheria, pertussis (whooping cough), rubella (German measles), mumps, tetanus, and Hepatitis b. Vaccine eradicated smallpox, one of the most devastating diseases in history. Over the years, vaccines have prevented countless cases of infectious diseases and saved literally millions of lives.

California children are required to be fully vaccinated before they enter kindergarten, with some exceptions. However, there are no official requirements for younger children, who are often more susceptible to dire consequences from vaccine-preventable diseases due to their immature immune systems.

Supporters note that vaccination rates for kids are not as high as they need to be, posing a risk for all children. They point to the risk of failing to vaccinate children by the 11,000 cases of pertussis in California in 2014 and the more recent measles outbreak in Disneyland. Supporters point out that although there are requirements for children to be vaccinated prior to going to school, there are no official requirements for younger children who often are more susceptible to dire consequences from infectious diseases because of their immature immunes systems. Supporters add that other states, such as New York, Louisiana, and Maine have had successful programs to increase vaccination rates in young children.

A number of individuals are opposed to this bill.

Analysis Prepared by: Roger Dunstan / HEALTH / (916) 319-2097 FN: 0000843

Date of Hearing: April 29, 2015

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Jimmy Gomez, Chair

ABPCA Bill Id:AB 1117

Author:(Cristina Garcia) – As Amended Ver:March 26, 2015

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill creates a 5-year program to provide $125 incentives per fully vaccinated child to Medi-Cal managed care plans, in order to increase the rate of 2 year-olds in Medi-Cal who are fully vaccinated.

The bill relies on voluntary provider contributions to leverage federal funds. It also allocates 1/3 of the funding raised to providers employing strategies to increase immunization rates.

FISCAL EFFECT:

1. DHCS would incur costs in the range of low hundreds of thousands of dollars (GF/federal), to develop and seek federal approval for a program. The annual administrative costs would be of a similar magnitude.

2. It is unclear precisely how much funding would be raised. A successful incentive program could be about $30 million per year (GF/federal), with $10 million allocated to provider support.

COMMENTS:

1. Purpose. According to the author, this bill will bring additional resources to the health care system to help improve California's relatively low vaccination rates for 2-year-olds. The author notes Medi-Cal has been plagued by low childhood immunization rates, creating a serious public health risk, as demonstrated by the recent whooping cough and measles outbreaks.

2. Current Programs. Managed care plans measure quality of services delivered by providers, and vaccination rates are a key pediatric quality measure. Plans may currently provide incentives to providers, but it is not always done on a centralized basis—though some private collaborations exist, such as the Integrated Healthcare Association which measures and rewards performance of provider groups. The program created by this bill would leverage federal funds to create an incentive program that would reward all Medi-Cal managed care providers with a consistent incentive, regardless of the plan.

3. Related Legislation. SB 277 (Pan and Allen), pending in the Senate, eliminates the personal belief exemption for vaccines required for school admission.

4. Staff Comments.

1. Administrative costs. The bill does not provide for administrative costs of DHCS to be reimbursed by funds from CCIQIF. The required evaluation can be reimbursed from the CCIQIF, but only an amount not exceeding 5% of the donations can be spent.

2. Requirements on DHCS. This bill allows DHCS only 120 days from its effective date to submit a waiver request to CMS. Given significant other workload, and the Legislature’s general preference that waivers be subject to ample public input and review prior to submittal, this timetable seems abrupt.

3. Is the incentive adequate? The program will have to raise enough funds so that providers and plans can be assured they will receive a payment for vaccinating more children than they currently vaccinate.

4. Incentivizing what? Some plans, such as Kaiser Permanente, have more sophisticated and integrated data systems that allow quality of care data to be reported with greater ease. Incentives as those contemplated in this bill may encourage plans to improve data collection in order to qualify for incentives (a positive thing in its own right), but separating improved documentation from actual improvements in quality of care may be difficult. It is challenging, but the author may wish to consider whether there are ways to ensure these incentives target improvements in quality of care, not just better data collection.

5. Voluntary Contributions. It is unclear how the voluntary contributions could work in practice. If a plan was aware its data quality is low and it would be difficult to substantiate full vaccination, it would have little incentive to contribute money to a pot whose rewards flow to higher-performing competitors. Additionally, plans may wish to ensure dollars provided to DHCS to encourage are targeted equitably throughout California, and they are getting their money's worth for the contributions they provide.

6. Public Health May Be a Better Fit for Provider Education. The author may wish to consider providing funding to the California Department of Public Health through a cross-department collaboration, instead of to DHCS. As purchaser of health care services, DHCS may be less equipped to do work on the ground to support providers. Improving vaccination rates is a core public health goal and the provider support strategies appears suited to a "grant" model of funding, which is familiar to public health departments. Locals have strong public health departments, and provide much of the care themselves to Medi-Cal enrollees through the public health care system. Public health, and particularly in the area of vaccination, has a strong history of community partnership and collaboration with providers to improve practice and encourage alignment with professional standards. At the state level, the CDPH Immunization Branch administers the federal Vaccines for Children program, which works directly with providers, runs the immunization registry, and tracks data on immunizations. Indeed, the Institutes of Medicine promotes integration of primary care and public health. Finally, definition of services to be provided in the provider support portion could use clarification.

Analysis Prepared by: Lisa Murawski / APPR. / (916) 319-2081

Date of Hearing: April 21, 2015

ASSEMBLY COMMITTEE ON HEALTH

Rob Bonta, Chair

ABPCA Bill Id:AB 1117

Author:(Cristina Garcia) – As Amended Ver:March 26, 2015

SUBJECT: Medi-Cal: vaccination rates.

SUMMARY: Establishes a pilot program in Medi-Cal to reward Medi-Cal managed care organizations (MCOs) and providers for vaccinating children younger than two years of age. Specifically, this bill:

1. Directs the Department of Health Care Services (DHCS) to establish and administer the California Childhood Immunization Quality Improvement Fund (CCIQIF).

2. Requires DHCS to apply to the Federal Center for Medicare and Medicaid Services (CMS) for a waiver or demonstration project to implement the CCIQIF within 120 days of the enactment of this bill.

3. Establishes that the demonstration project shall operate for a period of five years.

4. Requires DHCS to consult with stakeholders including the Medi-Cal Children’s Health Advisory Panel and the Managed Care Advisory workgroup.

5. Requires DHCS to develop a plan for the collection and expenditures of CCIQIF moneys.

6. Directs DHCS to finance the program with voluntary contributions from MCOs which must be used to draw down federal match for the program.

7. Provides that 33.3% of CCIQIF expenditures shall be used on providers to support providers in employing strategies to improve immunization rates within their practices.

8. Requires DHCS develop these strategies after consideration of public comment.

9. Provides that 66.7% of CCIQIF expenditures shall be allocated to MCOs for reward payment for each enroll who receives all recommended vaccinations by the by the time he or she reaches two years of age.

10. Requires plans to roll over at least 20% of the CCIQIF funds used for reward payments to contract providers based on the number of Medi-Cal enrollees who are under two years of age in each provider’s respect panel.

11. Requires DHCS to contract with the University of California or other researchers to develop and submit an evaluation of the effectiveness of the demonstration project after the first three years of the project have been completed.

12. Limits the evaluation to be financed with no more than 5% of the annual CCIQIF program expenditures during the year the evaluation is completed.

13. Provides the demonstration project shall be implemented only if federal financial participation is available and any necessary federal approvals have been obtained.

EXISTING LAW:

1. Establishes the Medi-Cal program, administered by DHCS, under which qualified low income individuals receive health care services.

2. Establishes requirements for Medi-Cal managed care plans, which includes vaccinations as part of the covered services in accordance with the Child Health and Disability Prevention (CHDP) periodicity schedule and under the preventive services benefit under the Medicaid Early Periodic, Screening, Testing, and Diagnosis and Treatment (EPSDT), within the contracting authority and capitation rate negotiated and paid by the state.

3. Provides for the regulation of health plans by the Department of Managed Health Care (DMHC).

4. Requires health plans licensed under the Knox-Keene Health Care Service Plan Act of 1975 to cover all medically necessary basic health care services, as defined. Defines basic health care services to include: physician services; hospital inpatient and outpatient services, including outpatient physical, occupational, and speech therapy; diagnostic laboratory and x-ray services; preventive and routine care, such as vaccinations and routine checkups; emergency and urgent care services, including ambulance and out-of-area emergency services; and, medically appropriate home health services.

5. Requires every health plan or health insurer that covers hospital, medical, or surgical expenses on a group basis to provide benefits for the comprehensive preventive care of children 16 years of age or younger, as specified. Requires every health plan or health insurer that covers hospital, medical, or surgical expenses on a group basis to offer benefits for the comprehensive preventive care of children 17 and 18 years of age.

6. Requires that comprehensive preventive care for children for purposes of 3) above include periodic health evaluations, immunizations, and laboratory services in connection with periodic health evaluations.

7. Requires a health plan to reimburse a physician for immunizations within 45 days of receiving from the physician documentation that the immunizations were administered.

FISCAL EFFECT: This bill has not yet been analyzed by a fiscal committee.

COMMENTS:

1. PURPOSE OF THIS BILL. According to the author, Medi-Cal health plans and providers need greater investments and supports to provide the quality health care services that they are required to deliver to young children and that parents and taxpayers deserve. The author argues this bill would bring additional resources to the health care system to help improve California's relatively low vaccination rates for 2-year-olds, without impacting parents’ ability to make decisions about their children’s health care. The author notes there is no existing law to incentivize Medi-Cal managed care plans and providers to fully immunize 2-year-olds, and as a result, Medi-Cal has been chronically plagued by low childhood immunization rates resulting in inefficient use of public monies and creating a serious public health risk, as demonstrated by the recent whooping cough and measles outbreaks. The author states the goal of this bill is to improve health care quality for children in Medi-Cal by significantly helping DHCS reach its stated goal of increasing the childhood immunization rate from 75% in 2013 to 80% in 2016. The author concludes by stating that, this bill will create a “pay-for-performance” (P4P) incentive as an enhancement strategy for Medi-Cal health plans, so that all participating health plans will recoup at least some portion of their contribution and all plans and providers can benefit from increased supports.

2. BACKGROUND.

Immunizations. According to the Centers for Disease Control and Prevention (CDC), vaccines contain the same antigens or parts of antigens that cause diseases, but the antigens in vaccines are either killed or greatly weakened. Vaccine antigens are not strong enough to cause disease, but they are strong enough to make the immune system produce antibodies against them. Memory cells prevent re-infection when they encounter that disease again in the future. Vaccines are responsible for the control of many infectious diseases that were once common around the world, including polio, measles, diphtheria, pertussis (whooping cough), rubella (German measles), mumps, tetanus, and Hepatitis b. Vaccine eradicated smallpox, one of the most devastating diseases in history. Over the years, vaccines have prevented countless cases of infectious diseases and saved literally millions of lives. Vaccine-preventable diseases have a costly impact, resulting in doctor's visits, hospitalizations, and premature deaths. Sick children can also cause parents to lose time from work. CDC recommends routine vaccination to prevent 17 vaccine-preventable diseases that occur in infants, children, adolescents, or adults. California children are required to be fully vaccinated before they enter kindergarten, with some exceptions. However, there are no official requirements for younger children, who are often more susceptible to dire consequences from vaccine-preventable diseases due to their immature immune systems. Other states have made efforts to increase their childhood immunization rates and have met with some success. New York, one managed care plan instituted P4P program. Immunization rates in that plan rose at a statistically significant higher rate than plans that used other methods to try and increase vaccination rates. Similarly, when P4P was instituted in Louisiana, the state went from 40th to 5th nationwide in childhood vaccination rates among children aged 19-35 months. However, the state slipped back to 30th raising questions about the durability of the program. Maine initiated a quality improvement program that provides education and technical assistance for providers and they achieved a five percentage point increase in childhood immunization rates. Immunization-related expenses. In 2011, the American Academy of Pediatrics (AAP) published a paper on pricing vaccines and immunization administration. The paper lists the following as vaccine-related expenses: Purchase price or acquisition cost of vaccine; Personnel costs for ordering and inventory, including staff time to monitor vaccine stock, place orders, negotiate prices, delivery and payment term, and monitor storage procedures; Storage costs, including refrigerators and freezers, locks, alarm systems, temperature monitoring devices, and generators for continued electrical supply; Insurance against loss of vaccine; Wastage and non-payment; and, Lost opportunity costs for the money invested in vaccines and for which a reasonable return on investment might otherwise be expected. The AAP paper indicates that the appropriate payment must be free of any discounts and based on a transparent and verifiable data source, such as the CDC vaccine price list for the private sector, and cover the vaccine purchase price and all related expenses as indicated above, and a return on the investment for the dollars invested in vaccine inventory. Physician Underpayment. In California, some pediatricians report that despite existing law requiring full reimbursement for acquisition of vaccines, they are not receiving reimbursements that cover the full direct costs. A 2008 article in Pediatrics on a national survey of pediatricians and family practice physicians found that about half had delayed the purchase of specific vaccines for financial reasons and experienced a decreased profit margin from immunizations in the past three years. The article reports 5% of pediatricians and 21% of family physicians said their practice had seriously considered whether to stop providing all vaccines to privately insured children. The article and other reports state that because of high vaccine costs, many physicians do not keep enough vaccines on hand to meet demand, or simply do not stock a vaccine, such as the human Papilloma virus (HPV) vaccine, which costs $360 for the full three dose vaccination. The development and recommendation of new vaccines increases the cost of fully vaccinating a child. According to a 2008 news article, in 1995, the federal government's cost to purchase all recommended vaccines for a child up to age 12 was $155; by 2007, the cost had risen to $927 for a boy and $1,214 for a girl (including the HPV vaccine). The 2009 CDC Vaccine Price List shows that private sector purchasers are charged substantially more for vaccines than the prices CDC negotiates. CDC prices for vaccines are often one-third less, and in some cases less than half what manufacturers charge private sector purchasers.

3. SUPPORT. Supporters note that vaccination rates for kids are not as high as they need to be, posing a risk for all children. They point to the risk of failing to vaccinate children by the 11,000 cases of pertussis in California in 2014 and the more recent measles outbreak in Disneyland. Supporters point out that although there are requirements for children to be vaccinated prior to going to school, there are no official requirements for younger children who often are more susceptible to dire consequences from infectious diseases because of their immature immunes systems. Supporters add that other states, such as New York, Louisiana and Maine have had successful programs to increase vaccination rates in young children.

4. RELATED LEGISLATION. SB 277 eliminates the personal belief exemption from the requirement that children receive specified vaccines for certain infectious diseases prior to being admitted to any public or private elementary or secondary school or day care center. This bill is in the Senate Education committee.

5. PREVIOUS LEGISLATION.

1. AB 2064 (V. Manuel Pérez) of 2012 would have required a health care service plan or health insurer that provides coverage for childhood and adolescent immunizations to reimburse a physician or physician group in an amount not less than the actual cost of acquiring the vaccine plus the cost of administration of the vaccine, as specified. AB 2064 was held on the Assembly Appropriations Committee suspense file.

2. AB 2093 (V. Manuel Pérez) of 2010, would have prohibited any contract issued, amended, delivered, or renewed on or after January 1, 2011 between a physician or physician group, and a DMHC-regulated health plan or California Department of Insurance regulated insurer, from requiring the physician or physician group to assume financial risk for the cost of acquiring required immunizations for children, regardless of whether those immunizations are part of the contract. AB 2093 was vetoed by Governor Schwarzenegger who indicated it "is an inappropriate effort to carve various elements out of negotiated provider contracts and set those reimbursement rates in statute. Existing law already requires health plans to fully cover certain preventive benefits, including immunizations. Reimbursing providers for their "administrative costs" at a Medicare rate completely undermines the purpose of capitation and provider contracts, especially if a provider's actual costs are below the Medicare fee."

3. AB 1201 (V. Manuel Pérez) of 2009 would have required a health care service plan or health insurer that provides coverage for childhood and adolescent immunizations to reimburse a physician or physician group the entire cost of acquiring and administering the vaccine, and prohibits a health plan or insurer from requiring cost-sharing for immunizations. AB 1201 was held on the Assembly Appropriations Committee suspense file.

6. POLICY COMMENTS.

1. Administrative costs. The bill does not provide for administrative costs of DHCS to be reimbursed by funds from CCIQIF. DHCS would have to incur administrative costs in advance to seek and gain approval of the waiver. Those could not be reimbursed for administrative costs even if the waiver is approved as the ongoing administration of an approved program is also not eligible for reimbursement from the CCIQIF. The required evaluation can be reimbursed from the CCIQIF but only an amount exceeding 5% of the donations can be spent.

2. Requirements on DHCS. Owing to health care reform, DHCS has been very busy with administering significant changes in the Medi-Cal program. Among the major efforts are a possible redesign of the California Children’s Services Program, a reform and waiver for behavioral health and substance abuse program and a major Section 1115 waiver request to CMS for continuing the 2010 Bridge to Reform Waiver. This bill allows DHCS only 120 days from its effective date to submit a waiver request to CMS. Given the other activities and the Legislature’s general preference that waivers be subject to ample public input and review prior to submittal these timetable seems abrupt.

3. Federal limitations on funds from providers. States have been very clever in designing Medicaid programs which rely on funds not from the state, but increasingly from providers and local governments. As these methods became more common and their impact on federal financing grew, the response of CMS was to significantly limit and restrict such sources of funds. The state has run into this directly with the state’s current MCO tax. CMS has directed the state to develop a new tax in line with federal requirements and have directed the state that the current tax does not comply with federal requirements. The committee may wish to hear from the supporters about any discussions they have had with CMS or precedents for use of such provider donations.

4. Is the incentive adequate? This program may not provide any monetary incentive for additional vaccinations. It all depends on the amount of money raised. Already most children are vaccinated. The bill provides payments for all children receiving vaccinations up to the amount of funds raised. To provide a reward that is likely to change behavior, plans and providers have to be paid more than they are currently. The program will have to raise enough funds so that providers and plans can be assured they will receive a payment for vaccinating more children than they currently vaccinate.

REGISTERED SUPPORT / OPPOSITION:

Support
Children NOW (sponsor)
American Academy of Pediatrics, California
American Federation of State, County and Municipal Employees, AFL-CIO

California Academy of Family Physicians

California Chapter of the American College of Emergency Physicians

California Children's Health Coverage Coalition

California Children's Hospital Association

California Medical Association

California Pan-Ethnic Health Network

Children's Defense Fund – California

Children's Specialty Care Coalition

Family Voices of California

First 5 Alameda County

First 5 Association of California

First 5 Santa Cruz County

Health Access California

Lincoln Child Center

Los Angeles Trust for Children's Health

March of Dimes California Chapter

St. John's Well Child and Family Center

The Children's Partnership

United Ways of California

Vision Y Compromiso

Opposition
None on file.

Analysis Prepared by: Roger Dunstan / HEALTH / (916) 319-2097