Existing law provides for the Medi-Cal program, which is administered by the State Department of Health Care Services and under which qualified low-income persons receive health care benefits and services. The Medi-Cal program is, in part, governed and funded by federal Medicaid Program provisions. Existing law provides for a demonstration project, known as Californias Bridge to Reform Medicaid 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 and maximization of opportunities to reduce the number of uninsured individuals.

Existing law requires the department to seek a subsequent demonstration project to implement specified objectives, including maximizing federal Medicaid funding for county public hospitals health systems and components that maintain a comparable level of support for delivery system reform in the county public hospital health systems as was provided under Californias Bridge to Reform Medicaid demonstration project.

SB 815 of the 201516 Regular Session, if enacted, would establish the Medi-Cal 2020 Demonstration Project Act, under which the department is required to implement specified components of the subsequent demonstration project, referred to as Californias Medi-Cal 2020 demonstration project, consistent with the Special Terms and Conditions approved by the federal Centers for Medicare and Medicaid Services.

This bill would require the department to establish and operate the Whole Person Care pilot program, a component of the Medi-Cal 2020 demonstration project, under which counties, Medi-Cal managed care plans, and community providers that elect to participate in the pilot program are provided an opportunity to establish a new model for integrated care delivery that incorporates health care needs, behavioral needs, and social support, including housing and other supportive services, for the states most high-risk, high-utilizing populations. The bill would establish the Whole Person Care Pilot Special Fund in the State Treasury, which would consist of moneys that a participating governmental agency or entity elects to transfer to the department as a condition of participation in the pilot program. The bill would provide that these funds shall be continuously appropriated, thereby making an appropriation, to the department to be used to fund the nonfederal share of any payments of Whole Person Care pilot payments authorized under Californias Medi-Cal 2020 demonstration project.

The bill would require the department to implement the Dental Transformation Initiative (DTI), a component of the Medi-Cal 2020 demonstration project, under which DTI incentive payments, as defined, within specified domain categories would be made available to qualified providers who meet achievements within one or more of the project domains. The bill would provide that providers in either the dental fee-for-service or dental managed care Medi-Cal delivery systems would be eligible to participate in the DTI.

The bill would require the department to conduct, or arrange to have conducted, any study, report, assessment, evaluation, or other similar demonstration project activity required under the Special Terms and Conditions.

The bill would become operative only if SB 815 of the 201516 Regular Session is enacted and takes effect on or before January 1, 2017.

This bill would declare that it is to take effect immediately as an urgency statute.

Existing law provides for the Medi-Cal program, which is administered by the State Department of Health Care Services and under which qualified low-income persons receive health care benefits and services. The Medi-Cal program is, in part, governed and funded by federal Medicaid Program provisions. Existing law provides for a demonstration project, known as Californias Bridge to Reform Medicaid 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 and maximization of opportunities to reduce the number of uninsured individuals.

Existing law requires the department to seek a subsequent demonstration project to implement specified objectives, including maximizing federal Medicaid funding for county public hospitals health systems and components that maintain a comparable level of support for delivery system reform in the county public hospital health systems as was provided under Californias Bridge to Reform Medicaid demonstration project.

SB 815 of the 201516 Regular Session, if enacted, would establish the Medi-Cal 2020 Demonstration Project Act, under which the department is required to implement specified components of the subsequent demonstration project, referred to as Californias Medi-Cal 2020 demonstration project, consistent with the Special Terms and Conditions approved by the federal Centers for Medicare and Medicaid Services.

This bill would require the department to establish and operate the Whole Person Care pilot program, a component of the Medi-Cal 2020 demonstration project, under which counties, Medi-Cal managed care plans, and community providers that elect to participate in the pilot program are provided an opportunity to establish a new model for integrated care delivery that incorporates health care needs, behavioral needs, and social support, including housing and other supportive services, for the states most high-risk, high-utilizing populations. The bill would establish the Whole Person Care Pilot Special Fund in the State Treasury, which would consist of moneys that a participating governmental agency or entity elects to transfer to the department as a condition of participation in the pilot program. The bill would provide that these funds shall be continuously appropriated, thereby making an appropriation, to the department to be used to fund the nonfederal share of any payments of Whole Person Care pilot payments authorized under Californias Medi-Cal 2020 demonstration project.

The bill would require the department to implement the Dental Transformation Initiative (DTI), a component of the Medi-Cal 2020 demonstration project, under which DTI incentive payments, as defined, within specified domain categories would be made available to qualified providers who meet achievements within one or more of the project domains. The bill would provide that providers in either the dental fee-for-service or dental managed care Medi-Cal delivery systems would be eligible to participate in the DTI.

The bill would require the department to conduct, or arrange to have conducted, any study, report, assessment, evaluation, or other similar demonstration project activity required under the Special Terms and Conditions.

The bill would become operative only if SB 815 of the 201516 Regular Session is enacted and takes effect on or before January 1, 2017.

This bill would declare that it is to take effect immediately as an urgency statute.

Existing law provides for the Medi-Cal program, which is administered by the State Department of Health Care Services and under which qualified low-income persons receive health care benefits and services. The Medi-Cal program is, in part, governed and funded by federal Medicaid Program provisions. Existing law provides for a demonstration project, known as Californias Bridge to Reform Medicaid 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 and maximization of opportunities to reduce the number of uninsured individuals.

Existing law requires the department to seek a subsequent demonstration project to implement specified objectives, including maximizing federal Medicaid funding for county public hospitals health systems and components that maintain a comparable level of support for delivery system reform in the county public hospital health systems as was provided under Californias Bridge to Reform Medicaid demonstration project.

SB 815 of the 201516 Regular Session, if enacted, would establish the Medi-Cal 2020 Demonstration Project Act, under which the department is required to implement specified components of the subsequent demonstration project, referred to as Californias Medi-Cal 2020 demonstration project, consistent with the Special Terms and Conditions approved by the federal Centers for Medicare and Medicaid Services.

This bill would require the department to establish and operate the Whole Person Care pilot program, a component of the Medi-Cal 2020 demonstration project, under which counties, Medi-Cal managed care plans, and community providers that elect to participate in the pilot program are provided an opportunity to establish a new model for integrated care delivery that incorporates health care needs, behavioral needs, and social support, including housing and other supportive services, for the states most high-risk, high-utilizing populations. The bill would establish Whole Person Care Pilot Special Fund in the State Treasury, which would consist of moneys that a participating governmental agency or entity elects to transfer to the department as a condition of participation in the pilot program. The bill would provide that these funds shall be continuously appropriated, thereby making an appropriation, to the department to be used to fund the nonfederal share of any payments of Whole Person Care pilot payments authorized under Californias Medi-Cal 2020 demonstration project.

The bill would require the department to implement the Dental Transformation Initiative (DTI), a component of the Medi-Cal 2020 demonstration project, under which DTI incentive payments, as defined, within specified domain categories would be made available to qualified providers who meet achievements within one or more of the project domains. The bill would provide that providers in either the dental fee-for-service or dental managed care Medi-Cal delivery systems would be eligible to participate in the DTI.

The bill would require the department to conduct, or arrange to have conducted, any study, report, assessment, evaluation, or other similar demonstration project activity required under the Special Terms and Conditions. The bill, in this regard, would require the department to amend its contract with its external quality review organization to complete an access assessment to, among other things, evaluate primary, core specialty, and facility access to care for managed care beneficiaries, as specified. The bill would require the department to establish an advisory committee to provide input into the structure of the access assessment, which would be comprised of specified stakeholders, including representatives from consumer advocacy organizations.

This bill would declare that it is to take effect immediately as an urgency statute.

Existing law provides for the Medi-Cal program, which is administered by the State Department of Health Care Services and under which qualified low-income persons receive health care benefits and services. The Medi-Cal program is, in part, governed and funded by federal Medicaid Program provisions. Existing law provides for a demonstration project, known as Californias Bridge to Reform Medicaid 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 and maximization of opportunities to reduce the number of uninsured individuals.

Existing law establishes the Medi-Cal Hospital/Uninsured Care Demonstration Project Act, which revises hospital supplemental payment methodologies under the Medi-Cal program in order to maximize the use of federal funds consistent with federal Medicaid law and to stabilize the distribution of funding for hospitals that provide care to Medi-Cal beneficiaries and uninsured patients. This act provides for funding, in supplementation of Medi-Cal reimbursement, to various hospitals, including designated public hospitals, nondesignated public hospitals, and private hospitals, as defined, in accordance with certain provisions relating to disproportionate share hospitals.

Existing law establishes both of the following continuously appropriated funds to be expended by the department:

(1)The Demonstration Disproportionate Share Hospital Fund, which consists of federal funds claimed and received by the department as federal financial participation with respect to certified public expenditures.

(2)The Public Hospital Investment, Improvement, and Incentive Fund, which consists of moneys that a county, other political subdivision of the state, or other governmental entity in the state elects to transfer to the department for use as the nonfederal share of investment, improvement, and incentive payments to participating designated public hospitals, nondesignated public hospitals, and the governmental entities with which they are affiliated, that provide intergovernmental transfers for deposit into the fund.

Existing law requires the department to seek a subsequent demonstration project to implement specified objectives, including maximizing federal Medicaid funding for county public hospitals health systems and components that maintain a comparable level of support for delivery system reform in the county public hospital health systems as was provided under Californias Bridge to Reform Medicaid demonstration project.

This bill would establish the Medi-Cal 2020 Demonstration Project Act, under which the department is required to implement specified components of the subsequent demonstration project, referred to as Californias Medi-Cal 2020 demonstration project, consistent with the Special Terms and Conditions approved by the federal Centers for Medicare and Medicaid Services.

The bill would distinguish which payment methodologies and requirements under the Medi-Cal Hospital/Uninsured Care Demonstration Project Act apply to the Medi-Cal 2020 Demonstration Project Act. The bill would, in this regard, retain the continuously appropriated Demonstration Disproportionate Share Hospital Fund, which will continue to consist of all federal funds received by the department as federal financial participation with respect to certified public expenditures, and would require moneys in this fund to be continuously appropriated, thereby making an appropriation, to the department for disbursement to eligible designated public hospitals. The bill would provide for a reconciliation process for disproportionate share hospital payment allocations and safety net care pool payment allocations that were paid to certain designated public hospitals, as specified.

The bill would require the department to implement the Global Payment Program (GPP), under which GPP systems, as defined, would be eligible to receive global payments that are calculated using a value-based point methodology, to be developed by the department, based on the health care they provide to the uninsured. The bill would provide that these global payments payable to GPP systems are in lieu of the traditional disproportionate share hospital payments and the safety net care pool payments previously made available under the Medi-Cal Hospital/Uninsured Care Demonstration Project Act. The bill would establish the Global Payment Program Special Fund in the State Treasury, which would consist of moneys that a designated public hospital or affiliated governmental agency or entity elects to transfer to the department for deposit into the fund as a condition of participation in the program. The bill would provide that these funds shall be continuously appropriated, thereby making an appropriation, to the department to be used as the nonfederal share of global payment program payments authorized under Californias Medi-Cal 2020 demonstration project.

The bill would require the department to establish and operate the Public Hospital Redesign and Incentives in Medi-Cal (PRIME) program, under which participating PRIME entities, as defined, would be eligible to earn incentive payments by undertaking specified projects set forth in the Special Terms and Conditions, for which there are required project metrics and targets. The bill would require the department to provide participating PRIME entities the opportunity to earn the maximum amount of funds authorized for the PRIME program under the demonstration project. The bill would retain the continuously appropriated Public Hospital Investment, Improvement, and Incentive Fund for purposes of making PRIME payments to participating PRIME entities. The Public Hospital Investment, Improvement, and Incentive Fund would consist of moneys that a designated public hospital, hospital or affiliated governmental agency or entity, or a district and municipal hospital, or affiliated public hospital-affiliated governmental agency or entity, elects to transfer to the department for deposit into the fund. The bill would provide that these funds are continuously appropriated, thereby making an appropriation, to the department to be used as the nonfederal share of PRIME program payments authorized under Californias Medi-Cal 2020 demonstration project.

The bill would require the department to establish and operate the Whole Person Care pilot program, under which counties, Medi-Cal managed care plans, and community providers that elect to participate in the pilot program are provided an opportunity to establish a new model for integrated care delivery that incorporates health care needs, behavioral needs, and social support, including housing and other supportive services, for the states most high-risk, high-utilizing populations. The bill would establish Whole Person Care Pilot Special Fund in the State Treasury, which would consist of moneys that a participating governmental agency or entity elects to transfer to the department as a condition of participation in the pilot program. The bill would provide that these funds shall be continuously appropriated, thereby making an appropriation, to the department to be used to fund the nonfederal share of any payments of Whole Person Care pilot payments authorized under Californias Medi-Cal 2020 demonstration project.

The bill would require the department to implement the Dental Transformation Initiative (DTI), under which DTI incentive payments, as defined, within specified domain categories would be made available to qualified providers who meet achievements within one or more of the project domains. The bill would provide that providers in either the dental fee-for-service or dental managed care Medi-Cal delivery systems would be eligible to participate in the DTI.

The bill would require the department to conduct, or arrange to have conducted, any study, report, assessment, evaluation, or other similar demonstration project activity required under the Special Terms and Conditions. The bill, in this regard, would require the department to amend its contract with its external quality review organization to complete an access assessment to, among other things, evaluate primary, core specialty, and facility access to care for managed care beneficiaries, as specified. The bill would require the department to establish an advisory committee to provide input into the structure of the access assessment, which would be comprised of specified stakeholders, including representatives from consumer advocacy organizations.

The bill would provide that these provisions shall be implemented only to the extent that any necessary federal approvals are obtained and federal financial participation is available and is not otherwise jeopardized. The bill would require the department to seek any federal approvals it deems necessary to implement these provisions during the course of the demonstration term.

The bill would authorize the department to implement the Medi-Cal 2020 Demonstration Project Act by means of all-county letters, provider bulletins, or other similar instructions without taking regulatory action.

This bill would declare that it is to take effect immediately as an urgency statute.

Existing law provides for the Medi-Cal program, which is administered by the State Department of Health Care Services and under which qualified low-income persons receive health care benefits and services. The Medi-Cal program is, in part, governed and funded by federal Medicaid Program provisions. Existing law provides for a demonstration project project, known as Californias Bridge to Reform Medicaid 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 and maximization of opportunities to reduce the number of uninsured individuals.

This bill would require the State Department of Health Care Services to implement a waiver or demonstration project authorized under a specified federal waiver that, among other things, includes a delivery system transformation and alignment incentive program for designated public hospital systems and district municipal hospitals. The bill would require the department to consult with interested stakeholders and the Legislature in implementing this waiver or demonstration project. establish the Medi-Cal 2020 Demonstration Project Act, under which the department is required to implement specified components of the subsequent demonstration project, referred to as Californias Medi-Cal 2020 demonstration project, consistent with the Special Terms and Conditions approved by the federal Centers for Medicare and Medicaid Services.

This bill would declare that it is to take effect immediately as an urgency statute.

Existing law provides for the Medi-Cal program, which is administered by the State Department of Health Care Services and under which qualified low-income persons receive health care benefits and services. The Medi-Cal program is, in part, governed and funded by federal Medicaid Program provisions. Existing law provides for 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 and maximization of opportunities to reduce the number of uninsured individuals.

This bill would require the State Department of Health Care Services to implement a waiver or demonstration project authorized under a specified federal waiver that, among other things, includes a delivery system transformation and alignment incentive program for designated public hospital systems and district municipal hospitals. The bill would require the department to consult with interested stakeholders and the Legislature in implementing this waiver or demonstration project.

This bill would declare that it is to take effect immediately as an urgency statute.

CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 1568

Author:(Bonta and Atkins)

As Amended Ver:June 2, 2016

2/3 vote. Urgency

Original Committee Reference: HEALTH

SUMMARY: Enacts the Medi-Cal 2020 Demonstration Project Act (Medi-Cal 2020 / Demonstration Project), administered by the Department of Health Care Services (DHCS) which implements the Special Terms and Conditions (STCs) approved by the federal Centers for Medicare and Medicaid Services, including the Dental Transformation Initiative (DTI), the Whole Person Care (WPC) program and the evaluations required under the STCs. Requires the DHCS to conduct or arrange to have conducted studies, reports and assessments required under the STCs. Makes the operation of this bill contingent upon the enactment of SB 815 (Hernandez and De León) of the current legislative session.

The Senate amendments require DHCS to implement the WPC and DTI provisions of Medi-Cal 2020, and conduct the studies, reports, and assessments required by the STCs.

FISCAL EFFECT: According to the Senate Appropriations Committee, the following information represents the fiscal impact of the entire Section 1115 waiver. Although this bill contains only a portion of the implementing language for the new waiver, this bill is contingent on SB 815 and the federal government has approved Medi-Cal 2020 as a single waiver. Therefore, the fiscal information below reflects the complete fiscal impact of the waiver.

Over the course of the five-year waiver period, the state will be able to access at least $6.2 billion in additional federal funding that the state would not be eligible for without the waiver. The state is eligible for the additional funding under the waiver for two primary reasons. First, the state's continuing use of Medi-Cal managed care reduces costs relative to the alternative fee-for-service system. The federal government will allow the state to use a portion of those projected savings for waiver programs. Second, the federal government will allow the state draw down federal matching funds for certain "state only" health care programs that are not currently eligible for federal funding. The General Fund savings from receiving those additional federal funds will be redirected to a specific waiver program.

The following are the major elements of Medi-Cal 2020. Note that the funding amounts are for the five-year waiver period, unless otherwise noted.

1. PRIME – $3.7 billion (federal funds). The Public Hospital Redesign and Incentives in Medi-Cal (PRIME) program authorizes federal matching funds to make incentive payments to Designated Public Hospitals and District/Municipal Public Hospitals in order to improve care delivery and strengthen their ability to take on risk-based payments.
2. Global Payment Program – at least $236 million (federal funds). The Global Payment Program restructures the distribution of federal funding for uncompensated care. This includes disproportionate share hospital (DSH) funding to designated public hospitals (excluding University of California (UC) hospitals) in order to incentivize improvements in care delivery and provision of care in appropriate settings. Medi-Cal 2020 maintains the DSH funding methodology for other hospitals, with DSH funding for UC hospitals capped by fiscal year. The $236 million in federal funding is only for the first year of the waiver. Additional funding in subsequent years will be determined based on future uncompensated care. Also, the figures above do not include existing DSH funding of about $5.9 billion in federal funds over the waiver period.
3. Dental Transformation Initiative - $375 million (federal funds). The DTI permits incentive payments to qualified dental providers to improve dental care and utilization among children enrolled in Medi-Cal. The state share of funding for this program is provided through the redirection of existing General Fund support for specific state only health care programs which will be eligible for federal matching funds under the waiver.
4. Designated State Health Programs - $375 million (federal funds). The waiver authorizes the state to access federal matching funds for several existing health care programs that are currently funded only with state and local funds. By making these programs eligible for federal matching funds, the waiver frees up state funding to support the DTI and to draw down federal matching funds.
5. WPC - $1.5 billion (federal funds). This program allows participating lead entities (primarily counties) to claim federal matching funds for efforts to coordinate health, behavioral health, and social services for high-risk Medi-Cal beneficiaries who are high-utilizers of health care services. Federal matching funds will be available for a variety of social services and supports that are not eligible for federal matching funds absent the waiver.

DHCS has requested additional administrative funding to oversee Medi-Cal 2020 of $34 million over the five-year waiver period, including $11 million in the Budget Year (General Fund and federal funds).

COMMENTS: According to the author, this bill is needed to provide the statutory framework for implementation of "Medi-Cal 2020." While the STCs outline the programmatic and financing elements of Medi-Cal 2020, state law changes are required, to appropriate funds for the waiver-related WPC provisions, to enable data sharing as part of WPC projects, and to codify the provisions of the STCs establishing the DTI and the WPC. In addition, this bill would require DHCS to conduct or contract for the waiver-required evaluations. This bill is a companion measure to SB 815.

Analysis Prepared by: Rosielyn Pulmano / HEALTH / (916) 319-2097 FN: 0003524

 THIRD READING  

Bill No: AB 1568

Author:

:

Vote:

SENATE HEALTH COMMITTEE: 7-0, 6/8/16

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

NO VOTE RECORDED: Hall, Wolk

SENATE APPROPRIATIONS COMMITTEE: 7-0, 6/20/16

AYES: Lara, Bates, Beall, Hill, McGuire, Mendoza, Nielsen

ASSEMBLY FLOOR: 80-0, 5/31/16 - See last page for vote

SUBJECT:

SOURCE: Author

DIGEST: This bill enacts specified statutory provisions of “Medi-Cal 2020,” the state’s recently approved five-year federal Section 1115 waiver, which runs through December 31, 2020, including the Dental Transformation Initiative, the Whole Person Care program and the evaluations required under the Special Terms of Conditions (STCs) of Medi-Cal 2020. Requires the Department of Health Care Services to conduct or arrange to have conducted studies, reports and assessments required under the STCs.

ANALYSIS: Existing law 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. Emergency and essential diagnostic and restorative dental services are part of the covered benefits of the Denti-Cal program.

This bill:

1. Requires DHCS to establish and operate the Whole Person Care (WPC) pilot program as authorized under Medi-Cal 2020 to allow for development of WPC pilots focused on target populations of high-risk, high-utilizing Medi-Cal beneficiaries in local geographic areas.
2. Requires WPC pilots to provide an option to a county, city and county, a health or hospital authority or a consortium of any of these entities to receive support to integrate care for particularly vulnerable Medi-Cal beneficiaries who have been identified as high users of multiple systems and who continue to have or are at-risk of poor health outcomes.
3. Defines the WPC target population as the population or populations identified by a WPC pilot through a collaborative data approach across partnering entities that identifies common Medi-Cal high-risk, high-utilizing beneficiaries who frequently access urgent and emergency services, including across multiple systems. Permits, at the discretion of the WPC lead entity, and in accordance with guidance as may be issued by DHCS during the application process and approved by DHCS, the WPC target population to include individuals who are not Medi-Cal patients, subject to the funding restrictions in the STCs regarding the availability of federal financial participation (FFP) for services provided to these individuals.
4. Requires WPC pilots to include specific strategies to increase integration among local governmental agencies, health plans, providers, and other entities that serve high-risk, high-utilizing beneficiaries, increase coordination and appropriate access to care, reduce inappropriate inpatient and emergency room utilization, improve data collection and sharing among local entities, improve health outcomes for the WPC target population and permits it to include other strategies to increase access to housing and supportive services.
5. Requires the WPC lead entity to be responsible for operating the WPC pilot, conducting ongoing monitoring of WPC participating entities, arranging for the required reporting, ensuring an appropriate financial structure is in place, and identifying and securing a permissible source of the nonfederal share for WPC pilot payments.
6. Requires each WPC pilot to include, at a minimum, specified entities as WPC participating entities in addition to the WPC lead entity, including at least one Medi-Cal managed care plan, the health service agency where the WPC operates, the local agency responsible for specialty mental health services, at least two community partners and at least one other public agency. Permits a WPC lead entity to request an exemption from this requirement from DHCS if a WPC lead entity cannot reach an agreement with a required participant.
7. Requires DHCS to enter into a pilot agreement with each WPC lead entity approved for participation in the WPC pilot program.
8. Permits the sharing of health information, records, and other data with and among WPC lead entities, and allows WPC participating entities to share health information, records, and other data with and among prospective WPC lead entities and WPC participating entities in the process of identifying a proposed target population and preparing an application for a WPC pilot.
9. Requires payments to WPC pilots to be disbursed twice a year to the WPC lead entity following the submission of required reports.
10. Requires that payments to the WPC pilot are intended to support infrastructure to integrate services among local entities that serve the WPC target population, to support the availability of services not otherwise covered or directly reimbursed by Medi-Cal to improve care for the WPC target population, and to foster other strategies to improve integration, reduce unnecessary utilization of health care services, and improve health outcomes.
11. Requires WPC lead entities to submit mid-year and annual reports to DHCS, in accordance with the schedules and guidelines established by DHCS and consistent with the STCs.
12. Requires the nonfederal share of any payments under the WPC pilot program to consist of voluntary intergovernmental transfers (IGTs) of funds provided by participating governmental agencies or entities, in accordance with this bill and the terms of the pilot agreement.
13. Requires DHCS to claim FFP for WPC pilot payments using moneys from the IGTs and FFP, and requires moneys disbursed from the fund, and all associated FFP to be distributed to WPC lead entities.
14. Requires DHCS to implement the Dental Transformation Initiative (DTI) in accordance with the STCs, with the goal of improving the oral health care for Medi-Cal children zero to 20, inclusive, years of age.
15. Establishes as the purpose of the DTI is to improve the oral health care for Medi-Cal children with a particular focus on increasing the statewide proportion of qualifying children enrolled in the Medi-Cal Dental Program who receive a preventive dental service by 10 percentage points over a five-year period.
16. Requires the DTI to include the following four domains as outlined in the STCs:
    1. Increase Preventive Services Utilization for Children;
    2. Caries Risk Assessment and Disease Management Pilot;
    3. Increase continuity of care; and,
    4. Local Dental Pilot Projects (LDPPs).
17. Requires the DTI to be funded at a maximum of $148 million annually, and for five years totaling a maximum of $740 million, except as provided in the STCs. Permits unspent funds to be rolled over to subsequent years.
18. Permits DHCS to earn additional demonstration authority, up to a maximum of $10 million to be added to the DTI Pool for use in paying incentives to qualifying providers under DTI by achieving higher performance improvement, as indicated in the STCs.
19. Permits providers in either the dental FFS or dental managed care Medi-Cal delivery systems to participate in the DTI.
20. Requires that incentive payments from the DTI Pool are intended to support and reward eligible service office locations for achievements within one or more of the project domains. Prohibits incentive payments from being considered as a direct reimbursement for dental services under Medi-Cal.
21. Requires DHCS to conduct or arrange to have conducted any study, report, assessment, evaluation or other similar demonstration project activity required under the STCs, including the two evaluations of the Global Payment Program, the PRIME evaluation, the WPC evaluations, and the DTI evaluation.
22. Makes this bill operative contingent upon the enactment of SB 815 (Hernandez and DeLeón).
23. Takes effect immediately as an urgency statute

Comments

1. Author’s statement. According to the author, this bill is needed to provide the statutory framework for implementation of “Medi-Cal 2020.” While the STCs outline the programmatic and financing elements of Medi-Cal 2020, state law changes are required, to appropriate funds for the waiver-related WPC provisions, to enable data sharing as part of WPC projects, and to codify the provisions of the STCs establishing the DTI and the WPC. In addition, this bill would require DHCS to conduct or contract for the waiver-required evaluations. This bill is a companion measure to SB 815 (Hernandez and De Leon).
   

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

According to the Senate Appropriations Committee:

The following information represents the fiscal impact of the entire Section 1115 waiver. Although AB 1568 contains only a portion of the implementing language for the new waiver, this bill is contingent on SB 815 (the other implementing bill) and the federal government has approved Medi-Cal 2020 as a single waiver. Therefore, the fiscal information below reflects the complete fiscal impact of the waiver.

Over the course of the five-year waiver period, the state will be able to access at least $6.2 billion in additional federal funding that the state would not be eligible for without the waiver. The state is eligible for the additional funding under the waiver for two primary reasons. First, the state’s continuing use of Medi-Cal managed care reduces costs relative to the alternative fee-for-service system. The federal government will allow the state to use a portion of those projected savings for waiver programs. Second, the federal government will allow the state draw down federal matching funds for certain “state only” health care programs that are not currently eligible for federal funding. The General Fund savings from receiving those additional federal funds will be redirected to a specific waiver program.

The following are the major elements of Medi-Cal 2020. Note that the funding amounts are for the five-year waiver period, unless otherwise noted.

1. PRIME – $3.7 billion (federal funds). The PRIME program authorizes federal matching funds to make incentive payments to Designated Public Hospitals and District/Municipal Public Hospitals in order to improve care delivery and strengthen their ability to take on risk-based payments.
2. Global Payment Program – at least $236 million (federal funds). The Global Payment Program restructures the distribution of federal funding for uncompensated care. This includes disproportionate share hospital funding (DSH) to designated public hospitals (excluding University of California hospitals) in order to incentivize improvements in care delivery and provision of care in appropriate settings. Medi-Cal 2020 maintains the DSH funding methodology for other hospitals, with DSH funding for UC hospitals capped by fiscal year. The $236 million in federal funding is only for the first year of the waiver. Additional funding in subsequent years will be determined based on future uncompensated care. Also, the figures above do not include existing DSH funding of about $5.9 billion in federal funds over the waiver period.
3. Dental Transformation Initiative - $375 million (federal funds). The Dental Transformation Initiative permits incentive payments to qualified dental providers to improve dental care and utilization among children enrolled in Medi-Cal. The state share of funding for this program is provided through the redirection of existing General Fund support for specific state only health care programs which will be eligible for federal matching funds under the waiver.
4. Designated State Health Programs - $375 million (federal funds). The waiver authorizes the state to access federal matching funds for several existing health care programs that are currently funded only with state and local funds. By making these programs eligible for federal matching funds, the waiver frees up state funding to support the Dental Transformation Initiative and to draw down federal matching funds.
5. Whole Person Care - $1.5 billion (federal funds). This program allows participating lead entities (primarily counties) to claim federal matching funds for efforts to coordinate health, behavioral health, and social services for high-risk Medi-Cal beneficiaries who are high-utilizers of health care services. Federal matching funds will be available for a variety of social services and supports that are not eligible for federal matching funds absent the waiver.

DHCS has requested additional administrative funding to oversee Medi-Cal 2020 of $34 million over the five-year waiver period, including $11 million in the Budget Year (General Fund and federal funds).

SUPPORT: (Verified 6/21/16)

Antelope Valley Hospital

Association of California Healthcare Districts

Bear Valley Community Healthcare District

California Association of Public Hospitals and Health Systems

California Hospital Association

California Primary Care Association

California State Association of Counties

Coalinga Regional Medical Center

Contra Costa County

County Health Executives Association of California

County of San Bernardino

District Hospital Leadership Forum

El Camino Hospital

Hazel Hawkins Memorial Hospital

Health Access California

Kern County Hospital Authority

Kern Valley Healthcare District

Mammoth Hospital

Marin General Hospital

Mayers Memorial Hospital District

Northern Inyo Hospital

Palo Verde Hospital

Palomar Health

Pioneers Memorial Healthcare District

Plumas District Hospital

Salinas Valley Memorial Healthcare System

San Bernardino Mountains Community Hospital District

San Gorgonio Memorial Hospital

San Joaquin General Hospital

Santa Clara County Board of Supervisors

SEIU California

Seneca Healthcare District

Sierra View Medical Center

Tahoe Forest Hospital District

Tri-City Medical Center

University of California

Urban Counties of California

Western Center on Law and Poverty

Ventura County Board of Supervisors

Washington Hospital Healthcare System

OPPOSITION: (Verified 6/21/16)

None received

ARGUMENTS IN SUPPORT: This bill is supported by hospitals and consumer and labor groups, which write in support of the $6.2 billion in federal funds and the new waiver funding components, including PRIME, GPP and WPC. The California State Association of Counties (CSAC) states that the WPC Pilots will test new care innovations and leverage lessons learned to improve outcomes; contain costs; and more effectively coordinate care beyond traditional health services. CSAC concludes that the Medi-Cal 2020 Waiver renewal is a strong and ambitious blueprint for building on the success of the Medi-Cal program and its continued transformation.

ASSEMBLY FLOOR: 80-0, 5/31/16

AYES: Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, 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, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Rendon

Prepared by:

6/22/16 17:53:47

**** END ****

SENATE COMMITTEE ON APPROPRIATIONS

Senator Ricardo Lara, Chair

2015 - 2016 Regular Session

AB 1568 (Bonta) - Medi-Cal: demonstration project

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

Bill Summary:

AB 1568 is one of two bills that would authorize in statute the state’s new Medi-Cal Section 1115 waiver, known as “Medi-Cal 2020”. This bill includes statutory provisions of the waiver relating to the Dental Transformation Initiative, the Whole Person Care Program, and evaluations required under the Special Terms and Conditions of the waiver.

Fiscal Impact:

The following information represents the fiscal impact of the entire Section 1115 waiver. Although AB 1568 contains only a portion of the implementing language for the new waiver, this bill is contingent on SB 815 (the other implementing bill) and the federal government has approved Medi-Cal 2020 as a single waiver. Therefore, the fiscal information below reflects the complete fiscal impact of the waiver.

Over the course of the five-year waiver period, the state will be able to access at least $6.2 billion in additional federal funding that the state would not be eligible for without the waiver. The state is eligible for the additional funding under the waiver for two primary reasons. First, the state’s continuing use of Medi-Cal managed care reduces costs relative to the alternative fee-for-service system. The federal government will allow the state to use a portion of those projected savings for waiver programs. Second, the federal government will allow the state draw down federal matching funds for certain “state only” health care programs that are not currently eligible for federal funding. The General Fund savings from receiving those additional federal funds will be redirected to a specific waiver program.

The following are the major elements of Medi-Cal 2020. Note that the funding amounts are for the five-year waiver period, unless otherwise noted.

• PRIME – $3.7 billion (federal funds). The Public Hospital Redesign and Incentives in Medi-Cal (PRIME) program authorizes federal matching funds to make incentive payments to Designated Public Hospitals and District/Municipal Public Hospitals in order to improve care delivery and strengthen their ability to take on risk-based payments.
• Global Payment Program – at least $236 million (federal funds). The Global Payment Program restructures the distribution of federal funding for uncompensated care. This includes disproportionate share hospital funding (DSH) to designated public hospitals (excluding University of California hospitals) in order to incentivize improvements in care delivery and provision of care in appropriate settings. Medi-Cal 2020 maintains the DSH funding methodology for other hospitals, with DSH funding for UC hospitals capped by fiscal year. The $236 million in federal funding is only for the first year of the waiver. Additional funding in subsequent years will be determined based on future uncompensated care. Also, the figures above do not include existing DSH funding of about $5.9 billion in federal funds over the waiver period.
• Dental Transformation Initiative - $375 million (federal funds). The Dental Transformation Initiative permits incentive payments to qualified dental providers to improve dental care and utilization among children enrolled in Medi-Cal. The state share of funding for this program is provided through the redirection of existing General Fund support for specific state only health care programs which will be eligible for federal matching funds under the waiver.
• Designated State Health Programs - $375 million (federal funds). The waiver authorizes the state to access federal matching funds for several existing health care programs that are currently funded only with state and local funds. By making these programs eligible for federal matching funds, the waiver frees up state funding to support the Dental Transformation Initiative and to draw down federal matching funds.
• Whole Person Care - $1.5 billion (federal funds). This program allows participating lead entities (primarily counties) to claim federal matching funds for efforts to coordinate health, behavioral health, and social services for high-risk Medi-Cal beneficiaries who are high-utilizers of health care services. Federal matching funds will be available for a variety of social services and supports that are not eligible for federal matching funds absent the waiver.

The Department of Health Care Services has requested additional administrative funding to oversee Medi-Cal 2020 of $34 million over the five-year waiver period, including $11 million in the Budget Year (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 low income individuals, families, and children. The federal government provides matching funds that vary from 50% to 90% of expenditures depending on the category of beneficiary.

Current federal law allows states to apply for “Section 1115 waivers” of requirements of the federal Social Security Act. This process allows states, on a case by case basis, to make changes to their Medicaid program with the approval of the federal Centers for Medicare and Medicaid Services. In general, for the federal government to approve a waiver, the state must demonstrate that the waiver will assist in promoting the objectives of Medicaid and that total federal costs will not exceed fee-for-service equivalent costs to the federal government over the period of the waiver, typically five years. In general, Section 1115 waivers allow states to draw down federal matching funds for activities that would not normally be eligible for federal funds, for example non-health care services or services to the uninsured.

California’s prior Section 1115 wavier, referred to as the “Bridge to Reform Waiver” was set to expire in October 2015 but was extended until the end of 2015. The prior wavier was designed to provide about $10 billion in addition federal funding to the state to fund an early implementation of the coverage expansion under the Affordable Care Act and to invest in safety net health care programs. The additional federal funds were available due to cost savings created through the use of Medi-Cal managed care to reduce per beneficiary expenditures below what they would have been through fee-for-service health care.

Proposed Law:

AB 1568 is one of two bills that would authorize in statute the state’s new Medi-Cal Section 1115 waiver, known as “Medi-Cal 2020”. This bill includes statutory provisions of the waiver relating to the Dental Transformation Initiative, the Whole Person Care Program, and the evaluations required under the Special Terms and Conditions of the waiver.

Major provisions of the bill would:

• Establish two new waiver programs – Whole Person Care and the Dental Transformation Initiative;
• Contain numerous administrative provisions relating to implementation of the Waiver by the Department of Health Care Services;
• Condition implementation of the bill and the waiver upon federal approval and the availability of federal funding;
• Authorize the fund-swap, under which new federal matching funds for designated state-only health care programs would free up existing General Fund monies that would be redirected to provide the state share of cost for the Dental Transformation Initiative;
• Continuously appropriate certain funds received under the waiver.
• Require the Department to conduct any study, report, evaluation, or assessment required in the Special Terms and Conditions.

The operation of this bill is contingent upon the enactment of SB 815 (Hernandez and de Leon).

This bill is an urgency measure.

Related Legislation:

SB 815 (Hernandez and de Leon) contains other implementing language for the Medi-Cal 2020 Section 1115 waiver. That bill is pending in the Assembly.

Staff Comments:

Determining available federal funding under the waiver. Both the prior and the new Section 1115 waivers were financed with additional federal funding that is available to the state, due to the cost-savings associated with using managed care to deliver Medi-Cal benefits versus the alternative fee-for-service system. The Department of Health Care Services, with oversight from the federal government, calculates the projected costs of providing care under Medi-Cal managed care versus the projected costs of doing so under fee-for-service. Under the prior waiver, the state was able to use all of the “budget neutrality room” under the projected fee-for-service cost to justify the additional federal funding available. The financing for the new Medi-Cal 2020 waiver has changed. Under Medi-Cal 2020, the federal government has reduced the savings projections that the state can use to justify additional federal funding. Under Medi-Cal 2020, the amount of savings will vary by Medi-Cal eligibility group. Doing so reflects the fact that certain Medi-Cal populations have been in managed care for longer and therefore managed care reflects the status quo for those groups. For example, the state can claim a much lower level of savings for families in urban counties (which were the first group to be mandatorily enrolled in managed care) than for rural families or seniors and persons with disabilities.

Additional federal funding under the waiver. As noted above, the fiscal projections for Medi-Cal 2020 only reflect the additional federal funding for the Global Payment Program that will be available in the first year of the waiver. In subsequent years, the amount of additional federal funding that will be available will be based on a study of the amount of uncompensated care that is provided by designated public hospitals.

Use of non-state funds to draw down federal funding. Much of the non-federal share of funding programs under Medi-Cal 2020 will be provided by hospitals. For example, both the PRIME and Global Payment Program will be funded by public hospitals transferring funding to the state (referred to as intergovernmental transfers of IGTs). The state will use those local funds to draw down federal matching funds and then provide the combined funding back to hospitals through Medi-Cal payments. Similarly, non-federal funding for Whole Person Care pilots is likely to be provided by counties using intergovernmental transfers. In addition, public hospitals will continue to draw down federal funding for hospital services through certified public expenditures, under which local governments certify that they have made expenditures for patient care and the federal government recognizes those payments as being eligible for federal matching funds.

-- END --

SENATE COMMITTEE ON HEALTH

Senator Ed Hernandez, O.D., Chair

BILL NO: AB 1568

SUBJECT: Medi-Cal: demonstration project

SUMMARY:

Enacts specified statutory provisions of “Medi-Cal 2020,” the state’s recently approved five-year federal Section 1115 waiver, which runs through December 31, 2020, including the Dental Transformation Initiative, the Whole Person Care program and the evaluations required under the Special Terms of Conditions (STCs) of Medi-Cal 2020. Requires the Department of Health Care Services to conduct or arrange to have conducted studies, reports and assessments required under the STCs. Urgency bill.

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. Emergency and essential diagnostic and restorative dental services are part of the covered benefits of the Denti-Cal program.
   
2. Establishes a Medicaid Section 1115 demonstration project under the Medi-Cal program until October 31, 2015 known as California’s Bridge to Reform, 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.
   
3. Provides for payments under the state’s Bridge to Reform waiver to designated public hospitals (DPHs are the University of California [UC] and county hospitals), and for federal disproportionate share (DSH), payments to private hospitals (referred to as “DSH replacement payments”) and non-designated public hospitals (NDPHs are now referred to as District/Municipal Public Hospitals or DMPH) through October 1, 2015.
   

This bill:

1. Requires DHCS to establish and operate the Whole Person Care (WPC) pilot program as authorized under Medi-Cal 2020 to allow for development of WPC pilots focused on target populations of high-risk, high-utilizing Medi-Cal beneficiaries in local geographic areas.
   
2. Establishes as the goal of WPC is the coordination of health, behavioral health, and social services, as applicable, in a patient-centered manner to improve beneficiary health and well-being through more efficient and effective use of resources.
   
3. Requires WPC pilots to provide an option to a county, city and county, a health or hospital authority or a consortium of any of these entities to receive support to integrate care for particularly vulnerable Medi-Cal beneficiaries who have been identified as high users of multiple systems and who continue to have or are at-risk of poor health outcomes.
   
4. Defines the WPC target population as the population or populations identified by a WPC pilot through a collaborative data approach across partnering entities that identifies common Medi-Cal high-risk, high-utilizing beneficiaries who frequently access urgent and emergency services, including across multiple systems. Permits, at the discretion of the WPC lead entity, and in accordance with guidance as may be issued by DHCS during the application process and approved by DHCS, the WPC target population to include individuals who are not Medi-Cal patients, subject to the funding restrictions in the STCs regarding the availability of FFP for services provided to these individuals.
   
5. Requires WPC pilots to include specific strategies to increase integration among local governmental agencies, health plans, providers, and other entities that serve high-risk, high-utilizing beneficiaries, increase coordination and appropriate access to care, reduce inappropriate inpatient and emergency room utilization, improve data collection and sharing among local entities, improve health outcomes for the WPC target population and permits it to include other strategies to increase access to housing and supportive services.
   
6. Requires WPC pilots to be approved by DHCS through the process outlined in the STCs.
   
7. Makes receipt of WPC services voluntary, and permits beneficiaries to opt out at any time.
   
8. Requires the WPC lead entity to be responsible for operating the WPC pilot, conducting ongoing monitoring of WPC participating entities, arranging for the required reporting, ensuring an appropriate financial structure is in place, and identifying and securing a permissible source of the nonfederal share for WPC pilot payments.
   
9. Requires each WPC pilot to include, at a minimum, all of the following entities as WPC participating entities in addition to the WPC lead entity:
10. At least one Medi-Cal managed care plan operating in the geographic area of the WPC pilot;

b) The health services agency or agencies or department or departments for the geographic region where the WPC pilot operates, or any other public entity operating in that capacity for the county or city and county;

c) The local entities, agencies, or departments responsible for specialty mental health services for the geographic area where the WPC pilot operates;

d) At least one other public agency or department, which may include, but is not limited to, county alcohol and substance use disorder programs, human services agencies, public health departments, criminal justice or probation entities, and housing authorities, regardless of how many of these fall under the same agency head within the geographic area where the WPC pilot operates; and,

e) At least two other community partners serving the target population within the applicable geographic area.

1. Permits a WPC lead entity to request an exemption from this requirement from DHCS if a WPC lead entity cannot reach an agreement with a required participant.
   
2. Requires DHCS to enter into a pilot agreement with each WPC lead entity approved for participation in the WPC pilot program.
   
3. Permits the sharing of health information, records, and other data with and among WPC lead entities, and allows WPC participating entities to share health information, records, and other data with and among prospective WPC lead entities and WPC participating entities in the process of identifying a proposed target population and preparing an application for a WPC pilot.
   
4. Permits WPC pilots to target the focus of their pilot on individuals at risk of or are experiencing homelessness who have a demonstrated medical need for housing or supportive services. Requires, in these instances, WPC participating entities to include local housing authorities, local continuum of care programs, community-based organizations, and others serving the homeless population as entities collaborating and participating in the WPC pilot.
   
5. Permits the housing interventions to include tenancy-based care management services, defined as supports to assist the target population in locating and maintaining medically necessary housing, and countywide housing pools.
   
6. Permits WPC participating entities to include contributions to a countywide housing pool that will directly provide needed support for medically necessary housing services, with the goal of improving access to housing and reducing churn in the Medi-Cal population.
   
7. Requires payments to WPC pilots to be disbursed twice a year to the WPC lead entity following the submission of required reports.
   
8. Requires DHCS to issue a WPC pilot application and selection criteria consistent with the STCs, requires DHCS to approve applicants that meet the WPC pilot selection criteria established by DHCS, and requires DHCS to allocate available funding to those approved WPC pilots up to the full amount of FFP authorized under the demonstration project for WPC pilots during each calendar year from 2016 to 2020.
   
9. Requires that payments to the WPC pilot are intended to support infrastructure to integrate services among local entities that serve the WPC target population, to support the availability of services not otherwise covered or directly reimbursed by Medi-Cal to improve care for the WPC target population, and to foster other strategies to improve integration, reduce unnecessary utilization of health care services, and improve health outcomes.
   
10. Requires WPC lead entities to submit mid-year and annual reports to DHCS, in accordance with the schedules and guidelines established by DHCS and consistent with the STCs.
    
11. Requires the nonfederal share of any payments under the WPC pilot program to consist of voluntary IGTs of funds provided by participating governmental agencies or entities, in accordance with this bill and the terms of the pilot agreement.
    
12. Requires DHCS to claim FFP for WPC pilot payments using moneys from the IGTs and FFP, and requires moneys disbursed from the fund, and all associated FFP to be distributed to WPC lead entities.
    
13. Requires DHCS to implement the Dental Transformation Initiative (DTI) in accordance with the STCs, with the goal of improving the oral health care for Medi-Cal children zero to 20, inclusive, years of age.
    
14. Establishes as the purpose of the DTI is to improve the oral health care for Medi-Cal children with a particular focus on increasing the statewide proportion of qualifying children enrolled in the Medi-Cal Dental Program who receive a preventive dental service by 10 percentage points over a five-year period.
    
15. Requires the DTI to include the following four domains as outlined in the STCs:
16. Increase Preventive Services Utilization for Children;
17. Caries Risk Assessment and Disease Management Pilot;
18. Increase continuity of care; and,
19. Local Dental Pilot Projects (LDPPs).
    
20. Requires, under the DTI, incentive payments within each domain to be available to qualified providers who meet the requirements of the domain.
    
21. Requires the DTI to be funded at a maximum of $148 million annually, and for five years totaling a maximum of $740 million, except as provided in the STCs. Permits unspent funds to be rolled over to subsequent years.
    
22. Permits DHCS to earn additional demonstration authority, up to a maximum of $10 million to be added to the DTI Pool for use in paying incentives to qualifying providers under DTI by achieving higher performance improvement, as indicated in the STCs.
    
23. Permits providers in either the dental FFS or dental managed care Medi-Cal delivery systems to participate in the DTI.
    
24. Requires DHCS to make DTI incentive payments directly to eligible contracted service office locations.
    
25. Requires incentive payments to be issued to the service office location based on the services rendered at the location and that service office location’s compliance with the criteria enumerated in the STCs.
    
26. Requires that incentive payments from the DTI Pool are intended to support and reward eligible service office locations for achievements within one or more of the project domains. Prohibits incentive payments from being considered as a direct reimbursement for dental services under Medi-Cal.
    
27. Requires service office locations to submit all data in a manner acceptable to DHCS within one year from the date of service or by January 31 for the preceding year that the service was rendered, whichever occurs sooner, to be eligible for DTI incentive payments associated with that timeframe.
28. Permits DHCS to implement this bill or the STCs by means of letters or bulletins without taking regulatory action. Requires notification to the Joint Legislative Budget Committee and to the Senate Committees on Appropriations, Budget and Fiscal Review, and Health, and the
    Assembly Committees on Appropriations, Budget, and Health within 10 business days after the above-described action is taken.
29. Permits DHCS to enter into exclusive or nonexclusive contracts or amend existing contracts on a bid or negotiated basis. Exempts these contracts from specified provisions of the Public Contract Code and Department of General Services (DGS) review.
    
30. Requires DHCS to seek any federal approval as necessary to implement Medi-Cal 2020, this bill and any changes to the STCs as deemed necessary. Implements this only to the extent federal financial participation (FFP) is available and is not otherwise jeopardized.
    
31. Permits the DHCS director to modify any process or methodology in this bill to the extent necessary to comply with federal law or the STCs, but only if the modification is consistent with the goals of this bill.
    
32. Requires the DHCS director develop a methodology by which payments under Medi-Cal 2020 are reduced if the amount of FFP is reduced due to the application of penalties in the STC, the enforcement of the budget neutrality limit or other similar occurrence.
    
33. Permits DHCS to claim FFP for expenditures associated with designated state health programs (DSHP) identified in the STCs.
    
34. Establishes the continuously appropriated WPC Pilot Special Fund in the State Treasury.
    
35. Requires DHCS to conduct or arrange to have conducted any study, report, assessment, evaluation or other similar demonstration project activity required under the STCs, including
    the two evaluations of the Global Payment Program, the PRIME evaluation, the WPC evaluations, and the DTI evaluation.
    
36. Makes this bill operative contingent upon the enactment of SB 815 (Hernandez and DeLeon).
    
37. Would take effect immediately as an urgency statute

FISCAL EFFECT:

According to the Assembly Appropriations Committee of the previous version of this bill:

1. DHCS has requested administrative resources through an April 2016 Spring Finance Letter totaling $33.6 million for waiver implementation over its five-year lifetime, $14 million of which is for contract costs. DHCS requests $10.8 million in 2016-17. Funding will pay for staff and contract costs for implementation, monitoring, oversight, evaluation and assessment, technical assistance, program development, and related activities (General Fund/federal).
2. Federal matching funds available by waiver program component are as follows:

PRIME $3.73 billion

Global Payment Program $236 million*

Dental Transformation Initiative $375 million

Designated State Health Programs $375 million

Whole Person Care $1.5 billion

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Total $6.21 billion

*GPP does not include the federal DSH component of funding. Federal DSH funding over the five-year life of the waiver is projected to be about $5.8 billion. In addition, only the first year of federal funding for GPP is shown here. Funding in subsequent years is based on a study on DPH uncompensated care.

PRIOR VOTES:

COMMENTS:

1. Author’s statement. According to the author, this bill is needed to provide the statutory framework for implementation of “Medi-Cal 2020.” While the STCs outline the programmatic and financing elements of Medi-Cal 2020, state law changes are required, to appropriate funds for the waiver-related WPC provisions, to enable data sharing as part of WPC projects, and to codify the provisions of the STCs establishing the DTI and the WPC. In addition, this bill would require DHCS to conduct or contract for the waiver-required evaluations. This bill is a companion measure to SB 815 (Hernandez and De Leon).
   
2. Federal Section 1115 Medicaid Waivers. Section 1115 of the Social Security Act authorizes the federal Secretary of Health and Human Services to allow states to receive federal Medicaid matching funds without complying with all of the federal Medicaid rules. Traditionally designed as research and demonstration programs to test innovative program improvements and to facilitate coverage expansions to populations not otherwise eligible for Medicaid, waivers are also used to allow states to change how services are delivered, and to change how services are reimbursed. In addition, under Section 1115, states are allowed to use federal Medicaid funds in ways that are not otherwise allowed under federal law and regulation (referred to expenditure authority for “costs not otherwise matchable” or CNOM).
   
   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.

On December 30, 2015, DHCS received CMS approval of “California Medi-Cal 2020 Demonstration” (Medi-Cal 2020). The five year waiver begins January 1, 2016 and ends December 31, 2020. Medi-Cal 2020 is anticipated to provide $6.2 billion in federal funds over the five years of the waiver.

1. DTI. The DTI is a new feature of Medi-Cal 2020. It is funded at $750 million total funds ($375 million in federal funds) generated from federal waiver funding drawn down for Designated State Health Programs. Of this amount, $10 million in total funds is contingent upon the state meeting statewide metrics. DTI consists of four domain areas as follows:
2. Domain 1: Increase Preventive Services Utilization for Children. The goal of this domain is to increase statewide proportion of children ages 20 and under enrolled in Medi-Cal who receive a preventive dental service by 10 percentage points over a five-year period (the 2014 rate for children was 37.84%). Incentive payments will be made annually to providers for utilization and provider participation and will be used to determine the subsequent year’s threshold. Semi-annual incentive payments will be made to dental provider service locations that provide preventative services to an increased number of Medi-Cal children, as compared to the DHCS-determined baseline. Incentive payments will be made to the service office locations for rendered preventive services once they have met the DHCS-established goal. As of September 2015, there were 5,370 service office locations in California that participated in Denti-Cal.
3. Domain 2: Caries Risk Assessment and Disease Management. The goal of this domain is to diagnose early childhood caries (cavities) by utilizing Caries Risk Assessments (CRA) to treat caries as a chronic disease for children ages six and under. The CRA would be a model that proactively prevents and mitigates oral disease through the delivery of preventative services in lieu of more invasive and costly procedures (restorative services). Children will have treatment plans prescribed based on caries risk level. DHCS will use a baseline year with statewide data for the most recent state fiscal year preceding implementation of the domain. DHCS will track and report the following measures:
   
4. Number of, and percentage change in, restorative services;
5. Number of, and percentage change in, preventive dental services;
6. Utilization of CRA CDT codes and reduction of caries risk levels (not available in the baseline year prior to the waiver implementation);
7. Change in use of emergency rooms for dental-related reasons among the targeted children for this domain; and,
8. Change in number and proportion of children receiving dental surgery under general anesthesia.

Dentists must opt-in by completing a DHCS recognized training program. Treatment plans and associated procedures will be carried out as follows, over a 12 month period, as follows:

1. “high risk” children will be authorized to visit four times;
2. “moderate risk” children will be authorized to visit three times; and,
3. “low risk” children will be authorized to visit two times.

Incentive payments will be made to providers for successful completion of caries treatment plan and improvement in “elevated risk” levels.

1. Domain 3: Increase Continuity of Care. The goal of this domain is to increase continuity of care for beneficiaries ages 20 and under for two, three, four, five, and six continuous periods. DHCS will establish a baseline year will be based on data from the most recent complete state fiscal year using claims data to determine the number of beneficiaries who received an examination each year from the same service office location for two, three, four, five, and six year continuous periods. Incentive payments will be available to service office locations that provide examinations to an enrolled Medi-Cal child for two, three, four, five, and six continuous periods. The incentive payment will be an annual flat payment for providing continuity of care to the beneficiary.
2. Domain 4: Local Dental Pilot Programs (LDPPs). LDPPS will address one or more of the three domains through alternative programs, potentially using strategies focused on rural areas including local case management initiatives and education partnerships. DHCS will solicit proposals once at the beginning of the demonstration and will review, approve, and make payments for LDPPs in accordance with the requirements stipulated in the waiver. A maximum of 15 LDPPs will be approved, and no more than 25% of the total funding in the DTI pool can be used for LDPPs. The specific strategies, target populations, payment methodologies, and participating entities will be proposed by the entity submitting the application for participation and included in the submission to DHCS. Each pilot application must designate a responsible county, Tribe, Indian Health Program, UC or CSU campus as the entity that will coordinate the pilot.
3. WPC. WPC is a new feature of Medi-Cal 2020. WPC is essentially a grant program over the five years of the waiver. The overarching goal of the WPC pilots is the coordination of health, behavioral health, and social services, as applicable, in a patient-centered manner with the goals of improved beneficiary health and well-being through more efficient and effective use of resources. WPC pilots will provide an option to participating entities to receive support to integrate care for beneficiaries who are high-risk and high-utilizers of multiple systems and continue to have poor health outcomes. WPC pilots will include collaboration between two or more public entities (e.g. county mental health plans and local housing authorities), at least one Medi-Cal managed care health plan, and other community entities with the goal of improving health outcomes for the WPC population. Program strategies would include increasing integration, data sharing and coordination among county agencies, health plans, providers, and other entities within the participating county or counties that serve high-risk, high-utilizing beneficiaries and develop an infrastructure that will reduce inappropriate emergency and inpatient utilization, increase coordination and appropriate access to care and increase collaboration and integration among the entities participating in the WPC Pilots over the long term. The WPC target populations, include, but are not limited to individuals:
   
4. With repeated incidents of avoidable emergency use, hospital admissions, or nursing facility placement;
5. With two or more chronic conditions;
6. With mental health and/or substance use disorders;
7. Who are currently experiencing homelessness; and/or,
8. Who are at risk of homelessness, including individuals who will experience homelessness upon release from institutions (e.g. hospital, skilled nursing facility, rehabilitation facility, jail/prison, etc.)

To test interventions that achieve these improved health outcomes and cost savings, WPC Pilots may focus on Medi-Cal beneficiaries with a demonstrated medical need for housing and supportive services. These Pilots would ensure that the entities collaborating and participating in the Pilot would include local housing authorities, community-based organizations, and others serving the homeless population. WPC pilots with a focus on housing may include interventions such as tenancy-based care management services and county housing pools.

Up to $300 million in federal funding is available annually for WPC. No single WPC pilot will be awarded more than 30% of total available funding unless additional funds are available after all initial awards are made. The non-federal share of funds used to draw down federal funding is through IGTs.

The STCs establish an early implementation schedule for WPC. DHCS is required to publish a WPC pilot application process, detailed timeliness and selection criteria by April 1, 2016, or within 90 days following CMS approval of WPC Pilot attachments, whichever is later. WPC lead entities must submit WPC Pilot applications to DHCS by May 15, 2016, or 45 days after DHCS issues the WPC Pilot application process (whichever is later). DHCS must complete its review of the application within 60 days of submission, and will respond to the WPC Pilot Lead Entity in writing with any questions, concerns or problems identified. Within 30 days after submission of final responses to questions about the application, DHCS will take action on the application and promptly notify the applicant and CMS of that decision.

1. Waiver required reports, assessments and analyses. The Waiver also contains several independent analyses of the Medi-Cal program and evaluations of the Waiver programs, including:
   
2. Medi-Cal Managed Care Access Assessment (language contained in SB 815);
3. Uncompensated Care Assessments for California hospitals (one due in 2016 and one due one in 2017);
4. GPP Evaluations (2 required);
5. PRIME Evaluation; and,
6. Report on CCS pilots

This bill requires DHCS to conduct or arrange to have conducted any study, report, assessment, evaluation or other similar demonstration project activity required under the STCs.

1. Related legislation. SB 815 (Hernandez and De Leon), is a companion measure to this bill currently pending in the Assembly Health Committee.  The Medi-Cal 2020 waiver includes four major components: GPP, PRIME, WPC, and DTI. SB 815 bill contains the provisions implementing the GPP and PRIME and the access assessment requirements while AB 1568 contains the WPC and DTI provisions, including all the required evaluations of the four waiver components. SB 815 is scheduled to be heard in the Assembly Health Committee on June 8, 2016.
2. Prior legislation.
   1. SB 36 (Hernandez and De Leon, Chapter 759, Statutes of 2015), authorized DHCS to request one or more temporary waiver extensions to continue the operation of, and the authorities provided under, the current "California Bridge to Reform Demonstration," the state’s Section 1115 Medicaid waiver. Requires DHCS to extend and apply the existing hospital payment methodologies and allocations on a state fiscal year, annual, partial year, or other basis, to the extent permitted under any approved temporary waiver extension, an approved subsequent waiver, or as otherwise permitted under federal Medicaid law.
      
   2. AB 1066 (John A. Pérez, Chapter 86, Statutes of 2011), made further statutory changes to implement the Bridge to Reform for funding DPHs. AB 1066 continued the FFS cost-based reimbursement for DPHs, with those hospitals providing the required federal match using their own funds through CPEs. In addition, AB 1066 established under the waiver a new distribution methodology for DSH and SNCP funds to DPHs, as specified.
      
   3. AB 342 (John A. Pérez, Chapter 723, Statutes of 2010), enacted the LIHP to provide health care benefits to uninsured adults up to 200% of the FPL, at county option through a Medi-Cal waiver demonstration project.
      
   4. SB 208 (Steinberg, Chapter 714, Statutes of 2010), implemented provisions of the 2010 Section 1115 waiver including establishing the Public Hospital Investment, Improvement and Incentive Fund (known as DRSIP) consisting of IGTs from counties or other specified governmental entities, to be matched with federal funds and to be used for investment, improvement and incentive payments for DPHs and the affiliated governmental entities (counties and UC); authorized DHCS to require the mandatory enrollment of SPDs in a Medi-Cal managed care plan commencing on the later of either June 1, 2011, or obtaining federal approval; and requires DHCS to implement pilot projects to provide coordinated care to children in CCS and to persons who are dually eligible for Medi-Cal and Medicare.
      
   5. SB 1100 (Perata, Chapter 560, Statutes of 2005), enacted the statutory framework for implementing a five-year waiver of federal Medicaid requirements that provides federal Medicaid funding under the terms of the waiver to pay DPHs, private, and district hospitals for services provided to Medi-Cal and uninsured patients.
3. Support. This bill is supported by hospitals and consumer and labor groups, which write in support of the $6.2 billion in federal funds and the new waiver funding components, including PRIME, GPP and WPC. The California State Association of Counties (CSAC) states that the WPC Pilots will test new care innovations and leverage lessons learned to improve outcomes; contain costs; and more effectively coordinate care beyond traditional health services. CSAC concludes that the Medi-Cal 2020 Waiver renewal is a strong and ambitious blueprint for building on the success of the Medi-Cal program and its continued transformation.

Western Center on Law & Poverty (WCLP) writes in support of the WPC and DTI provisions. WCLP states it supports the WPC element of the waiver, which would provide federal matching funds to local collaboratives working to improve health outcomes for high-risk Medi-Cal beneficiaries by integrating physical health and behavioral health services together with social service supports. Because being homeless or at risk for homelessness is such a significant risk factor and because it is so difficult to improve health outcomes for people who are homeless, WCLP urges a stronger emphasis on serving this population. WCLP also requests the strategies to increase access to housing and supportive services be required instead of optional.

WCLP also writes that it supports the inclusion of the DTI in the waiver and the bill as access to dental services for children on Medi-Cal has received important attention due to recent audits and reports and the DTI takes some important steps to address inadequate access to Denti-Cal services for children. WCLP states it would have liked to have seen elements aimed at access for adults as well as dental care for pregnant women is particularly important. WCLP writes that it supports the provision stating that dental managed care providers are eligible for the incentive payments.

SUPPORT AND OPPOSITION (prior version):

Support: Antelope Valley Hospital

Association of California Healthcare Districts

Bear Valley Community Healthcare District

California Association of Public Hospitals and Health Systems

California Hospital Association

California Primary Care Association

California State Association of Counties

Coalinga Regional Medical Center

Contra Costa County

County Health Executives Association of California

County of San Bernardino

District Hospital Leadership Forum

El Camino Hospital

Hazel Hawkins Memorial Hospital

Health Access California

Kern County Hospital Authority

Kern Valley Healthcare District

Mammoth Hospital

Marin General Hospital

Mayers Memorial Hospital District

Northern Inyo Hospital

Palo Verde Hospital

Palomar Health

Pioneers Memorial Healthcare District

Plumas District Hospital

Salinas Valley Memorial Healthcare System

San Bernardino Mountains Community Hospital District

San Gorgonio Memorial Hospital

San Joaquin General Hospital

Santa Clara County Board of Supervisors

SEIU California

Seneca Healthcare District

Sierra View Medical Center

Tahoe Forest Hospital District

Tri-City Medical Center

University of California

Urban Counties of California

Western Center on Law and Poverty

Ventura County Board of Supervisors

Washington Hospital Healthcare System

Oppose: None received

-- END --

ASSEMBLY THIRD READING

ATR Bill Id:AB 1568

Author:()

As Amended Ver:May 3, 2016

2/3 vote. Urgency

SUMMARY: Enacts the Medi-Cal 2020 Demonstration Project Act (Medi-Cal 2020 / Demonstration Project), administered by the Department of Health Care Services (DHCS) which implements the Special Terms and Conditions (STCs) approved by the federal Centers for Medicare and Medicaid Services (CMS). Specifies the four components of the Demonstration Project, as follows: Global Payment Program (GPP), Public Hospital Redesign and Incentives in Medi-Cal (PRIME), Whole Person Care (WPC) and Dental Transformation Initiative (DTI). Contains an urgency clause to ensure that the provisions of this bill go into immediate effect upon enactment. Specifically, this bill:

Access Assessment

1. Requires DHCS to amend its contract with the external quality review organization (EQRO) currently under contract with DHCS and approved by CMS to complete an access assessment within 90 days of the effective date of this bill.
2. Requires the assessment to do all of the following:
   1. Evaluate primary, core specialty, and facility access to care for managed care beneficiaries based on current health plan network adequacy requirements, as specified;
   2. Consider State Fair Hearing and Independent Medical Review decisions, and grievances, and appeals or complaints data; and,
   3. Report on the number of providers accepting new beneficiaries.
3. Requires DHCS to establish an advisory committee to provide input into the structure of the access assessment. Requires the EQRO to work with DHCS to establish the advisory committee, as specified.
4. Requires the advisory committee to include one or more representatives of the following stakeholders: consumer advocacy organizations, provider associations, health plans and health plan associations, and legislative staff. Specifies functions of the advisory committee.
5. Requires the EQRO to produce and establish an initial draft and a final access assessment report that includes a comparison of health plan network adequacy compliance across different lines of business. Requires DHCS to post the initial draft for a 30-day public comment period, as specified, and to be posted no later than 10 months after CMS approves the assessment design. Requires DHCS to submit the final access assessment report to CMS no later than 90 days after the initial draft report is posted for public comment.
6. Requires the assessment to do all of the following:
   1. Measure health plan compliance with network adequacy requirements, as specified;
   2. Review encounter data, including data from subcapitated plans;
   3. Review compliance with network adequacy requirements, as specified;
   4. Review and report applicable network adequacy requirements of the proposed or final Notice of Proposed Rulemaking, as specified;
   5. Determine health plan compliance with network adequacy, as specified; and,
   6. Measure managed care plan compliance with network adequacy requirements, as specified, accounting for geographic differences, previously approved alternate network access standards, access to in-network providers and out-of-network providers, the entire network of providers available to beneficiaries, and other modalities used for accessing care, including telemedicine.

General Provisions

1. Requires the STCs to prevail in the event of a conflict with this bill.
2. Authorizes DHCS to implement, interpret, or make specific this bill or the STCs through all-county letters, plan letters, provider bulletins, or other actions without regulatory action. Requires DHCS to inform specified committees of the Legislature when this action is taken.
3. Exempts contracts entered into by DHCS for purposes of this bill from the Public Contract Code and approval by Department of General Services.
4. Requires DHCS to seek any federal approval to implement this bill and conduct any study or activity required under the STCs. Implements this bill only if necessary federal approvals and federal financial participation (FFP) are available.
5. Authorizes the Director of DHCS to modify any process or methodology if necessary to comply with federal law or the STCs if the modification is consistent with the goals of the demonstration project. Requires, if the modification would not be consistent with the goals of this bill or would alter the level of support for affected participating entities, the Director to execute a declaration stating that this determination has been made. Specifies posting and notification requirements for the declaration.
6. Provides that in the event of a determination that the amount of FFP available under the demonstration project is reduced due to the application of penalties set forth in the STCs, the enforcement of the demonstration project's budget neutrality limit or other similar, occurrence, DHCS is required to develop the methodology by which payments under the demonstration project are to be reduced, as specified.
7. Authorizes DHCS to develop potential successor payment methodologies that could continue to support entities participating in the demonstration project, as specified. Requires DHCS to consult with entities participating in the payment methodologies in developing successor payment methodology. Authorizes an extension of the payment methodologies through demonstration year 16 or to subsequent time periods, as specified.
8. Authorizes DHCS to claim FFP for expenditures associated with the designated state health programs, as specified.
9. Appropriates an amount from General Fund (GF) equal to the FFP to the Health Care Deposit Fund, as specified.

Global Payment Program

1. Requires DHCS to implement the GPP to support participating public health care systems (systems) that provide health care services for the uninsured. States that GPP systems receive global payments based on the health care they provide to the uninsured, in lieu of traditional disproportionate share hospital (DSH) payments and safety net care pool payments (SNCP), as specified.
2. Requires systems to receive GPP payments calculated using an innovative value-based point methodology that incorporates measures of value for the patient in conjunction with the recognition of costs. Requires a system, to receive the full amount of GPP payments, to provide a threshold level of services measured through a point methodology, as specified, and based on the GPP system's historical volume, cost, and mix of services. Specifies that this payment methodology is intended to support GPP systems that continue to provide services to the uninsured, while incentivizing the GPP systems to shift the overall delivery of services for the uninsured to provide more cost-effective, higher value care.
3. Requires DHCS to implement and oversee the GPP pursuant to the STCs, to maximize the amount of FFP available to participating systems.
4. Defines a GPP system as a public health care system consisting of a designated public hospital (DPH), but excluding hospitals operated by the University of California (UC), and its affiliated and contracted providers. Authorizes multiple DPHs operated by a single legal entity to belong to the same GPP system, as specified.
5. Requires DHCS to determine the GPP's aggregate annual limit, which is the maximum amount of funding available under the GPP and which is the sum components of the following:
   1. A portion of the federal disproportionate share allotment shall be included as a component of the aggregate annual limit for each GPP program year, as specified; and,
   2. The aggregate annual limit amount shall also include the amount authorized under the demonstration project for the uncompensated care component of the GPP, as specified.
6. Requires DHCS to do the following:
   1. Develop a methodology for valuing health care services and activities provided to the uninsured that achieves the goals of the GPP. Requires the points assigned to a particular service or activity to be the same across all GPP systems. Specifies when points may be increased or decreased;
   2. For each GPP system, perform a baseline analysis for each GPP system's historical volume, cost and mix of services to the uninsured to establish an annual threshold for the GPP;
   3. Determine a pro rata allocation percentage for each GPP system, as specified;
   4. Determine an annual budget the GPP system will receive if it achieves its threshold;
   5. Specifies the formula for the GPP system's annual budget;
   6. Adjust and recalculate each GPP systems' annual threshold and annual budget if there is a change in the aggregate annual limit;
   7. Specify a reporting schedule for GPP systems to submit an interim yearend report and a final reconciliation report, as specified;
   8. Claim FFP for GPP payments using intergovernmental transfers (IGTs), as specified; and,
   9. Conduct or arrange for two evaluations of the GPP.
7. Specifies the calculation of the GPP funding payable to each GPP system, including a methodology to redistribute unearned GPP subject to fund availability and the STCs.
8. Specifies the manner and timeframes of payments to GPP systems, but no payment can be delayed beyond 21 days after all the necessary IGTs have been made.
9. States that the GPP provides a source of funding to support health care activities and services available to the uninsured, and not to be construed to constitute or offer health care coverage for individuals receiving services. Provides that the GPP payments are not paid on behalf of specific individuals and allows GPP systems to determine the scope, type and extent of available services, consistent with the STCs.
10. Requires the nonfederal share of any payments under the GPP to consist of voluntary IGT of funds provided by DPH or affiliated governmental agencies or entities, as specified. Requires DHCS, if FFP is not available or results in recoupment of payments already made, to return any IGT to the transferring entities, as specified.
11. Establishes the GPP Special Fund (Fund) to consist of moneys that a DPH or affiliated governmental agency or entity elects to transfer to DHCS for deposit into the Fund as a condition of participation in the GPP. Provides that moneys derived from these IGTs must be used as a source of the nonfederal share of GPP payments. Specifies distribution of the Fund.
12. Provides that as a condition of participation in the GPP, each DPH or affiliated governmental entity agrees to provide IGT of funds necessary to meet the nonfederal share obligation, as specified. Considers IGT of funds to be voluntary and prohibits the use of the GF monies to fund the nonfederal share of any GPP payment.
13. Specifies how DHCS should determine the IGT amount for each GPP system, including the initial transfer amount that is calculated partly with the use of a GPP system-specific IGT factor for each GPP system, as specified.
14. Authorizes DHCS to initiate audits of GPP systems' data submissions and reports, and to request supporting documentation. Requires DHCS audits to be conducted within 22 months of the ends of the applicable GPP program year to allow for the appropriate finalization of payments to the participating GPP system, but subject to recoupment if it is later determined that FFP is not available for any portion of the applicable systems.

Public Hospital Redesign and Incentives in Medi-Cal

1. Requires participating PRIME entities to earn incentive payments by undertaking projects set forth in the STCs, for which there are required project metrics and targets. Specifies a minimum number of required projects for each DPH system.
2. Requires DHCS to provide participating PRIME entities the opportunity to earn the maximum amount of funds authorized for the PRIME program under the demonstration project. Under the demonstration project, funding is available for the DPH systems and the district and municipal public hospitals (DMPH) through two separate pools. Authorizes up to $1.4 billion annually for the DPH systems pool, and up to $200 million is authorized annually for the DMPH pool, during the first three years of the demonstration project, with reductions to those amounts in the fourth and fifth years.
3. Requires PRIME payments to be incentive payments, and not payments for services otherwise reimbursable under the Medi-Cal, nor direct reimbursement for expenditures incurred by participating PRIME entities in implementing reforms. Prohibits PRIME incentive payments from offsetting payment amounts otherwise payable by the Medi-Cal program, or to and by Medi-Cal managed care plans for services provided to Medi-Cal beneficiaries, or otherwise supplant provider payments payable to PRIME entities.
4. Requires, within 30 days following federal approval of the protocols setting forth the PRIME projects, metrics, and funding mechanics, each participating PRIME entity to submit a five-year PRIME project plan containing the specific elements required in the STCs. Requires DHCS to review all five-year PRIME project plans and take action within 60 days to approve or disapprove each five-year PRIME project plan.
5. Authorizes PRIME entities to modify projects or metrics in their five-year PRIME project plan, to the extent authorized under the demonstration project and approved by DHCS.
6. Requires each PRIME entity to submit reports to DHCS twice a year demonstrating progress toward required metric targets. Provides that the submission of project reports constitutes a request for payment.
7. Establishes the Public Hospital Investment, Improvement, and Incentive Fund which is continuously appropriated.
8. Establishes requirements for the disbursement timeframe for PRIME payments, incentive payments and aggregate annual amounts, as specified.
9. Requires DHCS to conduct, or arrange an evaluation of the PRIME program.
10. Provides that the PRIME incentive payments are intended to support DPHs to change care and delivery and strengthen those systems' ability to participate under an alternative payment methodology (APM). Requires DHCS to issue an all-plan letter to Medi-Cal managed care plans that will promote and encourage positive system transformation.
11. Requires DPH to contract with at least one Medi-Cal managed care plan in the service area where they operate using an APM methodology by January 1, 2018.

Whole Person Care

1. Requires DHCS to establish and operate a WPC pilot program to allow for the development of WPC pilots focused on target populations of high-risk, high-utilizing Medi-Cal beneficiaries in local geographic areas. Specifies the overarching goal of the WPC as the coordination of health, behavioral health, and social services, in a patient-centered manner to improve beneficiary health and well-being through more efficient and effective use of resources.
2. States that the WPC pilot provides an option to a county, a city and county, a health or hospital authority, or a consortium of any of the above entities serving a county or region consisting of more than one county, to receive support to integrate care for particularly vulnerable Medi-Cal beneficiaries who have been identified as high users of multiple systems and who continue to have or are at-risk of poor health outcomes. Specifies that through collaboration, pilot entities will identify common beneficiaries, share data between systems, coordinate care in real time, and evaluate individual and population progress in order to meet the goal of providing comprehensive coordinated care for the beneficiary resulting in better health outcomes.
3. Requires the WPC pilots to include specific strategies to increase integration among local government agencies, health plans, providers, and other entities that serve high-risk, high-utilizing care for the most vulnerable Medi-Cal beneficiaries; reduce inappropriate inpatient and emergency room utilization; improve data collection and sharing among local entities; improve outcomes for the WPC target populations; and, may include other strategies to increase access to housing and supportive services.
4. Requires DHCS to approve WPC pilots through the process outlined in the STCs.
5. States that receipt of WPC services is voluntary, and individuals receiving these services may opt out at any time.
6. Defines a WPC lead entity as the entity designated to coordinate the WPC pilot and be the single point of contact for DHCS. Authorizes a lead entity to be a county, city and county, a health or hospital authority, a DPH, a district and municipal public hospital or an agency or department of those entities, or a consortium of any of such entities. Specifies requirements for the lead entity, including operating the WPC pilot, conducting ongoing monitoring of WPC participating entities, arranging for the required reporting, ensuring an appropriate financial structure is in place, and identifying and securing a permissible source of the nonfederal share of WPC pilot payments.
7. Requires the WPC to include, at a minimum, all of the following entities as participating entities in addition to the lead entity.
   1. At least one Medi-Cal managed care plan operating in geographic area of the WPC pilot to work in partnership with the WPC lead entity when implementing the pilot specific to Medi-Cal managed care beneficiaries;
   2. Health services agency or department for the geographic region where the WPC pilot operates, or any other public entity operating in that capacity for the county or city and city and county;
   3. Local entities, agencies or departments responsible for specialty mental health services for the geographic region where the WPC pilot operates;
   4. At least one other public agency or department, which may include, but is not limited to, county alcohol and substance use disorder programs, human services agencies, public health departments, criminal justice or probation entities, and housing authorities, regardless of how many of these fall under the same agency head within the geographic area where the WPC pilot operates; and,
   5. At least two other community partners serving the target population within the applicable geographic area.
8. Requires DHCS to enter into a pilot agreement with each WPC lead entity approved to participate in the WPC pilot program. Specifies requirements for the pilot agreement including the amount of funding that would be available to the WPC pilot and conditions for payments.
9. Permits the sharing of health information, records, and other data with and among WPC lead entities and WPC participating entities to the extent necessary for the activities and purposes, as specified.
10. Authorizes WPC pilots to target the focus of their pilot on individuals at risk or are experiencing homelessness who have a demonstrated medical need for housing or supportive services. States that WPC participating entities may include local housing authorities, local continuum of care programs, community-based organizations, and others servicing the homeless population as entities collaborating and participating in the WPC pilot. Specifies housing interventions to include: a) tenancy-based care management services, as specified; and, b) countywide housing pools (housing pool), as specified.
11. Authorizes WPC participating entities to include contributions to a housing pool that will directly provide needed support for medically necessary housing services, with the goal of improving access to housing and reducing churn in the Medi-Cal population.
12. Authorizes the housing pool to be funded through WPC pilot payments or direct contributions from community entities. Requires state and local government and community entity contributions to the housing pool to be separate from FFP funds, and may be allocated to fund support for long-term housing, including rental housing subsidies. Allows the housing pool to leverage local resources to increase access to subsidize housing units. Allows the housing pool to also incorporate or reinvest a portion of the savings from the reduced utilization of health care services in the housing pool. As applicable to an approved WPC pilot agreement, WPC investments in housing units or housing subsidies, including any payment for room and board shall not be eligible for FFP. Specifies that "room and board" does not include those housing-related activities or services recognized as reimbursable under CMS policy.
13. Specifies requirements for payments to WPC pilots, the pilot application and selection criteria, and carry over of remaining funds.
14. Requires an evaluation of the WPC pilot.

Dental Transformation Initiative

1. Requires DHCS to implement the DTI in accordance with the STCs to improve the oral health care for Medi-Cal children through age 20.
2. States that the DTI is intended to improve the oral health care of Medi-Cal children with a particular focus on increasing the statewide proportion of qualifying children enrolled in the Medi-Cal Dental Program who receive a preventive dental service by 10% points over a five year period.
3. Establishes four domains within the DTI including Preventive Services, Caries Risk Assessment, Continuity of Care, and Local Dental Pilot Projects, as follows:
   1. Increase Preventive Services Utilization for Children: Aim is to increase the statewide proportion of qualifying children enrolled in Medi-Cal who receive a preventive dental service in a given year. The statewide goal is to increase the utilization among children by at least 10% points by the end of the demonstration.
   2. Caries Risk Assessment and Disease Management Pilot: initially, this will only be available in select pilot counties, designated by DHCS. Requires participating service office locations to elect to be approved by DHCS to participate in this domain of the DTI program. Permits, to the extent DHCS determines the pilots to be successful, DHCS to seek to implement this domain on a statewide basis and subject to the availability of funding under the DTI Pool as available for this purpose, as specified.
   3. Increase Continuity of Care: requires a DTI incentive payment to be paid to eligible service office locations who have maintained continuity of care through providing examinations for their enrolled child beneficiaries under 21 years of age, as specified in the STCs. Requires DHCS to begin this effort in select counties and seek to implement on a statewide basis if the pilot is determined to be successful and subject to the availability of funding under the DTI Pool.
   4. Local Dental Pilot Projects (LDPPs): requires LDPPs to address one or more of the three domains identified in paragraph 3) above through alternative LDPPs, as authorized by DHCS pursuant to the STCs, as specified.
4. Permits incentive payments to be made available within each domain under the DTI to qualified providers who meet the requirements of the domain. Permits providers in either the dental fee-for-service (FFS) or dental managed care Medi-Cal delivery systems to participate in the DTI.
5. Requires the DTI to be funded at a maximum of $148 million annually, and for five years totaling a maximum of $740 million, except as provided in the STCs. Permits, when DTI funds in a given program year are not expended, those remaining program funds to be available for DTI payments in subsequent years.
6. Permits DHCS to earn additional demonstration authority, up to a maximum of $10 million, to be added to the DTI Pool for use in paying incentives to qualifying providers under DTI, as indicated in the STCs.
7. Requires DHCS to make DTI incentive payments directly to eligible contracted service office locations. Requires incentive payments to be issued to the service office location based on the services rendered at the location and that service office location's compliance with the criteria enumerated in the STCs. Permits DHCS to provide DTI incentive payments to eligible service office locations on a semiannual or annual basis.
8. Specifies that dental managed care provider service office locations are eligible for DTI incentive payments, as specified in the STCs, and specifies that these payments are to be considered separate from payment received from a dental managed care plan. Prohibits the incentive payments from being considered a direct reimbursement for dental services under the Medi-Cal state plan.
9. Requires DHCS to disburse DTI incentive payments to eligible service office locations that did not previously participate in Medi-Cal prior to the demonstration and that render preventive dental services during the demonstration to the extent the service office location meets or exceeds the goals specified by DHCS in accordance with the STCs.
10. Specifies that safety net clinics are eligible for DTI incentive payments specified in the STCs. Requires participating safety net clinics to be responsible for submitting data in a manner specified by DHCS for receipt of DTI incentive payments. Requires each safety net clinic office location to be considered a dental service office location for purposes of specified domains outlined in the STCs.
11. Requires service office locations to submit all data in a manner acceptable to the DHCS within one year from the date of service or by January 31 for the preceding year that the service was rendered to be eligible for DTI incentive payments associated with that timeframe.
12. Requires DHCS to conduct, or arrange to have conducted, the evaluation of the DTI as required by the STCs.

FISCAL EFFECT: According to the Assembly Appropriations Committee:

1. DHCS has requested administrative resources through an April 2016 Spring Finance Letter totaling $33.6 million for waiver implementation over its five-year lifetime, $14 million of which is for contract costs. DHCS requests $10.8 million in 2016-17. Funding will pay for staff and contract costs for implementation, monitoring, oversight, evaluation and assessment, technical assistance, program development, and related activities (General Fund/federal).
2. Federal matching funds available by waiver program component are as follows:

PRIME $3.73 billion

Global Payment Program $236 million*

Dental Transformation Initiative $375 million

Designated State Health Programs $375 million

Whole Person Care $1.5 billion

------------------------------------------------------------------------------

Total $6.21 billion

GPP does not include the federal DSH component of funding. Federal DSH funding over the five-year life of the waiver is projected to be about $5.8 billion. In addition, only the first year of federal funding for GPP is shown here. Funding in subsequent years is based on a study on DPH uncompensated care.

COMMENTS: According to the author, this bill is needed to provide the statutory framework for implementation of Medi-Cal 2020. While the STCs outline the programmatic and financing elements of Medi-Cal 2020, state law changes are required, particularly related to hospital financing. This bill is needed to continue existing Medi-Cal FFS payments to DPHs, to change how federal DSH funds are provided to DPHs consistent with the STCs under the GPP, to continue DSH payments to private and DMPHs, to implement the expanded provisions of PRIME, to appropriate funds for the waiver-related provisions, and to codify the provisions of the STCs establishing the DTI and the access assessments. In addition, this bill would grant flexibility to DHCS to implement Medi-Cal 2020 without using the regular contracting and regulatory processes due to waiver timelines, and would require notification to the Legislature regarding waiver-related activities.

Analysis Prepared by: Rosielyn Pulmano / HEALTH / (916) 319-2097 FN: 0003273

ASSEMBLY THIRD READING

ATR Bill Id:AB 1568

Author:()

As Amended Ver:May 3, 2016

2/3 vote. Urgency

SUMMARY: Enacts the Medi-Cal 2020 Demonstration Project Act (Medi-Cal 2020 / Demonstration Project), administered by the Department of Health Care Services (DHCS) which implements the Special Terms and Conditions (STCs) approved by the federal Centers for Medicare and Medicaid Services (CMS). Specifies the four components of the Demonstration Project, as follows: Global Payment Program (GPP), Public Hospital Redesign and Incentives in Medi-Cal (PRIME), Whole Person Care (WPC) and Dental Transformation Initiative (DTI). Contains an urgency clause to ensure that the provisions of this bill go into immediate effect upon enactment. Specifically, this bill:

Access Assessment

1. Requires DHCS to amend its contract with the external quality review organization (EQRO) currently under contract with DHCS and approved by CMS to complete an access assessment within 90 days of the effective date of this bill.
2. Requires the assessment to do all of the following:
   1. Evaluate primary, core specialty, and facility access to care for managed care beneficiaries based on current health plan network adequacy requirements, as specified;
   2. Consider State Fair Hearing and Independent Medical Review decisions, and grievances, and appeals or complaints data; and,
   3. Report on the number of providers accepting new beneficiaries.
3. Requires DHCS to establish an advisory committee to provide input into the structure of the access assessment. Requires the EQRO to work with DHCS to establish the advisory committee, as specified.
4. Requires the advisory committee to include one or more representatives of the following stakeholders: consumer advocacy organizations, provider associations, health plans and health plan associations, and legislative staff. Specifies functions of the advisory committee.
5. Requires the EQRO to produce and establish an initial draft and a final access assessment report that includes a comparison of health plan network adequacy compliance across different lines of business. Requires DHCS to post the initial draft for a 30-day public comment period, as specified, and to be posted no later than 10 months after CMS approves the assessment design. Requires DHCS to submit the final access assessment report to CMS no later than 90 days after the initial draft report is posted for public comment.
6. Requires the assessment to do all of the following:
   1. Measure health plan compliance with network adequacy requirements, as specified;
   2. Review encounter data, including data from subcapitated plans;
   3. Review compliance with network adequacy requirements, as specified;
   4. Review and report applicable network adequacy requirements of the proposed or final Notice of Proposed Rulemaking, as specified;
   5. Determine health plan compliance with network adequacy, as specified; and,
   6. Measure managed care plan compliance with network adequacy requirements, as specified, accounting for geographic differences, previously approved alternate network access standards, access to in-network providers and out-of-network providers, the entire network of providers available to beneficiaries, and other modalities used for accessing care, including telemedicine.

General Provisions

1. Requires the STCs to prevail in the event of a conflict with this bill.
2. Authorizes DHCS to implement, interpret, or make specific this bill or the STCs through all-county letters, plan letters, provider bulletins, or other actions without regulatory action. Requires DHCS to inform specified committees of the Legislature when this action is taken.
3. Exempts contracts entered into by DHCS for purposes of this bill from the Public Contract Code and approval by Department of General Services.
4. Requires DHCS to seek any federal approval to implement this bill and conduct any study or activity required under the STCs. Implements this bill only if necessary federal approvals and federal financial participation (FFP) are available.
5. Authorizes the Director of DHCS to modify any process or methodology if necessary to comply with federal law or the STCs if the modification is consistent with the goals of the demonstration project. Requires, if the modification would not be consistent with the goals of this bill or would alter the level of support for affected participating entities, the Director to execute a declaration stating that this determination has been made. Specifies posting and notification requirements for the declaration.
6. Provides that in the event of a determination that the amount of FFP available under the demonstration project is reduced due to the application of penalties set forth in the STCs, the enforcement of the demonstration project's budget neutrality limit or other similar, occurrence, DHCS is required to develop the methodology by which payments under the demonstration project are to be reduced, as specified.
7. Authorizes DHCS to develop potential successor payment methodologies that could continue to support entities participating in the demonstration project, as specified. Requires DHCS to consult with entities participating in the payment methodologies in developing successor payment methodology. Authorizes an extension of the payment methodologies through demonstration year 16 or to subsequent time periods, as specified.
8. Authorizes DHCS to claim FFP for expenditures associated with the designated state health programs, as specified.
9. Appropriates an amount from General Fund (GF) equal to the FFP to the Health Care Deposit Fund, as specified.

Global Payment Program

1. Requires DHCS to implement the GPP to support participating public health care systems (systems) that provide health care services for the uninsured. States that GPP systems receive global payments based on the health care they provide to the uninsured, in lieu of traditional disproportionate share hospital (DSH) payments and safety net care pool payments (SNCP), as specified.
2. Requires systems to receive GPP payments calculated using an innovative value-based point methodology that incorporates measures of value for the patient in conjunction with the recognition of costs. Requires a system, to receive the full amount of GPP payments, to provide a threshold level of services measured through a point methodology, as specified, and based on the GPP system's historical volume, cost, and mix of services. Specifies that this payment methodology is intended to support GPP systems that continue to provide services to the uninsured, while incentivizing the GPP systems to shift the overall delivery of services for the uninsured to provide more cost-effective, higher value care.
3. Requires DHCS to implement and oversee the GPP pursuant to the STCs, to maximize the amount of FFP available to participating systems.
4. Defines a GPP system as a public health care system consisting of a designated public hospital (DPH), but excluding hospitals operated by the University of California (UC), and its affiliated and contracted providers. Authorizes multiple DPHs operated by a single legal entity to belong to the same GPP system, as specified.
5. Requires DHCS to determine the GPP's aggregate annual limit, which is the maximum amount of funding available under the GPP and which is the sum components of the following:
   1. A portion of the federal disproportionate share allotment shall be included as a component of the aggregate annual limit for each GPP program year, as specified; and,
   2. The aggregate annual limit amount shall also include the amount authorized under the demonstration project for the uncompensated care component of the GPP, as specified.
6. Requires DHCS to do the following:
   1. Develop a methodology for valuing health care services and activities provided to the uninsured that achieves the goals of the GPP. Requires the points assigned to a particular service or activity to be the same across all GPP systems. Specifies when points may be increased or decreased;
   2. For each GPP system, perform a baseline analysis for each GPP system's historical volume, cost and mix of services to the uninsured to establish an annual threshold for the GPP;
   3. Determine a pro rata allocation percentage for each GPP system, as specified;
   4. Determine an annual budget the GPP system will receive if it achieves its threshold;
   5. Specifies the formula for the GPP system's annual budget;
   6. Adjust and recalculate each GPP systems' annual threshold and annual budget if there is a change in the aggregate annual limit;
   7. Specify a reporting schedule for GPP systems to submit an interim yearend report and a final reconciliation report, as specified;
   8. Claim FFP for GPP payments using intergovernmental transfers (IGTs), as specified; and,
   9. Conduct or arrange for two evaluations of the GPP.
7. Specifies the calculation of the GPP funding payable to each GPP system, including a methodology to redistribute unearned GPP subject to fund availability and the STCs.
8. Specifies the manner and timeframes of payments to GPP systems, but no payment can be delayed beyond 21 days after all the necessary IGTs have been made.
9. States that the GPP provides a source of funding to support health care activities and services available to the uninsured, and not to be construed to constitute or offer health care coverage for individuals receiving services. Provides that the GPP payments are not paid on behalf of specific individuals and allows GPP systems to determine the scope, type and extent of available services, consistent with the STCs.
10. Requires the nonfederal share of any payments under the GPP to consist of voluntary IGT of funds provided by DPH or affiliated governmental agencies or entities, as specified. Requires DHCS, if FFP is not available or results in recoupment of payments already made, to return any IGT to the transferring entities, as specified.
11. Establishes the GPP Special Fund (Fund) to consist of moneys that a DPH or affiliated governmental agency or entity elects to transfer to DHCS for deposit into the Fund as a condition of participation in the GPP. Provides that moneys derived from these IGTs must be used as a source of the nonfederal share of GPP payments. Specifies distribution of the Fund.
12. Provides that as a condition of participation in the GPP, each DPH or affiliated governmental entity agrees to provide IGT of funds necessary to meet the nonfederal share obligation, as specified. Considers IGT of funds to be voluntary and prohibits the use of the GF monies to fund the nonfederal share of any GPP payment.
13. Specifies how DHCS should determine the IGT amount for each GPP system, including the initial transfer amount that is calculated partly with the use of a GPP system-specific IGT factor for each GPP system, as specified.
14. Authorizes DHCS to initiate audits of GPP systems' data submissions and reports, and to request supporting documentation. Requires DHCS audits to be conducted within 22 months of the ends of the applicable GPP program year to allow for the appropriate finalization of payments to the participating GPP system, but subject to recoupment if it is later determined that FFP is not available for any portion of the applicable systems.

Public Hospital Redesign and Incentives in Medi-Cal

1. Requires participating PRIME entities to earn incentive payments by undertaking projects set forth in the STCs, for which there are required project metrics and targets. Specifies a minimum number of required projects for each DPH system.
2. Requires DHCS to provide participating PRIME entities the opportunity to earn the maximum amount of funds authorized for the PRIME program under the demonstration project. Under the demonstration project, funding is available for the DPH systems and the district and municipal public hospitals (DMPH) through two separate pools. Authorizes up to $1.4 billion annually for the DPH systems pool, and up to $200 million is authorized annually for the DMPH pool, during the first three years of the demonstration project, with reductions to those amounts in the fourth and fifth years.
3. Requires PRIME payments to be incentive payments, and not payments for services otherwise reimbursable under the Medi-Cal, nor direct reimbursement for expenditures incurred by participating PRIME entities in implementing reforms. Prohibits PRIME incentive payments from offsetting payment amounts otherwise payable by the Medi-Cal program, or to and by Medi-Cal managed care plans for services provided to Medi-Cal beneficiaries, or otherwise supplant provider payments payable to PRIME entities.
4. Requires, within 30 days following federal approval of the protocols setting forth the PRIME projects, metrics, and funding mechanics, each participating PRIME entity to submit a five-year PRIME project plan containing the specific elements required in the STCs. Requires DHCS to review all five-year PRIME project plans and take action within 60 days to approve or disapprove each five-year PRIME project plan.
5. Authorizes PRIME entities to modify projects or metrics in their five-year PRIME project plan, to the extent authorized under the demonstration project and approved by DHCS.
6. Requires each PRIME entity to submit reports to DHCS twice a year demonstrating progress toward required metric targets. Provides that the submission of project reports constitutes a request for payment.
7. Establishes the Public Hospital Investment, Improvement, and Incentive Fund which is continuously appropriated.
8. Establishes requirements for the disbursement timeframe for PRIME payments, incentive payments and aggregate annual amounts, as specified.
9. Requires DHCS to conduct, or arrange an evaluation of the PRIME program.
10. Provides that the PRIME incentive payments are intended to support DPHs to change care and delivery and strengthen those systems' ability to participate under an alternative payment methodology (APM). Requires DHCS to issue an all-plan letter to Medi-Cal managed care plans that will promote and encourage positive system transformation.
11. Requires DPH to contract with at least one Medi-Cal managed care plan in the service area where they operate using an APM methodology by January 1, 2018.

Whole Person Care

1. Requires DHCS to establish and operate a WPC pilot program to allow for the development of WPC pilots focused on target populations of high-risk, high-utilizing Medi-Cal beneficiaries in local geographic areas. Specifies the overarching goal of the WPC as the coordination of health, behavioral health, and social services, in a patient-centered manner to improve beneficiary health and well-being through more efficient and effective use of resources.
2. States that the WPC pilot provides an option to a county, a city and county, a health or hospital authority, or a consortium of any of the above entities serving a county or region consisting of more than one county, to receive support to integrate care for particularly vulnerable Medi-Cal beneficiaries who have been identified as high users of multiple systems and who continue to have or are at-risk of poor health outcomes. Specifies that through collaboration, pilot entities will identify common beneficiaries, share data between systems, coordinate care in real time, and evaluate individual and population progress in order to meet the goal of providing comprehensive coordinated care for the beneficiary resulting in better health outcomes.
3. Requires the WPC pilots to include specific strategies to increase integration among local government agencies, health plans, providers, and other entities that serve high-risk, high-utilizing care for the most vulnerable Medi-Cal beneficiaries; reduce inappropriate inpatient and emergency room utilization; improve data collection and sharing among local entities; improve outcomes for the WPC target populations; and, may include other strategies to increase access to housing and supportive services.
4. Requires DHCS to approve WPC pilots through the process outlined in the STCs.
5. States that receipt of WPC services is voluntary, and individuals receiving these services may opt out at any time.
6. Defines a WPC lead entity as the entity designated to coordinate the WPC pilot and be the single point of contact for DHCS. Authorizes a lead entity to be a county, city and county, a health or hospital authority, a DPH, a district and municipal public hospital or an agency or department of those entities, or a consortium of any of such entities. Specifies requirements for the lead entity, including operating the WPC pilot, conducting ongoing monitoring of WPC participating entities, arranging for the required reporting, ensuring an appropriate financial structure is in place, and identifying and securing a permissible source of the nonfederal share of WPC pilot payments.
7. Requires the WPC to include, at a minimum, all of the following entities as participating entities in addition to the lead entity.
   1. At least one Medi-Cal managed care plan operating in geographic area of the WPC pilot to work in partnership with the WPC lead entity when implementing the pilot specific to Medi-Cal managed care beneficiaries;
   2. Health services agency or department for the geographic region where the WPC pilot operates, or any other public entity operating in that capacity for the county or city and city and county;
   3. Local entities, agencies or departments responsible for specialty mental health services for the geographic region where the WPC pilot operates;
   4. At least one other public agency or department, which may include, but is not limited to, county alcohol and substance use disorder programs, human services agencies, public health departments, criminal justice or probation entities, and housing authorities, regardless of how many of these fall under the same agency head within the geographic area where the WPC pilot operates; and,
   5. At least two other community partners serving the target population within the applicable geographic area.
8. Requires DHCS to enter into a pilot agreement with each WPC lead entity approved to participate in the WPC pilot program. Specifies requirements for the pilot agreement including the amount of funding that would be available to the WPC pilot and conditions for payments.
9. Permits the sharing of health information, records, and other data with and among WPC lead entities and WPC participating entities to the extent necessary for the activities and purposes, as specified.
10. Authorizes WPC pilots to target the focus of their pilot on individuals at risk or are experiencing homelessness who have a demonstrated medical need for housing or supportive services. States that WPC participating entities may include local housing authorities, local continuum of care programs, community-based organizations, and others servicing the homeless population as entities collaborating and participating in the WPC pilot. Specifies housing interventions to include: a) tenancy-based care management services, as specified; and, b) countywide housing pools (housing pool), as specified.
11. Authorizes WPC participating entities to include contributions to a housing pool that will directly provide needed support for medically necessary housing services, with the goal of improving access to housing and reducing churn in the Medi-Cal population.
12. Authorizes the housing pool to be funded through WPC pilot payments or direct contributions from community entities. Requires state and local government and community entity contributions to the housing pool to be separate from FFP funds, and may be allocated to fund support for long-term housing, including rental housing subsidies. Allows the housing pool to leverage local resources to increase access to subsidize housing units. Allows the housing pool to also incorporate or reinvest a portion of the savings from the reduced utilization of health care services in the housing pool. As applicable to an approved WPC pilot agreement, WPC investments in housing units or housing subsidies, including any payment for room and board shall not be eligible for FFP. Specifies that "room and board" does not include those housing-related activities or services recognized as reimbursable under CMS policy.
13. Specifies requirements for payments to WPC pilots, the pilot application and selection criteria, and carry over of remaining funds.
14. Requires an evaluation of the WPC pilot.

Dental Transformation Initiative

1. Requires DHCS to implement the DTI in accordance with the STCs to improve the oral health care for Medi-Cal children through age 20.
2. States that the DTI is intended to improve the oral health care of Medi-Cal children with a particular focus on increasing the statewide proportion of qualifying children enrolled in the Medi-Cal Dental Program who receive a preventive dental service by 10% points over a five year period.
3. Establishes four domains within the DTI including Preventive Services, Caries Risk Assessment, Continuity of Care, and Local Dental Pilot Projects, as follows:
   1. Increase Preventive Services Utilization for Children: Aim is to increase the statewide proportion of qualifying children enrolled in Medi-Cal who receive a preventive dental service in a given year. The statewide goal is to increase the utilization among children by at least 10% points by the end of the demonstration.
   2. Caries Risk Assessment and Disease Management Pilot: initially, this will only be available in select pilot counties, designated by DHCS. Requires participating service office locations to elect to be approved by DHCS to participate in this domain of the DTI program. Permits, to the extent DHCS determines the pilots to be successful, DHCS to seek to implement this domain on a statewide basis and subject to the availability of funding under the DTI Pool as available for this purpose, as specified.
   3. Increase Continuity of Care: requires a DTI incentive payment to be paid to eligible service office locations who have maintained continuity of care through providing examinations for their enrolled child beneficiaries under 21 years of age, as specified in the STCs. Requires DHCS to begin this effort in select counties and seek to implement on a statewide basis if the pilot is determined to be successful and subject to the availability of funding under the DTI Pool.
   4. Local Dental Pilot Projects (LDPPs): requires LDPPs to address one or more of the three domains identified in paragraph 3) above through alternative LDPPs, as authorized by DHCS pursuant to the STCs, as specified.
4. Permits incentive payments to be made available within each domain under the DTI to qualified providers who meet the requirements of the domain. Permits providers in either the dental fee-for-service (FFS) or dental managed care Medi-Cal delivery systems to participate in the DTI.
5. Requires the DTI to be funded at a maximum of $148 million annually, and for five years totaling a maximum of $740 million, except as provided in the STCs. Permits, when DTI funds in a given program year are not expended, those remaining program funds to be available for DTI payments in subsequent years.
6. Permits DHCS to earn additional demonstration authority, up to a maximum of $10 million, to be added to the DTI Pool for use in paying incentives to qualifying providers under DTI, as indicated in the STCs.
7. Requires DHCS to make DTI incentive payments directly to eligible contracted service office locations. Requires incentive payments to be issued to the service office location based on the services rendered at the location and that service office location's compliance with the criteria enumerated in the STCs. Permits DHCS to provide DTI incentive payments to eligible service office locations on a semiannual or annual basis.
8. Specifies that dental managed care provider service office locations are eligible for DTI incentive payments, as specified in the STCs, and specifies that these payments are to be considered separate from payment received from a dental managed care plan. Prohibits the incentive payments from being considered a direct reimbursement for dental services under the Medi-Cal state plan.
9. Requires DHCS to disburse DTI incentive payments to eligible service office locations that did not previously participate in Medi-Cal prior to the demonstration and that render preventive dental services during the demonstration to the extent the service office location meets or exceeds the goals specified by DHCS in accordance with the STCs.
10. Specifies that safety net clinics are eligible for DTI incentive payments specified in the STCs. Requires participating safety net clinics to be responsible for submitting data in a manner specified by DHCS for receipt of DTI incentive payments. Requires each safety net clinic office location to be considered a dental service office location for purposes of specified domains outlined in the STCs.
11. Requires service office locations to submit all data in a manner acceptable to the DHCS within one year from the date of service or by January 31 for the preceding year that the service was rendered to be eligible for DTI incentive payments associated with that timeframe.
12. Requires DHCS to conduct, or arrange to have conducted, the evaluation of the DTI as required by the STCs.

FISCAL EFFECT: According to the Assembly Appropriations Committee:

1. DHCS has requested administrative resources through an April 2016 Spring Finance Letter totaling $33.6 million for waiver implementation over its five-year lifetime, $14 million of which is for contract costs. DHCS requests $10.8 million in 2016-17. Funding will pay for staff and contract costs for implementation, monitoring, oversight, evaluation and assessment, technical assistance, program development, and related activities (General Fund/federal).
2. Federal matching funds available by waiver program component are as follows:

PRIME $3.73 billion

Global Payment Program $236 million*

Dental Transformation Initiative $375 million

Designated State Health Programs $375 million

Whole Person Care $1.5 billion

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Total $6.21 billion

GPP does not include the federal DSH component of funding. Federal DSH funding over the five-year life of the waiver is projected to be about $5.8 billion. In addition, only the first year of federal funding for GPP is shown here. Funding in subsequent years is based on a study on DPH uncompensated care.

COMMENTS: According to the author, this bill is needed to provide the statutory framework for implementation of Medi-Cal 2020. While the STCs outline the programmatic and financing elements of Medi-Cal 2020, state law changes are required, particularly related to hospital financing. This bill is needed to continue existing Medi-Cal FFS payments to DPHs, to change how federal DSH funds are provided to DPHs consistent with the STCs under the GPP, to continue DSH payments to private and DMPHs, to implement the expanded provisions of PRIME, to appropriate funds for the waiver-related provisions, and to codify the provisions of the STCs establishing the DTI and the access assessments. In addition, this bill would grant flexibility to DHCS to implement Medi-Cal 2020 without using the regular contracting and regulatory processes due to waiver timelines, and would require notification to the Legislature regarding waiver-related activities.

Analysis Prepared by: Rosielyn Pulmano / HEALTH / (916) 319-2097 FN: 0003273

Date of Hearing: May 18, 2016

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez, Chair

ABPCA Bill Id:AB 1568

Author:(Bonta) – As Amended Ver:May 3, 2016

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

SUMMARY:

This bill, which contains an urgency clause, authorizes the Department of Health Care Services (DHCS) to implement the Medi-Cal 2020 Demonstration Project, implementing the Special Terms and Conditions (STCs) negotiated with and approved by the federal Centers for Medicare and Medicaid Services (CMS). Specifically, this bill:

1. Specifies the four components of Medi-Cal 2020, as follows:
   1. Global Payment Program (GPP), which restructures the distribution of federal funding for uncompensated care, including disproportionate share hospitals (DSH) funding, to designated public hospitals (DPHs), excluding University of California (UC) hospitals, in order to incentivize improvements in care delivery and provision of care in appropriate settings. The bill maintains the DSH funding methodology for other hospitals, with DSH funding for UC hospitals capped by fiscal year.
   2. Public Hospital Redesign and Incentives in Medi-Cal (PRIME), which authorizes federal matching funds to make incentive payments to DPHs and District/Municipal Public Hospitals (DMPHs), in order to improve care delivery and strengthen their ability to take on risk-based payments.
   3. Whole Person Care (WPC), which allows participating lead entities (primarily counties) to claim federal matching funds for efforts to coordinate health, behavioral health, and social services for high-risk Medi-Cal beneficiaries who are high utilizers of health care services.
   4. Dental Transformation Initiative (DTI), which permits incentive payments to qualified dental providers to improve dental care and utilization among children enrolled in Medi-Cal.
2. Requires a comprehensive assessment of access to care in Medi-Cal, as specified.
3. Contains a number of administrative provisions, including an exemption for DHCS from the regulatory process, exemption of contracts from the Public Contract Code and approval by Department of General Services, and authorization for the director of DHCS to modify any process or methodology if necessary to comply with federal law or the STCs, among other provisions.
4. Conditions implementation on federal approval and availability of federal financial participation (FFP).
5. Authorizes the nonfederal share of matching funds for the DTI through a fund swap, whereby DHCS may claim FFP for state expenditures on Designated State Health Programs (DSHPs), as specified, and appropriates an amount of GF equal to such FFP to the Health Care Deposit Fund for purposes of the DTI, as specified.
6. Authorizes the continuation of numerous authorities and programs approved in prior waivers, as specified, including continuation of current Medi-Cal fee-for-service payment methodologies for DPHs from the previous waiver, whereby DPHs receive cost-based reimbursement with county expenditures used to draw down federal matching funds.
7. Contains numerous other provisions and details related to waiver implementation.

FISCAL EFFECT:

1. DHCS has requested administrative resources through an April 2016 Spring Finance Letter totaling $33.6 million for waiver implementation over its five-year lifetime, $14 million of which is for contract costs. DHCS requests $10.8 million in 2016-17. Funding will pay for staff and contract costs for implementation, monitoring, oversight, evaluation and assessment, technical assistance, program development, and related activities (GF/federal).
2. Federal matching funds available by waiver program component are as follows:
   

PRIME $3.73 billion

Global Payment Program (GPP) $236 million*

Dental Transformation Initiative (DTI) $375 million

Designated State Health Programs $375 million

Whole Person Care (WPC) $1.5 billion

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Total $6.21 billion

* GPP does not include the federal Disproportionate Share Hospitals (DSH) component of funding. Federal DSH funding over the five-year life of the waiver is projected to be about $5.8 billion. In addition, only the first year of federal funding for GPP is shown here. Funding in subsequent years is based on a study on DPH uncompensated care.

COMMENTS:

1. Purpose. According to the author, while the STCs outline the programmatic and financing elements of Medi-Cal 2020, this bill is needed to provide the statutory framework. In addition, this bill would grant flexibility to DHCS to implement Medi-Cal 2020 without using the regular contracting and regulatory processes due to waiver timelines, and would require notification to the Legislature regarding waiver-related activities. Numerous health care provider and advocacy groups support this bill, and it has no opposition.
2. Federal Medicaid Waivers. Section 1115 of the federal Social Security Act authorizes the federal government to waive certain Medicaid rules. This authority has been used in order to allow states to test innovative program improvements and to facilitate coverage expansions. To obtain a waiver, a state negotiates with CMS about which Medicaid provisions might be waived, what innovations the state is proposing, and how the state plans to achieve budget neutrality (a requirement that waivers cannot cost the federal government more with the waiver than without the waiver). The negotiations are memorialized in the STCs, which constitute a contract between CMS and the state. In addition, the state adopts authorizing legislation, such as this bill, to implement the waiver.

Recent waivers have included the 2005 waiver, which established Medi-Cal's public hospital funding mechanisms and provided for coverage expansions in certain counties, and the 2010 "Bridge to Reform" waiver, which included, among other provisions, a phased implementation of health care reform through early expansion of Medi-Cal at local option, expansions of managed care, and a precursor to the PRIME program for public hospitals called the delivery system reform incentive pool (DSRIP).

1. California's new 1115 Waiver: Medi-Cal 2020. On December 30, 2015, DHCS received CMS approval of the five-year Medi-Cal 2020 waiver, which began January 1, 2016. Medi-Cal 2020 is anticipated to provide $6.2 billion in federal matching funds over the five years of the waiver, as specified above. The details of Medi-Cal 2020 are in the 300+ page STCs and related attachments agreed to by the state and CMS. DHCS sought significant stakeholder involvement in the development of the waiver. The WPC, the DTI, and the GPP programs are new components of this waiver, while the PRIME program is a redesign of a prior program.
2. Non-federal share of Costs. The waiver does not "provide" federal funds, but allows states to claim federal matching funds for designated programs and services that would otherwise not qualify. The nonfederal share of costs for Medi-Cal 2020 waiver programs are provided through various means, as indicated below.
   1. Intergovernmental transfers (IGTs). IGTs are transfers of public funds between governmental entities, such as from a county to the state. The nonfederal share of PRIME and GPP will be funded by transfers of funds from public hospitals to the state, whereby the state will match the transfer with federal funds and remit the local funds, with matching federal funds, back to the hospital. The nonfederal share for the WPC pilots is likely to be funded by counties through transfers of local revenues.
   2. Certified Public Expenditures (CPEs). Under a CPE arrangement, government providers certify their Medicaid expenditures to the state, and the state then obtains federal reimbursement on the basis of the CPEs. Under the state's prior two waivers as well as this one, DPHs use CPEs to claim federal matching funds for services provided to Medi-Cal beneficiaries on a fee-for-service basis.
   3. General Fund (GF). GF provides the nonfederal share for programs being continued under this waiver, including Medi-Cal managed care and the Coordinated Care Initiative. In addition, the waiver allows the state to claim federal matching funds for spending on State Designated Health Programs, which are various state-funded health programs specified in the STCs. This essentially frees up an equal amount of GF, which is used to fund the nonfederal share for the DTI.
3. Related Legislation. SB 815 (Hernández) is similar to this bill, and is pending in the Senate Appropriations Committee.

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

Date of Hearing: April 26, 2016

ASSEMBLY COMMITTEE ON HEALTH

Jim Wood, Chair

ABPCA Bill Id:AB 1568

Author:(Bonta and Atkins) – As Amended Ver:April 11, 2016

SUBJECT: Medi-Cal: demonstration project.

SUMMARY: Enacts the Medi-Cal 2020 Demonstration Project Act (Medi-Cal 2020/Demonstration Project), administered by the Department of Health Care Services (DHCS) which implements the Special Terms and Conditions (STCs) approved by the federal Centers for Medicare and Medicaid Services (CMS). Specifies the four components of the Demonstration Project, as follows: Global Payment Program (GPP), Public Hospital Redesign and Incentives in Medi-Cal (PRIME), Whole Person Care (WPC) and Dental Transformation Initiative (DTI). Contains an urgency clause to ensure that the provisions of this bill go into immediate effect upon enactment. Specifically, this bill:

Access Assessment

1. Requires DHCS to amend its contract with the external quality review organization (EQRO) currently under contract with DHCS and approved by CMS to complete an access assessment within 90 days of the effective date of this bill.
2. Requires the assessment to do all of the following:
   1. Evaluate primary, core specialty, and facility access to care for managed care beneficiaries based on current health plan network adequacy requirements, as specified;
   2. Consider State Fair Hearing and Independent Medical Review decisions, and grievances, and appeals or complaints data; and,
   3. Report on the number of providers accepting new beneficiaries.
      
3. Requires DHCS to establish an advisory committee to provide input into the structure of the access assessment. Requires the EQRO to work with DHCS to establish the advisory committee, as specified.
4. Requires the advisory committee to include one or more representatives of the following stakeholders: consumer advocacy organizations, provider associations, health plans and health plan associations, and legislative staff. Specifies functions of the advisory committee.
5. Requires the EQRO to produce and establish an initial draft and a final access assessment report that includes a comparison of health plan network adequacy compliance across different lines of business. Requires DHCS to post the initial draft for a 30-day public comment period, as specified, and to be posted no later than 10 months after CMS approves the assessment design. Requires DHCS to submit the final access assessment report to CMS no later than 90 days after the initial draft report is posted for public comment.
6. Requires the assessment to do all of the following:
   1. Measure health plan compliance with network adequacy requirements, as specified;
   2. Review encounter data, including data from subcapitated plans;
   3. Review compliance with network adequacy requirements, as specified;
   4. Review and report applicable network adequacy requirements of the proposed or final Notice of Proposed Rulemaking, as specified;
   5. Determine health plan compliance with network adequacy, as specified; and,
   6. Measure managed care plan compliance with network adequacy requirements, as specified, accounting for geographic differences, previously approved alternate network access standards, access to in-network providers and out-of-network providers, the entire network of providers available to beneficiaries, and other modalities used for accessing care, including telemedicine.
      

General Provisions

1. Requires the STCs to prevail in the event of a conflict with this bill.
2. Authorizes DHCS to implement, interpret, or make specific this bill or the STCs through all-county letters, plan letters, provider bulletins, or other actions without regulatory action. Requires DHCS to inform specified committees of the Legislature when this action is taken.
3. Exempts contracts entered into by DHCS for purposes of this bill from the Public Contract Code and approval by Department of General Services (DGS).
4. Requires DHCS to seek any federal approval to implement this bill and conduct any study or activity required under the STCs. Implements this bill only if necessary federal approvals and federal financial participation (FFP) are available.
5. Authorizes the Director of DHCS to modify any process or methodology if necessary to comply with federal law or the STCs if the modification is consistent with the goals of the demonstration project. Requires, if the modification would not be consistent with the goals of this bill or would alter the level of support for affected participating entities, the Director to execute a declaration stating that this determination has been made. Specifies posting and notification requirements for the declaration.
6. Provides that in the event of a determination that the amount of FFP available under the demonstration project is reduced due to the application of penalties set forth in the STCs, the enforcement of the demonstration project’s budget neutrality limit or other similar, occurrence, DHCS is required to develop the methodology by which payments under the demonstration project are to be reduced, as specified.
7. Authorizes DHCS to develop potential successor payment methodologies that could continue to support entities participating in the demonstration project, as specified. Requires DHCS to consult with entities participating in the payment methodologies in developing successor payment methodology. Authorizes an extension of the payment methodologies through demonstration year 16 or to subsequent time periods, as specified.
8. Authorizes DHCS to claim FFP for expenditures associated with the designated state health programs (DSHP), as specified.
9. Appropriates an amount from General Fund (GF) equal to the FFP to the Health Care Deposit Fund, as specified.

Global Payment Program

1. Requires DHCS to implement the GPP to support participating public health care systems (systems) that provide health care services for the uninsured. States that GPP systems receive global payments based on the health care they provide to the uninsured, in lieu of traditional disproportionate share hospital (DSH) payments and safety net care pool payments (SNCP), as specified.
2. Requires systems to receive GPP payments calculated using an innovative value-based point methodology that incorporates measures of value for the patient in conjunction with the recognition of costs. Requires a system, to receive the full amount of GPP payments, to provide a threshold level of services measured through a point methodology, as specified, and based on the GPP system’s historical volume, cost, and mix of services. Specifies that this payment methodology is intended to support GPP systems that continue to provide services to the uninsured, while incentivizing the GPP systems to shift the overall delivery of services for the uninsured to provide more cost-effective, higher value care.
3. Requires DHCS to implement and oversee the GPP pursuant to the STCs, to maximize the amount of FFP available to participating systems.
4. Defines a GPP system as a public health care system consisting of a designated public hospital (DPH), but excluding hospitals operated by the University of California (UC), and its affiliated and contracted providers. Authorizes multiple DPHs operated by a single legal entity to belong to the same GPP system, as specified.
5. Requires DHCS to determine the GPP’s aggregate annual limit, which is the maximum amount of funding available under the GPP and which is the sum components of the following:
   1. A portion of the federal disproportionate share allotment shall be included as a component of the aggregate annual limit for each GPP program year, as specified; and,
   2. The aggregate annual limit amount shall also include the amount authorized under the demonstration project for the uncompensated care component of the GPP, as specified.
6. Requires DHCS to do the following:
   1. Develop a methodology for valuing health care services and activities provided to the uninsured that achieves the goals of the GPP. Requires the points assigned to a particular service or activity to be the same across all GPP systems. Specifies when points may be increased or decreased;
   2. For each GPP system, perform a baseline analysis for each GPP system’s historical volume, cost and mix of services to the uninsured to establish an annual threshold for the GPP;
   3. Determine a pro rata allocation percentage for each GPP system, as specified;
   4. Determine an annual budget the GPP system will receive if it achieves its threshold;
   5. Specifies the formula for the GPP system’s annual budget;
   6. Adjust and recalculate each GPP systems’ annual threshold and annual budget if there is a change in the aggregate annual limit;
   7. Specify a reporting schedule for GPP systems to submit an interim yearend report and a final reconciliation report, as specified;
   8. Claim FFP for GPP payments using intergovernmental transfers (IGTs), as specified; and,
   9. Conduct or arrange for two evaluations of the GPP.
      
7. Specifies the calculation of the GPP funding payable to each GPP system, including a methodology to redistribute unearned GPP subject to fund availability and the STCs.
8. Specifies the manner and timeframes of payments to GPP systems, but no payment can be delayed beyond 21 days after all the necessary IGTs have been made.
9. States that the GPP provides a source of funding to support health care activities and services available to the uninsured, and not to be construed to constitute or offer health care coverage for individuals receiving services. Provides that the GPP payments are not paid on behalf of specific individuals and allows GPP systems to determine the scope, type and extent of available services, consistent with the STCs.
10. Requires the nonfederal share of any payments under the GPP to consist of voluntary IGT of funds provided by DPH or affiliated governmental agencies or entities, as specified. Requires DHCS, if FFP is not available or results in recoupment of payments already made, to return any IGT to the transferring entities, as specified.
11. Establishes the GPP Special Fund (Fund) to consist of moneys that a DPH or affiliated governmental agency or entity elects to transfer to DHCS for deposit into the Fund as a condition of participation in the GPP. Provides that moneys derived from these IGTs must be used as a source of the nonfederal share of GPP payments. Specifies distribution of the Fund.
12. Provides that as a condition of participation in the GPP, each DPH or affiliated governmental entity agrees to provide IGT of funds necessary to meet the nonfederal share obligation, as specified. Considers IGT of funds to be voluntary and prohibits the use of the GF monies to fund the nonfederal share of any GPP payment.
13. Specifies how DHCS should determine the IGT amount for each GPP system, including the initial transfer amount that is calculated partly with the use of a GPP system-specific IGT factor for each GPP system, as specified.
14. Authorizes DHCS to initiate audits of GPP systems’ data submissions and reports, and to request supporting documentation. Requires DHCS audits to be conducted within 22 months of the ends of the applicable GPP program year to allow for the appropriate finalization of payments to the participating GPP system, but subject to recoupment if it is later determined that FFP is not available for any portion of the applicable systems.

Public Hospital Redesign and Incentives in Medi-Cal

1. Requires participating PRIME entities to earn incentive payments by undertaking projects set forth in the STCs, for which there are required project metrics and targets. Specifies a minimum number of required projects for each DPH system.
2. Requires DHCS to provide participating PRIME entities the opportunity to earn the maximum amount of funds authorized for the PRIME program under the demonstration project. Under the demonstration project, funding is available for the DPH systems and the district and municipal public hospitals (DMPH) through two separate pools. Authorizes up to $1.4 billion annually for the DPH systems pool, and up to $200 million is authorized annually for the DMPH pool, during the first three years of the demonstration project, with reductions to those amounts in the fourth and fifth years.
3. Requires PRIME payments to be incentive payments, and not payments for services otherwise reimbursable under the Medi-Cal, nor direct reimbursement for expenditures incurred by participating PRIME entities in implementing reforms. Prohibits PRIME incentive payments from offsetting payment amounts otherwise payable by the Medi-Cal program, or to and by Medi-Cal managed care plans for services provided to Medi-Cal beneficiaries, or otherwise supplant provider payments payable to PRIME entities.
4. Requires, within 30 days following federal approval of the protocols setting forth the PRIME projects, metrics, and funding mechanics, each participating PRIME entity to submit a five-year PRIME project plan containing the specific elements required in the STCs. Requires DHCS to review all five-year PRIME project plans and take action within 60 days to approve or disapprove each five-year PRIME project plan.
5. Authorizes PRIME entities to modify projects or metrics in their five-year PRIME project plan, to the extent authorized under the demonstration project and approved by DHCS.
6. Requires each PRIME entity to submit reports to DHCS twice a year demonstrating progress toward required metric targets. Provides that the submission of project reports constitutes a request for payment.
7. Establishes the Public Hospital Investment, Improvement, and Incentive Fund which is continuously appropriated.
8. Establishes requirements for the disbursement timeframe for PRIME payments, incentive payments and aggregate annual amounts, as specified.
9. Requires DHCS to conduct, or arrange an evaluation of the PRIME program.
10. Provides that the PRIME incentive payments are intended to support DPHs to change care and delivery and strengthen those systems’ ability to participate under an alternative payment methodology (APM). Requires DHCS to issue an all-plan letter to Medi-Cal managed care plans that will promote and encourage positive system transformation.
11. Requires DPH to contract with at least one Medi-Cal managed care plan in the service area where they operate using an APM methodology by January 1, 2018.

Whole Person Care

1. Requires DHCS to establish and operate a WPC pilot program to allow for the development of WPC pilots focused on target populations of high-risk, high-utilizing Medi-Cal beneficiaries in local geographic areas. Specifies the overarching goal of the WPC as the coordination of health, behavioral health, and social services, in a patient-centered manner to improve beneficiary health and well-being through more efficient and effective use of resources.
2. States that the WPC pilot provides an option to a county, a city and county, a health or hospital authority, or a consortium of any of the above entities serving a county or region consisting of more than one county, to receive support to integrate care for particularly vulnerable Medi-Cal beneficiaries who have been identified as high users of multiple systems and who continue to have or are at-risk of poor health outcomes. Specifies that through collaboration, pilot entities will identify common beneficiaries, share data between systems, coordinate care in real time, and evaluate individual and population progress in order to meet the goal of providing comprehensive coordinated care for the beneficiary resulting in better health outcomes.
3. Requires the WPC pilots to include specific strategies to increase integration among local government agencies, health plans, providers, and other entities that serve high-risk, high-utilizing care for the most vulnerable Medi-Cal beneficiaries; reduce inappropriate inpatient and emergency room utilization; improve data collection and sharing among local entities; improve outcomes for the WPC target populations; and, may include other strategies to increase access to housing and supportive services.
4. Requires DHCS to approve WPC pilots through the process outlined in the STCs.
5. States that receipt of WPC services is voluntary, and individuals receiving these services may opt out at any time.
6. Defines a WPC lead entity as the entity designated to coordinate the WPC pilot and be the single point of contact for DHCS. Authorizes a lead entity to be a county, city and county, a health or hospital authority, a DPH, a district and municipal public hospital or an agency or department of those entities, or a consortium of any of such entities. Specifies requirements for the lead entity, including operating the WPC pilot, conducting ongoing monitoring of WPC participating entities, arranging for the required reporting, ensuring an appropriate financial structure is in place, and identifying and securing a permissible source of the nonfederal share of WPC pilot payments.
7. Requires the WPC to include, at a minimum, all of the following entities as participating entities in addition to the lead entity.
   1. At least one Medi-Cal managed care plan operating in geographic area of the WPC pilot to work in partnership with the WPC lead entity when implementing the pilot specific to Medi-Cal managed care beneficiaries;
   2. Health services agency or department for the geographic region where the WPC pilot operates, or any other public entity operating in that capacity for the county or city and city and county;
   3. Local entities, agencies or departments responsible for specialty mental health services for the geographic region where the WPC pilot operates;
   4. At least one other public agency or department, which may include, but is not limited to, county alcohol and substance use disorder programs, human services agencies, public health departments, criminal justice or probation entities, and housing authorities, regardless of how many of these fall under the same agency head within the geographic area where the WPC pilot operates; and,
   5. At least two other community partners serving the target population within the applicable geographic area.
      
8. Requires DHCS to enter into a pilot agreement with each WPC lead entity approved to participate in the WPC pilot program. Specifies requirements for the pilot agreement including the amount of funding that would be available to the WPC pilot and conditions for payments.
9. Permits the sharing of health information, records, and other data with and among WPC lead entities and WPC participating entities to the extent necessary for the activities and purposes, as specified.
   
10. Authorizes WPC pilots to target the focus of their pilot on individuals at risk or are experiencing homelessness who have a demonstrated medical need for housing or supportive services. States that WPC participating entities may include local housing authorities, local continuum of care programs, community-based organizations, and others servicing the homeless population as entities collaborating and participating in the WPC pilot. Specifies housing interventions to include: a) tenancy-based care management services, as specified; and, b) countywide housing pools (housing pool), as specified.
    
11. Authorizes WPC participating entities to include contributions to a housing pool that will directly provide needed support for medically necessary housing services, with the goal of improving access to housing and reducing churn in the Medi-Cal population.
    
12. Authorizes the housing pool to be funded through WPC pilot payments or direct contributions from community entities. Requires state and local government and community entity contributions to the housing pool to be separate from FFP funds, and may be allocated to fund support for long-term housing, including rental housing subsidies. Allows the housing pool to leverage local resources to increase access to subsidize housing units. Allows the housing pool to also incorporate or reinvest a portion of the savings from the reduced utilization of health care services in the housing pool. As applicable to an approved WPC pilot agreement, WPC investments in housing units or housing subsidies, including any payment for room and board shall not be eligible for FFP. Specifies that “room and board” does not include those housing-related activities or services recognized as reimbursable under CMS policy.
    
13. Specifies requirements for payments to WPC pilots, the pilot application and selection criteria, and carry over of remaining funds.
    
14. Requires an evaluation of the WPC pilot.
    

Dental Transformation Initiative

1. Requires DHCS to implement the DTI in accordance with the STCs to improve the oral health care for Medi-Cal children through age 20.
2. States that the DTI is intended to improve the oral health care of Medi-Cal children with a particular focus on increasing the statewide proportion of qualifying children enrolled in the Medi-Cal Dental Program who receive a preventive dental service by 10 percentage points over a five year period.
3. Establishes four domains within the DTI including Preventive Services, Caries Risk Assessment, Continuity of Care, and Local Dental Pilot Projects, as follows:
   
   1. Increase Preventive Services Utilization for Children: Aim is to increase the statewide proportion of qualifying children enrolled in Medi-Cal who receive a preventive dental service in a given year. The statewide goal is to increase the utilization among children by at least 10 percentage points by the end of the demonstration.
   2. Caries Risk Assessment and Disease Management Pilot: initially, this will only be available in select pilot counties, designated by DHCS. Requires participating service office locations to elect to be approved by DHCS to participate in this domain of the DTI program. Permits, to the extent DHCS determines the pilots to be successful, DHCS to seek to implement this domain on a statewide basis and subject to the availability of funding under the DTI Pool as available for this purpose, as specified.
   3. Increase Continuity of Care: requires a DTI incentive payment to be paid to eligible service office locations who have maintained continuity of care through providing examinations for their enrolled child beneficiaries under 21 years of age, as specified in the STCs. Requires DHCS to begin this effort in select counties and seek to implement on a statewide basis if the pilot is determined to be successful and subject to the availability of funding under the DTI Pool.
   4. Local Dental Pilot Projects (LDPPs): requires LDPPs to address one or more of the three domains identified in paragraph 3) above through alternative LDPPs, as authorized by DHCS pursuant to the STCs, as specified.
4. Permits incentive payments to be made available within each domain under the DTI to qualified providers who meet the requirements of the domain. Permits providers in either the dental fee-for-service (FFS) or dental managed care Medi-Cal delivery systems to participate in the DTI.
5. Requires the DTI to be funded at a maximum of $148 million annually, and for five years totaling a maximum of $740 million, except as provided in the STCs. Permits, when DTI funds in a given program year are not expended, those remaining program funds to be available for DTI payments in subsequent years.
6. Permits DHCS to earn additional demonstration authority, up to a maximum of $10 million, to be added to the DTI Pool for use in paying incentives to qualifying providers under DTI, as indicated in the STCs.
7. Requires DHCS to make DTI incentive payments directly to eligible contracted service office locations. Requires incentive payments to be issued to the service office location based on the services rendered at the location and that service office location’s compliance with the criteria enumerated in the STCs. Permits DHCS to provide DTI incentive payments to eligible service office locations on a semiannual or annual basis.
8. Specifies that dental managed care provider service office locations are eligible for DTI incentive payments, as specified in the STCs, and specifies that these payments are to be considered separate from payment received from a dental managed care plan. Prohibits the incentive payments from being considered a direct reimbursement for dental services under the Medi-Cal state plan.
9. Requires DHCS to disburse DTI incentive payments to eligible service office locations that did not previously participate in Medi-Cal prior to the demonstration and that render preventive dental services during the demonstration to the extent the service office location meets or exceeds the goals specified by DHCS in accordance with the STCs.
10. Specifies that safety net clinics are eligible for DTI incentive payments specified in the STCs. Requires participating safety net clinics to be responsible for submitting data in a manner specified by DHCS for receipt of DTI incentive payments. Requires each safety net clinic office location to be considered a dental service office location for purposes of specified domains outlined in the STCs.
11. Requires service office locations to submit all data in a manner acceptable to the DHCS within one year from the date of service or by January 31 for the preceding year that the service was rendered to be eligible for DTI incentive payments associated with that timeframe.
12. Requires DHCS to conduct, or arrange to have conducted, the evaluation of the DTI as required by the STCs.
    

EXISTING LAW:

1. Establishes the Medi-Cal program, which is administered by DHCS and under which qualified low-income persons receive health care benefits.
   
2. Establishes a Medicaid Section 1115 demonstration project under the Medi-Cal program until October 31, 2015 known as California’s Bridge to Reform, 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.
   
3. Provides for payments under the state’s Bridge to Reform waiver to DPHs (UC and county hospitals), and for federal DSH, payments to private hospitals (referred to as “DSH replacement payments”) and nondesignated public hospitals (NDPHs) through October 1, 2015. These provisions:
   
   1. Make DPHs eligible for cost-based FFS Medicaid funding using county certified public expenditures (CPEs) as the federal match, instead of state GF. DPHs put up the nonfederal share of Medi-Cal FFS payments used to draw down federal Medicaid matching funds, and receive cost-based reimbursement, using CPEs to draw down federal Medicaid matching funds;
      
   2. Provide DSH payments to DPHs, using county CPEs and county IGTs to draw down federal DSH funds;
      
   3. Provide DSH payments to eligible non-designated public hospitals (NDPH are primarily district hospitals) meeting DSH eligibility criteria, using the GF to draw down federal DSH funds;
      
   4. Provide for “DSH replacement payments” to private hospitals meeting DSH eligibility criteria, using non-DSH Medicaid funds and state GF as the fund source;
      
   5. Make DPHs eligible for payments from the federally funded SNCP for uncompensated care; and,
      
   6. Make DPHs eligible for payments from the federally funded delivery system reform incentive pool (DSRIP), based on the DPH’s progress toward and achievement of milestones and metrics established in its DSRIP proposal, funded by federal funds and IGTs.
      
4. Authorizes DHCS to request one or more temporary waiver extensions to continue the operation of, and the authorities provided under, the Bridge to Reform. Requires DHCS to extend and apply the existing hospital payment methodologies and allocations on a state fiscal year, annual, partial year, or other basis, to the extent permitted under any approved temporary waiver extension, an approved subsequent waiver, or as otherwise permitted under federal Medicaid law.
   
5. Requires the Department of Managed Health Care (DMHC) to develop and adopt regulations to ensure that health plan enrollees have access to health care services in a timely manner, and requires DMHC to develop indicators of timeliness and consider the following:
   
   1. Waiting times for appointments with physicians and specialists;
   2. Timeliness of care in an episode of illness, including timeliness to referrals; and,
   3. Waiting time to speak to a physician, registered nurse or other qualified health professional.
6. Requires contracts between health plans and health care providers to assure compliance with the timely access standards developed by DMHC. Requires the contracts to require reporting by health care providers to health plans and by health plans to DMHC to ensure compliance with the standards.
7. Requires health plans to report annually to DMHC on compliance with the timely access standards.
   
8. Requires DHCS to conduct annual medical audits of each Medi-Cal managed care plan unless the Director of DHCS determines there is good cause for additional reviews. Requires the reviews to use the standards and criteria established pursuant to the Knox-Keene Health Care Services Act of 1975, or Insurance Code, as appropriate.

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

COMMENTS:

1. PURPOSE OF THIS BILL. According to the author, this bill is needed to provide the statutory framework for implementation of Medi-Cal 2020. While the STCs outline the programmatic and financing elements of Medi-Cal 2020, state law changes are required, particularly related to hospital financing. This bill is needed to continue existing Medi-Cal FFS payments to DPHs, to change how federal DSH funds are provided to DPHs consistent with the STCs under the GPP, to continue DSH payments to private and DMPHs, to implement the expanded provisions of PRIME, to appropriate funds for the waiver-related provisions, and to codify the provisions of the STCs establishing the DTI and the access assessments. In addition, this bill would grant flexibility to DHCS to implement Medi-Cal 2020 without using the regular contracting and regulatory processes due to waiver timelines, and would require notification to the Legislature regarding waiver-related activities.
2. BACKGROUND.
   1. Medicaid Waivers. Under a Medicaid waiver, the federal government waives certain Medicaid requirements to give states the flexibility to operate their Medicaid programs (Medi-Cal in California) and allow states to test new approaches and demonstration projects to improve care. Section 1115 of the Social Security Act authorizes the federal government to grant Medicaid waivers.
      
      To obtain a waiver, a state negotiates with CMS about which Medicaid provisions might be waived, what innovations the state is proposing, and how the state plans to achieve budget neutrality (a requirement that waivers cannot cost the federal government more with the waiver than without the waiver). The negotiations are memorialized in the STCs which constitute a contract between CMS and the state. In addition, the state adopts authorizing legislation to implement the waiver.
   2. History of California’s Recent Medicaid Waivers. Apart from the Medi-Cal 2020 Waiver, California has negotiated two other waivers with CMS – the 2005 Medi-Cal Waiver and the 2010 Bridge to Reform Waiver. The 2005 waiver delineated the methods for hospitals to be paid for care to Medi-Cal and uninsured patients. It established a SNCP for public hospitals which subsidized uncompensated care costs for uninsured individuals. The 2005 Waiver also provided federal funds to expand coverage to childless adults under a Coverage Initiative project which has provided financial support to 10 counties.
      
      The 2010 Bridge to Reform Waiver was 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 major components of the Bridge to Reform Waiver include:
      1. Establishing Low-Income Health Programs (LIHP) which allow counties to draw down federal matching dollars to provide coverage to childless adults if they meet certain requirements;
         
      2. Requiring mandatory enrollment of SPDs on Medi-Cal into Medi-Cal managed care plans;
         
      3. Requiring DHCS to establish organized health care delivery pilot models for children with special health care needs who are eligible for both California Children’s Services and Medi-Cal; and,
         
      4. Continuing the SNCP to provide funding for public hospitals, a DSRIP, state health care programs, as well as the Health Care Coverage Initiative. The 2010 waiver also implemented a global payment demonstration project for hospitals.
         
3. MEDI-CAL 2020 WAIVER. On December 30, 2015, DHCS received CMS approval of Medi-Cal 2020. This five year, $6.2 billion waiver begins January 1, 2016, and ends December 31, 2020. The details of Medi-Cal 2020 are in the more than 300 page STCs and related attachments agreed to by the state and CMS. Funding by waiver program component is as follows:
   

PRIME $3.732 billion

Global Payment Program $236 million* and **

Dental Transformation Initiative $375 million

Designated State Health Programs $375 million

Whole Person Care $1.5 billion

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Total $6.21 billion

* GPP does not include the DSH component of funding. DSH funding over the five years of the waiver is projected to be $10.830 billion total funds ($5.915 billion federal funds).

** For GPP, initial federal funding only accounts for the first year of the GPP as funding in subsequent years is based on a study on DPH uncompensated care.

In addition to the program areas and federal funding under Medi-Cal 2020, the federal government waives specified federal Medicaid provisions, including the following:

• 1. Freedom of Choice: to enable California to require participants to receive benefits through certain providers and to permit California to require that individuals receive benefits through managed care providers who could not otherwise be required to enroll in managed care. No waiver of freedom of choice is authorized for family planning providers;
     
  2. DSH requirements: to exempt California from making DSH payments, in accordance with federal Medicaid law to a hospital which qualifies as a DSH during any year for which the Public Health Care System with which the DSH is affiliated with receives payment pursuant to the GPP;
     
  3. Statewideness:
     1. To enable California to operate the demonstration on a county-by-county basis and to provide Medi-Cal managed care plans only in certain geographic areas;
     2. To enable California to provide Drug Medi-Cal Organized Delivery System (DMC-ODS) services to individuals on a geographically limited basis;
     3. To enable California to authorize WPC pilots and to provide WPC services to individuals on a geographically limited basis; and,
     4. To enable the state to authorize DTI program pilots and to provide DTI services to individuals on a geographically limited basis.
        
  4. Amount, Duration, and Scope of Services and Comparability:
     1. To enable California to provide different benefits for low-income pregnant women between 109% up to and including 138% of the federal poverty level (FPL), as compared to other pregnant women in the same eligibility group;
     2. To enable California to authorize WPC pilots which may make available certain services, supports, or interventions to certain high-risk, vulnerable populations targeted under an approved WPC pilot program that are not otherwise available to all beneficiaries in the same eligibility group;
     3. To enable California to provide certain services, supports and other interventions to eligible individuals with substance use disorders under the DMC-ODS program that are not otherwise available to all beneficiaries in the same eligibility group;
     4. To enable California to provide certain services, supports and other interventions to eligible individuals under the DTI program that are not otherwise available to all beneficiaries in the same eligibility group.
        

1. DSH. Medicaid DSH payments are federally required Medicaid payments that states make to hospitals that serve a high proportion of Medicaid and other low-income patients. DSH payments supplement regular Medicaid payments for hospital services and are intended to improve the financial stability of safety-net hospitals by offsetting uncompensated care costs for Medicaid and uninsured patients. Each state’s annual DSH allotment is calculated by federal law. DSH payments are limited by annual federal DSH allotments to each state.

Because hospitals were anticipated to have reduced uncompensated care as a result of the federal Patient Protection and Affordable Care Act (ACA), the ACA reduced federal DSH funds. Beginning in federal fiscal year (FY) 2014, the ACA proposed to dramatically decrease the amount of funding that will be provided under DSH, based on the premise that the ACA coverage expansions will result in fewer individuals receiving uncompensated care. Under the ACA, the federal Secretary of the Department of Health and Human Services is required to develop a methodology that will reduce the DSH payments by $14.1 billion during the period of 2014 to 2019, pursuant to a schedule set out in the ACA. These reductions increase over time, and by 2019 represent an approximate 50% reduction over baseline projections. These reductions have been delayed multiple times and are currently scheduled to begin in FY 2018. California anticipates receiving $1.2 billion in federal DSH funds in 2015-16.

Under this bill, and consistent with the previous legislation implementing the 2010 waiver, DHCS will “run the DSH list” to determine which hospitals are eligible for federal DSH funds. In FY 2014-15, the threshold for DSH eligibility is a 40.3% Medi-Cal utilization rate (MUR) or higher, or a low-income utilization rate (LIUR), (county indigent, charity care and Medi-Cal) of 25% (the 25% LIUR is in statute and applies each year while the MUR varies year-to-year). In FY 2014-15, there were 140 hospitals that were DSH-eligible, plus three UC hospitals (one at UCSF and two at UCLA) that were made DSH-eligible by statute implementing the waiver. Under existing law dating back to 1994-95, the state had a “rake off” of DSH funds to achieve budget savings. The current rake off amount in statute is $85 million, but the “rake off” was suspended in the legislation implementing the 2005 and 2010 waivers, and continues to be suspended in this bill.

Private hospitals that are DSH-eligible do not receive DSH funds. instead, they receive “virtual DSH” (also referred to as “DSH replacement payments”) which is the same amount of funding they would have received from DSH funds, except the additional funds are funded by state GFs and “regular” federal Medicaid matching funds (instead of being funded from the capped federal DSH allotment). DMPHs receive DSH funds, with the state GF providing the matching funds used to draw down federal funds. These requirements apply in the previous waiver and continue in this bill.

Under Medi-Cal 2020, the five UC DPHs will continue to receive DSH funds as they did in the prior waiver, using CPEs to draw down the funds for costs below 100% of their costs, and IGTs to drawn down DSH funds for their amounts between 100-175% of their costs. Consistent with the previous waiver, this bill makes UCLA and UCSF hospitals DSH-eligible who would not otherwise be DSH eligible. The amount of DSH funds UC is eligible to receive under this bill systemwide is capped at between 26.2% and 21.8% after amounts for DMPHs are made, depending upon the state fiscal year. DHCS is required to consult with UC prior to making interim and final DSH payments, and to make any adjustments to the payment distributions requested by UC so long as the aggregate net effect of the adjustments is zero.

County DPHs will now longer receive DSH funds as they did in the prior waiver. Instead, county DPHs will receive DSH funds under the new GPP, described in 5) below.

1. GPP. The GPP is a new feature of Medi-Cal 2020. Under GPP, a statewide pool of funding for the remaining uninsured would be established by combining federal DSH funding (which is limited to a hospital under federal law) for county DPHs and some level of federal SNCP funding (a funding component of the previous waiver for the uninsured). Under the GPP, each individual public hospital system would receive a “global budget” for the remaining uninsured from the overall GPP pool based on annual threshold amount determined through baseline analysis of historical/projected volume/cost/mix of services to the uninsured. The GPP would integrate and reform Medicaid DSH and SNCP funding by moving away from a cost-based payment methodology restricted to mostly hospital settings to a more “risk-based” and/or “bundled” payment structure.
   

GPP would encourage public hospital systems to provide greater primary and preventive services, as well as alternative modalities such as phone visits, group visits, telemedicine, and other electronic consultations with the goal of improving the health of the remaining uninsured through coordination of care. DHCS would establish individual public hospital “global budgets” for remaining uninsured for each DPH from the overall pool based on annual threshold amount determined through baseline analysis of historical/projected volume/cost/mix of services to the uninsured. Achievement of threshold service targets would be done on a “points” system with a base level of points required for each system to earn their full global budget. The threshold amounts for each public health care system will initially be constructed using the volume and cost of services occurring in participating providers, and will use the most recent complete state fiscal year data. Funding would be claimed on a quarterly basis, with the DPHs providing the necessary IGTs for the non-federal share. Partial funding would be available based on partial achievement of the “points” target. Funding for the GPP is expected to decline over the duration of the waiver due to the scheduled reduction in federal DSH funds, and the amount of funding for the prior SNCP is unknown after the initial year and will be determined based on an assessment of DPH uninsured costs.

As a condition of participation in the GPP, each DPH or affiliated governmental agency or entity must agree to provide IGTs necessary to meet the nonfederal share obligation. This bill establishes different IGT transfer amounts for each DPH under a methodology agreed to by the DPHs. The reason for the different IGT transfer amounts is to take into account hospital systems with high Medi-Cal losses. The GPP is for the uninsured and it allows for care in non-hospital setting. However, because the points are only for the uninsured and DSH is also intended for Medi-Cal, it disadvantages DPHs that have substantial Medi-Cal hospital losses. The second reason for the different IGFT transfer amounts is the single standardized point system used in the GPP is regardless of cost variation among DPHs, and it results in a disadvantage to DPH systems in higher cost areas as DPHs in lower-cost areas could meet their threshold by providing relatively fewer services than would otherwise be required.

1. PRIME. PRIME is a continuation and expansion on the DSRIP from the 2010 waiver aimed to improve the care delivery in public hospital systems. PRIME participating entities consist of DPHs and DMPHs. DMPHs did not receive funds from DSRIP under the 2010 waiver. There are 21 DPHs operating 17 health and hospital systems, with one system comprised of four hospitals in Los Angeles. DPHs are located in mostly urban areas in northern, central and southern California. These hospitals range in size from approximately 160 to 600 beds. DPHs are similar in that they are academic teaching centers providing a broad range of inpatient and outpatient services including specialty care. More than 50% of patients served across these health and hospital systems are Medi-Cal beneficiaries or uninsured. DPHs provide 30% of all hospital-based care to the Medi-Cal population in the state and operate more than half of the state’s level one trauma centers and more than two-thirds of its burn centers.
   
   There are 40 DMPHs spanning 19 counties across California. DMPHs are heterogeneous, varying significantly in size (from approximately three to 500 beds) and in the range of services provided.
   
   PRIME entities can earn incentive payments based on the achievement of specified benchmarks across various metrics. In addition, PRIME requires the achievement of set targets in three domains (Outpatient Delivery System Transformation, Targeted High-Risk or High Cost, Populations, Resource Utilization Efficiency) for moving toward APMs for DPHs over the course of the Waiver. DPHs must participate in all three domains, while DMPHs must participate in only one domain. Within the first two domains, DPHs are required to participate in certain elements (for example, integration of physical and behavioral health, ambulatory care redesign for primary care and specialty care). The non-federal share of funding for PRIME will be provided by DPHs/DMPHs through IGTs. Reporting and payments will be made on a semi-annual basis, and PRIME entities can achieve partial payment for partial achievement. Annual federal funding available by waiver demonstration year (DY) for DPH and DMPHs is shown below:
   
   

DPHs DMPHs

DY 11 (Jan 2016 – June 2016) $700 million $100 million

DY 12 (July 2016 – June 2017) $700 million $100 million

DY 13 (July 2017 – June 2018) $700 million $100 million

DY 14 (July 2018 – June 2019) $630 million $90 million

DY 15 (July 2019 – June 2020) $535.5 million $76.5 million

--------------------------------------------------------------------------------

Five Year Total $3.2 billion $466.6 million

A goal of the waiver is to move participating DPH PRIME providers toward a value-based payment structure when receiving payments for managed care beneficiaries. A new feature in Medi-Cal 2020 is the establishment of APM targets for DPHs in the aggregate that, if not met, result in financial penalties. The waiver establishes four ways for payments to be counted towards the APM thresholds, and the target percentages are based on the number of Medi-Cal managed care beneficiaries assigned to DPHs where all of, or a portion of, their care is paid for under a contracted APM:

• 1. 50% by January 2018 (DY 13);
  2. 55% by January 2019 (DY 14);
  3. 60% by end of waiver (DY 15)
     

Five percent of DPH PRIME funding at risk in DY14 (July 2018-June 2019) and DY15 (July 2019-June 2020) is tied to the achievement of the APM targets. The APM targets do not apply to DMPHs.

1. DTI. The DTI is a new feature of Medi-Cal 2020. It is funded at $750 million total funds ($375 million in federal funds) generated from Designated State Health Programs. Of this amount, $10 million in total funds is contingent upon the state meeting statewide metrics. DTI consists of four domain areas as follows:
   
   1. Domain 1: Increase Preventive Services Utilization for Children. The goal of this domain is to increase statewide proportion of children ages through 20 years of age and enrolled in Medi-Cal who receive a preventive dental service by 10 percentage points over a five-year period. Incentive payments will be made annually to providers for utilization and provider participation and will be used to determine the subsequent year’s threshold. Semi-annual incentive payments will be made to dental provider service locations that provide preventative services to an increased number of Medi-Cal children, as compared to the DHCS-determined baseline. Incentive payments will be made to the service office locations for rendered preventive services once they have met the DHCS-established goal; and,
      
   2. Domain 2: Caries Risk Assessment and Disease Management. The goal of this domain is to diagnose early childhood caries (cavities) by utilizing CRA to treat caries as a chronic disease for children ages six and under. The CRA would be a model that proactively prevents and mitigates oral disease through the delivery of preventative services in lieu of more invasive and costly procedures (restorative services). Children will have treatment plans prescribed based on caries risk level. DHCS will use a baseline year with statewide data for the most recent state fiscal year preceding implementation of the domain. DHCS will track and report the following measures:
      1. Number of, and percentage change in, restorative services;
      2. Number of, and percentage change in, preventive dental services;
      3. Utilization of CRA dental procedure codes and reduction of caries risk levels (not available in the baseline year prior to the waiver implementation);
      4. Change in use of emergency rooms for dental-related reasons among the targeted children for this domain; and,
      5. Change in number and proportion of children receiving dental surgery under general anesthesia.

Dentists must opt-in by completing a DHCS recognized training program, and incentive payments will be made to providers for successful completion of caries treatment plan and improvement in “elevated risk” levels. Treatment plans and associated procedures will be carried out as follows, over a 12 month period:

• • 1. “High risk” children will be authorized four visits;
    2. “Moderate risk” children will be authorized three visits; and,
    3. “Low risk” children will be authorized to two visits.
  1. Domain 3: Increase Continuity of Care. The goal of this domain is to increase continuity of care for beneficiaries ages 20 and under for 2, 3, 4, 5, and 6 continuous periods. DHCS will establish a baseline year, based on data from the most recent complete state fiscal year using claims data to determine the number of beneficiaries who received an examination each year from the same service office location for 2, 3, 4, 5, and 6 year continuous periods. Incentive payments will be available to service office locations that provide examinations to an enrolled Medi-Cal child for 2, 3, 4, 5, and 6 continuous periods. The incentive payment will be an annual flat payment for providing continuity of care to the beneficiary.
     
  2. Domain 4: LDPPs. LDPPS will address 1 or more of the 3 domains through alternative programs, potentially using strategies focused on rural areas including local case management initiatives and education partnerships. DHCS will solicit proposals once at the beginning of the demonstration and will review, approve, and make payments for LDPPs in accordance with the requirements stipulated in the Medi-Cal 2020 Waiver. A maximum of 15 LDPPs will be approved. The specific strategies, target populations, payment methodologies, and participating entities will be proposed by the entity submitting the application for participation and included in the submission to DHCS. Each pilot application must designate a responsible county, Tribe, Indian Health Program, UC, or CSU campus as the entity that will coordinate the pilot.

1. WPC. WPC is a new feature of Medi-Cal 2020. WPC is essentially a grant program over the five years of the waiver. The overarching goal of the WPC pilots is the coordination of health, behavioral health, and social services, as applicable, in a patient-centered manner with the goals of improving beneficiary health and well-being through more efficient and effective use of resources. WPC pilots will provide an option to participating entities to receive support to integrate care for beneficiaries who are high-risk and high-utilizers of multiple systems and continue to have poor health outcomes. WPC pilots will include collaboration between two or more public entities (e.g. county mental health plans and local housing authorities); at least one Medi-Cal managed care health plan, and other community entities with the goal of improving health outcomes for the WPC population. Program strategies would include increasing integration, data sharing and coordination among county agencies, health plans, providers, and other entities within the participating county or counties that serve high-risk, high-utilizing beneficiaries, and develop an infrastructure that will reduce inappropriate emergency and inpatient utilization, increase coordination and appropriate access to care and increase collaboration and integration among the entities participating in the WPC Pilots over the long term.
   
   The WPC target populations, include, but are not limited to the following individuals:
   
   1. With repeated incidents of avoidable emergency use, hospital admissions, or nursing facility placement;
   2. With two or more chronic conditions;
   3. With mental health and/or substance use disorders;
   4. Who are currently experiencing homelessness; and/or,
   5. Who are at risk of homelessness, including individuals who will experience homelessness upon release from institutions (e.g. hospital, skilled nursing facility, rehabilitation facility, incarceration, etc.)

To test interventions that achieve these improved health outcomes and cost savings, WPC Pilots may focus on Medi-Cal beneficiaries with a demonstrated medical need for housing and supportive services. These Pilots would ensure that the entities collaborating and participating in the Pilot would include local housing authorities, community-based organizations, and others serving the homeless population. WPC pilots with a focus on housing may include interventions such as tenancy-based care management services and county housing pools.

Up to $300 million in federal funding is available annually for WPC. No single WPC pilot will be awarded more than 30% of total available funding unless additional funds are available after all initial awards are made. The non-federal share of funds used to draw down federal funding is through IGTs.

The STCs establish an early implementation schedule for WPC. DHCS is required to publish a WPC pilot application process, detailed timeliness and selection criteria by April 1, 2016, or within 90 days following CMS approval of WPC Pilot attachments, whichever is later. WPC lead entities must submit WPC Pilot applications to DHCS by May 15, 2016, or 45 days after DHCS issues the WPC Pilot application process (whichever is later). DHCS must complete its review of the application within 60 days of submission, and will respond to the WPC Pilot Lead Entity in writing with any questions, concerns or problems identified. Within 30 days after submission of final responses to questions about the application, DHCS will take action on the application and promptly notify the applicant and CMS of that decision.

1. DSHPs. This bill permits DHCS to claim FFP for expenditures associated with DSHPs identified in the STCs. The state was able to draw down federal funds in the previous waivers to offset GF expenditures. Any FFP claimed is required to be used to offset applicable GF expenditures. DSHP funds will be used to fund DTI FFP, not to exceed $375 million over five years. The DSHPs in the waiver are as follows:
   1. California Children Services (CCS);
   2. Genetically Handicapped Persons Program;
   3. Medically Indigent Adult Long Term Care;
   4. Breast & Cervical Cancer Treatment Program;
   5. AIDS Drug Assistance Program;
   6. Department of Developmental Services;
   7. Prostate Cancer Treatment Program;
   8. Song Brown Health Care Workforce Training Program;
   9. Steven M. Thompson Physician Corp Loan Repayment Program; and,
   10. Mental Health Loan Assumption Program
       
2. WAIVER REQUIRED REPORTS, ASSESSMENTS AND ANALYSES. The 2020 Waiver also contains several independent analyses of the Medi-Cal program and evaluations of the Waiver programs, including: a) Medi-Cal Managed Care Access Assessment; b) Uncompensated Care Assessments for California hospitals (one due in 2016 and one due one in 2017); c) GPP; d) PRIME; f) WPC evaluation; g) DTI; and, h) CCS Report on CCS pilots.
   
   This bill requires DHCS to conduct or arrange to have conducted any study, report, assessment, evaluation or other similar demonstration project activity required under the STCs, and grants DHCS expedited contracting authority by allowing DHCS to enter into exclusive or nonexclusive contracts or amend existing contracts on a bid or negotiated basis, and by exempting these contracts from specified provisions of the Public Contract Code and DGS review. This bill codifies the one of the evaluations (the Medi-Cal Managed Care Access Assessment).
   
   Two foundations are funding the 2016 uncompensated care assessment, which is due May 15, 2016, and is focused on DPHs. This report is significant in that it will be used by CMS to determine the appropriate level of Uncompensated Care Pool funding of those providers in years two through five of the demonstration (this pool of funding and DSH are the two fund sources for the GPP). This report will review the impact of the uncompensated care pool on those providers who participate in the uncompensated care pool with respect to: uncompensated care provided; Medicaid provider payment rates; Medicaid beneficiary access; and, the role of managed care plans in managing care. CMS will provide a formal determination of the funding levels for demonstration years two through five within 60 days of receipt of the complete report.
   
3. THE NEXT WAIVER POST-MEDI-CAL 2020. The funding in this waiver is reduced from the 2010 waiver. DHCS and the public hospitals both report CMS’ desire to standardize waivers across the states and CMS’ view that waiver funding should be reduced and/or eliminated due to the coverage expansions enacted by the federal ACA. The most recent waiver was approved the day before the expiration of the prior waiver, which, because it occurred when the Legislature was not in session, necessitated legislation (SB 36 (Hernandez and De Leon), Chapter 759, Statutes of 2015) allowing DHCS to continue the operation of, and the authorities provided under the prior waiver. This bill contains language similar to SB 36 allowing DHCS to extend the hospital methodologies payment in this waiver consistent with federal requirements and after consultation with affected entities. In addition, this bill contains language authorizing DHCS to work to develop successor payment methodologies that would continue to support entities participating in Medi-Cal 2020 following its expiration that further the goals of this bill and the STCs.
   
4. SUPPORT. The California Hospital Association supports the Medi-Cal 2020 Demonstration, including PRIME, GPP, DTI, and the WPC Pilots.  The California Association of Public Hospitals and Health Systems states that the PRIME, WPC pilot, and GPP components of this bill, along with other efforts in the Medi-Cal 2020 Waiver can improve the state’s health care services and as a result, the health of the Medi-Cal and the remaining uninsured populations in California. 
   
   The Association of California Healthcare Districts supports all elements of the Waiver, especially PRIME. Medi-Cal 2020 is the first time that DMPHs will participate in PRIME. District hospitals will begin transformation work, improve outcomes, and increase efficiencies over the next five years of the waiver. Almost all of the DMPHs submitted PRIME application earlier this month that focus on at least one project in the three project domains: Domain1: outpatient delivery system transformation and prevention; Domain 2: targeted high-risk or high-cost populations; and, Domain 3: resource utilization efficiency. District hospitals will only receive federal funding if they meet specific established performance goals. By 2020, PRIME will result in the widespread adoption and sustainability of system transformations that will ensure district hospitals deliver high-quality care to Medi-Cal beneficiaries.
   
   The California State Association of Counties (CSAC) states that the WPC Pilots will test new care innovations and leverage lessons learned to improve outcomes; contain costs; and more effectively coordinate care beyond traditional health services.  Additionally, CSAC contends that PRIME will result in the wide-spread adoption and sustainability of system transformations that will ensure public hospitals deliver high-quality care to millions of Medi-Cal beneficiaries.  Finally, CSAC contends that the GPP is intended to promote the delivery of more cost-effective and higher-value care to the uninsured.  CSAC concludes that the Medi-Cal 2020 Waiver renewal is a strong and ambitious blueprint for building on the success of the Medi-Cal program and its continued transformation. 
   
   The County of San Bernardino states that the Medi-Cal 2020 Waiver will leverage California’s coverage expansion with significant payment reforms and delivery system improvements for public health care systems.  Contra Costa County states that the Medi-Cal 2020 Waiver challenges and supports the public health care systems’ efforts to become models of integrated care that are high value, high quality, patient-centered, efficient and equitable, with great patient experience and a demonstrated ability to improve health care and the health status of populations.  The Ventura Board of Supervisors states that this renewed waiver will enable public health care systems to more effectively provide high quality, accessible care to the millions of patients they serve. 
5. SUPPORT WITH AMENDMENTS. Western Center on Law & Poverty (WCLP) writes in support and requests amendments on the following: a) that the access assessment include a geographic assessment of the network that examines how far patients have to go to access core specialists and what transportation assistance and support the plans provide to get patients to remote providers, and an amendment to report languages spoken by the provider’s office; b) to require DHCS to issue a final proposed point system for the GPP to stakeholder for comments before finalizing it; c) to clarify that GPP systems may determine the scope, type and extent to which services are available to the extent they are consistent with the STCs but also to require that a patient’s services needs are met; d) to make mandatory (instead of optional) the WPC strategies of increasing access to housing and supportive services for serving the homeless population; and, e) to include a requirement to share such guidance issued by DHCS with stakeholders prior to issuing it and provide a chance for input.
6. CLARIFICATION. The California Medical Association, California Hospital Association, California Academy of Family Physicians, Service Employees International Union - United Healthcare Workers West, Children Now, Planned Parenthood Affiliates of California, Medical Oncology Association of Southern California, Inc., Osteopathic Physicians and Surgeons of California (the “organizations”) request additional clarification regarding this bill’s requirement for an independent assessment of access to care and states that the assessment should be conducted by the appropriate independent entity and should examine the appropriate data points to produce meaningful and actionable policy changes for the Legislature and Governor to consider.  These organizations set forth a number of recommendations for this independent assessment including:  requiring the Bureau of State Audits to conduct the independent assessment; examining access to essential health benefits; examining access to specialty health; examining access to skilled nursing facilities; and, including an examination of payments to downstream providers. 
7. RELATED LEGISLATION. SB 815 (Hernández and De Leon) is identical to this bill. SB 815 is scheduled to be heard in Senate Health Committee on April 27, 2016.
8. PREVIOUS LEGISLATION
   1. SB 36 authorizes DHCS to request one or more temporary waiver extensions to continue the operation of, and the authorities provided under, the current "California Bridge to Reform Demonstration," the state’s Section 1115 Medicaid waiver. Requires DHCS to extend and apply the existing hospital payment methodologies and allocations on a state fiscal year, annual, partial year, or other basis, to the extent permitted under any approved temporary waiver extension, an approved subsequent waiver, or as otherwise permitted under federal Medicaid law.
   2. AB 1066 (John A. Pérez), Chapter 86, Statutes of 2011, makes further statutory changes to implement the Bridge to Reform for funding DPHs.  AB 1066 continued under the 2010 waiver the FFS cost-based reimbursement for DPHs, with those hospitals providing the required federal match using their own funds through CPEs. In addition, AB 1066 establishes under the waiver a new distribution methodology for DSH and SNCP funds to DPHs, as specified.
      
   3. AB 342 (John A. Pérez), Chapter 723, Statutes of 2010, enacts the LIHP to provide health care benefits to uninsured adults up to 200% of the FPL, at county option through a Medi-Cal waiver demonstration project.
      
   4. SB 208 (Steinberg), Chapter 714, Statutes of 2010, implemented provisions of the 2010 Section 1115 waiver including establishing DSRIP, consisting of IGTs from counties or other specified governmental entities, to be matched with federal funds and to be used for investment, improvement and incentive payments for DPHs and the affiliated governmental entities (counties and UC); authorizes DHCS to require the mandatory enrollment of SPDs in a Medi-Cal managed care plan commencing on the later of either June 1, 2011, or obtaining federal approval; and, requires DHCS to implement pilot projects to provide coordinated care to children in the CCS and to persons who are dually eligible for Medi-Cal and Medicare.
      
   5. SB 1100 (Perata), Chapter 560, Statutes of 2005, enacts the statutory framework for implementing a five-year waiver of federal Medicaid requirements that provides federal Medicaid funding under the terms of the waiver to pay DPHs, private, and district hospitals for services provided to Medi-Cal and uninsured patients.
      
9. POLICY ISSUES.
   
   1. Need for urgency bill. This bill contains an urgency clause. DHCS has indicated it would like to have this bill enacted by June 2016 as several aspects of the work DHCS is required to conduct under the Medi-Cal 2020 waiver cannot be started or fully implemented without legislative authority. For example, the waiver-required access assessment must be conducted by the DHCS EQRO. A contract amendment with this entity is needed, and this bill contains the authority for DHCS to move forward on this assessment.  In addition, DHCS requires other contracting resources for other evaluations and technical assistance, which cannot occur until DHCS has the legislative authority, and a delay in the department’s ability to contract impedes and delays DHCS’ ability to implement the various components of the waiver.  Finally, DHCS indicates that, although it believes the waiver extension legislation from last year provided DHCS the ability to make payments under GPP and PRIME, it is possible that that interpretation could be challenged and without this payment authority, DPH would have severe cash flow issues.
      
   2. Contracting obligation on DPHs. Under the PRIME provisions of the STCs and this bill, DPHs are required to contract with at least one Medi-Cal managed care plan in the service area where the plan operates using an APM methodology by January 1, 2018. If a DPH system is unable to meet the requirement and can demonstrate that it has made a good faith effort to contract with a Medi-Cal managed care plan in the service area that it operates in or a gap in contracting period occurs, DHCS has the discretion to waive this requirement.
      
      One of the issues faced by patients in Medi-Cal managed care plans is UC hospitals do not always contract with Medi-Cal managed care plans, or they limit their contracting to tertiary services or to letters of agreement for individual patients. The contracting obligation in this bill and the STCs is narrow in that the requirement that DPHs contract only applies to one plan, and is limited to the service area where they operate. However, this narrow waiver requirement effectively means UC hospitals in urban locations (UC hospitals are in San Diego, Irvine, San Francisco, Sacramento, and Los Angeles) may not be accessible to patients enrolled in the other Medi-Cal plan in two-plan model counties, or to beneficiaries in rural or inland Medi-Cal managed care plans. Medi-Cal 2020 provides a benefit to UC hospitals in that it continues to make two of their hospitals (UCSF and UCLA) DSH-eligible who would not otherwise be DSH eligible, as shown below:
      
      
      

DSH Medicaid DSH Low-Income

Utilization Rate Utilization Rate

Minimum DSH Eligibility 40.3%* 25%
UCLA/Ronald Reagan 20.8% 10.8%

UCLA/Santa Monica 12.8% 13%

UCSF 26% 16.1%

*For 2014-15

In addition, Medi-Cal 2020 enables UC to receive cost-based reimbursement in FFS Medi-Cal, and by making federal funding available for quality improvement through PRIME. However, UC also puts up the state match (through CPEs and IGTs) to draw down federal Medicaid funds, which saves the state GF, and UC argues it has sicker patient population because of the specialized services it provides, and UC uses its hospital to help support its medical schools due to insufficient state support. Should the requirement that DPHs contracting requirement with Medi-Cal managed care plans be applied more broadly beyond one Medi-Cal managed care plan in that plan’s area to include the other Medi-Cal managed care plan in the county and Medi-Cal managed care plans serving patients in inland and rural areas who use UC hospitals for specialized care?

REGISTERED SUPPORT / OPPOSITION:

Support

Antelope Valley Hospital

Association of California Healthcare Districts

Bear Valley Community Healthcare District

California Association of Public Hospitals and Health Systems

California Hospital Association

California Primary Care Association

California State Association of Counties

Coalinga Regional Medical Center

Contra Costa County

County Health Executives Association of California

County of San Bernardino

District Hospital Leadership Forum

El Camino Hospital

Hazel Hawkins Memorial Hospital

Kern Valley Healthcare District

Mammoth Hospital

Marin General Hospital

Mayers Memorial Hospital

Northern Inyo Hospital

Palo Verde Hospital

Palomar Health

Pioneers Memorial Healthcare District

Plumas District Hospital

Salinas Valley Memorial Healthcare System

San Bernardino Mountains Community Hospital District

San Gorgonio Memorial Hospital

San Joaquin General Hospital

Santa Clara County Board of Supervisors

SEIU California

Seneca Healthcare District

Sierra View Medical Center

Tahoe Forest Hospital District

Tri-City Medical Center

University of California

Urban Counties of California

Ventura County Board of Supervisors

Washington Hospital Healthcare System

Opposition

None on file.

Analysis Prepared by: Rosielyn Pulmano / HEALTH / (916) 319-2097