Existing law requires the Office of Statewide Health Planning and Development to perform various functions and duties with respect to health policy and planning and health professions development. Existing law states the Legislatures finding that there is a need to improve the effectiveness of health care delivery systems. Existing law generally defines a medical home as a single provider, facility, or team that coordinates an individuals health care services.

This bill would require the Secretary of California Health and Human Services to convene a working group of public payers, private health insurance carriers, 3rd-party purchasers, and health care providers providers, and health care consumer representatives to identify appropriate payment methods to align incentives in support of patient centered medical homes. The bill would prescribe the powers and duties of the working group, including consulting with, and providing recommendations to, the Legislature and relevant state agencies on matters relating to the implementation of the patient centered medical home care model. The bill would require the secretary to convene the working group only after making a determination that sufficient nonstate funds have been received to pay for all costs of implementing the bill.

This bill would make legislative findings and declarations regarding the intent of the Legislature to exempt and immunize activities undertaken in connection with patient centered medical homes from state and federal antitrust laws, as specified.

Existing law requires the Office of Statewide Health Planning and Development to perform various functions and duties with respect to health policy and planning and health professions development. Existing law states the Legislatures finding that there is a need to improve the effectiveness of health care delivery systems. Existing law generally defines a medical home as a single provider, facility, or team that coordinates an individuals health care services.

This bill would require the Secretary of California Health and Human Services to convene a working group of public payers, private health insurance carriers, third-party 3rd-party purchasers, and health care providers to identify appropriate payment methods to align incentives in support of patient centered medical homes. The bill would prescribe the powers and duties of the working group, including consulting with, and providing recommendations to, the Legislature and relevant state agencies on matters relating to the implementation of the patient centered medical home care model. The bill would be implemented using state and federal funds, grants, donations, and other financial support, as prescribed. require the secretary to convene the working group only after making a determination that sufficient nonstate funds have been received to pay for all costs of implementing the bill.

This bill would make legislative findings and declarations regarding the intent of the Legislature to exempt and immunize activities undertaken in connection with patient centered medical homes from state and federal antitrust laws, as specified.

Existing law requires the Office of Statewide Health Planning and Development to perform various functions and duties with respect to health policy and planning and health professions development. Existing law states the Legislatures finding that there is a need to improve the effectiveness of health care delivery systems. Existing law generally defines a medical home as a single provider, facility, or team that coordinates and an individuals health care serevices. services.

Existing law requires the Office of Statewide Health Planning and Development to perform various functions and duties with respect to health policy and planning and health professions development. Existing law states the Legislatures finding that there is a need to improve the effectiveness of health care delivery systems. Existing law generally defines a medical home as a single provider, facility, or team that coordinates and individuals health care serevices.

This bill would declare the intent of the Legislature to enact legislation to establish the patient centered medical home health care delivery model.

SENATE THIRD READING

STR Bill Id:SB 435

Author:(Pan)

As Amended Ver:July 7, 2015

Majority vote

SENATE VOTE: 27-11

SUMMARY: Requires the Secretary of California Health and Human Services Agency (HHSA) to convene a working group to identify appropriate payment methods to align incentives in support of patient centered medical homes (PCMHs). Specifically, this bill:

1. Requires the HHSA Secretary to convene a working group of public payers, private health insurance carriers, third-party purchasers, consumer representatives, and health care providers to identify appropriate payment methods to align incentives in support of PCMHs.

2. Requires the Secretary to convene the working group only to after he or she makes a determination that sufficient non-state funds have been received to pay for all costs of implementing the workgroup.

3. Requires the working group to consult with, and provide recommendations to, the Legislature and relevant state agencies on all matters relating to the implementation of a PCMH.

4. Authorizes the working group to develop consensus on strategies for implementing the PCMH care model and service delivery change at the practice, community, and health care system level; identify ways to create alignment regarding payment, reporting, and infrastructure investments; identify ways to utilize public and private purchasing power and ways to enable competing payers to work collaboratively to establish common PCMH initiatives; and, propose participation in federally funded pilot and demonstration projects.

5. Makes legislative findings and declarations regarding the intent of the Legislature to exempt and immunize activities undertaken in connection with PCMH from state and federal antitrust laws.

FISCAL EFFECT: According to the Assembly Appropriations Committee:

1. Costs of $20,000 to HHSA to convene a workgroup.

2. This bill includes intent to exempt from applicable antitrust laws, but does not do so. Specifically, it does not include a process by which the state can manage the requirements of immunity from federal antitrust laws under the State Action Doctrine. This liability poses General Fund risk. The California Department of Justice (DOJ) notes that in light of recent Supreme Court case law, it is likely that the antitrust immunity provisions contained in this bill would not comply with the State Action Doctrine.  DOJ indicates enactment of this bill will expose the state to liability and damages for collaborations formed under the statute. DOJ costs as a result of these liabilities are impossible to predict but potentially significant.

COMMENTS: According to the author, it is important that the state supports care that is patient-centered, cost-efficient, continuous, focused on prevention, and built on sound, evidence-based medicine rather than episodic, illness-oriented care. PCMHs provide the needed team-based care that has proven to decrease costs and improve health outcomes. No one should have to navigate this complex health system alone and PCMHs ensure that no one will. The author states that this bill will establish a group that will make sure the best PCMH model is created for California.

According to the federal Department of Health and Human Services, the PCMH delivery model is designed to improve quality of care through team-based coordination of care, treating the many needs of the patient at once, increasing access to care, and empowering the patient to be a partner in their own care. The central features of PCMHs include enhanced patient access to a regular source of primary care, continuous relationships with clinicians, increased access to preventive services, and improved management of chronic conditions.

According to the National Council of State Legislatures, although general agreement exists about the basic tenets of the PCMH, the model is still evolving. Not all PCMHs look alike or use the same strategies to reduce costs, improve quality and coordinate care. PCMH accreditation is available from national accreditation organizations, as well as a few states that have developed their own standards. Although certain health care providers already embody many elements of the PCMH, many are seeking formal recognition, due in part to the fact that medical practices that participate in PCMH pilot programs often qualify for enhanced reimbursement rates, or receive other financial incentives for coordinating care.

In July 2013, the Commonwealth Fund published an issue brief entitled, "State Strategies to Avoid Antitrust Concerns in Multipayer PCMH Initiatives." According to this issue brief, convening multiple payers distributes the costs associated with creating a PCMH and results in greater alignment around payment, reporting, and infrastructure investments. However, the issue brief notes that states that promote collaboration among payers to reach agreement on common or aligned payments for their PCMH initiatives risk antitrust liability for their participating payers. The cooperation and collaboration to set prices and payments among a group of otherwise competitive payers would be seen as illegal restraint of trade under the Sherman Act, a federal antitrust law. Immunity from federal antitrust laws when convening multiple payers may be available to states as well as private payers under the "state action doctrine," if the policy in place meets two criteria. First, the state must have clearly articulated a policy to displace competition. This requires that the policy both justifies the anticompetitive behavior and sufficiently expresses that such behavior is both expected and endorsed. Secondly, the state must have committed to active supervision of activities by health care payers; simple authorization or regulation of proceedings is not sufficient. The state must be able to review potential anticompetitive acts such as setting prices and rates among payers.

The California Academy of Family Physicians (CAFP) is the sponsor of this bill and states that, as a convener under the bill, the HHSA Secretary will be able to bring together public payers, private health carriers, third-party purchasers, and providers to identify appropriate payment methods and align incentives to support the PCMH model and improve care of chronic illnesses. CAFP states that California's health care delivery system too often fails to provide effective, coordinated care for patients, particularly those with chronic illnesses. Despite the obvious benefits of alignment, stakeholders struggle with a variety of challenges to achieve a more streamlined system: consensus building is difficult given conflicting interests and payer concerns regarding lost autonomy and competitive advantage. CAFP states that the state can play an important role to help overcome these obstacles, and through its power to waive specific anti-trust liability, it can convene payers, purchasers, and providers to identify a consistent payment model for chronic care management, common performance and outcome measures, and align incentives to support the PCMH. CAFP argues that state participation, especially as a convener, enables competing payers to work collaboratively to establish a common initiative without risking antitrust violations, and that only by coordinating payer efforts with common goals and expectations, as well as creating reliable financing streams, can true system reform occur.

There is no known opposition to this bill.

Analysis Prepared by: Kelly Green / HEALTH / (916) 319-2097 FN: 0001666

Date of Hearing: August 19, 2015

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Jimmy Gomez, Chair

SBPCA Bill Id:SB 435

Author:(Pan) – As Amended Ver:July 7, 2015

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

SUMMARY:

This bill requires the Secretary of the California Health and Human Services Agency (CHHSA) to convene a working group of public payers, private health insurance carriers, third-party purchasers, health care providers, and health care consumer representatives to identify appropriate payment methods to align incentives in support of patient-centered medical homes (PCMHs).

It also states intent to exempt from state antitrust laws, and to provide immunity from federal antitrust laws pursuant to the State Action Doctrine for, any activities undertaken pursuant to this bill that otherwise might be constrained by those laws.

FISCAL EFFECT:

1. Costs of $20,000 to CHHSA to convene a workgroup.

2. This bill includes intent to exempt from applicable antitrust laws, but does not do so. Specifically, it does not include a process by which the state can manage the requirements of immunity from federal antitrust laws under the State Action Doctrine. This liability poses GF risk. The California Department of Justice notes that in light of recent Supreme Court case law, it is likely that the antitrust immunity provisions contained in this bill would not comply with the State Action Doctrine.  DOJ indicates enactment of this bill will expose the state to liability and damages for collaborations formed under the statute.  DOJ costs as a result of these liabilities are impossible to predict but potentially significant.

COMMENTS:

1. Purpose. According to the author, the state should support care that is patient-centered, cost-efficient, continuous, focused on prevention, and built on sound, evidence-based medicine rather than episodic, illness-oriented care. The author believes the outcome of this bill will be the best PCMH model for California. The bill is sponsored by the California Academy of Family Physicians.

2. PCMH. According to the federal Agency for Healthcare Research and Quality, a PCMH delivery model improves health by transforming the way primary care is organized and delivered. It includes five features: comprehensive care, patient orientation, coordinated care, improved primary care accessibility, and a commitment to quality and safety. It is designed to improve quality of care through team-based coordination, and to empower the patient to be a partner in their own care.

3. Anti-trust concerns. In July 2013, the Commonwealth Fund published an issue brief titled, “State Strategies to Avoid Antitrust Concerns in Multipayer PCMH Initiatives.” According to this issue brief, convening multiple payers distributes the costs associated with creating a PCMH and results in greater alignment around payment, reporting, and infrastructure investments. However, it also notes states that promote collaboration among payers to reach agreement on common or aligned payments for their PCMH initiatives risk antitrust liability for their participating payers. The cooperation and collaboration to set prices and payments among a group of otherwise competitive payers would be seen as illegal restraint of trade under the Sherman Act, a federal antitrust law. Immunity from federal antitrust laws is available under the "state action doctrine" if the policy in place meets specific criteria: that the state has a clear policy that justifies the anticompetitive behavior, and that the state has committed to active supervision of anticompetitive activities. Some states with PCMH initiatives have passed legislation that explicitly addresses antitrust concerns.

4. Prior Legislation.

   1. ACR 152 (Pan), Resolution Chapter 143, Statutes of 2014, states the Legislature supports and encourages the development and expansion of a California health care delivery system that identifies PCMHs and is based upon certain principles of coordination of patient care.

2. AB 1208 (Pan) of 2013 was similar to SB 393 from 2012. AB 1208 was later amended on the Senate Floor to address a different subject matter.

3. SB 393 (Ed Hernandez) established a definition for a PCMH based upon specified standards. SB 393 was vetoed by the Governor. In his veto message, the Governor stated that he commended the author for trying to improve the delivery of health care by encouraging the greater use of “patient-centered medical homes" but because the concept is still evolving, he thought more work was needed before the definition was codified.

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

Date of Hearing: July 14, 2015

ASSEMBLY COMMITTEE ON HEALTH

Rob Bonta, Chair

SBPCA Bill Id:SB 435

Author:(Pan) – As Amended Ver:July 7, 2015

SENATE VOTE: 27-11

SUBJECT: Medical home: health care delivery model.

SUMMARY: Requires the Secretary of California Health and Human Services Agency (HHSA) to convene a working group to identify appropriate payment methods to align incentives in support of patient centered medical homes (PCMHs). Specifically, this bill:

1. Requires the HHSA Secretary to convene a working group of public payers, private health insurance carriers, third-party purchasers, consumer representatives, and health care providers to identify appropriate payment methods to align incentives in support of PCMHs.

2. Requires the working group to consult with, and provide recommendations to, the Legislature and relevant state agencies on all matters relating to the implementation of a PCMH.

3. Authorizes the working group to do all of the following:

1. Develop consensus on strategies for implementing the PCMH care model and service delivery change at the practice, community, and health care system level;
   
   

2. Identify ways to create alignment regarding payment, reporting, and infrastructure investments;
   
   

3. Identify ways to utilize public and private purchasing power and ways to enable competing payers to work collaboratively to establish common PCMH initiatives; and,
   
   

4. Propose participation in federally funded pilot and demonstration projects.

4. Requires the Secretary to convene the working group only to after he or she makes a determination that sufficient non-state funds have been received to pay for all costs of implementing the workgroup.

5. Makes legislative findings and declarations regarding the intent of the Legislature to exempt and immunize activities undertaken in connection with PCMH from state and federal antitrust laws.

EXISTING LAW:

1. Permits the Department of Health Care Services (DHCS) to establish a California Health Home Program to provide health home services, as defined, to Medi-Cal beneficiaries and Section 1115 waiver demonstration populations with chronic conditions, and to develop a payment methodology, including payment structures that may include tiered payment rates that take into account the intensity of services necessary to outreach to, engage, and serve the populations it identifies.

2. Authorizes the Health Home Program to be implemented only if federal participation is available, necessary federal approval is obtained, and no additional General Fund moneys are used to fund the administration or cost of services.

FISCAL EFFECT: According to the Senate Appropriations Committee, this bill, as amended April 6, 2015, results in likely one-time costs of $150,000 to $300,000 to provide staff support and technical assistance to the workgroup (private funds).

COMMENTS:

1. PURPOSE OF THIS BILL. According to the author, it is important that the state supports care that is patient-centered, cost-efficient, continuous, focused on prevention, and built on sound, evidence-based medicine rather than episodic, illness-oriented care. PCMHs provide the needed team-based care that has proven to decrease costs and improve health outcomes. No one should have to navigate this complex health system alone and PCMHs ensure that no one will. The author states that this bill will establish a group that will make sure the best PCMH model is created for California.

2. BACKGROUND.

   1. PCMHs. One goal of the federal Patient Protection and Affordable Care Act (ACA) is to strengthen the primary care system by encouraging the adoption of PCMH models of care. According to the federal Department of Health and Human Services, the PCMH delivery model is designed to improve quality of care through team-based coordination of care, treating the many needs of the patient at once, increasing access to care, and empowering the patient to be a partner in their own care. The central features of PCMHs include enhanced patient access to a regular source of primary care, continuous relationships with clinicians, increased access to preventive services, and improved management of chronic conditions. One important aspect of the PCMH model is funding for infrastructure investments.

According to a September 2012 brief prepared by the National Conference of State Legislatures (NCSL), the PCMH model of care offers one method of transforming the health care delivery system. PCMHs can reduce costs while improving quality and efficiency through an innovative approach to delivering comprehensive patient-centered preventive and primary care. This model is designed around patient needs and aims to improve access to care (e.g. through extended office hours and increased communication between providers and patients via email and telephone), increase care coordination and enhance overall quality, while simultaneously reducing costs. The PCMH relies on a team of providers—such as physicians, nurses, nutritionists, pharmacists, and social workers—to meet a patient’s health care needs. Studies have shown that the PCMH model’s attention to the whole-person and integration of all aspects of health care offer potential to improve physical health, behavioral health, access to community-based social services, and management of chronic conditions.


NCSL notes that although general agreement exists about the basic tenets of the PCMH, the model is still evolving. Not all PCMHs look alike or use the same strategies to reduce costs, improve quality and coordinate care. Accreditation offers formal recognition and a stamp of approval to those that successfully meet specific standards and requirements, facilitating payment from both public and private payers. PCMH accreditation is available from national accreditation organizations, as well as a few states that have developed their own standards. Although certain health care providers already embody many elements of the PCMH, many are seeking formal recognition, due in part to the fact that medical practices that participate in PCMH pilot programs often qualify for enhanced reimbursement rates, or receive other financial incentives for coordinating care.

According to NCSL, as of April 2013, 43 states had policies promoting the PCMH model for certain Medicaid or Children's Health Insurance Program beneficiaries. States have created pilot projects, reformed payment structures, invested in health information technology, restructured Medicaid provider systems, and included the PCMH model in service delivery.

2. ACA and AB 361 (Mitchell), Chapter 642, Statutes of 2013. The ACA contained several provisions to support and advance the PCMH model of care. One of these was entitled, “Establishing Community Health Teams to Support the Patient-Centered Medical Home.” This is a grant program to help establish community-based interdisciplinary, interprofessional teams to support primary care practices, and requires grants to be used to establish health teams to provide support services to primary care providers and provide capitated payments to primary care providers. Under this program, PCMH is defined as a model of care that includes the following: i) personal physicians; ii) whole person orientation; iii) coordinated and integrated care; iv) safe and high-quality care through evidence-informed medicine, appropriate use of health information technology, and continuous quality improvements; v) expanded access to care; and, vi) payment that recognizes added value from additional components of patient-centered care.
   
   Another provision of the ACA, entitled “State Option to Provide Health Homes for Enrollees with Chronic Conditions,” established a waiver program to give states the option of enrolling Medicaid beneficiaries with chronic conditions into a health home. “Health home,” for purposes of this program, is defined as “a designated provider (including a provider that operates in coordination with a team of health care professionals) or a health team selected by an eligible individual with chronic conditions to provide health home services.” This waiver program would provide a 90% federal match for the first two years. States are permitted to tier payments to reflect a team of health care professionals operating with a designated provider, as well as the severity or number of individual’s with chronic conditions or the specific capabilities of the designated provider and health team. “Health home services” is defined as comprehensive and timely high-quality services that are provided by a designated provider or a team of health care professionals operating with a designated provider and include: i) comprehensive care management; ii) care coordination and health promotion; iii) comprehensive transitional care, including appropriate follow-up, from inpatient to other settings; iv) patient and family support; v) referral to community and social support services; and, vi) use of health information technology to link services.
   
   In 2013, the Legislature passed AB 361 which permitted DHCS to submit a waiver application under the above provision of the ACA to establish a California Health Home Program to provide health home services to Medi-Cal beneficiaries and Section 1115 waiver demonstration populations with chronic conditions. While the bill required that no General Fund moneys be used, to supplement the 90% federal match, the California Endowment has offered to fund the remaining 10% of funds, up to $25 million per year, required for these additional services for the two years of the federal match. According to DHCS, the state has developed a set of policy goals that will guide the planning and implementation of AB 361. DHCS intends to submit a state plan amendment application to the federal Centers for Medicare and Medicaid Services (CMS) which would provide federal regulatory authority for implementing the health home model for Medi-Cal beneficiaries.

3. Anti-trust concerns. In July 2013, the Commonwealth Fund published an issue brief entitled, “State Strategies to Avoid Antitrust Concerns in Multipayer PCMH Initiatives.” According to this issue brief, convening multiple payers distributes the costs associated with creating a PCMH and results in greater alignment around payment, reporting, and infrastructure investments. However, the issue brief notes that states that promote collaboration among payers to reach agreement on common or aligned payments for their PCMH initiatives risk antitrust liability for their participating payers. The cooperation and collaboration to set prices and payments among a group of otherwise competitive payers would be seen as illegal restraint of trade under the Sherman Act, a federal antitrust law.

According to this issue brief, immunity from federal antitrust laws when convening multiple payers may be available to states as well as private payers under the state action doctrine, first articulated in Parker v. Brown, 317 U.S. 341 (1943). The doctrine of Parker v. Brown may extend immunity to both state actors and private entities if the policy in place meets two criteria. First, the state must have clearly articulated a policy to displace competition. This requires that the policy both justifies the anticompetitive behavior and sufficiently expresses that such behavior is both expected and endorsed. Secondly, the state must have committed to active supervision of activities by health care payers; simple authorization or regulation of proceedings is not sufficient. The state must be able to review potential anticompetitive acts such as setting prices and rates among payers.

3. SUPPORT. The California Academy of Family Physicians (CAFP) is the sponsor of this bill and states that, as a convener under the bill, the HHSA Secretary will be able to bring together public payers, private health carriers, third-party purchasers, and providers to identify appropriate payment methods and align incentives to support the PCMH model and improve care of chronic illnesses. CAFP states that California’s health care delivery system too often fails to provide effective, coordinated care for patients, particularly those with chronic illnesses. Despite the obvious benefits of alignment, stakeholders struggle with a variety of challenges to achieve a more streamlined system: consensus building is difficult given conflicting interests and payer concerns regarding lost autonomy and competitive advantage. CAFP states that the state can play an important role to help overcome these obstacles, and through its power to waive specific anti-trust liability, it can convene payers, purchasers, and providers to identify a consistent payment model for chronic care management, common performance and outcome measures, and align incentives to support the PCMH. CAFP argues that state participation, especially as a convener, enables competing payers to work collaboratively to establish a common initiative without risking antitrust violations, and that only by coordinating payer efforts with common goals and expectations, as well as creating reliable financing streams, can true system reform occur.

4. PREVIOUS LEGISLATION.

1. ACR 152 (Pan), Resolution Chapter 143, Statutes of 2014, states that the Legislature supports and encourages the development and expansion of a California health care delivery system that identifies PCMHs and is based upon certain principles of coordination of patient care.

2. AB 1208 (Pan) of 2013 proposed to establish the PCMH Act of 2013 and would have established a definition for a PCMH based upon specified standards (similar to SB 393 from 2012). AB 1208 was later amended on the Senate Floor to address a different subject matter.

3. AB 361 permits DHCS to establish a California Health Home Program to provide health home services to Medi-Cal beneficiaries and Section 1115 waiver demonstration populations with chronic conditions. Implements this bill only if federal financial participation is available and CMS approves the state plan amendment.

4. AB 2266 (Mitchell), of 2012, would have required DHCS to establish a program to provide specified health home services, with the intent of reducing avoidable hospitalization or use of emergency medical services. AB 2266 died on the Senate Inactive File.

5. SB 393 (Ed Hernandez) would have enacted the PCMH Act of 2012 and would have established a definition for a PCMH based upon specified standards. SB 393 was vetoed by the Governor. In his veto message, the Governor stated that he commended the author for trying to improve the delivery of health care by encouraging the greater use of “patient-centered medical homes" but because the concept is still evolving, he thought more work was needed before the definition was codified.

6. AB 1542 (Jones), of 2010, would have defined a PCMH to mean, in part, a health care delivery model in which a patient establishes an ongoing relationship with a physician or other licensed health care provider, working in a physician-directed practice team to provide comprehensive, accessible, and continuous evidence-based primary care and coordinate the patient's health care needs across the health care system. AB 1542 died on the Assembly Floor while on concurrence.

7. SB 1738 (Steinberg), of 2008, would have required DHCS to establish a three-year pilot program to provide intensive multidisciplinary services to 2,500 Medi-Cal beneficiaries identified as frequent users of health care. SB 1738 was vetoed by Governor Schwarzenegger.

REGISTERED SUPPORT / OPPOSITION:

Support

California Academy of Family Physicians (sponsor)

Community Clinic Association of Los Angeles County

Health Access California

Opposition

None on file.

Analysis Prepared by: Kelly Green / HEALTH / (916) 319-2097

 THIRD READING  

Bill No: SB 435

Author: Pan (D)

Amended: 6/2/15

Vote: 21

SENATE HEALTH COMMITTEE: 7-1, 4/22/15

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

NOES: Nielsen

NO VOTE RECORDED: Hall

SENATE APPROPRIATIONS COMMITTEE: 5-2, 5/28/15

AYES: Lara, Beall, Hill, Leyva, Mendoza

NOES: Bates, Nielsen

SUBJECT: Medical home: health care delivery model

SOURCE: California Academy of Family Physicians

DIGEST: This bill requires the Secretary of the Health and Human Services Agency to convene a working group to identify appropriate payment methods to align incentives in support of patient centered medical homes.

ANALYSIS:

Existing law:

1. Permits the Department of Health Care Services (DHCS) to establish a California Health Home Program to provide health home services, as defined, to Medi-Cal beneficiaries and Section 1115 waiver demonstration populations with chronic conditions, and to develop a payment methodology, including payment structures that may include tiered payment rates that take into account the intensity of services necessary to outreach to, engage, and serve the populations the department identifies.

2. Allows this this Health Home Program to be implemented only if federal financial participation is available, necessary federal approval is obtained, and no additional General Fund moneys are used to fund the administration or cost of services.

This bill:

1. Requires the Secretary of the Health and Human Services Agency (HHS) to convene a working group of public payers, private health insurance carriers, third-party purchasers, and health care providers to identify appropriate payment methods to align incentives in support of patient centered medical homes (PCMHs).

2. Requires the working group convened pursuant to this bill to consult with, and provide recommendations to, the Legislature and relevant state agencies on all matters relating to the implementation of a PCMH care model.

3. Requires the working group to have the authority to do all of the following:

1. Develop consensus on strategies for implementing the PCMH care model and service delivery change at the practice, community, and health care system level;

2. Identify ways to create alignment regarding payment, reporting, and infrastructure investments;

3. Identify ways to utilize public and private purchasing power and ways to enable competing payors to work collaboratively to establish common PCMH initiatives; and

4. Propose participation in relevant federally funded pilot and demonstration projects.

4. Requires the Secretary of HHS to convene the working group only after he or she makes a determination that sufficient nonstate funds have been received to pay for all costs of implementing this bill.

Comments

1. Author’s statement. According to the author, it is important that California supports care that is patient centered, cost efficient, continuous, focused on prevention, and built on sound, evidence-based medicine rather than episodic, illness oriented care. PCMHs provide the needed team-based care that has proven to decrease costs and improve health outcomes. No one should have to navigate this complex health system alone and PCMHs ensure that no one will. This bill will establish a group that will make sure the best PCMH model is created for California.

2. The PCMH model. According to a September 2012 brief prepared by the National Conference of State Legislatures (NCSL), the PCMH model of care offers one method of transforming the health care delivery system. PCMHs can reduce costs while improving quality and efficiency through an innovative approach to delivering comprehensive patient-centered preventive and primary care. This model is designed around patient needs and aims to improve access to care (e.g. through extended office hours and increased communication between providers and patients via email and telephone), increase care coordination and enhance overall quality, while simultaneously reducing costs. The PCMH relies on a team of providers—such as physicians, nurses, nutritionists, pharmacists, and social workers—to meet a patient’s health care needs. Studies have shown that the PCMH model’s attention to the whole-person and integration of all aspects of health care offer potential to improve physical health, behavioral health, access to community-based social services and management of chronic conditions.
   
   NCSL notes that although general agreement exists about the basic tenets of the PCMH, the model is still evolving. Not all PCMHs look alike or use the same strategies to reduce costs, improve quality and coordinate care. Accreditation offers formal recognition and a stamp of approval to those that successfully meet specific standards and requirements, facilitating payment from both public and private payers. PCMH accreditation is available from national accreditation organizations, as well as a few states that have developed their own standards. Although certain health care providers already embody many elements of the PCMH, many are seeking formal recognition, due in part to the fact that medical practices that participate in PCMH pilot programs often qualify for enhanced reimbursement rates, or receive other financial incentives for coordinating care.
   
   According to NCSL, as of April 2013, 43 states had policies promoting the PCMH model for certain Medicaid or Children’s Health Insurance Program beneficiaries. States have created pilot projects, reformed payment structures, invested in health information technology, restructured Medicaid provider systems, and included the PCMH model in service delivery.

3. Affordable Care Act (ACA) and AB 361. The ACA contained several provisions to support and advance the PCMH model of care. One of these was entitled, “Establishing Community Health Teams to Support the Patient-Centered Medical Home.” This is a grant program to help establish community-based interdisciplinary, interprofessional teams to support primary care practices, and requires grants to be used to establish health teams to provide support services to primary care providers and provide capitated payments to primary care providers. Under this program, PCMH is defined as a model of care that includes the following: a) personal physicians; b) whole person orientation; c) coordinated and integrated care; d) safe and high-quality care through evidence-informed medicine, appropriate use of health information technology, and continuous quality improvements; e) expanded access to care; and, f) payment that recognizes added value from additional components of patient-centered care.
   
   Another provision of the ACA, entitled “State Option to Provide Health Homes for Enrollees with Chronic Conditions,” established a waiver program to give states the option of enrolling Medicaid beneficiaries with chronic conditions into a health home. “Health home,” for purposes of this program, is defined as “a designated provider (including a provider that operates in coordination with a team of health care professionals) or a health team selected by an eligible individual with chronic conditions to provide health home services.” This waiver program would provide a 90% federal match for the first two years. States are permitted to tier payments to reflect a team of health care professionals operating with a designated provider, as well as the severity or number of individual’s with chronic conditions or the specific capabilities of the designated provider and health team. “Health home services” is defined as comprehensive and timely high-quality services that are provided by a designated provider or a team of health care professionals operating with a designated provider and include: a) comprehensive care management; b) care coordination and health promotion; c) comprehensive transitional care, including appropriate follow-up, from inpatient to other settings; d) patient and family support; e) referral to community and social support services; and, f) use of health information technology to link services.
   
   In 2013, the Legislature passed AB 361 (Mitchell, Chapter 642, Statutes of 2013) which permitted DHCS to submit a waiver application under the above provision of the ACA to establish a California Health Home Program to provide health home services to Medi-Cal beneficiaries and Section 1115 waiver demonstration populations with chronic conditions. While the bill required that no General Fund moneys be used, to supplement the 90% federal match, The California Endowment has offered to fund the remaining 10 percent of funds, up to $25 million per year, required for these additional services for the two years of the federal match. According to DHCS, through a complementary planning process, the California State Innovation Model (CalSIM) initiative, it has developed a recommendation to create “Health Homes for Patients with Complex Needs” (HHPCN). According to DHCS, in collaboration with the CalSIM initiative and with respect to the requirements of the ACA and AB 361, the state has developed a set of policy goals that will guide the planning and implementation of the HHPCN. DHCS intends to submit a state plan amendment application in summer/fall of 2015, which would provide federal regulatory authority for implementing the HHPCN model for Medi-Cal beneficiaries.

4. Anti-trust concerns. As described in the supporting arguments later in this analysis, the sponsor of this bill states in support that “state participation, especially as a convener, enables competing payers to work collaboratively to establish a common initiative without risking antitrust violations.” In July 2013, The Commonwealth Fund published an issue brief entitled, “State Strategies to Avoid Antitrust Concerns in Multipayer PCMH Initiatives.” According to this issue brief, convening multiple payers distributes the costs associated with creating a PCMH and results in greater alignment around payment, reporting, and infrastructure investments. However, the issue brief notes that states that promote collaboration among payers to reach agreement on common or aligned payments for their PCMH initiatives risk antitrust liability for their participating payers. The cooperation and collaboration to set prices and payments among a group of otherwise competitive payers would be seen as illegal restraint of trade under the Sherman Act. According to this issue brief, immunity from federal antitrust laws when convening multiple payers may be available to states as well as private payers under the state action doctrine, first articulated in Parker v. Brown in 1943. The doctrine of Parker v. Brown may extend immunity to both state actors and private entities if the policy in place meets two criteria. First, the state must have clearly articulated a policy to displace competition. This requires that the policy both justifies the anticompetitive behavior and sufficiently expresses that such behavior is both expected and endorsed. Secondly, the state must have committed to active supervision of activities by health care payers; simple authorization or regulation of proceedings is not sufficient. The state must be able to review potential anticompetitive acts such as setting prices and rates among payers.

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

According to the Senate Appropriations Committee, likely one-time costs of $150,000 to $300,000 to provide staff support and technical assistance to the workgroup (private funds).

SUPPORT: (Verified 5/29/15)

California Academy of Family Physicians (source)

OPPOSITION: (Verified 5/29/15)

None received

ARGUMENTS IN SUPPORT: This bill is sponsored by the California Academy of Family Physicians (CAFP), which states that this bill allows the Secretary of HHS to act as a “convener,” waiving specific anti-trust liability and bringing together public payers, private health carriers, third-party purchasers, and providers in order to identify appropriate payment methods to align incentives to support the PCMH and improve care of chronic illnesses. CAFP states that multi-payer projects have been shown to support high-performing delivery systems by aligning incentives and reporting requirements. Despite the obvious benefits of alignment, CAFP states that stakeholders struggle with a variety of challenges to achieve a more streamlined system, given conflicting interests and payer concerns regarding lost autonomy and competitive advantage. According to CAFP, the state can play an important role to help overcome these articles. Through its power to waive specific anti-trust liability, the state can convene payers, purchasers and providers to develop a consistent payment model for chronic care management, common performance and outcome measures, and align incentives to support the PCMH. According to CAFP, state participation, especially as a convener, enables competing payers to work collaboratively to establish a common initiative without risking antitrust violations.

Prepared by: Vince Marchand / HEALTH /

6/2/15 14:42:40

**** END ****

SENATE COMMITTEE ON APPROPRIATIONS

Senator Ricardo Lara, Chair

2015 - 2016 Regular Session

SB 435 (Pan) - Medical home: health care delivery model

SUSPENSE FILE. AS AMENDED.

Bill Summary:

SB 435 would require the Secretary of the Health and Human Services Agency to convene a working group to identify appropriate payment methods to align incentives in support of patient centered medical homes.

Fiscal Impact (as approved on May 28, 2014):

• Likely one-time costs of $150,000 to $300,000 to provide staff support and technical assistance to the workgroup (private funds).

Background:

In concept, a patient centered medical home is a method of providing coordinated health care, using a team of providers, to meet all of the patient’s health care needs in a more coordinated, effective, and cost efficient manner.

Current law authorizes the Department of Health Care Services to develop a pilot project for a patient centered medical home for certain high-risk Medi-Cal beneficiaries. This pilot would take advantage of authority in the Affordable Care Act that provides enhanced matching funds for patient centered medical home programs. The Department is currently in the process of developing the pilot.

Proposed Law:

SB 435 would require the Secretary of the Health and Human Services Agency to convene a working group to identify appropriate payment methods to align incentives in support of patient centered medical homes.

Specific provision of the bill would:

• Require the Secretary to convene a working group of public payers, private health insurance carriers, third-party purchasers, and health care providers;

• Require the working group to identify appropriate payment methods to align incentives in support of patient centered medical homes;

• Require the working group to report to the Legislature;

• Authorize the working group to develop consensus strategies for implementing patient centered medical home care models;

• Authorize the working group to create alignment regarding payment, reporting, and infrastructure investments;

• Authorize the working group to design and compose pilot projects;

• Authorize the working group to utilize public and private purchasing power and enable competing payers to work together to establish patient centered medical home models;

• Authorize the working group to propose participation in federally funded pilot and demonstration models;

• Require the state to use existing resources and federal funds or solicit outside funds to implement the bill.

Staff Comments:

As noted above, the bill gives the working group very broad authority to undertake what appear to be program development and implementation activities, in addition to developing strategies and reporting to the Legislature. The bill does not provide detail on the scope of those activities.

Committee amendments (as adopted May 28, 2015): delete the authority to develop pilot projects, clarify the stakeholder group responsibilities, and require non-state funding.

-- END --

SENATE COMMITTEE ON APPROPRIATIONS

Senator Ricardo Lara, Chair

2015 - 2016 Regular Session

SB 435 (Pan) - Medical home: health care delivery model

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

Bill Summary:

SB 435 would require the Secretary of the Health and Human Services Agency to convene a working group to identify appropriate payment methods to align incentives in support of patient centered medical homes.

Fiscal Impact:

• Likely one-time costs of $150,000 to $300,000 to provide staff support and technical assistance to the workgroup (General Fund or other fund source).

• Unknown costs for the workgroup to design and compose pilot projects or to establish common patient centered medical home initiatives (General Fund or other fund source). In addition to requiring the working group to provide recommendations to the Legislature, the bill gives the working group broad authority to undertake activities that appear more like program development and implementation than traditional study activities undertaken by working groups. The bill does not provide much detail on these authorized activities, so estimating the cost to exercise those authorities is unknown.

Background:

In concept, a patient centered medical home is a method of providing coordinated health care, using a team of providers, to meet all of the patient’s health care needs in a more coordinated, effective, and cost efficient manner.

Current law authorizes the Department of Health Care Services to develop a pilot project for a patient centered medical home for certain high-risk Medi-Cal beneficiaries. This pilot would take advantage of authority in the Affordable Care Act that provides enhanced matching funds for patient centered medical home programs. The Department is currently in the process of developing the pilot.

Proposed Law:

SB 435 would require the Secretary of the Health and Human Services Agency to convene a working group to identify appropriate payment methods to align incentives in support of patient centered medical homes.

Specific provision of the bill would:

• Require the Secretary to convene a working group of public payers, private health insurance carriers, third-party purchasers, and health care providers;

• Require the working group to identify appropriate payment methods to align incentives in support of patient centered medical homes;

• Require the working group to report to the Legislature;

• Authorize the working group to develop consensus strategies for implementing patient centered medical home care models;

• Authorize the working group to create alignment regarding payment, reporting, and infrastructure investments;

• Authorize the working group to design and compose pilot projects;

• Authorize the working group to utilize public and private purchasing power and enable competing payers to work together to establish patient centered medical home models;

• Authorize the working group to propose participation in federally funded pilot and demonstration models;

• Require the state to use existing resources and federal funds or solicit outside funds to implement the bill.

Staff Comments:

As noted above, the bill gives the working group very broad authority to undertake what appear to be program development and implementation activities, in addition to developing strategies and reporting to the Legislature. The bill does not provide detail on the scope of those activities.

-- END --

SENATE COMMITTEE ON HEALTH

Senator Ed Hernandez, O.D., Chair

BILL NO: SB 435

SUBJECT: Medical home: health care delivery model

SUMMARY:

Requires the Secretary of the Health and Human Services Agency to convene a working group to identify appropriate payment methods to align incentives in support of patient centered medical homes.

Existing law permits the Department of Health Care Services (DHCS) to establish a California Health Home Program to provide health home services, as defined, to Medi-Cal beneficiaries and Section 1115 waiver demonstration populations with chronic conditions, and to develop a payment methodology, including payment structures that may include tiered payment rates that take into account the intensity of services necessary to outreach to, engage, and serve the populations the department identifies. Allows this this Health Home Program to be implemented only if federal financial participation is available, necessary federal approval is obtained, and no additional General Fund moneys are used to fund the administration or cost of services.

This bill:

1. Requires the Secretary of the Health and Human Services (HHS) Agency to convene a working group of public payers, private health insurance carriers, third-party purchasers, and health care providers to identify appropriate payment methods to align incentives in support of patient centered medical homes (PCMHs).

2. Requires the working group convened pursuant to this bill to consult with, and provide recommendations to, the Legislature and relevant state agencies on all matters relating to the implementation of a PCMH care model.

3. Requires the working group to have the authority to do all of the following:

1. Develop consensus on strategies for implementing the PCMH care model and service delivery change at the practice, community, and health care system level;

2. Create alignment regarding payment, reporting, and infrastructure investments;

3. Design and compose pilot projects, including multipayor pilot projects;

4. Utilize public and private purchasing power and enable competing payors to work collaboratively to establish common PCMH initiatives; and,

5. Propose participation in relevant federally funded pilot and demonstration projects.

4. Requires the state to use existing state resources and available federal funds to implement this bill, and permits the Secretary of HHS, if state or federal funds are not available, to apply for and accept grants, or receive donations and other financial support from public or private sources.

FISCAL EFFECT:

This bill has not been analyzed by a fiscal committee.

COMMENTS:

1. Author’s statement. According to the author, it is important that our state supports care that is patient centered, cost efficient, continuous, focused on prevention, and built on sound, evidence-based medicine rather than episodic, illness oriented care. PCMHs provide the needed team-based care that has proven to decrease costs and improve health outcomes. No one should have to navigate this complex health system alone and PCMHs ensure that no one will. This bill will establish a group that will make sure the best PCMH model is created for California.

2. Background on the PCMH model. According to a September 2012 brief prepared by the National Conference of State Legislatures (NCSL), the PCMH model of care offers one method of transforming the health care delivery system. PCMHs can reduce costs while improving quality and efficiency through an innovative approach to delivering comprehensive patient-centered preventive and primary care. This model is designed around patient needs and aims to improve access to care (e.g. through extended office hours and increased communication between providers and patients via email and telephone), increase care coordination and enhance overall quality, while simultaneously reducing costs. The PCMH relies on a team of providers—such as physicians, nurses, nutritionists, pharmacists, and social workers—to meet a patient’s health care needs. Studies have shown that the PCMH model’s attention to the whole-person and integration of all aspects of health care offer potential to improve physical health, behavioral health, access to community-based social services and management of chronic conditions.
   
   NCSL notes that although general agreement exists about the basic tenets of the PCMH, the model is still evolving. Not all PCMHs look alike or use the same strategies to reduce costs, improve quality and coordinate care. Accreditation offers formal recognition and a stamp of approval to those that successfully meet specific standards and requirements, facilitating payment from both public and private payers. PCMH accreditation is available from national accreditation organizations, as well as a few states that have developed their own standards. Although certain health care providers already embody many elements of the PCMH, many are seeking formal recognition, due in part to the fact that medical practices that participate in PCMH pilot programs often qualify for enhanced reimbursement rates, or receive other financial incentives for coordinating care.
   
   According to NCSL, as of April 2013, 43 states had policies promoting the PCMH model for certain Medicaid or CHIP beneficiaries. States have created pilot projects, reformed payment structures, invested in health information technology, restructured Medicaid provider systems, and included the PCMH model in service delivery.

3. Affordable Care Act (ACA) and AB 361. The ACA contained several provisions to support and advance the PCMH model of care. One of these was entitled, “Establishing Community Health Teams to Support the Patient-Centered Medical Home.” This is a grant program to help establish community-based interdisciplinary, interprofessional teams to support primary care practices, and requires grants to be used to establish health teams to provide support services to primary care providers and provide capitated payments to primary care providers. Under this program, PCMH is defined as a model of care that includes the following: 1) personal physicians; 2) whole person orientation; 3) coordinated and integrated care; 4) safe and high-quality care through evidence-informed medicine, appropriate use of health information technology, and continuous quality improvements; 5) expanded access to care; and, 6) payment that recognizes added value from additional components of patient-centered care.
   
   Another provision of the ACA, entitled “State Option to Provide Health Homes for Enrollees with Chronic Conditions,” established a waiver program to give states the option of enrolling Medicaid beneficiaries with chronic conditions into a health home. “Health home,” for purposes of this program, is defined as “a designated provider (including a provider that operates in coordination with a team of health care professionals) or a health team selected by an eligible individual with chronic conditions to provide health home services.” This waiver program would provide a 90 percent federal match for the first two years. States are permitted to tier payments to reflect a team of health care professionals operating with a designated provider, as well as the severity or number of individual’s with chronic conditions or the specific capabilities of the designated provider and health team. “Health home services” is defined as comprehensive and timely high-quality services that are provided by a designated provider or a team of health care professionals operating with a designated provider and include: 1) comprehensive care management; 2) care coordination and health promotion; 3) comprehensive transitional care, including appropriate follow-up, from inpatient to other settings; 4) patient and family support; 5) referral to community and social support services; and, 6) use of health information technology to link services.
   
   In 2013, the Legislature passed AB 361 (Mitchell), Chapter 642, Statutes of 2013, which permitted DHCS to submit a waiver application under the above provision of the ACA to establish a California Health Home Program to provide health home services to Medi-Cal beneficiaries and Section 1115 waiver demonstration populations with chronic conditions. While the bill required that no General Fund moneys be used, to supplement the 90 percent federal match, The California Endowment has offered to fund the remaining 10 percent of funds, up to $25 million per year, required for these additional services for the two years of the federal match. According to DHCS, through a complementary planning process, the California State Innovation Model (CalSIM) initiative, it has developed a recommendation to create “Health Homes for Patients with Complex Needs” (HHPCN). According to DHCS, in collaboration with the CalSIM initiative and with respect to the requirements of the ACA and AB 361, the state has developed a set of policy goals that will guide the planning and implementation of the HHPCN. DHCS intends to submit a state plan amendment application in summer/fall of 2015, which would provide federal regulatory authority for implementing the HHPCN model for Medi-Cal beneficiaries.

4. Anti-trust concerns. As described in the supporting arguments later in this analysis, the sponsor of this bill states in support that “state participation, especially as a convener, enables competing payers to work collaboratively to establish a common initiative without risking antitrust violations.” In July 2013, The Commonwealth Fund published an issue brief entitled, “State Strategies to Avoid Antitrust Concerns in Multipayer PCMH Initiatives.” According to this issue brief, convening multiple payers distributes the costs associated with creating a PCMH and results in greater alignment around payment, reporting, and infrastructure investments. However, the issue brief notes that states that promote collaboration among payers to reach agreement on common or aligned payments for their PCMH initiatives risk antitrust liability for their participating payers. The cooperation and collaboration to set prices and payments among a group of otherwise competitive payers would be seen as illegal restraint of trade under the Sherman Act. According to this issue brief, immunity from federal antitrust laws when convening multiple payers may be available to states as well as private payers under the state action doctrine, first articulated in Parker v. Brown in 1943. The doctrine of Parker v. Brown may extend immunity to both state actors and private entities if the policy in place meets two criteria. First, the state must have clearly articulated a policy to displace competition. This requires that the policy both justifies the anticompetitive behavior and sufficiently expresses that such behavior is both expected and endorsed. Secondly, the state must have committed to active supervision of activities by health care payers; simple authorization or regulation of proceedings is not sufficient. The state must be able to review potential anticompetitive acts such as setting prices and rates among payers.

5. Prior legislation. ACR 152 (Pan), Resolution Chapter 143, Statutes of 2014, stated that the Legislature supports and encourages the development and expansion of a California health care delivery system that identifies PCMHs and is based upon certain principles of coordination of patient care.

AB 1208 (Pan), of 2013 proposed to establish the PCMH Act of 2013 and established a definition for a PCMH based upon specified standards (similar to SB 393 from 2012). AB 1208 was later amended on the Senate Floor to address a different subject matter.

AB 361 (Mitchell), Chapter 642, Statutes of 2013, permitted DHCS to establish a California Health Home Program to provide health home services to Medi-Cal beneficiaries and Section 1115 waiver demonstration populations with chronic conditions. Implements this bill only if federal financial participation is available and the federal Centers for Medicare and Medicaid Services approve the state plan amendment.

AB 2266 (Mitchell), of 2012, would have required DHCS to establish a program to provide specified health home services, with the intent of reducing avoidable hospitalization or use of emergency medical services. AB 2266 died on the Senate Inactive File.

SB 393 (Hernandez), would have enacted the PCMH Act of 2012 and established a definition for a PCMH based upon specified standards. SB 393 was vetoed by the Governor. In his veto message, the Governor stated that he commended the author for trying to improve the delivery of health care by encouraging the greater use of “patient-centered medical homes" but because the concept is still evolving, he thought more work was needed before the definition was codified.

AB 1542 (Jones), of 2010, would have defined a PCMH to mean, in part, a health care delivery model in which a patient establishes an ongoing relationship with a physician or other licensed health care provider, working in a physician-directed practice team to provide comprehensive, accessible, and continuous evidence-based primary care and coordinate the patient's health care needs across the health care system. AB 1542 died on the Assembly Floor.

SB 1738 (Steinberg), of 2008, would have required DHCS to establish a three-year pilot program to provide intensive multidisciplinary services to 2,500 Medi-Cal beneficiaries identified as frequent users of health care. SB 1738 was vetoed by Governor Schwarzenegger.

6. Support. This bill is sponsored by the California Academy of Family Physicians (CAFP), which states that this bill would allow the Secretary of HHS to act as a “convener,” waiving specific anti-trust liability and bringing together public payers, private health carriers, third-party purchasers, and providers in order to identify appropriate payment methods to align incentives to support the PCMH and improve care of chronic illnesses. CAFP states that multi-payer projects have been shown to support high-performing delivery systems by aligning incentives and reporting requirements. Despite the obvious benefits of alignment, CAFP states that stakeholders struggle with a variety of challenges to achieve a more streamlined system, given conflicting interests and payer concerns regarding lost autonomy and competitive advantage. According to CAFP, the state can play an important role to help overcome these articles. Through its power to waive specific anti-trust liability, the state can convene payers, purchasers and providers to develop a consistent payment model for chronic care management, common performance and outcome measures, and align incentives to support the PCMH. According to CAFP, state participation, especially as a convener, enables competing payers to work collaboratively to establish a common initiative without risking antitrust violations.

SUPPORT AND OPPOSITION:

Support: California Academy of Family Physicians (sponsor)

Oppose: None received

-- END --