Date of Hearing: March 17, 2020

ASSEMBLY COMMITTEE ON HEALTH

Jim Wood, Chair

ABPCA Bill Id:AB 2146

Author:(Chiu) – As Introduced Ver:February 10, 2020

SUBJECT: Public University Dental School Intergovernmental Transfer Program.

SUMMARY: Requires the Department of Health Care Services (DHCS) to establish, implement, and maintain the Public University Dental School Intergovernmental Transfer (PUDS IGT) Program within the Denti-Cal program. Requires DHCS to authorize public university dental schools to utilize IGTs to support the training and dental care that these schools provide to California’s most vulnerable residents who are served by Denti-Cal. Permits the nonfederal share of the funding to be provided through voluntary IGTs from affected public entities. Specifically, this bill:

1. Requires DHCS to establish, implement, and maintain the PUDS IGT Program.
2. Requires DHCS to authorize public university dental schools to utilize IGTs to support the training and dental care that these schools provide to California’s most vulnerable residents who are served by the Denti-Cal.
3. Permits the nonfederal share of the funding to be provided through voluntary IGTs from affected public entities. Requires each transferring entity, upon providing any IGT of funds, to certify, in the form and manner specified by DHCS, that the transferred funds qualify for federal financial participation (FFP) pursuant to applicable Medicaid program laws.
4. Requires any IGT made to be voluntary for purposes of federal law.
5. Prohibits DHCS from assessing any fee to reimburse DHCS for the administrative costs of operating the program and for the support of the Medi-Cal program.
6. Requires DHCS to obtain federal approvals or waivers as necessary to implement this bill and to obtain FFP, to the maximum extent permitted by federal law. Requires this bill to be implemented only if, and to the extent that, FFP is available and not jeopardized.
7. Requires DHCS to implement this bill by means of policy letters, all-county letters, or similar instructions, without taking further regulatory action. Prohibits this bill from precluding DHCS from adopting regulations.
8. Makes legislative findings and declarations regarding barriers to access to care for people with developmental or intellectual disabilities, that providing dental care to people with special needs often takes more time and specialized skill than providing similar services to healthy and ambulatory patients, the role of university dental school clinics as safety net sites that serve as the training ground for a dental workforce that assume the additional costs associated with this responsibility, that university dental school clinics are severely impacted, which results in significant wait times for patients who seek care, and that fully funding university dental school clinics for the unreimbursed cost of providing specialized care to patients with special needs will increase the ability of these clinics to provide care to greater numbers of Medi-Cal beneficiaries and expand access to oral health care in California.
9. States legislative intent to authorize PUDS to utilize IGTs as a means to support the training and dental care that these schools provide to California’s most vulnerable residents who are served by Denti-Cal.

EXISTING LAW:

1. Establishes the Medi-Cal program administered by DHCS, under which qualified low-income individuals receive health care services, including certain dental services, as specified.
   
2. Permits any county, other political subdivision of the state, or governmental entity in the state to elect to transfer funds to DHCS in support of the Medi-Cal program.
   
3. Permits those transfers to consist of cash or loans to the state, and grants DHCS the discretion to accept or reject any elective transfer from a county, political subdivision, or other governmental entity, as well as the discretion of whether to deposit the transfer.
   
4. Requires, if DHCS accepts a transfer, to obtain federal matching funds to the full extent permitted by federal law.
   
5. Requires, for certain IGTs, the state to assess a fee of 20% on each IGT subject to reimburse DHCS for the administrative costs of operating the IGT program and for the support of the Medi-Cal program.
   

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

COMMENTS:

1. PURPOSE OF THIS BILL. According to the author, people with developmental or intellectual disabilities face numerous barriers to health care. Behavioral, cognitive and physical limitations can make completing daily health care tasks and receiving regular health care services challenging. This is especially true when it comes to oral health. One barrier to dental care for special needs patients in California is a lack of access to specialized dental clinics capable of serving their specific needs and a lack of programs that train providers on how to treat this sensitive population. University dental school clinics are the safety net for California’s most vulnerable patients as well as the training ground for a specialized dental workforce. However, challenges exist in meeting both responsibilities, and there is much room for expansion and improvement. Currently, University of California at San Francisco (UCSF) and UC Los Angeles (UCLA) dental schools both provide care through special needs clinics. These dental school clinics are backlogged with a minimum year-long wait list for treatment; in many cases the waitlist is two years or more. Low reimbursement rates combined with the additional time and skill required for treating this vulnerable population, mean patients suffer for years longer than necessary. This bill will ensure California’s special needs dental clinics have access to federal matching dollars by authorizing and directing public university dental schools to enter into an IGT arrangement with DHCS to fund Medi-Cal dental care provided in their clinics. Gaining access to additional resources for the development or expansion of university dental school special needs clinics will not only support the state’s need to train dental providers, but also expand the capacity to care for more patients.
2. BACKGROUND. There are four private dental schools in California (University of Southern California, University of the Pacific, Loma Linda and Western University of Health Sciences) and two public dental schools (UCSF and UCLA). IGTs require a public entity to transfer funds, meaning only the two UC schools would be eligible for the additional Medicaid funds under this proposal. According to data from the California Dental Association, both UCLA and UCSF see approximately 125,000 patients each year. UCLA’s pediatric clinic population is 90% Medi-Cal, and its special patient care clinic is approximately 85% Medi-Cal. Approximately 47% of UCSF’s patient population is on Medi-Cal in its general dental clinic, and 80% Medi-Cal in its pediatric specialty clinic. UCSF reportedly has a two year waitlist for patients who need dentistry in the hospital operating room.
   
   The Denti-Cal Program is administered by DHCS and covers dental services for children and adults. Denti-Cal currently uses two different models for delivering dental services: Fee-for-service (FFS) and dental managed care (DMC). In contrast to Medi-Cal managed care (where nearly 80% of beneficiaries are enrolled in a Medi-Cal managed care plan), DMC is only mandatorily implemented in two counties despite broad statutory authority enabling DHCS to implement DMC. The two Denti-Cal models are as follows:
   1. FFS. In the FFS dental model, beneficiaries may receive dental services from any provider who accepts Denti-Cal patients and agrees to see them. Dental providers receive a payment for each service provided to the Denti-Cal beneficiary; and,
   2. DMC. In the DMC model, Denti-Cal pays contracting dental plans a set amount per member per month (known as a capitation payment) to provide dental care to beneficiaries enrolled in the plan. Generally, enrollees may only receive services from providers that are within the plan’s provider network.

Only two counties have DMC. In Sacramento County, almost all children and adults are mandatorily enrolled in a dental plan. If a beneficiary does not choose a dental plan, the beneficiary will be automatically assigned to one. In Los Angeles County, beneficiaries may voluntarily enroll in a dental plan. If a beneficiary in Los Angeles County does not choose to enroll in a dental plan, they are automatically enrolled in FFS. The Newsom Administration has proposed as part of its 2020-21 Budget to end Denti-Cal managed care effective January 1, 2021, and has proposed trailer bill language to do so.

Denti-Cal expenditures for 2019-20 are expected to be $1.2 billion total funds, $646 million federal funds, $471 million General Fund (GF). DHCS’ most recent statutorily required Denti-Cal rate entitled “The Department of Health Care Services Medi-Cal Dental Services Rate Review October 2019” compared the Medi-Cal reimbursement rates of the 25 most utilized procedure codes in dental FFS to the same 25 procedure codes from other comparable states’ Medicaid dental fee schedules. For California these 25 procedures made up approximately 91% of billed procedures in fiscal year (FY) 2016-17 and FY 2017-18. California’s rates for Denti-Cal FFS in state FY 2016-17 paid an average of 106.4% of Illinois, 100.4% percent of Florida, 76.9% of New York, and 65% of Texas’ Medicaid Program’s dental fee schedule.

However, Denti-Cal rates in dental FFS in FY 2017-18, inclusive of Proposition 56 supplemental payments are very low compared to commercial payers. The DHCS rate review compared prevailing customary dental charges within California to Medi-Cal dental FFS rates using the American Dental Association’s (ADA) 2016 Survey of Dental Fees for General Practitioners for FY 2016-17 and the ADA’s 2018 Survey of Dental Fees for General Practitioners for FY 2017-18. The Pacific Division, which includes California, was selected to represent the prevailing customary dental charges within California and the Pacific Region. Denti-Cal paid an average of 33.9% of the National Average and 31.7% of the California Division Average.

1. IGTS AND PENDING FEDERAL REGULATION CHANGE. Under federal Medicaid law, Medicaid financing is a shared responsibility of the federal government and the states, with states receiving federal matching funds (aka, FFP) toward allowable state expenditures. The Medicaid statute permits states to generate their share of Medicaid expenditures through multiple sources, including state general revenue, contributions from local governments (through IGTs from local governments or certified public expenditures [CPEs] from government-owned providers, such as fire districts and public hospitals), and specialized revenue sources such as health care-related taxes. Although 40% of non-federal financing must come from the state, up to 60% may be derived from local sources. The extent to which states rely on funding sources other than state general revenue varies considerably and may be influenced by how states have historically split financing with localities for functions such as education, social services, indigent care, and corrections.

On November 18, 2019, the Trump Administration released a proposed federal regulatory rule called the Medicaid Fiscal Accountability Regulation (MFAR). The Centers for Medicare & Medicaid Services (CMS) indicates it intends with the rule to ensure that all Medicaid payments to providers are transparent, including a requirement that states clearly account for how they finance their share of supplemental payments as CMS argued it has seen a proliferation of payment arrangements that mask or circumvent the rules.  

The changes proposed are extremely technical and complex but are likely to have significant implications for provider payment rates and state financing of Medicaid by disrupting current arrangements and restricting the future use of such arrangements. For example, the proposed rule would limit permissible IGTs and CPEs to funds from units of governments, state or local taxes or funds appropriated to state university teaching hospitals. Such changes are aimed at addressing financing arrangements involving certain public-private partnerships and could restrict which entities can make IGTs (like public hospitals). The proposed rule would allow CMS to apply new “net effect” standards to determine if certain IGTs involve provider donations that do not comply with hold-harmless rules. To limit the use of CPEs, the rule would limit Medicaid payments to costs and require that providers retain the full amount of all Medicaid payments. In addition, the rules would not allow states to withhold part of a Medicaid payment or require providers to give back part of a payment. This provision could affect the ability of states to enter into certain financing agreements with providers through CPEs. Similar to restrictions with provider taxes, restrictions on states’ ability to use IGTs and CPEs could limit the state share of Medicaid and therefore overall Medicaid funding. Public comment on the proposed rule closed on February 1, 2020.

1. SUPPORT. This bill is sponsored by the California Dental Association (CDA), which writes that this bill will ensure California’s special needs dental clinics have access to these federal matching dollars by authorizing and directing public university dental schools to enter into an IGT arrangement with DHCS to fund Medi-Cal dental care provided in their clinic. This bill would allow them to directly pull down federal matching dollars to cover significant portions of the uncompensated costs of providing care without additional state General Fund commitments. CDA writes that people with developmental or intellectual disabilities face numerous barriers to health care, and research has documented disproportionately high rates of dental disease and tooth decay among individuals with developmental disabilities. These individuals are more likely than the general population to lack access to regular dental care across their lifespan. Many special needs patients cannot be seen by their community or family dentist because most clinicians do not have the advanced training necessary to treat special patient populations. In addition, many of these patients require IV sedation or general anesthesia to receive even basic dental care. CDA states that university dental school clinics are the safety net for California’s most vulnerable patients as well as the training ground for a specialized dental workforce. Frequent patient conditions that are seen in these clinics include: neurological disorders (cerebral palsy, seizure disorder, dementia, Parkinson’s disease), Down syndrome, intellectual disabilities, autism and genetic disorders. The added risks and time involved in treating special needs patients, coupled with the historically low reimbursement rates in the Denti-Cal, have further compounded the issue. At several of the specialized university clinics, current wait times for special needs patients who require general anesthesia in the operating room is approximately two years, and patients who need IV sedation frequently wait close to a year to receive treatment. Gaining access to additional resources to sustain and expand university dental school special needs clinics will not only support the state’s need to train dental providers, but also expand the capacity to care for more patients.

The Arc and United Cerebral Palsy California Collaboration (UCPCC) write that this bill is an important step toward ensuring access to dental care for people with intellectual and developmental disabilities who have special dental health care needs as it would increase access to specialized dental clinics as well as increase the number of dental care providers who receive additional training on treating individuals with intellectual and developmental disabilities who have special needs. The Arc and UCPCC write that it is well documented that people with intellectual and developmental disabilities in California face significant barriers to accessing timely, thorough, and appropriate dental care services.

1. FLEXIBILITY IN DRAWING DOWN FEDERAL FUNDS AMENDMENT. IGTs are one way for local governments to draw down federal Medicaid funds. Another method in FFS is through CPEs. In the event IGTs are not available to implement IGT financing because of their current use to fund UC hospitals, the proposed amendment would also allow CPEs and other federally approved methods to be used to draw down federal Medicaid matching funds, and would rename the program the Uncompensated Care Reimbursement Program.

REGISTERED SUPPORT / OPPOSITION:

Support

California Dental Association (sponsor)

Pacific Dental Services

The Arc and United Cerebral Palsy California Collaboration

Opposition

None received

Analysis Prepared by: Scott Bain / HEALTH / (916) 319-2097