SENATE COMMITTEE ON

Senator Anthony Portantino, Chair

2019 - 2020 Regular Session

AB 719 (Blanca Rubio) - Endangered wildlife: crocodiles and alligators

Bill Summary:

This bill would make it a misdemeanor, on or after March 30, 2022, to sell the dead body, or any part or product thereof, of a crocodile or alligator unless manufacturers develop a technology or process to "track and trace" these products in order to verify they are coming from sustainable sources.

Fiscal Impact:

• Unknown but potentially significant costs, possibly in the low millions of dollars in the first year and hundreds of thousands of dollars ongoing (General Fund), for the Department of Fish and Wildlife (DFW) to implement this bill (see staff comments).
• The Department of Justice estimates costs of about $160,000 ongoing (General Fund and Legal Services Revolving Fund) due to an increase in referrals from their client, DFW, to defend potential lawsuits with the enactment of AB 719.
• Unknown, potentially significant workload cost pressures to the court to adjudicate charges brought against defendants who import into this state for commercial purposes, possess with intent to sell, or sell within the state, the dead body, or any part or product thereof, of a crocodile or alligator not tracked using the established technology proscribed by this measure. While the superior courts are not funded on a workload basis, an increase in workload could result in delayed court services and would put pressure on the General Fund to fund additional staff and resources.  For example, the Budget Act of 2019 appropriated $41.8 million from the General Fund to backfill continued reduction in fine and fee revenue for trial court operations.  (General Fund*)
• Unknown potential increase in non-reimbursable local enforcement and incarceration costs to prosecute and incarcerate those charged with and found guilty of conduct proscribed by this bill.  Costs would be offset, to a degree, by fee and assessment revenue.  (Local funds)

*Trial Court Trust Fund

Background:

The American alligator is one species of the reptile order crocodilian— which includes crocodiles and caiman—that is commercially traded for both its hide and meat. Because of the threatened or endangered status of some crocodilians, both domestic and international trade are highly regulated and monitored. The U.S. Fish and Wildlife Service (USFWS), through the Endangered Species Act (ESA) and other wildlife laws, monitors state programs and inspects all shipments of hides that are exported. Individual state agencies regulate both wild harvest and farm production activities. Foreign importers of alligator and crocodile hides are subject to the regulations of a treaty known as the Convention for the International Trade of Endangered Species (CITES). There are 26 species of alligators, crocodiles, caiman, and gharials listed and protected under CITES. Opposition groups note that this bill could legalize conduct that may threaten endangered or threatened species and contribute to their inhumane treatment.

History of the Sunset. In 2006, former Governor of Louisiana Kathleen Blanco sponsored SB 1485 (Hollingsworth), which lifted the ban on importation and sale of alligator and crocodile products in California. The state of Louisiana argued that permitting the sale of alligator products in California would encourage sustainable use management of alligator populations in Louisiana, benefit local communities and economic recovery in that state after Hurricanes Katrina and Rita, and encourage conservation of wetlands. The Legislature agreed to lift the ban but added a sunset date of 2010 in response to concerns that allowing importation could encourage increased production, putting increased pressure on wild stocks, or lead to more harvesting of endangered or threatened species that resemble species taken legally.

In 2009, the sunset was extended for another five years to 2015 with the passage of SB 609 (Hollingsworth). The state of Louisiana again sponsored the measure, and asserted that the opening up of the California market had helped to support a sustainable use program that generated significant annual economic revenue for coastal Louisiana. They cited that CITES had recognized Louisiana’s management program as a world-wide model for sustainable conservation. In 2014, the law was extended five more years to 2020 with the passage of AB 2075 (Alejo) sponsored by the California Retailers Association.

The waiver of §PEN 653o has been granted 3 times by the Legislature with no discernable action by the industry or the proponents of this bill to develop an effective tracking or chain of custody system.

Proposed Law:

This bill would:

• Require manufacturers of products that use the hides of crocodiles or alligators, after consultation with DFW, to submit to the Director of Fish and Wildlife proposals for technologies or processes that allow for the tracking or tracing of the source of origin of crocodile or alligator hides used to manufacture products sold in this state and require humane treatment of farmed crocodiles and alligators, as well as humane slaughtering techniques.
• Require the director, on or before March 30, 2021, to approve technologies or processes that meet those requirements.
• Make it a misdemeanor, on or after March 30, 2022, to import into this state for commercial purposes, to possess with intent to sell, or to sell within the state, the dead body, or any part or product thereof, of a crocodile or alligator unless the part or product has been tracked using the established technology or process.
• If the director determines that a technology or process has not been submitted that meets the requirements, make it a misdemeanor to import into this state for commercial purposes, to possess with intent to sell, or to sell within the state, the dead body, or any part or product thereof, of a crocodile or alligator for purposes other than medical research, specialized pet food, or human consumption after January 1, 2021, or the date of the director’s determination and would also make it a misdemeanor to import into this state for commercial purposes, to possess with intent to sell, or to sell within the state, the dead body, or any part or product thereof, of a crocodile or alligator for purposes of medical research, specialized pet food, or human consumption on or after January 1, 2022.

Related Legislation:

AB 1260 (Maienschein) would prohibits the importation in California of products made from caiman, among other things. As noted above, the several species of caiman are in the alligator family which, in turn, is in the crocodylia order. Because the caiman leather can easily be confused for that of another species, AB 1260, if it becomes state law, may irreconcilably conflict with this bill. AB 1260 is on the Suspense File for this committee.

Staff Comments:

DFW Costs. At the time of this analysis, DFW did not have an updated fiscal estimate for the August 13 version of this bill available. However, DFW had previously estimated a cost of $853,000 in 2019-20, and $692,000 annually and ongoing (General Fund) for additional staff to support their Wildlife Trafficking Unit and field investigations. Recent amendments add to the requirements of DFW, and could potentially increase costs to the low millions. DFW is currently working on a more accurate fiscal estimate to reflect the new provisions added to this measure. The department did indicate that recent amendments would likely increase costs significantly, and also provided an explanation of anticipated workload related to AB 719.

According to DFW, adding a requirement for crocodile or alligator products with a statement of origin and compliance disclaimer creates several enforcement challenges and creates additional workload. This is a new requirement in this section that historically has either prohibited or authorized possession of specified animal products. There are alligator and crocodile products already in the market that would have to come into compliance with this law but may not be able to accurately provide the required disclosure. The department anticipates an increase in responding to public complaints and having to answer technical questions on what is legal or illegal. Based on experience with the prohibition on commercialization of ivory and rhinoceros horn, the DFW estimates it will need one and one-half new law enforcement officer and one Wildlife Forensic Specialist to determine when products may be illegal, or simply mislabeled.

The cases generated from violations of the labeling requirement would also increase workload of field wildlife officers and wildlife forensics specialists providing laboratory analysis. There are significant amounts of faux alligator and crocodile products in the marketplace. There are also a significant number of cow leather products stamped to look like alligator hide. Some of these are well crafted and shopkeepers and trained professionals may have a difficult time discerning the difference. Wildlife forensics analysis will be necessary to prove these cases in court and the department’s current Wildlife Forensics Laboratory does not have the staffing or expertise at this time to conduct those types of tests and incur the additional anticipated workload.

There are also several enforcement challenges for wildlife officers to inspect businesses selling these products. If a wildlife officer believes there is a possible violation, they do not have inspection authority to check any sort of records without first obtaining permission from the proprietor or a search warrant from a court. It will be extremely difficult to obtain a search warrant because the violation is for the disclosure requirement regarding crocodile and alligator products. Faux products would still be legal to sell without a labeling requirement. This is different than the prohibition against the commercialization of ivory and rhinoceros horn. Anything that is advertised as ivory or rhinoceros horn, whether it is in fact these products or not, is illegal to sell with very few exceptions that are clearly noted and easily discernable. Mere possession of ivory or rhinoceros horn in a retail or wholesale outlet commonly used for buying or selling of similar items is prima facia evidence of possession with intent to sell. Trying to obtain a search warrant to determine if there is a violation of alligator or crocodile disclosure requirement will be very difficult if not impossible as the officer will not know if it is truly alligator, crocodile or a faux replica product.

Court costs. The fiscal impact of this bill cannot be known with certainty, as the actual impact will be dependent on numerous factors, including, but not limited to, judicial and prosecutorial discretion, the criminal history of a defendant, and the factors unique to each case.  As the crime created by this bill is punishable as a misdemeanor with the potential for incarceration, certain rights to the defendants are attached to the proceedings, including the right to a jury trial and the right to counsel (at public expense if the defendants are unable to afford the costs of representation) which could lead to lengthier and more complex court proceedings.  Consequently, to the extent that the court adjudicates eleven or more of these new crimes, on average, that otherwise would not have been filed or resulted in a criminal action but for the alleged violation of AB 719, cost pressures to the courts would surpass the Suspense File threshold.

-- END --

SENATE COMMITTEE ON NATURAL RESOURCES AND WATER

Senator Henry Stern, Chair

2019 - 2020 Regular

Bill No: AB Hearing Date: July 9, 2019

Subject: Endangered wildlife: crocodiles and alligators

BACKGROUND AND EXISTING LAW

1. Makes it unlawful to import into the state for commercial purposes, to possess with intent to sell, or to sell within the state, the dead body, or any part or product thereof, of specified wild animal species that are not native to California. Violation of this prohibition is punishable as a misdemeanor subject to a fine of not less than $1,000 and not more than $5,000, or six months imprisonment, or both. [Penal Code (PEN) §653(o)]
2. Makes it unlawful, commencing January 1, 2020, to import into this state for commercial purposes, to possess with intent to sell, or to sell within the state, the dead body, or any part or product thereof, of a crocodile or alligator. Importation, possession, and sale of such products are currently allowed in California until that date, except that the law does not authorize importation or sale of any alligator or crocodilian species, or any products thereof, that are listed as endangered under the federal Endangered Species Act, or where such action would be in violation of any federal law or international treaty to which the United States is a party. (PEN §653o)
3. Existing federal law establishes the Endangered Species Act (Title 16, United State Code, §§1531 et seq.) to protect animals at risk.
4. The Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) is an international agreement between 183 governments. Its aim is to ensure that international trade in specimens of wild animals and plants does not threaten their survival. PEN §653o complements the implementation of CITES.
5. CITES was drafted as a result of a resolution adopted in 1963 at a meeting of members of IUCN (The International Union for Conservation of Nature). The text of the Convention was agreed to at a meeting of representatives of 80 countries in Washington, D.C., in1973, and in 1975 CITES entered into force. The U.S. is a party to CITES.
6. CITES is an international agreement to which nations and regional economic integration organizations adhere voluntarily. Although CITES is legally binding, it does not take the place of national laws. Rather, it provides a framework to be respected by each member which has to adopt its own legislation to ensure that CITES is implemented at the national level.

Annually, international wildlife trade is estimated to be worth billions of dollars and to include hundreds of millions of plant and animal specimens. The trade is diverse, ranging from live animals and plants to a vast array of wildlife products derived from them, including food products, exotic leather goods, wooden musical instruments, timber, tourist curios and medicines. Levels of exploitation of some animal and plant species are high, and the trade in them, together with other factors, such as habitat loss, is capable of heavily depleting their populations and even bringing some species close to extinction. Many wildlife species in trade are not endangered, but the existence of an agreement to ensure the sustainability of the trade is important in order to safeguard these resources for the future.

Because the trade in wild animals and plants crosses borders between countries, the effort to regulate it requires international cooperation to safeguard certain species from over-exploitation. Today, it accords varying degrees of protection to more than 35,000 species of animals and plants, whether they are traded as live specimens, fur coats or dried herbs.

1. The IUCN established its “Red List” of threatened species in 1964. According to the IUCN, the list “has evolved to become the world’s most comprehensive information source on the global conservation status of animal, fungi, and plant species.” The intent of the Red List is to guide research and direct actions needed to protect species. The Red List informs CITES.
2. Animals listed in CITES’ Appendices are subject to varying levels of trade restriction.
   1. Appendix I species are the most endangered species among CITES-listed animals and international trade in those species is prohibited.
   2. Appendix II species are “not now threatened with extinction, but may become so if trade is not controlled.” Importantly, as seen below, Appendix II species include “look-alike” species for those species that appear similar when traded.
3. Existing state law establishes the California Department of Fish and Wildlife (department) and the Fish and Game Commission (commission) in the California Natural Resources Agency. The department’s mission is “to manage California's diverse fish, wildlife, and plant resources, and the habitats upon which they depend, for their ecological values and for their use and enjoyment by the public.”
   1. In general, the commission sets regulations that the department implements and enforces. The department also provides data and expertise to inform the commission’s decision-making process.

PROPOSED LAW

This bill:

1. Extends for five years, until January 1, 2025, the existing provision that permits the commercial importation, possession with intent to sell, and sale in California of the dead body, or parts and products from the dead body, of an alligator and crocodile.
2. Prohibits the importation or sale of any alligator or crocodile, or the products thereof, that is listed as endangered under the Endangered Species Act, or that would be in violation of any federal law or international treaty.
3. Requires products sold in California before January 1, 2025 to be accompanied by a disclosure that the materials were sourced in full compliance with the provisions of the Convention on International Trade in Endangered Species (CITES).

ARGUMENTS IN SUPPORT

According to the author, “since being listed on the Federal Endangered Species list in 1971, the resurgence of the alligator population in the wild habitat is nothing short of an amazing recovery. The species now flourishes in the wild in many Southeastern US states (their natural habitat), while the illegal trade (hunting and poaching) in alligator skins has essentially been eliminated.

That resurgence is due to a coordinated response by federal and state government agencies, environmental and wildlife groups, international organizations and the development of a legitimate, highly regulated alligator farming industry working together.

This effort has resulted in the US Fish and Wildlife Service stating that “The story of the American alligator is one of both drastic decline and complete recovery. A story of state and federal cooperation, it is truly one of the prominent successes of the nation’s endangered species program”. In effect, the coordinated effort to restore the alligator species has resulted in an “ecosystem” that does the following things:

1. Provides a well-coordinated and funded program that helps to maintain and preserve alligator wildlife habitat (wetlands and coastal marshes).
2. Requires regulated alligator farmers to provide a minimum of 10% of farmed alligator yearlings back into the wildlife to promote the wild population.
3. Provides revenue sources to both private and public wetland property owners for use in wetland maintenance.
4. The revenue generated for these efforts comes from three sources:
5. Revenue from alligator farmers who purchase eggs from the wild for farming purposes.
6. A fee paid by alligator farmers per hide (or skin) harvested to states to promote the regulation of the farms and wetlands.
7. Both governmental and private NGO funds which are accessed thru the matching funds provided by farmers.

Without the legal, commercial market for alligator and crocodile products and the revenue it provides for farmers and the above efforts, the “ecosystem” created to save alligators will collapse, with the unintended consequence of providing a market for illegal hunting and poaching.

In addition, failure to extend the current law prohibition would adversely impact ground breaking medical research being conducted at California universities, by making research elements less available and more expensive. It would also prohibit the sale of important pet foods made using alligator meat upon which allergy sensitive pets rely.”

Other supporters emphasize the economic importance of the trade in alligator and crocodile products, estimated to be $1 billion annually on a global basis, the need to avoid disruption of that trade, and how the failure of this bill could affect the wetlands restoration efforts funded by the industry in Louisiana. Several supporters asserted that no other state or country currently bans alligator or crocodile trade.

The Pet Food Institute indicated that some pet foods contain alligator protein which can help pets with special dietary needs. Another company that makes the vaccine that is used in Louisiana to curtail the spread of West Nile virus supports the bill.

A significant volume of supporting materials was submitted to the Committee.

ARGUMENTS IN OPPOSITION

According to a coalition that includes Defenders of Wildlife, Natural Resources Defense Council, Sierra Club California, and Center for Biological Diversity, AB 719 would continue to waive existing law by allowing a market for alligator and crocodile products even though there is considerable evidence that international trafficking in wildlife, particularly endangered animals, is a significant problem in California as well as the rest of the United States. These groups also oppose the process by which this bill was referred to this committee.

This coalition notes that while the status of the American alligator was upgraded from “endangered” to “threatened due to similarity of appearance” after increased trade regulations were put in place and controlled farming operations began in 1987. However, international trafficking threatens more than 20 additional crocodilian species and they argue it is time for California to allow the prohibition on trade to recommence.

They argue that the harvested skins of protected crocodilian species are illegally harvested and then tanned into luxury leather goods. Because of the similar appearance of the leather of various crocodiles, alligators, caimans, and gharials, combined with inadequate tracking legal harvest, it is virtually impossible for consumers to distinguish between products made from legally farmed as opposed to wild-caught endangered animals.

Separately, Defenders of Wildlife has released a study showing that illegal wildlife shipments from Latin America, (tracking 10 years of trade), showed that reptile species were among the top traded illegal products seized by volume, with 5700 pounds of shoes and 4700 pounds of small leather products. Of these, caiman and crocodile were the most common.

The study indicated that 9% of all the shipments contained caiman items, 86% of which were sourced from the wild, and 50% of which were imported for commercial purposes. It also indicated that 9% of all shipments contained crocodile items, 96% of which were sourced from the wild, and 88% of which were imported for personal purposes.

A coalition of animal protection nonprofit organizations are also in opposition. The letter argues that crocodiles and alligators are killed using barbaric methods such as being skinned alive, so they can be turned into luxury items. Undercover videos have documented inhumane treatment of animals. These groups also note that many companies have already banned exotic animal skins including Adidas, Bebe, Hugo Boss, Nike, Puma, Stella McCartney, Victoria Beckham, among others.

A research paper from opposition groups take aim at the research provided by the supporters. This paper, written by Clifford Warwick, a noted, peer-reviewed researcher, emphasizes the lack of appropriate husbandry of the industry, that 25% of all wildlife trade is illegal, and that monitoring and enforcement of illegal trade, including in the U.S., is deficient.

As for the argument that alligators produce certain substances that may have medical values, this paper points out ongoing research into that question is not dependent on a market in commercial body parts. Warwick also dismisses the argument that re-instating a ban in California will drive the market underground. He notes that previous bans on other reptile species did not have that effect. Instead, the industry simply contracted to follow the law.

COMMENTS

Background: The American alligator is one species of the reptile order crocodilia, which includes crocodiles and caiman that is commercially traded for both its hide and meat. Because of the threatened or endangered status of some crocodilians, both domestic and international trade are highly regulated and monitored. The U.S. Fish and Wildlife Service (USFWS), through the Endangered Species Act (ESA) and other wildlife laws, monitors state programs and inspects all shipments of hides that are exported. Individual state agencies regulate both wild harvest and farm production activities. Foreign importers of alligator and crocodile hides are subject to the regulations of a treaty known as the Convention for the International Trade of Endangered Species (CITES). There are 26 species of alligators, crocodiles, caiman, and gharials listed and protected under CITES. Opposition groups note that this bill could legalize conduct that may threaten endangered or threatened species and contribute to their inhumane treatment.

History of the Sunset. In 2006, former Governor of Louisiana Kathleen Blanco sponsored SB 1485 (Hollingsworth), which lifted the ban on importation and sale of alligator and crocodile products in California. The state of Louisiana argued that permitting the sale of alligator products in California would encourage sustainable use management of alligator populations in Louisiana, benefit local communities and economic recovery in that state after Hurricanes Katrina and Rita, and encourage conservation of wetlands. The Legislature agreed to lift the ban but added a sunset date of 2010 in response to concerns that allowing importation could encourage increased production, putting increased pressure on wild stocks, or lead to more harvesting of endangered or threatened species that resemble species taken legally.

In 2009, the sunset was extended for another five years to 2015 with the passage of SB 609 (Hollingsworth). The state of Louisiana again sponsored the measure, and asserted that the opening up of the California market had helped to support a sustainable use program that generated significant annual economic revenue for coastal Louisiana. They cited that CITES had recognized Louisiana’s management program as a world-wide model for sustainable conservation. In 2014, the law was extended five more years to 2020 with the passage of AB 2075 (Alejo) sponsored by the California Retailers Association.

Global Trade and CITES Regulations. Of the 23 species in the order crocodilia, seven are endangered and four are vulnerable according to the International Union for Conservation of Nature’s (IUCN) Red List, which assesses the conservation status of species at a global level. Crocodiles and alligators are found in international trade for the leather, for meat, and as live animals for breeding operations, the pet industry, and zoos. According to the UN Environment World Conservation Monitoring Centre’s (UNEP-WCMC) 2018 report on international trade in crocodilian skins, ten species are legally traded commercially. Alligators comprise nearly 40 percent of global trade. They and two other species, the Nile crocodile and the Brown Caiman, account for 85 percent of trade. All three are listed as least concerned by the IUCN. Two traded species are listed as endangered or vulnerable, but these exports are reported as farm-raised and account for two percent of global trade. More than 1.4 million skins are exported globally. Most meat is consumed or used locally but over 1.2 million pounds of meat are still exported globally each year.

All crocodilians are listed in either Appendix I (endangered) or Appendix II (threatened or similar in appearance to threatened species) of CITES. Under CITES, all hides sold commercially are required to be tagged to distinguish them from listed species that are not permitted to be legally traded. However, the products made from the hide are not required to carry tags. A 1987 USFWS ruling noted “small parts and products of crocodilian leather are nearly impossible to distinguish when made into goods, thus hampering the identification of legal alligator products from those of endangered or threatened crocodilians. Problems with identification could increase illegal trade in endangered crocodilian products” (Federal Register: 52 FR 21059-21064). All countries are also required to submit annual reports on the alligators and crocodiles harvested to CITES. The US has filed all required annual reports, but several countries important to the global crocodile products trade including Australia, Bangladesh, Botswana, Israel, Papua New Guinea, Panama, South Africa, and Tanzania fail to do so despite new enforcement regulations. The UNEP-WCMC report also notes that the accuracy of data as well as the quality and consistency of some annual reports further limit analysis of the trade. CITES attempts to improve accuracy by cross matching import data with original export permit information. The report summarizes: “Significant improvement in reporting of crocodilian trade continues; however, absence of annual reports from some countries continues to be a hindrance to timely analysis of the trade.”

History of Alligators in Louisiana. In response to a declining alligator population due to over hunting and loss of habitat, Louisiana banned alligator hunting in 1962. Alligators gained federal protection in 1967, and were listed as endangered in 1973 with the passing of ESA. As the population started recovering, Louisiana reopened a limited hunting season in certain areas of the state in 1972 and then expanded it statewide in 1981. In the 1970s, the Louisiana Department of Fisheries and Wildlife (LDFW) also developed a program of regulated commercial harvest and farming. The intent of the program was to convince private landowners, who own the majority of Louisiana’s wetlands (roughly two million acres of alligator habitat), to view alligators as a resource rather than a liability, to maintain habitats, and to provide long-term benefits to the survival of the species. In 1975 alligators were downlisted under the ESA to “threatened” and were deemed recovered by 1987. The LDFW’s 2017 summer survey estimated that there were 50,989 wild alligator nests, down 12 percent from 2016 due to Tropical Strom Cindy but up over 650 percent from the 1971 survey. From this survey, the LDFW estimates there are currently two million wild alligators in Louisiana.

Louisiana is one of nine southern states that has a regulated alligator hunt and one of four that have commercial alligator farming (the others are Texas, Georgia, and Florida). Louisiana accounts for over 90 percent of total annual farm-raised production and over 60 percent of wild alligator harvests. Florida accounts for eight percent of farm-raised alligators and nearly 35 percent of wild alligator harvests. Louisiana and Florida also rely on private certified hunters to deal with, annually, over 10,000 nuisance alligators— alligators that pose a threat to people or property. Hunters are allowed to process the meat and skin of the nuisance alligator for commercial sale as compensation.

In order to export alligator hides and meat, the state of Louisiana is required by USFWS and CITES regulations to certify annually that the harvest programs will not be detrimental to the survival of the species. The LDFW sets hunting and egg harvest quotas for different habitat areas based upon the annual nest surveys as to not negatively impact populations at any location. Alligator eggs collected from the wild are then grown in captivity on alligator farms. The LDWF requires a certain percentage, similar to wild survival rates, of juvenile alligators hatched from the eggs be returned to the wild within two years of hatching, and the released alligators are tagged for follow-up monitoring. The return requirement is 10 percent, down from a 20 percent return requirement in the early 1990s as the population has recovered. During the 2017 hunting season, a total of 15,052 wild alligators were harvested (down from 34,234 in 2016), 387,373 wild alligator eggs were collected, and 49,112 farm raised alligators were returned to the wild. Louisiana has 57 licensed alligator farms with a total of 857,728 alligators. These farms harvested 382,039 alligators and over a million pounds of meat in 2017 with an estimated worth of $70 million.

Concerns over Farm Conditions and Slaughter. In recent years, issues have been raised regarding appropriate humane methods for slaughter of farm-raised alligators. In 2011, to address the issues, the LDFW and the Louisiana State University School of Veterinary Medicine developed a document entitled “Best Management Practices for Louisiana Alligator Farming.” The document details recommended practices to ensure animal welfare of captive reared alligators in Louisiana, including egg collection, hatching, rearing, release to the wild, and euthanasia. This document was updated in January 2016 as new information regarding euthanasia was investigated. The recommended methods have been approved by the American Veterinary Medicine Association. There are, however, ongoing concerns regarding the implementation of these kinds of guidelines and regulations particularly in countries where enforcement may not be as robust. Past media reports have pointed to abuse and inhumane slaughtering of crocodiles at farms in Vietnam and a small alligator farm in Texas.

The Lookalike Problem. As noted earlier, it is virtually impossible for consumers to tell the difference between products made from farmed versus wild-caught animals. Conservation groups have been trying for years to convince the industry to develop a system to number skins and products with tags that can’t be counterfeited. While Louisiana does tag skins, product manufacturers do not take finished products. This bill could lead to otherwise innocent Californians purchasing products made from wild-caught, endangered animals.

CITES recognizes the problem of lookalike species and specifically extends protection to them based on that very reason. The proponents may have a difficult problem in overcoming that point.

Similarly, a curious amendment in the Assembly Water Parks and Wildlife Committee was successful in helping an earlier bill this year achieve passage in that committee. The amendment provided that all products introduced into California were “made using materials that were sourced in full compliance with the provisions of the [CITES] Convention.”

The obvious difficulty with this amendment is that it makes a declaration that products are in full compliance with CITES but it does not establish how that compliance will be verified. For that amendment to work, there has to be a way to track products back to the skins that were used, and there has to be a way to make sure the skins are from lawfully sourced animals, and that products use the skins that are legally sourced. That system simply does not exist at the present. Some conservation groups have been actively pursuing a discussion with the industry on this point for years but that discussion has never developed.

A related problem for the proponents is posed by AB 1260 (Maienschein) which, among other things, prohibits the importation in California of products made from caiman. As noted above, the several species of caiman are in the alligator family which, in turn, is in the crocodylia order. Because the caiman leather can easily be confused for that of another species, AB 1260, if it becomes state law, may irreconcilably conflict with this bill. AB 1260 is currently pending in Senate Appropriations, after having passed this Committee.

The waiver of §PEN 653o has been granted 3 times by the Legislature with no discernable action by the industry or the proponents of this bill to develop an effective tracking or chain of custody system. The Committee may therefore want to defeat this bill.

On the point of developing an effective tracking system, it is not clear what it takes to create movement in that regard, but as an alternative to defeating the bill, the Committee may want to hold this bill until next year (or later) pending the development of such a system. The lack of a market in California may provide an incentive. Several industries have certification systems to inform consumers of the production safeguards of their products. Staff suggests that an effective tracking and chain of custody system must be certified as effective by the director of the Department of Fish and Wildlife. Any such system also must be able to ensure chain of custody from skin to product to ensure that products come from lawfully sourced skins, differentiate between caiman and other species, and specifically enable enforcement of any prohibition of trade in lookalike species.

SUPPORT

Accessories Council

AdvaMed

American Watch Association

AMTAN Louisiana

Belvedere Shoes

Beverly Hills Chamber of Commerce

Biocom

Boehringer Ingelheim Animal Health USA Inc.

Brooks Family Alligator Farm II, LLC

Caimanes y Cocodrilos de Chiapas

California Biomedical Research Association

California Grain and Feed

California Hispanic Chamber of Commerce

California Life Sciences Association

California Retailers Association

Cape Cobra Leathercraft

Comtesse Delphine de Grasse

Crocodilian Innovations

Donald Organic Extractions, LLC

ECOCAIMAN S.A.S.

Faggioli s.r.l.

Federation of Swiss Watch Industry

FRANCESCO SKINS CORP

Georgia Agribusiness Council

Global Alligator Coalition, LLC

Hesiquio Benitez Diaz, Head of the CITES Scientific Authority of Mexico

Ikon Construction, LLC

Innovative Extractions, LLC

Izintaba Crocodile Farm

Jerome CARAGUEL

JL & Co., LTD/John Lobb America

jPardue

JT Shea properties LLC

Karen Kay Atelier

Lacerta Life Sciences, LLC

Lagniappe Nutrition, LLC

LIRICA S.A.S.

Lola Prusac

Louisiana Landowners Association, Inc.

Mercury Leather Works

METTIQUE

Mississippi Department of Wildlife, Fisheries, and Parks

MNDW, LLC

Monarch Marketing, LLC

Monk Made Goods

MwaLeatherGoods

Nathan Wall & Sons Alligator Services, LLC

Nathan Wall Alligator Consulting, LLC

Nomadic Hardgoods

Nutcracker Inc.

Pellletterie Bianchi e Nardi SpA

Pet Food Institute

Rancho 2R, LLC

Second Time Around Watch Company

SELMINT

Silver King

South LA Nutrition, LLC

Swampland Leather Company, LLC

UNIC Italian Tanneries

United Leather Product Co., Ltd.

Wall to Wall Alligator Company, LLC

Wall’s Gator Farm II, LLC

Wall’s Gator Farm, LLC

WG Alligator Farm, LLC

WHG Consulting, LLC

White Line S.r.I.

Dozens of individuals

OPPOSITION

Advancing Law for Animals

Animal Hero Kids

Animal Hope in Legislation

Animal Legal Defense Fund

Animal Welfare Institute

Anonymous for the Voiceless

Berkeley Animal Rights Center

California Coastal Protection Network

Center for Biological Diversity

Clean Water Action

Compassionate Bay

Cultivate Empathy for All

Defenders of Wildlife

Delfina Saddlery

Direct Action Everywhere

Fur Free Minneapolis

Hangars Underwear

Happy Hen Sanctuary

Humane Society of the United States

International Citizen Fashion

Jane Unchained News Network

Natural Resources Defense Council

PawPac

Peace 4 Animals

People for the Ethical Treatment of Animals

Petacure

Poison Free Malibu

Project Coyote

Raptors are the Solution

Sierra Club California

Social Compassion in Legislation

The HIT Living Foundation

The Save Movement

The Sheep Heal Project

Their Turn

Veterans Empowered to Protect African Wildlife

Voters for Animal Rights

Women United for Animal Welfare

World Animal News

-- END --

ASSEMBLY THIRD READING

ATR Bill Id:AB 719

Author:(Diep)

As Amended Ver:May 16, 2019

Majority vote

SUMMARY:

Makes legislative findings and declarations that payments for Medi-Cal fee-for-service (FFS) payments for specified non-Medi-Cal programs have been reduced by 10% for dates of services on and after June 1, 2011, and payments to Medi-Cal managed care plans have been reduced by the actuarial equivalent amount of the payment reductions for FFS benefits. States legislative intent to enact legislation to require the Department of Health Care Services (DHCS) to discontinue reducing or limiting these provider payments.

Major Provisions

COMMENTS:

Beginning in 2008, Medi-Cal payment rates to health plans and providers in the program were reduced to help address state budget deficits. In 2011, the Legislature passed and Governor Brown signed AB 97 (Committee on Budget), Chapter 3, into law, which largely replaced prior Medi-Cal rate reductions and which remain in effect today. Major provisions of AB 97 include the following:

1. Reduced Medi-Cal provider payments, with specified exceptions, by 10% for FFS benefits for dates of service on and after June 1, 2011;
2. Required Medi-Cal managed care plan rates to be reduced by the actuarial equivalent amount of the FFS reduction, effective July 1, 2011;
3. Froze rates at the 2008-09 rate year and then applied the 10% rate reduction for certain types of facility providers;
4. Required the payment reductions to be applied retroactively to June 1, 2011 or on such other date as may be applicable when federal approval is obtained;
5. Conditioned the implementation of the payment reductions on the reductions complying with federal Medicaid requirements and federal approval;
6. Granted the Director of DHCS the discretion to not implement a particular payment reduction or adjustment, or to adjust the payment as necessary to comply with federal Medicaid requirements, to the extent that the Director determines that the payments do not comply with the federal Medicaid requirements or that federal financial participation is not available with respect to any payment that is reduced; and,

Federal approval of the AB 97 rate reductions was obtained in October 2011, but a court injunction prevented DHCS from implementing many of these reductions. In June 2013, the injunctions were lifted, which gave the state the authority to: 1) apply the reductions to current and future payments to providers on an ongoing basis; and, 2) retroactively recoup the reductions from past payments that were made to providers during the period in which the injunctions were in effect (this is commonly referred to as a "claw back").

The AB 97 reductions did not apply to certain provider categories, including hospital inpatient and outpatient services, critical access hospitals, federally qualified health centers, hospices, services provided under Planning, Access, Care, and Treatment program, and payments funded by intergovernmental transfers or certified public expenditures. Entities subject to the AB 97 rate reduction include physician services to adults, other health care providers (such as nurse practitioners, psychologists, podiatrists, optometrists, and physical therapists), blood banks, adult day care centers, Multipurpose Senior Services Program providers, medical transportation providers, durable medical equipment/medical supply providers, dental service providers, clinics, and pharmacy providers. Several types of providers and services were exempted from the ongoing payment reductions through either administrative decisions by DHCS or through subsequently enacted legislation. DHCS administratively exempted the Medi-Cal managed care plans from the AB 97 retroactive reduction, and various providers and services were exempted prospectively.

DHCS assumes total fund savings from the AB 97 reductions of $531.8 million ($181.3 million General Fund (GF)) in 2018-19, of which $13.9 million is due to recoupments ($7.2 million GF).

According to the Author:

California is experiencing a budget surplus of $21.4 billion this year. The Legislature should reinvest part of that money in our struggling Medi-Cal system. AB 97 (Committee on Budget), Chapter 3, Statutes of 2011, made some significant cuts to various Medi-Cal plans and provider rates. This bill will discontinue those cuts and make sure providers receive adequate reimbursements so they continue offering their services. Increasing Medi-Cal's FFS rates provides an incentive to providers to provide better treatments because payments are less dependent on the quantity of care.

Arguments in Support:

The California Medical Association (CMA) writes in support that access to care for the growing Medi-Cal population continues to be a challenge and recruiting enough providers to care for these beneficiaries will be further exacerbated. Low Medi-Cal reimbursement rates are the most critical factor cited for the inability to recruit physicians to safety-net communities. CMA states that, for many services, California ranks near the bottom of what states pay Medicaid providers. Years of persistently low provider rates have made it impossible for physicians to treat Medi-Cal patients while also maintaining a viable practice. Most physicians, despite their best intentions, simply cannot sustain a practice with a substantial Medi-Cal patient mix.

Arguments in Opposition:

There is no known opposition.

FISCAL COMMENTS:

According to the Assembly Appropriations Committee, ongoing costs of about $185 million GF ($531 million total funds) annually to discontinue the payment reductions as specified. Half-year costs would be incurred for 2019-20 since this bill is effective for dates of service after January 1, 2020, but as Medi-Cal is budgeted on a cash basis, not an accrual basis, the actual 2019-20 fiscal impact requires further analysis.

VOTES:

ASM HEALTH: 15-0-0

YES: Wood, Mayes, Aguiar-Curry, Bigelow, Bonta, Burke, Carrillo, Flora, Limón, McCarty, Nazarian, Ramos, Rodriguez, Santiago, Waldron

ASM APPROPRIATIONS: 18-0-0

YES: Gonzalez, Bigelow, Bloom, Bonta, Brough, Calderon, Carrillo, Chau, Diep, Eggman, Fong, Gabriel, Eduardo Garcia, Maienschein, Obernolte, Petrie-Norris, Quirk, Robert Rivas

UPDATED:

VERSION: May 16, 2019

CONSULTANT: Scott Bain / HEALTH / (916) 319-2097 FN: 0000828

Date of Hearing: May 1, 2019

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez, Chair

ABPCA Bill Id:AB 719

Author:(Diep) – As Amended Ver:April 12, 2019

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

SUMMARY:

This bill requires the Department of Health Care Services (DHCS), for dates of service on or after January 1, 2020, to discontinue reducing or limiting the Medi-Cal provider payments and specified other programs under the “AB 97” Medi-Cal rate reduction.

FISCAL EFFECT:

Ongoing costs of about $185 million GF ($531 million total funds) annually to discontinue the payment reductions as specified. Half-year costs would be incurred for 2019-20 since this bill is effective for dates of service after January 1, 2020, but as Medi-Cal is budgeted on a cash basis, not an accrual basis, the actual 2019-20 fiscal impact requires further analysis.

COMMENTS:

1. Purpose. According to the author, California should invest some of the state’s large budget surplus into reversing rate reductions made to Medi-Cal providers. AB 97 (Committee on Budget), Chapter 3, Statutes of 2011, cut provider rates. This bill will discontinue the cuts.
2. Provider Rate Reductions. During the recession, reductions were made to most provider reimbursement rates and managed care capitation payments. Almost immediately, however, some providers questioned the legality of these cuts, and injunctions were issued, blocking some of the reductions. This issue played out in the courts over several years, with some reductions reversed, others implemented prospectively and still others implemented retrospectively, leading to recoupment schedules that structure repayments from providers back to the state. The complicated web of challenges, injunctions, exemptions and recoupments is described in detail in the semi-annual Medi-Cal estimates published by DHCS and summarized in a report by the Center for Healthcare and Policy Research at UC Davis, the “Medi-Cal Budget: Lessons Learned from a Review of Policy Changes with Significant Budgetary Impact, 2007– 2017.”

Many rate reductions remain in effect, including for managed care plans, nursing facilities, physicians, medical supplies and durable medical equipment, among other provider categories. The cost estimate above assumes this bill language is adequate to reverse all “AB 97 cuts” on a prospective basis. This bill does not affect planned recoupments that went into effect when injunctions were lifted, nor does it affect reimbursement for services rendered prior to January 1, 2020.

1. Provider Rate Increases. In more prosperous recent years, prior cuts to dental providers and long-term care facilities were reversed, and provider payments to primary care physicians increased in 2013 and 2014 as required by the federal Affordable Care Act.

In addition, Proposition 56 of November 2016 increased the excise tax rate on cigarettes by $2 per pack and equivalently taxed electronic cigarettes. The 2017-18 budget package included a two-year budget agreement on Proposition 56 revenues in Medi-Cal, which dedicated $546 million Proposition 56 funding in 2017-18 and up to $800 million in 2018-19 to increase certain provider rates. Specifically, provider categories targeted for Proposition 56 supplemental payments include physician services, dental services, women’s health services, intermediate care facilities for the developmentally disabled and the HIV/AIDS waiver program.

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

Date of Hearing: April 23, 2019

ASSEMBLY COMMITTEE ON HEALTH

Jim Wood, Chair

ABPCA Bill Id:AB 719

Author:(Diep) – As Amended Ver:April 12, 2019

SUBJECT: Medi-Cal: reimbursement rates.

SUMMARY: Requires the Department of Health Care Services (DHCS), for dates of service on or after January 1, 2020, to discontinue reducing or limiting the Medi-Cal provider payments and specified other programs under what is known as the AB 97 Medi-Cal rate reduction.

EXISTING LAW:

1. Establishes the Medi-Cal program, administered by DHCS, under which qualified low-income patients receive health care benefits.
   
2. Requires, except as otherwise provided, Medi-Cal provider payments and payments for specified non-Medi-Cal programs to be reduced by 10% for dates of service on and after June 1, 2011, and requires payments to Medi-Cal managed care plans to be reduced by the actuarially equivalent amount of 10% for dates of service on and after June 1, 2011.
3. Requires the payment reductions and adjustments to be implemented only if the DHCS Director determines that the payments that result will comply with applicable federal Medicaid requirements and that federal financial participation (FFP) will be available.
4. Requires the DHCS Director, in determining whether FFP is available, to determine whether the payments comply with applicable federal Medicaid requirements.
5. Requires the DHCS Director, to the extent that the director determines that the payments do not comply with the federal Medicaid requirements or that FFP is not available with respect to any payment that is reduced, to retain the discretion to not implement the particular payment reduction or adjustment and to adjust the payment as necessary to comply with federal Medicaid requirements.

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

COMMENTS:

1. PURPOSE OF THIS BILL. According to the author, California is experiencing a budget surplus of $21.4 billion this year. The Legislature should reinvest part of that money in our struggling Medi-Cal system. AB 97 (Committee on Budget), Chapter 3, Statutes of 2011, made some significant cuts to various Medi-Cal plans and provider rates. This bill will discontinue those cuts and make sure providers receive adequate reimbursements so they continue offering their services. Increasing Medi-Cal’s fee-for-service (FFS) rates provides an incentive to providers to provide better treatments because payments are less dependent on the quantity of care.
2. BACKGROUND. Beginning in 2008, Medi-Cal payment rates to health plans and providers in the program were reduced to help address state budget deficits. In 2011, the Legislature passed and Governor Brown signed AB 97 into law, which largely replaced prior Medi-Cal rate reductions and which remain in effect today. Major provisions of AB 97 include the following:
   1. Reduced Medi-Cal provider payments, with specified exceptions, by 10% for FFS benefits for dates of service on and after June 1, 2011;
   2. Required Medi-Cal managed care plan rates to be reduced by the actuarial equivalent amount of the FFS reduction, effective July 1, 2011;
   3. Froze rates at the 2008-09 rate year and then applied the 10% rate reduction for certain types of facility providers;
   4. Required the payment reductions to be applied retroactively to June 1, 2011 or on such other date as may be applicable when federal approval is obtained;
   5. Conditioned the implementation of the payment reductions on the reductions complying with federal Medicaid requirements;
   6. Granted the Director of DHCS the discretion to not implement a particular payment reduction or adjustment, or to adjust the payment as necessary to comply with federal Medicaid requirements, to the extent that the Director determines that the payments do not comply with the federal Medicaid requirements or that federal financial participation is not available with respect to any payment that is reduced; and,
   7. Prohibited implementation of the reductions until federal approval was obtained.
      

Federal approval of the AB 97 rate reductions was obtained in October 2011, but a court injunction prevented DHCS from implementing many of these reductions. In June 2013, the injunctions were lifted, which gave the state the authority to: a) apply the rceductions to current and future payments to providers on an ongoing basis; and, b) retroactively recoup the reductions from past payments that were made to providers during the period in which the injunctions were in effect (this is commonly referred to as a “claw back”).

The AB 97 reductions did not apply to certain provider categories, including hospital inpatient and outpatient services, critical access hospitals, federally qualified health centers, hospices, services provided under Family PACT, and payments funded by intergovernmental transfers or certified public expenditures. Entities subject to the AB 97 rate reduction include physician services to adults, other health care providers (such as nurse practitioners, psychologists, podiatrists, optometrists, and physical therapists), blood banks, adult day care centers, Multipurpose Senior Services Program providers, medical transportation providers, durable medical equipment/medical supply providers, dental service providers, clinics, and pharmacy providers.

Several types of providers and services were exempted from the ongoing payment reductions through either administrative decisions by DHCS or through subsequently enacted legislation. DHCS administratively exempted the Medi-Cal managed care plans from the AB 97 retroactive reduction, and the following providers/services were exempted prospectively:

• 1. Pediatric health care;
  2. Audiology rates by a particular type of provider;
  3. Residential care facilities for the elderly and care coordinator agencies;
  4. Genetic disease screening program;
  5. Community-based adult services providers located in San Francisco;
  6. Non-profit dental pediatric surgery centers that provide at least 99% of their services under general anesthesia to children with severe dental disease under age 21;
  7. For-profit dental pediatric surgery centers that provide services to at least 95% of their Medi-Cal beneficiaries under age 21; and,
  8. Certain prescription drugs (or categories of drugs) that are generally high-cost drugs used to treat extremely serious conditions, such as hemophilia, multiple sclerosis, and hepatitis.
     

Providers subject to the retroactive payment recoveries include pharmacies, durable medical equipment/medical supply providers, clinical laboratories/laboratory services, distinct part skilled nursing facilities, and radiology service providers.

Dental services and applicable ancillary services and Denti-Cal managed care plans were exempt from the AB 97 reduction as the result of SB 75 (Committee on Budget and Fiscal Review), Chapter 18, Statutes of 2015, and which made pharmacy reductions to pharmacy drugs no longer subject to the 10% reduction effective April 1, 2017.

DHCS assumes total fund savings from the AB 97 reductions of $531.8 million ($181.3 million General Fund (GF)) in 2018-19, of which $13.9 million is due to recoupments ($7.2 million GF). For 2019-20, savings are estimated to be $531.8 million ($185.5 million), of which $13.9 million is due to recoupments ($7.2 million GF). The largest category of savings from the AB 97 reduction is from Medi-Cal managed care ($359 million in total funds in 2018-19).

1. PROPOSITION 56. Proposition 56 raised state taxes on tobacco products and dedicated the majority of associated revenues to Medi-Cal on an ongoing basis. Proposition 56 revenues have been used for two main purposes: a) augmenting the Medi-Cal program, such as, for example, by increasing Medi-Cal provider payments; and, b) offsetting General Fund (GF) spending on cost growth in Medi-Cal.
   
   The 2017-18 budget package included a two-year budget agreement on Proposition 56 revenues in Medi-Cal, which dedicated Proposition 56 funding to: a) increasing payments for certain Medi-Cal providers, and, b) paying for anticipated growth in state Medi-Cal costs over and above 2016-17 Budget Act levels, which offsets what otherwise have been GF costs. Specifically, the agreement authorized up to $546 million in 2017-18 and up to $800 million in 2018-19 in provider payment increases, with any remaining Proposition 56 Medi-Cal funding from 2017-18 ($711 million) and 2018-19 ($218 million) used to offset GF spending on cost growth in the Medi-Cal program.
   
   For 2017-18 and 2018-19, the budget agreement came with a structure of fixed dollar amount or fixed percentage increases in provider reimbursement levels that applied to an identified set of Medi-Cal services ranging from physician and dental visits to certain women’s health visits. For provider payment increases in 2018-19 above the total 2017-18 amount, most was dedicated to physician services payment increases, with the remainder dedicated to dental services payment increases and an assortment of other program increases.
2. PROPOSITION 56 AND GOVERNOR’S 2019-20 BUDGET. The Governor’s 2019-20 Budget continues to include supplemental payments for physicians, dentists, women’s health services, intermediate care facilities for the developmentally disabled (ICF/DD) providers, and HIV/AIDS Waiver services, and no longer proposes to use Proposition 56 funds to offset GF spending on cost growth in Medi-Cal. In addition, there are Proposition 56-funded ongoing rate increases for home health agencies, private duty nursing, and pediatric day health care programs. The total fiscal year (FY) 2019-20 Proposition 56 funding for these providers is $769.5 million.
   
   DHCS estimates the total funding (both federal and Proposition 56) in FY 2018-19 for these payments is $2.297 billion and in FY 2019-20 will be $3.174 billion. For FY 2019-20, the Governor’s Budget proposes three new programs funded with Proposition 56 revenues.
   1. A Value-Based Payment Program (VBP) through Medi-Cal managed care plans will provide incentive payments to providers for meeting specific measures aimed at improving care for certain high-cost or high-need populations. These risk-based incentive programs will be targeted at physicians that meet specific achievement on metrics targeting areas such as behavioral health integration; prenatal/post-partum care and chronic disease management. This program is funded with $180 million in Proposition 56 funds.
      
   2. Proposition 56 funding will support the provision of both developmental and trauma screenings for all children ages 0-21, as well as support trauma screenings for all adults with full- scope coverage in Medi-Cal. These screenings will be billed and reimbursed in both the managed care and fee-for-service delivery systems. These payments will be in addition to the amounts paid generally for the office visit in fee-for-service scenarios or capitation paid by managed care plans. The budget estimates that these screenings will spend $52.5 million of Proposition 56 funding.
      
   3. An additional family planning supplemental payment program targeted specifically at Medi-Cal family planning services in both fee-for-service and managed care. This program will provide additional fiscal support of family planning services in the Medi-Cal program. While $50 million of Proposition 56 is allocated to this program, with federal funding, this is expected to result in up to $500 million in supplemental payments.
3. SUPPORT. No letters yet
4. PREVIOUS LEGISLATION.
   1. AB 5 X3 (Committee on Budget), Chapter 3, Statutes of 2007-08 Third Extraordinary Session, reduced Medi-Cal provider FFS payments and payments to Medi-Cal managed care plans by 10% effective July 1, 2008, and also reduced payments for specified non-Medi-Cal programs in a similar manner and reduced non-contract Medi-Cal hospital payments as specified. AB 5 X3 exempted specified providers from payment reductions.
   2. AB 1183 (Committee on Budget), Chapter 758, Statutes of 2008, rendered inoperative the AB 5 X3 rate reduction provisions on February 28, 2009, and applied various payment reductions to other providers, including a 1% and a 5% rate reduction for certain types of providers.
   3. AB 5 X4 (Committee on Budget), Chapter 5, Statutes of 2009 froze Medi-Cal payment rates for specified providers, for services provided in the 2009-10 rate year and beyond, by prohibiting reimbursement rates from exceeding rates applicable in the 2008-09 rate year after the 5% reduction mandated by AB 1183.
   4. AB 97 (Committee on Budget), Chapter 3, Statutes of 2011, requires the rate reductions required by AB 1183 and AB 5 X4 not be instituted for services delivered on or after June 1, 2011 (with specified exceptions). Reduces Medi-Cal provider FFS and managed care payments by 10% effective June 1, 2011. Reduces payments for non-Medi-Cal programs for services on and after June 1, 2011, with exceptions. AB 97 was dependent upon federal approval and specified that payment reductions would be collected retroactively to June 1, 2011. Federal approval was obtained October, 2011 and effectively voided the payment reductions mandated in AB 1183 and AB 5 X4.
   5. AB 102 (Committee on Budget), Chapter 29, Statutes of 2011, continued the 1% and 5% Medi-Cal reductions set to expire effective June 1, 2011, until the reimbursement reductions specified in AB 97 received federal approval, at which time payments were to be collected retroactively back to June 1, 2011.
   6. AB 366 (Bonta) of 2015, among other provisions, would have increased rates paid to providers in the Medi-Cal program to the comparable rate paid in the Medicare program. AB 366 was held in the Senate Appropriations Committee suspense file and was eventually amended to deal with another issue.
   7. SB 243 (Ed Hernandez) of 2015 was virtually identical to AB 366. SB 243 was held in the Senate Appropriations Committee suspense file.
   8. AB 2203 (Gray) of 2018 would have increased rates in the Medi-Cal program for primary care services, as defined, by establishing that the rates are equal to 100% of Medicare rates for such services in both the fee-for-service and managed care delivery systems, and would have exempted primary care services from rate reductions that otherwise apply. AB 2203 was held on the Assembly Appropriations Committee suspense file.
   9. SB 840 (Mitchell), Chapter 29, Statutes of 2018, the 2018-19 Budget Bill, contained an appropriation and budget bill language requiring DHCS to develop the structure and parameters for Medi-Cal supplemental provider payments and rate increases using Proposition 56 tobacco tax funds in a manner similar to the Budget Act of 2017 (Chapter 14, 22, and 54, Statutes of 2017).

REGISTERED SUPPORT / OPPOSITION:

Support

>

Opposition

None on file.

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