Existing law establishes the Medi-Cal program, which is administered by the State Department of Health Care Services and under which qualified low-income individuals receive health care services. The Medi-Cal program is, in part, governed and funded by federal Medicaid program provisions.

Existing law, subject to implementation of the California Advancing and Innovating Medi-Cal (CalAIM) initiative, authorizes a Medi-Cal managed care plan to elect to cover community supports approved by the department as cost effective and medically appropriate in a comprehensive risk contract that are in lieu of applicable Medi-Cal state plan services. Under existing law, community supports that the department is authorized to approve include, among other things, housing transition navigation services, recuperative care, respite, day habilitation programs, and medically supportive food and nutrition services.

This bill would add fitness, physical activity, recreational sports, and mental wellness or recreational sports programs, activities, or memberships to the above-described list of community supports.

Existing law establishes the Medi-Cal program, which is administered by the State Department of Health Care Services and under which qualified low-income individuals receive health care services. The Medi-Cal program is, in part, governed and funded by federal Medicaid program provisions.

Existing law, subject to implementation of the California Advancing and Innovating Medi-Cal (CalAIM) initiative, authorizes a Medi-Cal managed care plan to elect to cover community supports approved by the department as cost effective and medically appropriate in a comprehensive risk contract that are in lieu of applicable Medi-Cal state plan services. Under existing law, community supports that the department is authorized to approve include, among other things, housing transition navigation services, recuperative care, respite, day habilitation programs, and medically supportive food and nutrition services.

This bill would add fitness, physical activity, recreational sports, and mental wellness memberships to the above-described list of community supports.

Date of Hearing: May 3, 2023

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Chris Holden, Chair

ABPCA Bill Id:AB 1338

Author:(Petrie-Norris) – As Amended Ver:April 20, 2023

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

SUMMARY:

Requires the Department of Health Care Services (DHCS) to approve, and a Medi-Cal managed care plan to elect to cover “fitness, physical activity, or recreational sports programs, activities, or memberships” (hereinafter, “fitness programs”) as an allowable Community Support through the California Advancing and Innovating Medi-Cal (CalAIM) demonstration project.

FISCAL EFFECT:

Cost pressure, possibly exceeding $150,000, for DHCS to seek federal approval to add fitness programs as a community support in the CalAIM project. If the federal government approves the amendment, there will be additional cost pressures, potentially in the millions of dollars, to provide the newly available community support (General Fund and federal funds).

COMMENTS:

1. Purpose. This bill is sponsored by the California Fitness Alliance (Alliance). According to the author:

Increasing gym access is a solid investment in individuals and our community health as a whole. Unfortunately, many low income Californians face barriers to accessing exercise and wellness services that could dramatically lower their risk for common chronic diseases and help with their mental well-being. By expanding fitness, physical activity, recreational sports and mental wellness memberships for our state’s most vulnerable populations, AB 1338 can provide Medi-Cal beneficiaries additional resources to prevent chronic disease and support their mental health and wellbeing.

1. Background.
   
   CalAIM. CalAIM is a collection of major initiatives that align with the administration’s program improvement goals, including addressing social drivers of health, reducing program complexity and increasing flexibility, and modernizing payment structures to promote better outcomes. The majority of CalAIM proposals were put forward in 2021 through two comprehensive applications to the federal government. DHCS received approval on December 29, 2021, for both proposals, through December 31, 2026.

Community Supports. Every Medicaid program has a Medicaid State Plan that specifies the benefits and services covered by that program. One component of CalAIM that addresses social drivers of health is called community supports, which are delivered by a different provider or in a different setting than is described in the State Plan. Community supports are services that may be provided by Medi-Cal managed care plans as cost-effective alternatives to traditional medical services or settings.

DHCS has a pre-approved list of 14 community supports that provide flexibility to address specific needs of complex populations, based largely on experience with prior demonstration programs. For instance, housing support services, including transition and navigation services, housing deposits, and housing tenancy and sustaining services, can provide health improvements that are comparable to those from expensive, high-intensity health care services.

Medi-Cal may cover community supports only if the state determines they are medically appropriate and cost-effective substitutes or settings for a Medicaid State Plan service. Community supports are provided under a federal authority known as “in lieu of services,” because the community support is provided in lieu of another covered service. Twelve of the 14 CalAIM community supports, including the housing supports mentioned above, home modifications, medically tailored meals, and other services, were approved in the state’s renewal of its 1915(b) waiver. Because the CalAIM waiver and demonstration are already approved, implementing this bill to add new community supports would require an amendment, likely to the Section 1915(b) waiver. Such an amendment would require federal approval.

Unclear Efficacy of Offering Fitness Programs. According to the Assembly Health Committee analysis, community supports are specifically designed to be cost-effective services provided “in lieu of” other services. While a physical activity membership may improve an individual’s health, there does not appear to be strong evidence that fitness memberships are a cost-effective substitute for other health care services.

1. Related Legislation.
   
   1. AB 1085 (Maienschein) requires DHCS to seek federal approval to add housing support services as a Medi-Cal benefit, as specified. AB 1085 is pending on the suspense file in this committee.
   2. AB 586 (Calderon) adds “climate change or environmental remediation devices” to the list of allowable community supports DHCS may approve, and a Medi-Cal managed care plan may elect to cover, through the CalAIM demonstration project. AB 586 is pending in this committee.

Analysis Prepared by: Allegra Kim / APPR. / (916) 319-2081

Date of Hearing: April 18, 2023

ASSEMBLY COMMITTEE ON HEALTH

Jim Wood, Chair

ABPCA Bill Id:AB 1338

Author:((Petrie-Norris) – As Introduced Ver:February 16, 2023

SUBJECT: Medi-Cal: community supports.

SUMMARY: Authorizes the Department of Health Care Services (DHCS) to approve and a Medi-Cal managed care plan to elect to cover “fitness, physical activity, recreational sports, and mental wellness memberships,” as an allowable Community Support through the California Advancing and Innovating Medi-Cal (CalAIM) demonstration project.

EXISTING LAW:

1. Establishes the Medi-Cal Program, administered by DHCS, to provide comprehensive health benefits to low-income individuals who meet specified eligibility criteria. [Welfare and Institutions Code (WIC) § 14000 et seq.]
2. Establishes a schedule of benefits under the Medi-Cal program, which includes federally required and optional Medicaid benefits. [WIC § 14132]
3. Establishes the CalAIM Act, and requires the implementation of DHCS’s CalAIM initiative to support the following goals:
   1. Identify and manage the risk and needs of Medi-Cal beneficiaries through whole-person-care approaches and addressing social determinants of health;
   2. Transition and transform the Medi-Cal program to a more consistent and seamless system by reducing complexity and increasing flexibility; and,
   3. Improve quality outcomes, reduce health disparities, and drive delivery system transformation and innovation through value-based initiatives, modernization of systems, and payment reform. [WIC § 14184.100]
4. Establishes a CalAIM term of January 1, 2022, to December 31, 2026, inclusive, and any extensions. [WIC § 14184.101]
5. Requires DHCS to seek federal approval for specific CalAIM components, including those related to Medi-Cal managed care, specialty mental health, behavioral health payment reform, Drug Medi-Cal, pre-release services for justice-involved individuals, county administration of Medi-Cal, the Providing Access and Transforming Health program to build CalAIM implementation capacity, and other components. [WIC § 14184.102]
6. Authorizes 14 specific services, under CalAIM, as Community Supports that DHCS may approve and a Medi-Cal managed care plan may elect to cover. Specifies Community Supports are provided “in lieu of” typical Medi-Cal covered services, in accordance with the federally approved CalAIM Terms and Conditions. [WIC § 14184.206]

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

COMMENTS:

1. PURPOSE OF THIS BILL. This bill is sponsored by the California Fitness Alliance (Alliance). According to the author, regular physical activity has many positive health benefits, including protection against chronic disease, improved physical and mental health and cognitive function, and better health-related quality of life, but lack of access to physical activity is associated with higher health care costs and utilization. The author states promoting health plan coverage for fitness center memberships has the potential to address multiple barriers to physical activity, such as cost and access, and extend fitness resources to low-income Californians.
   
2. BACKGROUND.
   1. Medicaid Waivers and Demonstrations. Medicaid (Medi-Cal in California) is administered as a state-federal partnership. States are subject to federal law and strict federal rules that guide the provision of Medicaid services. However, federal law also authorizes the Centers for Medicare and Medicaid Services (CMS), which oversees state Medicaid programs, to approve demonstrations and waivers. Under these authorities, states are granted flexibility to design, deliver and receive federal matching participation (FFP, or federal matching funds) for Medicaid services in ways that are not otherwise authorized under Medicaid rules.
      
      Under Section 1115 of the federal Social Security Act (SSA), CMS may waive certain provisions of the Medicaid law to give states additional flexibility to design and improve their programs. Similarly, Section 1915(b) of the SSA provides states with the flexibility to modify their delivery systems by allowing CMS to waive statutory requirements for comparability, statewideness, and freedom of choice that otherwise apply to Medicaid programs. Many states, including California, have active 1115 demonstrations and Section 1915(b) waivers.
   2. CalAIM. CalAIM is a collection of major initiatives spearheaded by the DHCS that align with the administration’s program improvement goals, including addressing social drivers of health, reducing program complexity and increasing flexibility, and modernizing payment structures to promote better outcomes. The majority of CalAIM proposals were put forward in 2021 through two comprehensive applications to the federal government for a Section 1115 demonstration and Section 1915(b) waiver, as explained above. DHCS received approval on December 29, 2021, for both the demonstration and waiver, effective through December 31, 2026.
   3. Community Supports. One component of CalAIM that addresses social drivers of health is called Community Supports. Community Supports are services that can be provided by Medi-Cal managed care plans as cost-effective alternatives to traditional medical services or settings.

Every Medicaid program has a Medicaid State Plan that specifies the benefits and services covered by that program. Community Supports, as defined through CalAIM, are alternative services to those covered under the Medi-Cal State Plan, but are delivered by a different provider or in a different setting than is described in the State Plan.

DHCS has a pre-approved list of 14 Community Supports, based largely on experience with prior demonstration programs. These supports are designed to provide flexibility to address specific needs of complex populations. For instance, home modifications and adaptations can support individuals in maintaining or improving their health and reduce emergency department visits and inpatient stays. Similarly, housing support services, including transition and navigation services, housing deposits, and housing tenancy and sustaining services can potentially provide similar health improvements and avoidance of expensive, high-intensity health care services.

Community Supports can only be covered if a state determines they are medically appropriate and cost-effective substitutes or settings for a State Plan service. They are provided under a federal authority known as “in lieu of services,” (ILOS) because the Community Support is provided “in lieu of” another covered service.

Twelve of the 14 Community Supports under federal ILOS authority were approved in the state’s renewal of its 1915(b) waiver:

• • 1. Housing Transition Navigation Services;
    2. Housing Deposits;
    3. Housing Tenancy and Sustaining Services;
    4. Respite Services;
    5. Day Habilitation Programs;
    6. Nursing Facility Transition/Diversion to Assisted Living Facility;
    7. Community Transition Services/Nursing Facility Transition to a Home;
    8. Personal Care and Homemaker Services;
    9. Environmental Accessibility Adaptations (Home Modifications);
    10. Asthma Remediation;
    11. Medically Tailored Meals; and,
    12. Sobering Centers.
        

Two additional Community Supports – recuperative care and short-term post-hospitalization services – are authorized through the 1115 demonstration. CMS states it does not consider such services to be appropriate under the ILOS framework due to the general prohibitions that apply to Medicaid payments for room and board under federal law.

Because the CalAIM waiver and demonstration are already approved, implementing this bill to add new Community Supports would necessitate an amendment, likely to the Section 1915(b) waiver, that would need federal approval.

• 1. Physical Activity Recommendations and Disparities. National Physical Activity Guidelines issued by the U.S. Department of Health and Human Services recommend adults limit sedentary time and participate in 150 minutes of moderate-intensity aerobic physical activity each week, 75 minutes of vigorous aerobic physical activity per week, or some combination of the two. In addition, the guidelines recommend muscle strengthening exercises two or more days a week. Over half of American adults do not meet the aerobic activity guidelines, and three-quarters meet the do not currently meet the overall recommendations for physical activity. Evidence suggests underserved populations, including members of racial and ethnic minority groups, are less likely to participate in sufficient amounts of physical activity at recommended levels. According to the Centers for Disease Control and Prevention (CDC), lack of access to safe and convenient places to be physically active may contribute to these racial and ethnic disparities.
     
     According to the CDC, physical inactivity has been estimated to cost approximately $117 billion per year nationally in additional health care costs.
  2. Fitness Memberships as a Health Care Benefit. Although some health care plans and insurers offer gym memberships, the effect of adding gym memberships as a Community Support or a Medi-Cal benefit on overall health of Medi-Cal beneficiaries and avoidance of other high-cost health care services is unclear. According to the Medicaid and the Children’s Health Insurance Program Payment and Access Commission, a federal body that reviews and makes recommendations on Medicaid, several states have offered memberships to a gym or Weight Watchers as incentives for healthy behaviors through their Medicaid programs. However, it does not appear states are covering fitness memberships broadly through their Medicaid programs.
     

A 2012 systematic review prepared for the Department of Veteran’s Affairs on the effects of health plan-sponsored fitness center benefits on physical activity, health outcomes, and health care costs and utilization found surprisingly few studies assessed the impact of health plan-sponsored fitness membership benefits. The review found existing studies lack diversity in included populations, benefits assessed, outcomes collected, and study designs employed.

Some evidence suggests cost can discourage people who might otherwise participate in fitness programs. One study found participation of patients referred to the YMCA at routine office visits declined dramatically once the YMCA instituted a $10 per month patient copay for new and previously engaged health center patients. The study found instituting a fee appeared to discourage more tentative users, especially women and older patients who may be less physically active.

Many Medicare Advantage plans cover SilverSneakers, a fitness program for older adults that provides access to gyms, community exercise classes, and workout videos. Similarly, Medi-Cal managed care plans currently may cover supplemental benefits at their discretion, such as fitness memberships or programs, in addition to those benefits they are required to cover.

1. SUPPORT. This bill is supported by a coalition of fitness centers, as well as chronic disease advocacy groups and the California Black Health Network (CBHN). CBHN writes that this bill brings equity to Medi-Cal recipients by allowing them to purchase fitness, sports, and wellness memberships to improve their physical and mental health outcomes. The Alliance, representing a coalition of fitness centers, indicates fitness centers have a unique opportunity to be part of the preventative health care solution by helping expand access to safe and equitable places to exercise for all Californians. The Alliance indicates many communities face significant barriers to accessing places and ways to exercise, which this bill would address.
   
   
2. RELATED LEGISLATION.
   1. AB 1085 (Maienschein) requires DHCS to seek federal approval to add housing support services, comprised of three housing-related CalAIM Community Supports, as a Medi-Cal benefit, as specified. AB 1085 is pending in the Assembly Appropriations Committee.
   2. AB 586 (Calderon) adds “Climate change or environmental remediation devices,” as specified, as a Community Support under the Medi-Cal CalAIM initiative. AB 586 is pending in the Assembly Health Committee.
3. PREVIOUS LEGISLATION. AB 133 (Committee on Budget), Chapter 143, Statutes of 2021, established statutory authority for various aspects of the CalAIM initiative, including authority to provide ILOS, which was later renamed as Community Supports.
4. POLICY COMMENTS. Community Supports are specifically designed to be cost-effective services provided “In Lieu Of” other services. While physical activity memberships may improve someone’s health on an individual basis, there does not appear to be significant evidence overall that fitness memberships are a cost-effective substitute for other health care services. However, with respect to physical activity, given low numbers of adults meeting guidelines, disparities in participation by race/ethnicity and income, barriers to physical activity that may be faced by Medi-Cal enrollees, and its well-documented health benefits, leveraging Medi-Cal to increase access to physical activity merits consideration. Adding physical activity-related services as a Community Support may allow the state and health plans to study and learn about the costs and efficacy of these services.
   
   DHCS and its Medi-Cal managed care plan partners have taken on numerous and wide-ranging transformation initiatives over the last couple of years as part of CalAIM. Managed care plans are still in the process of implementing 14 Community Supports, which require engagement with new partners like community-based organizations and other non-traditional providers, while plans are simultaneously implementing a large number of other changes and program improvements. This bill as drafted is permissive for DHCS and for plans to implement and does not specify a time period for implementation. This is appropriate given the current volume and pace of change in the Medi-Cal program and the need to appropriately phase in new initiatives over time.
   
   Finally, the bill language is limited to fitness, physical activity, recreational sports, and mental wellness “memberships.” This limits the support to particular payment models that may not be applicable in all cases. For instance, there could be an evidence-based fitness program that is offered for a flat fee over a period of time. Furthermore, the addition of “mental wellness memberships” is vague and does not appear well-supported by evidence.
5. AMENDMENTS. To address concerns raised in the policy comments, the Committee may wish to amend the bill as follows:

(15) Fitness, physical activity, or recreational sports, programs, activities or and mental wellness memberships.

REGISTERED SUPPORT / OPPOSITION:

Support

American Diabetes Association

California Black Health Network

California Chronic Care Coalition

California Commission on Aging

California Council of Community Behavioral Health Agencies

California Family Fitness

California Fitness Alliance

California Health Collaborative

California Health+Advocates

California Retired Teachers Association

Cancer Support Community Los Angeles

Cancer Support Community San Francisco Bay Area

Chuze Fitness

Fitness 19

Fitness Sf

Joya Yoga

Liver Coalition of San Diego

Looms for Lupus

Orange Theory Fitness

TriFit LA

Opposition

None on file.

Analysis Prepared by: Lisa Murawski / HEALTH / (916) 319-2097