Existing law vests the Public Utilities Commission with regulatory authority over public utilities, including telephone corporations. Existing law requires the commission to develop, implement, and administer the California Advanced Services Fund to encourage deployment of high-quality advanced communications services to all Californians that will promote economic growth, job creation, and the substantial social benefits of advanced information and communications technologies, as specified. Existing law establishes the Broadband Infrastructure Grant Account in the fund to approve funding for infrastructure projects that will provide broadband access to no less than 98% of California households in each consortia region, and establishes the Federal Funding Account in the fund to expeditiously connect unserved and underserved communities, as specified.

The Get Connected California Act of 2024, 2024 would require the commission to ensure all deployment grant awardees, defined as all internet service providers that receive funding from certain accounts the Broadband Infrastructure Grant Account and the Federal Funding Account within the California Advanced Services Fund, offer affordable home internet service to households participating in certain public assistance programs, as specified, in the deployment grant awardees service territory within 90 days of receiving that funding. The bill would define affordable home internet service to mean internet service costing no more than $30 per month and that meets specified minimum speed requirements. The bill would require these deployment grant awardees to establish telephone numbers to sign up eligible households and would require these awardees to advertise the availability of affordable home internet service, among other requirements placed on these awardees. internet service that costs no more than $30 per month and meets certain minimum speed requirements, as specified. The bill would require a deployment grant awardee to allow any household in a project area, as defined, to switch to the above-described low-cost broadband service option in the billing cycle immediately following the households enrollment in the low-cost broadband service option. The bill would not apply these requirements to applications submitted to the commission before January 1, 2025. The bill would make the above-described provisions severable.

Under existing law, a violation of the Public Utilities Act or any order, decision, rule, direction, demand, or requirement of the commission is a crime.

Because the above provisions would be part of the act and a violation of a commission action implementing this bills requirements would be a crime, the bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Existing law establishes the California Childrens Services (CCS) Program, administered by the State Department of Health Care Services and a designated agency of each county, to provide medically necessary services for persons under 21 years of age who have any of specified medical conditions and who meet certain financial eligibility requirements.

Existing law establishes the Medi-Cal program, which is administered by the department 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 establishes a Whole Child Model program for Medi-Cal eligible CCS children and youth enrolled in a Medi-Cal managed care plan served by a county organized health system or Regional Health Authority, or, commencing no sooner than January 1, 2024, an alternate health care service plan, in certain listed counties. requires the department to establish a statewide Whole Child Model program stakeholder advisory group that includes specified persons, including CCS case managers, and to consult with that advisory group on prescribed matters. Existing law terminates the advisory group on December 31, 2023.

Existing law establishes the California Childrens Services (CCS) Program, administered by the State Department of Health Care Services and a designated agency of each county, to provide medically necessary services for persons under 21 years of age who have any of specified medical conditions and who meet certain financial eligibility requirements.

Existing law establishes the Medi-Cal program, which is administered by the department 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 establishes a Whole Child Model program for Medi-Cal eligible CCS children and youth enrolled in a Medi-Cal managed care plan served by a county organized health system or Regional Health Authority, or, commencing no sooner than January 1, 2024, an alternate health care service plan, in certain listed counties.

This bill would specify that only those listed counties are authorized for the Whole Child Model program.

Existing law prohibits the incorporation of CCS-covered services into a Medi-Cal managed care contract entered into after August 1, 1994, pursuant to specified provisions, until January 1, 2022, and until a certain related evaluation has been completed, except for contracts entered into under the Whole Child Model program or for county organized health systems or Regional Health Authority, as specified.

This bill would extend that prohibition indefinitely by removing the expiration set for January 1, 2022, and for completion of the evaluation.

(1)Existing law establishes the California Childrens Services (CCS) Program, administered by the State Department of Health Care Services and a designated agency of each county, to provide medically necessary services for persons under 21 years of age who have any of specified medical conditions and who meet certain financial eligibility requirements.

Under existing law, CCS-eligible medical conditions include, among others, cystic fibrosis and fibrosis, hemophilia, and other conditions set forth by the Director of Health Care Services.

This bill would statutorily expand the list of CCS-eligible medical conditions to include those conditions that are specified in existing CCS-related regulations. The bill would, commencing no later than January 1, 2026, and every 5 years thereafter, require the department to consult with, at a minimum, CCS medical directors and experts from the departments CCS technical advisory committees, to consider the addition of other medical conditions to the list, by regulation. The bill would make conforming changes to related provisions.

(2)This bill would, commencing on January 1, 2025, and subject to an appropriation, for a child who has an eligible medical condition, but who is not financially eligible for the CCS Program, require the department to provide financial assistance for out-of-pocket costs not covered by the childs health care coverage, as specified, if those costs are for medically necessary services to treat a CCS-eligible medical condition. The bill would require the department to establish a procedure for providing that financial assistance.

(3)This bill would require the department, on or before December 31 of each year, commencing on December 31, 2025, to provide an annual sustainability and access grant, under a certain formula, to each CCS-approved hospital that operates one or more CCS special care centers, as specified.

With respect to payment rates for physician services that are lower than federal Medicare payment rates for the same services, the bill would require the department to review and adjust those rates, annually as necessary, to be no less than the federal rates. Under the bill, the rate adjustments would apply only to services provided to a CCS-enrolled child to treat a CCS-eligible condition, provided on or after January 1, 2025, and to which physician reimbursement rates apply if provided under the Medi-Cal program. Under the bill, the adjustments and updates would apply to both CCS payments made under the Medi-Cal program and CCS payments that are not made under the Medi-Cal program, as specified.

For lifesaving specialty drugs, as defined, that are provided by a hospital on an inpatient basis, the bill would require the department to reimburse the hospital for the cost incurred by the hospital to acquire the drug. Under the bill, the reimbursement would apply to both lifesaving specialty drugs furnished to a CCS-enrolled child for a CCS-eligible condition reimbursed under the Medi-Cal program and lifesaving specialty drugs that are not reimbursed under the Medi-Cal program but that are reimbursed directly by the CCS Program, as specified.

The bill would condition implementation of the provisions in this paragraph on receipt of any necessary federal approval and, for purposes of the physician-related payment rate increases and drug-related reimbursements, on the availability of federal financial participation.

The bill would also condition implementation of the provisions in this paragraph on an appropriation. The bill would state the intent of the Legislature that any consideration of a future appropriation for these provisions be made in accordance with legislative findings concerning subsequent deficits.

(4)By increasing the duties of counties relating to the administration of the CCS Program through the above-described provisions, the bill would impose a state-mandated local program.

(5)Existing law establishes the Medi-Cal program, which is administered by the department 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 establishes a Whole Child Model program for Medi-Cal eligible CCS children and youth enrolled in a Medi-Cal managed care plan served by a county organized health system or Regional Health Authority, or, commencing no sooner than January 1, 2024, an alternate health care service plan, in certain listed counties.

This bill would specify that only those listed counties are authorized for the Whole Child Model program.

Existing law prohibits the incorporation of CCS-covered services into a Medi-Cal managed care contract entered into after August 1, 1994, pursuant to specified provisions, until January 1, 2022, and until a certain related evaluation has been completed, except for contracts entered into under the Whole Child Model program or for county organized health systems or Regional Health Authority, as specified.

This bill would extend that prohibition indefinitely by removing the expiration set for January 1, 2022, and for completion of the evaluation.

(6)The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above.

(1)Existing law establishes the California Childrens Services (CCS) Program, administered by the State Department of Health Care Services and a designated agency of each county, to provide medically necessary services for persons under 21 years of age who have any of specified medical conditions and who meet certain financial eligibility requirements.

Under existing law, CCS-eligible medical conditions include, among others, cystic fibrosis and hemophilia, and other conditions set forth by the Director of Health Care Services.

This bill would statutorily expand the list of CCS-eligible medical conditions to include those conditions that are specified in existing CCS-related regulations. The bill would, commencing no later than January 1, 2026, and every 5 years thereafter, require the department to consult with, at a minimum, CCS medical directors and experts from the departments CCS technical advisory committees, to consider the addition of other medical conditions to the list, by regulation. The bill would make conforming changes to related provisions.

(2)This bill would, commencing on January 1, 2025, and subject to an appropriation, for a child who has an eligible medical condition, but who is not financially eligible for the CCS Program, require the department to provide financial assistance for out-of-pocket costs not covered by the childs health care coverage, as specified, if those costs are for medically necessary services to treat a CCS-eligible medical condition. The bill would require the department to establish a procedure for providing that financial assistance.

(3)This bill would require the department, on or before December 31 of each year, commencing on December 31, 2025, to provide an annual sustainability and access grant, under a certain formula, to each CCS-approved hospital that operates one or more CCS special care centers, as specified.

For medically necessary treatments provided during the 2025 calendar year, the bill would require the department to adjust CCS payment rates for physician services, reflecting the cumulative effect of inflation, as specified. Under the bill, commencing on January 1, 2026, those payments would be updated annually to reflect the effect of inflation. Under the bill, the adjustments and updates would apply to both CCS payments made under the Medi-Cal program and CCS payments that are not made under the Medi-Cal program, as specified.

For lifesaving specialty drugs, as defined, that are provided by a hospital on an inpatient basis, the bill would require the department to reimburse the hospital for the cost incurred by the hospital to acquire and administer the drug. Under the bill, the reimbursement would apply to both lifesaving specialty drugs furnished to a CCS-enrolled child for a CCS-eligible condition reimbursed under the Medi-Cal program and lifesaving specialty drugs that are not reimbursed under the Medi-Cal program but that are reimbursed directly by the CCS Program, as specified.

The bill would condition implementation of the provisions in this paragraph on receipt of any necessary federal approval and, for purposes of the physician-related payment rate increases and drug-related reimbursements, on the availability of federal financial participation.

The bill would also condition implementation of the provisions in this paragraph on an appropriation. The bill would state the intent of the Legislature that any consideration of a future appropriation for these provisions be made in accordance with legislative findings concerning subsequent deficits.

(4)By increasing the duties of counties relating to the administration of the CCS Program through the above-described provisions, the bill would impose a state-mandated local program.

(5)Existing law establishes the Medi-Cal program, which is administered by the department 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 establishes a Whole Child Model program for Medi-Cal eligible CCS children and youth enrolled in a Medi-Cal managed care plan served by a county organized health system or Regional Health Authority, or, commencing no sooner than January 1, 2024, an alternate health care service plan, in certain listed counties.

This bill would specify that only those listed counties are authorized for the Whole Child Model program.

Existing law prohibits the incorporation of CCS-covered services into a Medi-Cal managed care contract entered into after August 1, 1994, pursuant to specified provisions, until January 1, 2022, and until a certain related evaluation has been completed, except for contracts entered into under the Whole Child Model program or for county organized health systems or Regional Health Authority, as specified.

This bill would extend that prohibition indefinitely by removing the expiration set for January 1, 2022, and for completion of the evaluation.

(6)The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above.

(1)Existing law establishes the California Childrens Services (CCS) Program, administered by the State Department of Health Care Services and a designated agency of each county, to provide medically necessary services for persons under 21 years of age who have any of specified medical conditions and who meet certain financial eligibility requirements.

Under existing law, CCS-eligible medical conditions include, among others, cystic fibrosis and hemophilia, and other conditions set forth by the Director of Health Care Services.

This bill would statutorily expand the list of CCS-eligible medical conditions to include those conditions that are specified in existing CCS-related regulations. The bill would, commencing no later than January 1, 2026, and every 5 years thereafter, require the department to consult with, at a minimum, CCS medical directors and experts from the departments CCS technical advisory committees, to consider the addition of other medical conditions to the list, by regulation. The bill would make conforming changes to related provisions.

(2)This bill would, commencing on January 1, 2025, and subject to an appropriation, for a child who has an eligible medical condition, but who is not financially eligible for the CCS Program, require the department to provide financial assistance for out-of-pocket costs not covered by the childs health care coverage, as specified, if those costs are for medically necessary services to treat a CCS-eligible medical condition. The bill would require the department to establish a procedure for providing that financial assistance.

The bill would condition implementation of the provisions in this paragraph on receipt of any necessary federal approval and, for purposes of the physician-related payment rate increases and drug-related reimbursements, on the availability of federal financial participation.

The bill would also condition implementation of the provisions in this paragraph on an appropriation. The bill would state the intent of the Legislature that any consideration of a future appropriation for these provisions be made in accordance with legislative findings concerning subsequent deficits.

(4)By increasing the duties of counties relating to the administration of the CCS Program through the above-described provisions, the bill would impose a state-mandated local program.

(5)Existing law establishes the Medi-Cal program, which is administered by the department 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 establishes a Whole Child Model program for Medi-Cal eligible CCS children and youth enrolled in a Medi-Cal managed care plan served by a county organized health system or Regional Health Authority, or, commencing no sooner than January 1, 2024, an alternate health care service plan, in certain listed counties.

This bill would specify that only those listed counties are authorized for the Whole Child Model program.

Existing law prohibits the incorporation of CCS-covered services into a Medi-Cal managed care contract entered into after August 1, 1994, pursuant to specified provisions, until January 1, 2022, and until a certain related evaluation has been completed, except for contracts entered into under the Whole Child Model program or for county organized health systems or Regional Health Authority, as specified.

This bill would extend that prohibition indefinitely by removing the expiration set for January 1, 2022, and for completion of the evaluation.

(6)The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above.

(1)Existing law establishes the California Childrens Services (CCS) Program, administered by the State Department of Health Care Services and a designated agency of each county, to provide medically necessary services for persons under 21 years of age who have any of specified medical conditions and who meet certain financial eligibility requirements.

Under existing law, CCS-eligible medical conditions include, among others, cystic fibrosis and hemophilia, and other conditions set forth by the Director of Health Care Services.

This bill would statutorily expand the list of CCS-eligible medical conditions to include those conditions that are specified in existing CCS-related regulations. The bill would, commencing no later than January 1, 2026, and every 5 years thereafter, require the department to consult with, at a minimum, CCS medical directors and experts from the departments CCS technical advisory committees, to consider the addition of other medical conditions to the list, by regulation. The bill would make conforming changes to related provisions.

(2)This bill would, commencing on January 1, 2025, and subject to an appropriation, for a child who has an eligible medical condition, but who is not financially eligible for the CCS Program, require the department to provide financial assistance for out-of-pocket costs not covered by the childs health care coverage, as specified, if those costs are for medically necessary services to treat a CCS-eligible medical condition. The bill would require the department to establish a procedure for providing that financial assistance.

(3)This bill would, commencing on January 1, 2025, require the department to provide a sustainability and access payment of $500 to a hospital or CCS special care center for every CCS-enrolled child seen in the hospital or center, with annual adjustments for inflation, as specified.

The bill would, for medically necessary treatments provided during the 2025 calendar year, require the department to adjust CCS payment rates for physician services, reflecting the cumulative effect of inflation, as specified. Under the bill, commencing on January 1, 2026, those payments would be updated annually to reflect the effect of inflation.

The bill would require the department to provide reimbursements for lifesaving specialty drugs prescribed and administered to a CCS-enrolled child for a CCS-eligible medical condition, as specified.

The bill would condition implementation of the provisions in this paragraph on receipt of any necessary federal approval and, for purposes of the physician-related payment rate increases and drug-related reimbursements, on the availability of federal financial participation.

The bill would also condition implementation of the provisions in this paragraph on an appropriation. The bill would state the intent of the Legislature that any consideration of a future appropriation for these provisions be made in accordance with legislative findings concerning subsequent deficits.

(4)By increasing the duties of counties relating to the administration of the CCS Program through the above-described provisions, the bill would impose a state-mandated local program.

(5)Existing law establishes the Medi-Cal program, which is administered by the department 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 establishes a Whole Child Model program for Medi-Cal eligible CCS children and youth enrolled in a Medi-Cal managed care plan served by a county organized health system or Regional Health Authority, or, commencing no sooner than January 1, 2024, an alternate health care service plan, in certain listed counties.

This bill would specify that only those listed counties are authorized for the Whole Child Model program.

Existing law prohibits the incorporation of CCS-covered services into a Medi-Cal managed care contract entered into after August 1, 1994, pursuant to specified provisions, until January 1, 2022, and until a certain related evaluation has been completed, except for contracts entered into under the Whole Child Model program or for county organized health systems or Regional Health Authority, as specified.

This bill would extend that prohibition indefinitely by removing the expiration set for January 1, 2022, and for completion of the evaluation.

(6)The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above.

Date of Hearing: August 7, 2024

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Buffy Wicks, Chair

SBPCA Bill Id:SB 424

Author:(Durazo) – As Amended Ver:July 2, 2024

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

SUMMARY:

This bill requires the California Public Utilities Commission (CPUC) to ensure that recipients of broadband infrastructure grants offer a low-cost broadband service option in their grant project areas; to award up to $1 billion in broadband infrastructure grants by January 1, 2025; and to align requirements of existing broadband infrastructure grant programs.

Specifically, this bill:

1. Requires the CPUC, by January 1, 2026, to ensure all Federal Funding Account and Broadband Infrastructure Grant Account grant awardees, as a condition of receiving a grant, do all of the following:
   1. Offer a low-cost broadband service option in their project areas for no more than $30 per month at minimum speeds of at least 100 megabits per second downstream and 20 megabits per second upstream (100/20 mps).
   2. Allow any household in the project area to convert to a low-cost broadband service option in the billing cycle immediately following the household’s enrollment in the low-cost broadband service option.
2. Provides the low-cost broadband service option does not apply to broadband infrastructure grant applications submitted to the CPUC before January 1, 2025.
3. Requires the CPUC, by January 1, 2025, to issue a draft resolution to award a total of at least $1 billion in broadband infrastructure grant funding from the CPUC’s Federal Funding Account and Broadband Infrastructure Grant Account within the California Advanced Services Fund (CASF) program.
4. Requires the CPUC, by January 1, 2027, to adopt updated rules for the Federal Funding Account and the Broadband Infrastructure Grant Account programs to conform rules for project eligibility, applicant requirements, and eligible technologies.

FISCAL EFFECT:

The CPUC reports costs of $1,483,000 annually ongoing for seven permanent full-time positions and $200,000 annually for three years for contracts to meet the requirements of this bill through rulemakings to modify program rules and award grants; incorporate changes to support systems, maps and databases; monitor all grantees for compliance with pricing commitments; resolve complaints; develop resolutions to make timely award of grants; and provide associated technical assistance, analysis, and support. The CPUC states the bill’s program alignment requirement “raises legal risk and presents contentious and difficult to resolve legal issues” such as how to handle the funding allocation requirements for projects in each county under existing state law and how to meet ongoing federal reporting, oversight and audit requirements applicable to federal funds in the Federal Funding Account.

Funds to cover the CPUC’s costs to implement this bill are available from existing appropriations from the Federal Funding Account and Infrastructure Grant Account, which would thereby reduce the available funding within each account for grant awards to deploy infrastructure.

COMMENTS:

1. Purpose. According to the author:

California needs a back-up plan to ensure affordable high-speed Internet access for all residents, a critical element of achieving Digital Equity. Over 5.8 million low-income households in California need affordable internet to improve their quality of life, public safety, and economic empowerment. California led the nation by enrolling nearly 3 million households in [Affordable Connectivity Program], yet more than 2.8 million eligible households remain unenrolled, with many unaware of the program according to the 2023 Statewide Digital Equity Survey. This highlights the need for targeted advertising in multiple languages and cultures…SB 424 ensures ISPs continue to offer affordable internet subscriptions for low-income households.

1. Background. The CASF program administered by the CPUC, established 16 years ago and funded with billions of dollars, continually struggles to get grant dollars out the door to fund broadband infrastructure in unserved locations. Overly complex grant requirements in statute, exacerbated by additional burdensome conditions and processes imposed in CPUC regulations, deter program participation and achieving the goal to connect all Californians to high-speed internet service.

The CPUC administers three separate programs, under three separate CPUC program rules, to award grants for essentially the same purpose – to fund broadband infrastructure deployment to connect unserved locations. Each program has a different approach to address affordability of service.

• The CASF Infrastructure Grant Account program, funded by communications customer surcharges with authorized collections up to $150 million per year through 2031.
  • No statutory requirement, but CPUC rules encourage, through supplementary scoring credit, a grant recipient to offer a $15 service option to all eligible low-income households in the grant project area with no speed requirement.
• The Federal Funding Account program, funded by state General Fund and federal funds, originally $2 billion in 2021 and adjusted in subsequent budgets.
  • No statutory requirement, but CPUC rules score projects based, in part, on whether a project applicant provides a $40 service option with minimum 50/20 speeds to all households in the project area, with no low-income eligibility requirement.
• The Broadband, Equity, Access and Deployment (BEAD) program, funded by the federal Infrastructure, Investment and Jobs Act (IIJA), with California expected to draw up to $1.86 billion upon approval of its BEAD plan by the National Telecommunications and Information Administration (NTIA).
  • The IIJA and NTIA rules require BEAD grantees to offer a “low-cost broadband service option,” which states can propose for NTIA approval. California’s BEAD plan proposes to require BEAD grantees to offer a $30 service option with minimum 100/20 speeds to all eligible low-income households in the project area, now that the federal Affordable Connectivity Program (a $30 customer subsidy program) has expired, as described on page 190 of the CPUC’s Volume II BEAD proposal pending before NTIA.

This bill layers on top of those provisions a new requirement that a grant recipient under the Infrastructure Grant Account and the Federal Funding Account offer a “low-cost broadband service option,” defined as costing no more than $30 per month with100/20 minimum speeds to all households in the project area, with no low-income eligibility requirement.

Supporters of this bill state a low-cost service option without a low-income eligibility requirement is necessary to address the affordability barrier to getting all Californians connected to high-speed service. Opponents contend new and different program requirements, especially with a precise rate set in statute for the first time, would create more CPUC delay and deter program participation by the providers needed to accept grants to build infrastructure to achieve program goals. In addition, a new and different affordability requirement runs counter to the provisions of this bill that require the CPUC to conduct a rulemaking to align requirements of the infrastructure grant programs.

1. Prior Legislation. SB 156 (Committee on Budget and Fiscal Review), Chapter 112, Statutes of 2021, established the Federal Funding Account and required the CPUC to allocate $1 billion in funding each for rural and urban counties.

SB 4 (Gonzalez), Chapter 671, Statutes of 2021, and AB 14 (Aguiar-Curry), Chapter 658, Statutes of 2021, revised and extended the CASF program and authorized surcharge collections to fund the program up to $150 million per year through 2031.

Analysis Prepared by: Jacqueline Kinney / APPR. / (916) 319-2081

Date of Hearing: June 26, 2024

ASSEMBLY COMMITTEE ON COMMUNICATIONS AND CONVEYANCE

Tasha Boerner, Chair

SBPCA Bill Id:SB 424

Author:(Durazo) – As Amended Ver:June 11, 2024

SENATE VOTE: 40-0

SUBJECT: Get Connected California Act of 2024

SUMMARY: This bill would require a broadband deployment grant awardee receiving funds from the California Advanced Services Fund (CASF) to offer home internet service costing no more than $30 per month to eligible households, as defined, across the awardee’s service territory as a condition of receiving the grant. Additionally, this bill sets specified goals for adoption of those plans and outreach requirements.

Specifically, this bill:

1. Establishes definition for relevant terms:
   1. “Affordable home internet service” means internet service costing no more than $30 per month and that meets minimum speed requirements.
   2. “Minimum speed requirements” means at least 100 megabits per second downstream and 20 megabits per second upstream and sufficient speed and latency to support distance learning and telehealth services. Authorizes the California Public Utilities Commission (CPUC) to subsequently increase the minimum speed requirement to correspond with updated state or federal policies.
   3. “Eligible household” means a resident in a group home or congregate care facility within the deployment grant awardee’s California service territory participating in a qualified public assistance program, or a household within the deployment grant awardee’s California service territory with at least one resident of the household participating in a qualified public assistance program.
   4. “Overall goals for adoption” means that at least 90% of eligible households receive affordable home internet service by January 1, 2026 and at least 95% of eligible households receive affordable home internet service by January 1, 2029.
   5. “Qualified public assistance programs” means the California Alternate Rates for Energy program, the National School Lunch Program, the State Supplementary Payment Program, the Temporary Assistance for Needy Families Program, CalFresh, Covered California, Medi-Cal, Supplemental Security Income, and financial aid for postsecondary education.
2. Requires the CPUC to ensure that all deployment grant awardees, as a condition of receiving a deployment grant, offer affordable home internet service to all eligible households in its service territory within 90 days of receiving funding.
3. Requires the CPUC to monitor the progress towards achieving the overall goals for adoption.
4. Requires that an eligible household shall be allowed to immediately convert to affordable home internet service during the month the household qualifies as an eligible household.
5. Requires a deployment grant awardee to establish a telephone number with trained personnel to sign up eligible households in no more than 30 minutes.
6. Requires a deployment grant awardee to advertise the availability of affordable home internet and the federal Affordable Connectivity Program in various specific manners, including in multiple languages, in print, and online. Requires the advertisements to be run until there is documented awareness of the availability of affordable home internet by at least 80% of all eligible households or 95% of all eligible households are connected.
7. Requires a deployment grant awardee to meet with the CPUC and the California Broadband Council in an open workshop with key stakeholders to confer on how to achieve the overall goals for adoption, among other things.
8. Imposes new reporting requirements on deployment grant awardees regarding the number of eligible households that signed up for affordable home internet service.
9. States that the provisions of this bill are severable.

EXISTING LAW:

1. Requires the California Public Utilities Commission (CPUC) to develop, implement, and administer the California Advanced Services Fund (CASF) program to encourage deployment of high-quality advanced communications services to all Californians that will promote economic growth, job creation, and substantial social benefits of advanced information and communications technologies, as provided in specific decisions of the CPUC and in the CASF statute. (Public Utilities Code § 281(a))
2. Provides that projects funded pursuant to the Federal Funding Account (FFA) of the CASF shall be implemented consistent with applicable federal regulations and any condition or guidelines applicable to the one-time federal infrastructure moneys. (Public Utilities Code § 281 (n))

FISCAL EFFECT: Unknown. This bill is keyed fiscal by the Legislative Counsel.

COMMENTS:

1. Problem statement. Reputable studies have found that the affordability of broadband service is a persistent challenge, especially for low-income households, which leads to suppressed adoption of broadband service in those households. Federal and state policies have attempted to address this issue in various manners, most notably through the Affordable Connectivity Program (ACP). However, due to Congress’ inaction to commit more funds to the program, the benefit has expired, leaving millions of California households without assistance to afford their broadband bills. This bill is an attempt to reduce the negative impact on California households and ensure ongoing affordable connectivity options for those households.

According to the author: “California needs a back-up plan to ensure affordable high-speed Internet access for all residents, a critical element of achieving Digital Equity. Over 5.8 million low-income households in California need affordable internet to improve their quality of life, public safety, and economic empowerment. California led the nation by enrolling nearly 3 million households in ACP, yet more than 2.8 million eligible households remain unenrolled, with many unaware of the program according to the 2023 Statewide Digital Equity Survey. This highlights the need for targeted advertising in multiple languages and cultures.” The author also comments that, “SB 424 ensures ISPs continue to offer affordable internet subscriptions for low-income households.”

1. Californians struggling to afford broadband service are losing federal support. Broadband affordability is an issue for many low-income California households. According to the Broadband for All Action Plan completed by the California Broadband Council in December of 2020, broadband affordability and adoption remains a large challenge to achieving broadband for all in the state. According to the report, 23% of California housing units—home to 8.4 million residents—do not have broadband subscriptions. To put that in context, broadband infrastructure is available to an upwards 95% of California households. According to CETF-USC Statewide Broadband Adoption Survey over two-thirds of respondents cited affordability as the reason they chose not to subscribe to broadband, with the lack of an appropriate computing device also being relevant factors.

In response to the COVID-19 pandemic and through the Bipartisan Infrastructure Investment and Jobs Act (IIJA), Congress established the Affordable Connectivity Program (ACP) in 2021. ACP helped ensure that households were able to afford the broadband they needed for work, school, healthcare and more. The ACP benefit provided a discount of up to $30 per month toward internet service for eligible households and up to $75 per month for households on qualifying Tribal lands. Eligible households could also receive a one-time discount of up to $100 to purchase a laptop, desktop computer, or tablet from participating providers if they contributed more than $10 and less than $50 toward the purchase price. The Affordable Connectivity Program was limited to one monthly service discount and one device discount per household. Due to a lack of additional funding from Congress, the Affordable Connectivity Program has ended for now. Effective June 1, 2024, households will no longer receive an ACP discount.

In California, there were nearly 3 million households enrolled in the program across all the counties. While enrollment rates varied from county to county, the statewide figure represented about half of all eligible households. The county with the highest enrollment rate in California was Imperial County, with data showing that 100% of eligible households in that county were enrolled in the program. The success of the ACP demonstrates the need for affordable broadband options and the value of public assistance to ensure connectivity. Also, compared to the California Lifeline program, which only has about 1 million households enrolled, which represents about a third of eligible households, the ACP was clearly a more popular program. The expiration of the program will almost certainly result in California households losing connectivity, particularly those low-income households who were only able to afford the service because of the subsidy.

1. California Advanced Services Fund Overview. This bill would impose new requirements on entities (“grantees”) receiving awards from the California Advanced Services Fund (CASF), in order to ensure affordable plans are available in the marketplace. The CASF Broadband Infrastructure Grant Account (IGA) and the Federal Funding Account (FFA) both provide grants to fund broadband infrastructure. However, the IGA and FFA are distinct funds with different funding sources, statutory requirements and program goals as summarized below.

The IGA, which existed since the inception of the CASF, is funded through state surcharges collected by the CPUC on telephone bills. Authorized use of IGA funds has its basis in existing state law. The goal of the IGA is to provide broadband access to 98% of households in each consortia region by December 31, 2032.

The FFA, on the other hand, is a newer account. The FFA was established in 2021 pursuant to SB 156 (Committee on Budget and Fiscal Review. Chapter 112 of 2021). Pursuant to that legislation and the companion budget agreement, the FFA received $2 billion to fund grants for last-mile broadband infrastructure projects. Pursuant to state law under SB 156, the FFA must be spent corresponding with federal rules and requirements. For example, federal guidelines require the federal fund portions of FFA funds to be encumbered by December 31, 2024 and spent by December 31, 2026.

Both the FFA and IGA include some affordability provisions, but they are not consistent among the two programs. Additionally, the Broadband, Equity, Access and Deployment (BEAD) program, which is a last-mile broadband infrastructure program that will also be administered by the CPUC, will have its own requirements for low-cost offerings too. The table below summarizes the affordable or low-cost offerings for each program compared to the requirements proposed by this bill, which would impose this bill’s requirements on the FFA and IGA only.

While the requirements for BEAD are subject to approval by the federal government, because BEAD is a federal program, both the FFA and IGA are state programs for which the grant requirements could be changed through legislation. Notably, neither program’s affordability requirements have their basis in statute, rather the CPUC exercised its administrative discretion, based on comments from stakeholders, to adopt program rules that included affordability requirements. If signed, this bill would be the first time broadband service plans of a specific price were required statutorily of the CASF program. Regarding speeds, the IGA statute specifically requires that eligible projects provide a minimum service speed of 100/20mbps.

1. This committee has voted down similar provisions of this bill. It has been clear to stakeholders and the public since at least 2023 that Congress would likely fail to appropriate additional funding to extend the life of the ACP program. In advance of the ACP expiring, earlier this year this committee passed with amendments Assembly Bill 1588 by Assemblymember Wilson. That bill is still active and pending hearing in the Senate. As originally introduced, AB 1588 included provisions that were substantially similar to the provisions of this bill. For example, AB 1588 proposed to adopt a definition of affordable home internet that was also priced at $30 per month, and also would have only been available to eligible households as similarly defined by this bill. AB 1588 also proposed to require an overall goal for adoption that is identical to this bill, plus outreach and coordination requirements that are similar to this bill. However, before passing the bill the committee adopted amendments that struck those ancillary parts of the bill, such as the outreach and coordination requirements, while retaining the core affordability requirements. Nonetheless, this bill proposes provisions that are substantially similar or identical to the provisions that were amended out of AB 1588 in this same committee.

Nonetheless, there are key differences between AB 1588 and this bill that are worth mentioning. For example, AB 1588 proposed to establish a new program called the Net Equality Program, which would have been under the administration of the California Department of Technology (CDT). This bill does not purport to establish a new program, but rather places new requirements on an existing program under the administration of the CPUC. Nonetheless, this bill still establishes enrollment goals for the affordable plan proposed by this bill and ties the outreach and coordination requirements to adoption of those affordable plans by low-income households. Thus, similar question must be raised: is the overall goal for adoption reasonable and is it reasonable to tie outreach and coordination to adoption of a single type of plan? The answer: arguably not, for a few reasons described below.

First and foremost, all consumers, even low-income consumers, ought to have a choice to choose the plan that best suits their needs. The advantage of the ACP, unlike the Lifeline program, is that consumers received a portable benefit that they could apply to the broadband service plan of their choosing. Under this bill, the goal would be to enroll eligible low-income households into a specific plan that is affordable but offers relatively low-speed. However, some low-income consumers may wish to buy purchase more expensive plans given the needs of their families or household. Secondly, this bill proposes to tie outreach and coordination activities to low-income households’ enrollment or awareness of the affordable plan offering. Specifically, this bill sets a goal of 95% enrollment in affordable plans; ACP achieved about 50% enrollment of eligible households and lifelines hovers at around 30%. While almost nobody would disagree that targeted outreach is beneficial for reaching low-income and diverse communities, tying that outreach to a questionable and arguably unrealistic goal may lead to unintended consequences. Lastly, outreach to new customers is already inherently a part of the CASF programs. Given that areas that are awarded CASF grants previously had no internet service, the grantees that are awarded funds will already market their services to their potential new customers in their service territory. Given all these reasons, the committee may wish to consider striking the outreach and coordination requirements proposed by this bill.

1. This bill may delay CASF-funded projects. In response to the passage of several pieces of legislation during the 2021 legislative session, in April 2022 the CPUC adopted the most recent program requirements for the FFA and in November 2022 the CPUC did the same for the IGA. Following adoption of the updated CASF rules, about a year later the CPUC opened project application windows that ended on September 29, 2023 for the FFA, and June 1, 2023 for the IGA. Since then, the CPUC has slowly began awarding grants from each account. For example, the first FFA final awards and proposed awards totaling about $105 million, or 5% of total funding, were announced only as of June 7, 2024; this is over two years after the program rules were initially adopted. Needless to say, the pace has been very slow, and this bill could potentially cause further delay.

In order to implement this bill, the CPUC would likely stop issuing grants while it took the necessary steps of updating the program rules to align with the provisions of this bill. While some may assert that the CPUC could simply enforce the provisions of this bill without going through the process of updating new program rules, procedurally that is not how the CPUC implements bills. Therefore, there is a legitimate risk that this bill as currently drafted may cause delay. In order to address the issues with possible delays, the committee may wish to amend this bill provided that the requirements of this bill shall not be applied to applications submitted prior to the effective date of this section. Further, given that the CPUC representatives have communicated publicly on multiple occasions that the agency is ready to begin awarding grants, the committee may also wish to amend this bill to require the CPUC to propose project funding totaling $1 billion dollars for both accounts. This figure represents about half of the total funding available in the FFA alone, and the committee has confirmed with the Assembly Budget Committee and Legislative Analyst Office that there are sufficient funds for the CPUC to meet the obligation if this bill should be signed.

1. Aligning the rules for the FFA and IGA is reasonable, but this bill could go further. As was summarized in the table above, the IGA, FFA, and BEAD all have different requirements for applications, including the service affordability requirements. This bill proposes to impose uniform affordability requirements on the FFA and IGA, but not BEAD given that it is a federal program with requirements that must be aligned with and approved by the federal government. Nonetheless, given that the functions of the FFA, IGA, and also BEAD are essentially the same, it is reasonable that the different accounts should have the same, or substantially similar, requirements as this bill proposes to do.

However, affordability requirements are only one aspect of the IGA and FFA application requirements. Other provisions such as eligible areas, eligible technology types, and matching fund requirements also are different among the different programs. In order to align other aspects of the programs as well, the committee may also wish to amend this bill to require the CPUC to in the future conform the rules for the FFA and IGA to the extent that doing so would not prohibit state or federal law.

1. Committee amendments. The committee may wish to consider the following amendments:
   1. Revise terminology from “affordable home internet service” to “low-cost broadband service option” to align with existing terminology used by the CPUC.
   2. Revise requirement to provide affordable home internet service in the entire service territory to qualified households, and instead require low-cost broadband service option in the project area only. Accordingly, the definitions of eligible household and qualified public assistance program would also be deleted as they would be inoperable.
   3. Establish the date of January 1, 2026, as the date by which the CPUC must ensure deployment grate awardees must comply with the provisions of this bill, and clarify that the requirements shall not be applied to applications submitted to the CPUC before the effective date of this section.
   4. Strike various sections of this bill that were previously amended out of AB 1588, including the overall goal for adoption, requirements for the CPUC to monitor the progress towards achieving the goal, the requirement for the CPUC to post specified information on its internet website, and the various outreach, coordination, and reporting activities imposed on deployment grant awardees.
   5. Clarify language that authorizes a household to immediately convert to a low-cost broadband service option, specifying that the timeline is following the next month’s billing cycle from the time of enrollment.
   6. Add provisions require the CPUC to issue proposed decisions of awards totaling at least $1,000,000,000 in project funding from the FFA and IGA by January 1, 2025.
   7. Add provisions requiring the CPUC, by January 1, 2027, to adopt updated rules for the FFA and IGA to bring the program requirements into conformity to extent it is not prohibited by state or federal law.
2. Similar/related legislation.
   1. AB 1588 (Wilson) of this legislative session.
   2. AB 662 (Boerner) would have require the CPUC to strictly follow federal guidelines established by the National Telecommunications and Information Administration (NTIA) for use of federal Broadband Equity, Access, and Deployment (BEAD) Program funds. The bill was held in Senate Appropriations Committee.
   3. AB 2749 (Quirk-Silva) would have require the CPUC to review California Advanced Services Fund (CASF) FFA grant applications within 120 days, and provides that applications are deemed approved if the commission does not deny the application or meet the 120 day deadline. The bill also expressly authorized the CPUC to adopt affordability requirements. The bill was vetoed by the Governor.
   4. AB 2751 (E. Garcia) of the 2022 legislative session would have required the California Department of Technology to establish a program that required internet service providers doing business in California to offer affordable home internet as defined. That bill failed passage in the Senate Governmental Organization Committee.
   5. SB 156 (Committee on Budget and Fiscal Review. Chapter 112 of 2021) established the Federal Funding Account and required the CPUC to allocate $1 billion in funding each for rural and urban counties.

REGISTERED SUPPORT / OPPOSITION:

Support

California Emerging Technology Fund

Opposition

Calbroadband
Calcom Association
CTIA
United States Telecom Association Dba Ustelecom - the Broadband Association

Analysis Prepared by: Emilio Perez / C. & C. / (916) 319-2637

 THIRD READING  

Bill No: SB 424

Author: Durazo (D), et al.

Amended: 5/25/23

Vote: 21

SENATE HEALTH COMMITTEE: 11-0, 4/12/23

AYES: Eggman, Nguyen, Glazer, Gonzalez, Hurtado, Limón, Menjivar, Roth, Rubio, Wahab, Wiener

NO VOTE RECORDED: Grove

SENATE APPROPRIATIONS COMMITTEE: 7-0, 5/18/23

AYES: Portantino, Jones, Ashby, Bradford, Seyarto, Wahab, Wiener

SUBJECT: Medi-Cal: Whole Child Model program

SOURCE: California Children's Hospital Association

Children's Specialty Care Coalition

DIGEST:

This bill extends the operation of the statewide Whole Child Model (WCM) program stakeholder advisory group established by the Department of Health Care Services (DHCS) to consult with on the implementation and monitoring of the WCM program whereby Medi-Cal managed care plans provide California Children’s Services (CCS) covered services to Medi-Cal enrollees in specified counties.

Senate Floor Amendments of 5/25/23:

1. Remove the prohibition on CCS-covered services from being incorporated into any MCMC contract entered into after August 1, 1994, except for contracts entered into COHS or Regional Health Authority in the Counties of San Mateo, Santa Barbara, Solano, Yolo, Marin, and Napa.
2. Remove the specification that the existing WCM program counties are the only counties where the Department of Health Care Services (DHCS) is permitted to establish the WCM program.
3. Extend the sunset of the existing statewide WCM program stakeholder advisory group from December 31, 2023, to December 31, 2026.

ANALYSIS:

Existing law:

1. Establishes the Medi-Cal program, administered by DHCS, under which low-income individuals, including children, are eligible for medical coverage. [WIC §14000, et seq.]
2. Establishes CCS, administered by DHCS, under which individuals under the age of 21 who have eligible medical conditions established in regulation and meet financial requirements, are eligible to receive medically necessary services and treatments. [HSC §123800, et seq.]
3. Prohibits CCS covered services from being be incorporated into any Medi-Cal managed care contract (known as the CCS “carve out”) entered into after August 1, 1994 until January 1, 2022, except for contracts entered into for county organized health systems (COHS) or Regional Health Authority in the Counties of San Mateo, Santa Barbara, Solano, Yolo, Marin, and Napa. [WIC §14094.3]
4. Authorizes DHCS to establish a “Whole Child Model” (WCM) program for Medi-Cal enrolled children who are also enrolled in CCS in specified counties. [WIC §14094.4]
5. Requires DHCS to establish a statewide WCM program stakeholder advisory group composed of representatives of CCS providers, county CCS program administrators, health plans, family resource centers, regional centers, recognized exclusive representatives of CCS county providers, CCS case managers, CCS medical therapy units, and representatives from family advisory groups. Requires DHCS to consult the stakeholder advisory group on the implementation of the WCM program and consider the recommendations of the group in developing and monitoring processes and outcome measures by which plans participating in the WCM program shall be monitored and evaluated.
6. Terminates the WCM program stakeholder advisory group on December 31, 2023.

This bill extends the WCM program stakeholder advisory group until December 31, 2026.

Comments

1. Author’s statement. According to the author, this bill, the CCS Modernization Act, will ensure a 3-year extension, until December 31, 2026, of CCS WCM Advisory Group. Established in 1927, the CCS Program cares for children with complex and/or life-threatening conditions such as cancer. The committee provides oversight and stakeholder engagement on the CCS program, including the roll out of the WCM program. The Advisory Group currently sunsets at the end of this year, but should be maintained, especially given DHCS’s intent to expand the WCM into 12 additional counties beginning in 2024.
2. CCS. The CCS program provides diagnostic and treatment services, medical case management, and physical and occupational therapy health care services to children under 21 years of age with CCS-eligible conditions (e.g., severe genetic diseases, chronic medical conditions, infectious diseases producing major sequelae, and traumatic injuries) from families unable to afford catastrophic health care costs. A child eligible for CCS must be a resident of California, have a CCS-eligible condition, and must generally be income eligible. Approximately 200,000 children are in CCS; of those, roughly, 95% are also in Medi-Cal and 5% are in the CCS-only program.
3. CCS “carve out” and WCM. Children who are eligible for both Medi-Cal and the CCS program are enrolled in MCMC and receive CCS-covered services through the CCS program on a FFS basis. This is known as the CCS “carve out,” which has been extended a number of times since it was first established by SB 1371. (Bergeson, Chapter 917, Statutes of 1994).

When the CCS program reached the end of one of its “carve out” authorization periods in 2015, the Brown Administration indicated that it would support an extension of the “carve out” only if it is accompanied by a plan for a more organized delivery system. SB 586 (Hernandez, Chapter 625, Statutes of 2015) authorized DHCS to establish the WCM in 21 counties, in which both Medi-Cal and most CCS services would be covered and paid for by the MCMC plan. SB 586 also required DHCS to create a statewide WCM stakeholder advisory group to inform implementation, as well as, the development of the monitoring and evaluation process. Recently, DHCS released proposed budget trailer bill language that would expand WCM to 15 additional counties, which are the counties that are converting to County Organized Health Systems (COHS) and Single Plan counties in order to conform policy across all counties operating with one plan. Currently, COHS MCMC plans in WCM counties assume full financial responsibility, with some exceptions, of authorization and payment of CCS-eligible medical services, including but not limited to, service authorization activities, claims processing and payment, case management, and quality oversite.

On March 30, 2023, DHCS released the statutorily required evaluation of the WCM. The evaluation was over 600 pages, with over 1000 pages of appendices. While the topline summary noted in the evaluation was that WCM and classic CCS fared similarly in access to CCS services, patient and family satisfaction and the quality of care received, there were some notable differences within subgroups and specific questions asked. Some results indicate that those with more medically complex conditions had more difficulty accessing services or obtaining transportation in WCM versus classic CCS. Care coordination and case management also seemed to suffer in some cases. Conversely, the durable medical equipment authorization process seemed to improve in WCM, as did access to behavioral health services.

DHCS has also released proposed trailer bill language to extend the WCM program in the 12 counties converting to COHS as part of a recent county model change that will be implemented January 1, 2024. This bill extends the existing WCM stakeholder advisory group to account for this extension and ongoing discussions resulting from the WCM evaluation.

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

According to the Senate Appropriations Committee, this bill has unknown, likely minimal, fiscal impact.

SUPPORT: (Verified 5/24/23)

California Children's Hospital Association (co-source)

Children's Specialty Care Coalition (co-source)

Children Now

Epilepsy California

The Children's Partnership

The Leukemia and Lymphoma Society

OPPOSITION: (Verified 5/24/23)

None received

ARGUMENTS IN SUPPORT: This bill’s co-sponsors California Children’s Hospital Association, Children’s Specialty Care Coalition, and other children’s and health advocacy groups write as part of this year’s budget process, DHCS is proposing to expand WCM into the 12 counties that will move to a COHS model when Medi-Cal managed care plan model changes go into effect in 2024. They have serious concerns about the expansion in light of several issues uncovered by an independent evaluation of the WCM, which was released in March of this year. Among other issues, the evaluation showed a statistically significant drop in CCS enrollment where WCM has gone into effect, less robust case management services, and difficulty accessing CCS specialist care for children in WCM counties. Supporters state they have had productive conversations with DHCS about their concerns, but feel, at a minimum that the CCS WCM stakeholder advisory group must remain in place to help address the problems with the way WCM is currently operating, as well as hold DHCS accountable for implementing solutions. The advisory group enjoys broad representation from family members of children in the CCS program, CCS providers, children’s hospital administrators, children’s advocates, health plan leaders, and others, and its members are uniquely qualified to provide expert advice.

Prepared by: Jen Flory / HEALTH / (916) 651-4111

5/26/23 11:01:19

**** END ****

SENATE COMMITTEE ON APPROPRIATIONS

Senator Anthony Portantino, Chair

2023 - 2024 Regular Session

SB 424 (Durazo) - California Children’s Services Program

Bill Summary:

SB 424 would make various changes to the California Children’s Services (CCS) program.

*********** ANALYSIS ADDENDUM – SUSPENSE FILE ***********

The following information is revised to reflect amendments

adopted by the committee on May 18, 2023

Fiscal Impact:

Unknown, likely minimal, fiscal impact.

Committee Amendments:

Committee amendments delete the provisions related to codifying eligible medical conditions, financial assistance to families, and providing financial payments to providers; and instead limit the bill’s provisions to requirements related to the Whole Child Model and managed care models.

-- END --

SENATE COMMITTEE ON APPROPRIATIONS

Senator Anthony Portantino, Chair

2023 - 2024 Regular Session

SB 424 (Durazo) - California Children’s Services Program

Bill Summary:

SB 424 would make various changes to the California Children’s Services (CCS) program.

Fiscal Impact:

• Unknown significant ongoing costs (General Fund and federal funds) to provide financial assistance for out-of-pocket costs, sustainability and access grants to specified hospitals, rate increases for physician services, and reimbursements to hospitals for lifesaving specialty drugs.
• Unknown ongoing costs, likely hundreds of thousands (General Fund and federal funds), for the Department of Health Care Services to administer the provisions.
• Cost to counties for administration would be potentially reimbursable by the state, subject to a determination by the Commission on State Mandates.

Background:

The CCS program, administered by the Department of Health Care Services (DHCS) provides diagnostic and treatment services, medical case management, and physical and occupational therapy health care services to children under 21 years of age with CCS-eligible conditions (e.g., severe genetic diseases, chronic medical conditions, infectious diseases producing major sequelae, and traumatic injuries) from families unable to afford catastrophic health care costs.

A child eligible for CCS must be a resident of California, have a CCS-eligible condition, and must generally be income eligible. Children are currently financially eligible for CCS if they are eligible for full-scope Medi-Cal, in families with adjusted gross incomes below $40,000 as determined by their state tax filing, or the estimated cost of their care would exceed 20 percent of the family’s adjusted gross income. Children in households with incomes below 266 percent of the federal poverty level (currently $69,090 for a family of three) are eligible for full-scope Medi-Cal. For children with the most expensive conditions, there is effectively no income cap on eligibility due to the 20 percent rule. However, for children in middle class families with moderately expensive treatment, their families may face considerable out-of-pocket costs for their care.

Children who are eligible for both Medi-Cal and the CCS program are enrolled in Medi-Cal managed care and receive CCS-covered services through the CCS program on a fee-for-service basis, this is known as the CCS “carve-out”. Current law authorizes the “Whole Child Model” (WCM) whereby both Medi-Cal and most CCS services would be covered and paid for by the Medi-Cal managed care plan. The law allows DHCS to establish a WCM program in certain counties, and currently 21 counties participate in the WCM program. The Governor’s proposed budget includes trailer bill language that would expand WCM to 15 additional counties.

Current law requires that payment for services provided under CCS be identical to the rates of payment for the same service performed by the same provider pursuant to the Medi-Cal program, and authorizes DHCS’s director to reimburse at a greater rate if those rates are adopted by the director in regulation.

Proposed Law:

Specific provisions of the bill would:

• Codify the list of CCS-eligible medical conditions to include those that are specified in existing regulation.
• Require, subject to appropriation by the Legislature, the DHCS to provide financial assistance for out-of-pocket costs not covered by a child’s health plan to children with eligible medical conditions who are not financially eligible for the CCS program.
• Require, subject to appropriation by the Legislature and federal approval, the DHCS to provide an annual sustainability and access grant to each CCS-approved hospital operating one or more CCS special care centers.
• Require, subject to appropriation by the Legislature and federal financial participation, that with respect to payment rates for physician services that are lower than federal Medicare payment rates for the same services, those rates must be adjusted to be no less than the federal Medicare payment rates for those services, as specified.
• Require, subject to appropriation by the Legislature and federal financial participation, the DHCS to reimburse hospitals for the cost incurred by the hospital to acquire lifesaving specialty drugs, as defined, provided on an inpatient basis to a CCS-enrolled child.
• Authorize that if the Director of Finance certifies that the state General Fund would be in a deficit in the following fiscal year, the Governor may, on or before July 1 of that fiscal year, notify the Legislature of the Governor’s recommendation that an appropriation not be made for any sustainability and access payments, increases to payment rates for physician services, or reimbursements for lifesaving specialty drugs. Would state the intent of the Legislature that any temporary suspension of those payments, rate increases, or reimbursements not exceed two consecutive fiscal years.
• Prohibit the expansion of the Whole Child Model program or the incorporation of CCS covered services into Medi-Cal managed care contracts for Medi-Cal eligible CCS children, as specified.

-- END --

SENATE COMMITTEE ON HEALTH

Senator Dr. Susan Talamantes Eggman, Chair

BILL NO: SB 424

SUBJECT: California Children’s Services Program

SUMMARY:

Codifies the list of California Children’s Services (CCS)-eligible medical conditions to include those that are specified in existing regulation. Requires the Department of Health Care Services (DHCS) to provide financial assistance for out-of-pocket costs not covered by a child’s health plan to children with eligible medical conditions who are not financially eligible for the CCS program. Requires DHCS to provide an annual sustainability and access grant to each CCS-approved hospital operating one or more CCS special care centers. Requires DHCS to adjust CCS payment rates for physician services annually to reflect inflation. Requires DHCS to reimburse hospitals for the cost incurred by the hospital to acquire and administer lifesaving specialty drugs provided on an inpatient basis to a CCS-enrolled child. Prohibits the expansion of the Medi-Cal managed care Whole Child Model program for Medi-Cal eligible CCS children and youth enrolled in specified counties.

Existing law:

1. Establishes the Medi-Cal program, administered by DHCS, under which low-income individuals, including children, are eligible for medical coverage. [WIC §14000, et seq.]
2. Establishes CCS, administered by DHCS, under which individuals under the age of 21 who have eligible medical conditions established in regulation and meet financial requirements, are eligible to receive medically necessary services and treatments. [HSC §123800, et seq.]
3. Authorizes the DHCS director to establish which conditions are eligible medical conditions, except as the Legislature may otherwise include, and as such, specifies phenylketonuria, hyaline membrane disease, cystic fibrosis, and hemophilia as included conditions. Current regulations include many conditions under the categories of infectious diseases; neoplasms; endocrine, nutritional and metabolic diseases, and immune disorders; diseases of blood and blood-forming organs; diseases of the nervous system; diseases of the eye; diseases of the ear and mastoid process; diseases of the circulatory system; diseases of the respiratory system; diseases of the digestive system; diseases of the genitourinary system; diseases of the skin and subcutaneous tissues; diseases of the musculoskeletal system and connective tissue; congenital anomalies; accidents, poisonings, violence, and immunization reactions; as well as another list of conditions specifically eligible for a medical therapy program provided within CCS. [HSC § 123830; 22 CCR §41515.1-41518.9]
4. Establishes financial eligibility for the CCS program to include children eligible for full-scope Medi-Cal, children in families with adjusted gross incomes below $40,000 as calculated for California state income tax purposes, and children in families with higher incomes if the estimated cost of care to the family is expected to exceed 20% of the family’s adjusted gross income. [HSC §123870]
5. Requires that payment for services provided under CCS be identical to the rates of payment for the same service performed by the same provider pursuant to the Medi-Cal program, and authorizes DHCS’s director to reimburse at a greater rate if those rates are adopted by the director in regulation. Current regulations reimburse CCS physician services at a rate that is 39.7% higher than the Medi-Cal rate that would otherwise be applicable. [WIC §14105.18; 22 CCR §51503]
6. Establishes the Medi-Cal inpatient hospital reimbursement methodology based on diagnosis-related groups (DRGs) and froze hospital rates during the implementation of this methodology. [WIC §14105.28 and 14105.281]
7. Prohibits CCS covered services from being be incorporated into any Medi-Cal managed care contract (known as the CCS “carve out”) entered into after August 1, 1994 until January 1, 2022, except for contracts entered into for county organized health systems (COHS) or Regional Health Authority in the Counties of San Mateo, Santa Barbara, Solano, Yolo, Marin, and Napa. [WIC §14094.3]
8. Authorizes DHCS to establish a “Whole Child Model” (WCM) program for Medi-Cal enrolled children who are also enrolled in CCS in specified counties. [WIC §14094.4]
9. Requires Medi-Cal managed care (MCMC) plans to pay physician and surgeon provider services at rates that are equal to or exceed the applicable CCS fee-for-service rates, unless the physician and surgeon enters into an agreement on an alternative payment methodology mutually agreed to by the physician and surgeon and the MCMC plan. [WIC §14094.16]

This bill:

1. Codifies the medical conditions described in 3) above as required by regulation, as they were in effect on January 1, 2022, as eligible medical conditions for the CCS program.
2. Requires DHCS to consult with CCS medical directors and experts from DHCS’s technical advisory committees to consider addition of other medical conditions to the list by regulation starting January 1, 2026 and every five years thereafter.
3. Requires DHCS to provide financial assistance for out-of-pocket costs not covered by the child’s health care coverage if those costs are for medically necessary services to treat a CCS-eligible condition starting January 1, 2025. Limits such out-of-pocket costs to the costs had the child been enrolled in a silver plan under the Covered California. Subjects implementation of this provision to an appropriation by the Legislature.
4. Requires, by December 31 of each year and starting in 2025, that DHCS provide an annual sustainability and access grant to each CCS-approved hospital that operates one or more CCS special care centers. Requires the grant to be the number of CCS inpatient days and the number of CCS outpatient visits multiplied by $500 for the immediately preceding fiscal year. Prohibits grants from constituting Medi-Cal payments or patient care payments, supplanting or reducing the financial obligations of MCMC plans for services provided by those facilities, being offset by the state for any other purpose, or being included in the calculation of low-income percentage used to calculate a hospital’s disproportionate share payment.
5. Requires that the CCS physician payment rate for medically necessary treatments provided during the 2025 calendar year be adjusted to reflect the cumulative effect of inflation for the period between January 1, 2002 and January 1, 2025. Also, requires, starting January 1, 2026, that CCS physician payments be updated annually to reflect the effect of inflation and that these payments apply both to the CCS payments made under the Medi-Cal program and those made directly by the CCS program. Requires DHCS to develop and seek federal approval requiring that MCMC plan payments not be lower than these rates and that DHCS adjust payments as necessary to MCMC plans to implement this requirement.
6. Requires DHCS to reimburse hospitals for lifesaving specialty drugs that are provided on an inpatient basis for the cost incurred by the hospital to acquire and administer the drug. Applies this requirement to both CCS payments made under the Medi-Cal program and those made directly by the CCS program. Excludes this reimbursement from being included as part of any payment made pursuant to the existing hospital reimbursement based on DRG. Defines “lifesaving specialty drugs” as those granted breakthrough therapy designation or priority review by the federal Food and Drug Administration (FDA) prior to final approval. Requires DHCS to develop and seek federal approval requiring that MCMC plan payments not be lower than these rates and that DHCS adjust payments as necessary to MCMC plans to implement this requirement.
7. Conditions the enhanced payments in 4) through 6) above on the receipt of federal approvals. Requires DHCS to seek federal financial participation for 5) and 6) above and conditions the payments on the receipt of federal financial participation. Further conditions the enhanced payments in 4) through 6) above on an appropriation made by the Legislature for the purpose of implementing those sections and permits the Governor to suspend these additional payments for the following fiscal year should the Director of Finance certify that the state General Fund would be in a deficit the following fiscal year. State the intent of the Legislature that such suspensions should not exceed two consecutive fiscal years.
8. Prohibits CCS covered services from being incorporated into any MCMC contract entered into after August 1, 1994, except for contracts entered into COHS or Regional Health Authority in the Counties of San Mateo, Santa Barbara, Solano, Yolo, Marin, and Napa.
9. Specifies that the existing WCM program counties are the only counties where DHCS is permitted to establish the WCM program.

FISCAL EFFECT:

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

COMMENTS:

1. Author’s statement. According to the author, the CCS Modernization Act will help make life-saving medical care for critically ill children accessible and affordable for more families. Established in 1927, the CCS program cares for children with complex and/or life-threatening conditions such as cancer, but needs modernizing. This bill will align CCS medical eligibility with best practices. Additionally, it will update financial eligibility so moderately middle class families with critically ill children can avoid financial catastrophe. Third, this bill will make reimbursement for CCS providers more sustainable by adjusting them for inflation, as rates have not been updated since 2002. Children’s access to lifesaving drugs in hospitals is jeopardized since DHCS doesn’t cover these expensive drugs the same way as out-patient, so this bill would equalize drug access. This bill will also preserve the proven CCS expert case management and support by maintaining the separation from MCMC. Most children in this program are eligible for Medi-Cal, 70% are children of color, and many reside in rural and under-resourced communities. They are some of the state’s most medically fragile, with conditions like cancer, sickle cell disease, cystic fibrosis, severe burns, cerebral palsy and congenital heart disease. This bill will help these children access quality care.
2. CCS. The CCS program provides diagnostic and treatment services, medical case management, and physical and occupational therapy health care services to children under 21 years of age with CCS-eligible conditions (e.g., severe genetic diseases, chronic medical conditions, infectious diseases producing major sequelae, and traumatic injuries) from families unable to afford catastrophic health care costs. A child eligible for CCS must be a resident of California, have a CCS-eligible condition, and must generally be income eligible. Approximately 200,000 children are in CCS; of those, roughly 95% are also in Medi-Cal and 5% are in the CCS-only program.
3. Financial eligibility. Children are currently financially eligible for CCS if they are eligible for full-scope Medi-Cal, in families with adjusted gross incomes below $40,000 as determined by their state tax filing, or the estimated cost of their care would exceed 20% of the family’s adjusted gross income. Children in households with incomes below 266% of the federal poverty level (currently $69,090 for a family of three) are eligible for full-scope Medi-Cal. For children with the most expensive conditions, there is effectively no income cap on eligibility due to the 20% rule. However, for children in middle class families with moderately expensive treatment, their families may face considerable out-of-pocket costs for their care. This bill would cap that treatment at the same out-of-pocket costs as a Silver plan sold by Covered California. That plan currently has a $4,750 individual medical deductible that applies primarily during a hospital stay and an $8,750 individual maximum out-of-pocket cost. Several services are not subject to the deductible, such as specialist visits, which are $85. Such help would presumably only be available to children enrolled in health plans with less generous cost-sharing provisions such as high deductible health plans.
4. Provider rates. As CCS rates are based on Medi-Cal rates, hospitals participating in the CCS program rely on these rates. Medi-Cal payments to hospitals used to be confidentially negotiated through the California Medical Assistance Commission (CMAC), the agency who negotiated on behalf of DHCS until July 1, 2012 using the Selective Provider Contracting Program. This program was criticized for being non-transparent and highly politicized. It was replaced by the implementation of the new discharge-based diagnosis-related groups (DRG) hospital payment methodology beginning July 1, 2013 based on the requirements of SB 853 (Committee on Budget and Fiscal Review, Chapter 717, Statutes of 2010). However, despite problems with the CMAC rates, they were increased annually. According to DHCS’s most recent DRG fact sheet, implementation of DRGs required budget neutrality in aggregate for fee-for-service (FFS) Medi-Cal. This requirement ensures that payment for hospital services for each year of DRG payment are not below 2012-13 levels. Base rates are set each state fiscal year with a budget target that is budget neutral. There are other payments to hospitals for Medi-Cal services, including Disproportionate Share Hospital (DSH) payments and similar programs for hospitals with high numbers of Medi-Cal patients and the Hospital Quality Assurance Fee program designed to draw down additional federal Medicaid dollars based on fees collected from hospitals. Nonetheless, the base reimbursement rate has not increased since the implementation of the DRG payment program.

State-established CCS physician rates were last increased pursuant to AB 1740 (Committee on Budget, Chapter 52, Statutes of 2000), through a legislative augmentation to the state budget act. That augmentation was placed into regulation in 2002 and allowed for CCS physicians to be reimbursed at a rate 39.7% higher than the underlying Medi-Cal FFS rate for the same services. As the underlying Medi-Cal FFS rates for physician services has not increased since then, even with this supplemental payment, the rates have remained fixed. While MCMC plans can pay more for services than the FFS rate, the FFS rate is one of the bases of determining the capitated rate that plans are paid, thus there is little incentive for plans to pay more. This bill also contains language, similar to language in the existing WCM program to ensure the MCMC plan payments to physicians are not less than this augmented FFS rate for physician services. This bill would require a backward adjustment for inflation since 2002 and an annual adjustment every year starting in 2025.

1. Lifesaving specialty drugs. While the cost of prescription drugs has long been on the rise, recently certain specialty drugs that are potentially curative, in particular gene therapies have become available. These drugs can cost in the millions for one dose and may need to be administered in the hospital given the child’s serious underlying medical condition and the method of administration. This bill would require full reimbursement for the actual cost of drugs if the drug was granted breakthrough therapy designation or priority review by the FDA prior to final approval. According to the FDA, drugs are given priority review designation for applications for drugs that treat serious conditions and provide significant improvements in the safety or effectiveness of the treatment, diagnosis, or prevention of serious conditions compared to available therapies. A priority review designation is intended to direct overall attention and resources to the evaluation of applications for drugs that, if approved, provide significant improvements to public health and sets a goal date for taking action on an application within six months (rather than ten months) of receipt. Breakthrough therapy designation is a process designed to expedite the development and review of drugs that are intended to treat a serious condition and preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over available therapy on a clinically significant endpoint. In general, the preliminary clinical evidence should show a clear advantage over available therapies. On the priority designation alone, this bill could impact many more drugs than just those that are currently the most costly.
2. CCS “carve out” and WCM. Children who are eligible for both Medi-Cal and the CCS program are enrolled in MCMC and receive CCS-covered services through the CCS program on a FFS basis. This is known as the CCS “carve out,” which been extended a number of times since it was first established by SB 1371. (Bergeson, Chapter 917, Statutes of 1994).

When the CCS program reached the end of one of its “carve out” authorization periods in 2015, the Brown Administration indicated that it would support an extension of the “carve out” only if it is accompanied by a plan for a more organized delivery system. SB 586 (Hernandez, Chapter 625, Statutes of 2015) authorized DHCS to establish the WCM in 21 counties, in which both Medi-Cal and most CCS services would be covered and paid for by the MCMC plan. SB 586 also required DHCS to create a statewide WCM stakeholder advisory group to inform implementation, as well as, the development of the monitoring and evaluation process. Recently, DHCS released proposed budget trailer bill language that would expand WCM to 15 additional counties, which are the counties that are converting to County Organized Health Systems (COHS) and Single Plan counties in order to conform policy across all counties operating with one plan. Currently, COHS MCMC plans in WCM counties assume full financial responsibility, with some exceptions, of authorization and payment of CCS-eligible medical services, including but not limited to, service authorization activities, claims processing and payment, case management, and quality oversite. This bill would prevent this expansion of the WCM in those counties.

On March 30 of last month, DHCS released the statutorily required evaluation of the WCM. The evaluation was over 600 pages, with over 1000 pages of appendices. While the topline summary noted in the evaluation was that WCM and classic CCS fared similarly in access to CCS services, patient and family satisfaction and the quality of care received, there were some notable differences within subgroups and specific questions asked. Some results indicate that those with more medically complex conditions had more difficulty accessing services or obtaining transportation in WCM versus classic CCS. Care coordination and case management also seemed to suffer in some cases. Conversely, the durable medical equipment authorization process seemed to improve in WCM, as did access to behavioral health services.

1. Prior legislation. AB 2458 (Weber of 2022) would have required, subject to an appropriation, that the reimbursement rates for physician services provided under the CCS be increased by adding at least 25% to the augmentation percentage that was in effect for CCS physician services on December 31, 2022, relative to the applicable Medi-Cal rates. Such rate increase would have applied only to physicians in a practice in which at least 30% of the practice’s pediatric patients are Medi-Cal beneficiaries. AB 2548 was held on the Assembly Appropriations suspense file.

AB 382 (Kamlager, Chapter 51, Statutes of 2021), extended the sunset date of the statewide CCS WCM program stakeholder advisory group by an additional two years, from December 31, 2021 to December 31, 2023.

AB 1585 (Committee on Health, Chapter 181, Statutes of 2021) extended the due date, from July 1, 2020 to January 1, 2023, by which DHCS is required to adopt regulations related to the WCM in accordance with the rulemaking requirements.

AB 1688 (Committee on Health, Chapter 511, Statues of 2017), required DHCS to provide a report on the CCS WCM by the later of January 1, 2021, or three years from the date when all counties in which DHCS is authorized to establish the WCM program are fully operational, instead of by January 1, 2021, under prior law.

SB 586 (Hernandez, Chapter 625, Statutes of 2015) authorized the WCM for children enrolled in both CCS and Medi-Cal in 21 counties where both Medi-Cal and most CCS services would be covered by MCMC.

SB 853 (Committee on Budget and Fiscal Review, Chapter 717, Statutes of 2010) created the Medi-Cal impatient DRG reimbursement methodology and froze the rates.

AB 1740 (Committee on Budget, Chapter 52, Statutes of 2000) authorized the supplemental CCS rate.

1. Support. Co-sponsors California Children’s Hospital Association, Children’s Specialty Care Coalition, and other children’s hospitals and advocacy groups write that provider reimbursement is woefully inadequate and is having a consequential impact on access to care. Despite rampant inflation, CCS physician rates have been frozen since 2002 and hospital rates have not been increased since 2012, which is impeding the ability to maintain a sufficient workforce to meet the needs of children with medical complexity. Further, state policy forces hospitals to absorb a portion of the costs of new breakthrough drug therapies for some of the most complex, life-threatening diseases. Finally, the CCS program provides families with expert and intensive case management support that is provided by public health nurses trained to understand the unique needs of CCS patients. This specialized expertise is being eroded by the implementation of the DHCS’s WCM program, which carves CCS into MCMC. They also write that for decades the State of California has shortchanged the needs of its most medically vulnerable children. That has had real-world consequences not just for children in CCS but for all children in California who need high-acuity care, because the providers who treat CCS children also serve as the backbone of the state’s pediatric specialty care delivery system. This bill makes long overdue investments to support the pediatric system of care that serves the state’s most medically complex children, preserving not only the CCS program but access to needed pediatric specialty care for all California’s children.
2. Oppose Unless Amended. The Local Health Plans of California submitted an oppose unless amended letter requesting the that provisions in Section 8 and 9 of the bill that prohibit the WCM expansion be removed. They write that the WCM employs a treatment approach that coordinates all services and support through a single access point while providing dedicated case management for each member. This makes it easier for families and caregivers to get their loved ones the specialized care they need. It also facilitates enhanced care coordination that integrates primary and specialty care. This enables doctors to communicate with one another and successfully collaborate on each child’s case. Prohibiting WCM expansion in counties that will be joining a plan that already operates the WCM program will create a bifurcated system of care for the CCS children they serve. For example, CCS eligible children in neighboring counties could be enrolled in the same local health plan, but CCS children in one county would receive services for their CCS condition through the county and CCS children in the other would receive these same services through the plan which would be integrated and coordinated with other Medi-Cal services not related to their CCS condition. They also point out that this creates unnecessary operational complexities for the plans.
3. Policy comment. This bill largely consists of updates to CCS rates to account for inflation. However, if both the hospital and the physician services costs are augmented, language in the lifesaving specialty drugs piece that requires a hospital to be reimbursed for the cost incurred by the hospital to administer the drug may be duplicative. The author should consider limiting this section to just the cost to acquire the drug as the hospital rates are already increased in another section of the bill. Additionally, the definition of “lifesaving specialty drugs” is broad and focuses on the status of the drug at the time of its approval. At some point, drugs that had breakthrough therapy or priority designation may no longer be as cutting edge or as expensive. A further narrowing, perhaps based on the current cost of the drug, would be warranted.
4. Amendments. The author has agreed to delete the phrase “and to administer” from language that would reimburse for the cost incurred by the hospital to administer lifesaving drugs as suggested in the policy comment above.

SUPPORT AND OPPOSITION:

Support: California Children's Hospital Association (co-sponsor)

Children's Specialty Care Coalition (co-sponsor)

American Academy of Pediatrics, California

California Association of Public Hospitals & Health Systems

California Life Sciences

Children's Hospital of Orange County

Children Now

Hemophilia Council of California

Loma Linda University Adventist Health Sciences Center

Lucile Packard Children's Hospital Stanford

Rady Children's Hospital

The Arc and United Cerebral Palsy California Collaboration

The Children's Partnership

The Leukemia and Lymphoma Society

Valley Children's Healthcare

Oppose: Local Health Plans of California (unless amended)

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