Author: Alison Klurfeld

LIHPs in counties across the state are beginning to enroll newly eligible patients into Medi-Cal, which opens to all California citizens and 5 year legal permanent residents with incomes under 133% FPL on January 1, 2014. With more than 3 million Californians expected to become eligible for the program, Medi-Cal expansion poses great challenges for the state. California’s Medicaid program is already the largest in the country and the state’s budget stresses are unlikely to disappear anytime soon.

What does Medi-Cal expansion mean for California? To find out, Autumn Kieber-Emmons, Tom Bodenheimer, and Kevin Grumbach interviewed key health policymakers and stakeholders across the political spectrum. Their findings, summarized here, showed important areas of consensus:

• Excitement about expanding coverage for low-income childless adults, from both Democrats and Republicans.
• Concern that, even with the federal government paying 100% of costs for newly eligible beneficiaries, the state could spend $3 to 4 billion in new annual costs by 2020.
• Hope that greater enrollment in managed care will help to control costs.
• Apprehension about worsening provider shortages and more difficult access to care.
• Belief that the 1115 waiver can and will be used to provide a “bridge to reform.”

With LIHP enrollment beginning in earnest, counties are facing a little-discussed side effect of joint county-federal financing for the program. Whereas counties presently use local funding to pay for care of their uninsured low-income residents, they will now receive a 1-to-1 federal match. In most cases, this federal support should increase the total funding available to counties for indigent health.

For a small proportion of patients who are currently covered by joint state and federally-funded programs, LIHP enrollment could significantly shift costs from the state to the counties. ADAP is a prime example. In 2009, California’s ADAP program covered medication costs for 38,033 uninsured or underinsured beneficiaries, nearly a third of HIV-positive people in the state.

42% of ADAP beneficiaries have incomes under 100% FPL and 30% make between 100 and 200% of FPL. With the high cost of HIV and AIDS medications, the program spends an average of $1,480 per member per month.

Right now, the state pays for 29% of ADAP spending (more than $126 million in FY 2010), with the rest covered by federal Ryan White Part B and ADAP emergency funding (25%), and by manufacturer drug rebates (47%).

If ADAP’s low-income beneficiaries enroll in LIHP, a sizeable proportion of the state’s current costs could shift to counties. Los Angeles (15,047 ADAP beneficiaries in FY 2009-10), San Francisco (4,717), and San Diego (4,317) are likely to see the biggest shifts.

As California expands coverage under reform, policymakers will need to reconsider the interactions of funding and administration of ADAP and other state and county coverage programs. For now, their future remains unclear.

Uncited ADAP statistics are from KFF’s statehealthfacts.org.

With enhanced FMAP rates expiring tomorrow, another potential Medicaid payment change could further shift costs from the federal government to the states. The Obama administration has proposed combining the various matching rates that states receive for different populations into one “blended rate” and eliminating state Medicaid provider taxes.

Right now, the federal government agrees to pay a different match rate for different groups:

• Current Medicaid beneficiaries (50% in CA, as of July 1);
• Low-income children, through CHIP (65% in CA); and
• Newly eligible Medicaid beneficiaries (100% from 2014 to 2016, and 90% afterwards).

With a blended rate, each state would receive a single match rate to cover all populations. The advantage of a blended rate is that it is simpler to administer and removes incentives to differentially enroll particular populations. The blended match rate would rely on projections for new enrollment in 2014 and would be set lower than the current average in order to save federal dollars. This would shift costs from the federal government to states at a time when states like California are already financially hard pressed and trying to cut Medicaid payments.

As of 2009, 43 of 50 states incorporated some provider taxes to fund their Medicaid programs. California relies quite heavily on provider and plan taxes to support Medi-Cal and Healthy Families and has had significant difficulties mustering the two thirds legislative majorities required to increase state General Fund taxes.

The August 2nd deadline on raising the federal debt ceiling is fast approaching, but it is not clear how much support the blended rate proposal has in the bipartisan discussions. Governor Brown sent a letter to the President stating that the proposed cost-cutting measures would “cripple California’s Medicaid program.”

For more information, the Center on Budget and Policy Priorities has a comprehensive analysis.

A new report from the California Health Care Foundation spurred discussion yesterday about California’s dual regulators of health insurance. For the past decade, California’s Department of Insurance (CDI) and Department of Managed Health Care (DMHC) shared oversight of the health insurance market even as distinctions between PPOs and HMOs blurred. While CDI and DMHC are already collaborating across department lines, the two agencies have different governance, legal frameworks, and regulatory emphases.

With Exchange implementation and new federal insurance requirements looming in 2014, regulatory consistency will be crucial for success. Report co-author Deborah Kelch suggested two options for regulatory reform: consolidation of the two departments that draws on their relative strengths, or institutionalized coordination and consistency between the two agencies. Whichever path the state chooses for the near term, Kelch said the focus should be on improving the consumer experience.

Maureen McKennan, Acting Deputy Director for Plan and Provider Relations at DMHC, and Janice Rocco, Deputy Commissioner for Health Policy at CDI, stressed their departments’ informal teamwork to ready the state for the ACA. Patrick Johnston, President and CEO of CAHP, commented that while regulatory questions are important, they should not overshadow the critical work remaining to implement the Exchange. While Anthony Wright, Executive Director of Health Access, agreed that there is pressing work to be done in the present, he argued that CDI and DMCH should still get on the path toward a future merger.

Slides from the session can be found here.

Anthem Blue Cross recently settled a class-action lawsuit filed on behalf of 122,000 individual policyholders who alleged that the insurer violated state law by closing their plans to new members without offering comparable coverage options. The company admitted no wrongdoing, but will now offer consumers the option of remaining in their current plan with limits on rate increases or switching to a new plan without a medical history review.

Responsibility for regulation and enforcement of rate-setting and risk pooling practices in the individual insurance market may evolve over the next few years with full implementation of the Exchange. The California Dept. of Insurance and Dept. of Managed Health Care currently share responsibility for oversight, although there has been some discussion of merging the two. Officials have stated that the Exchange will work closely with these departments, but function primarily as an insurance purchaser and facilitator, not a regulator.

HBEX held a webinar today on the Federal Level 1 Establishment Grant. It expands on a preliminary outline shared at the most recent board meeting. Patricia Powers, Acting Administrative Officer, presented a comprehensive breakdown of the Exchange’s $40 million request to enable planning activities between July 1, 2011 and June 30, 2012. The Exchange is working closely with DHCS, CDI, DMHC, and other agencies to coordinate planning and implementation with existing programs.

Program Integration, Information Technology, and Health Plan Management were highlighted as the largest and most challenging projects at this stage, with the largest funding requests.

• Other “core” areas include: Background Research; Stakeholder Consultation; Legislative and Regulatory Action; Governance; Financial Management; Oversight and Program Integrity; Health Insurance Market Reforms; Strategic Visioning; Business and Operational Planning; Navigator Programs; Consumer Assistance; Outreach and Education; and Employer Relationships.

The grant application will be available on the Exchange website at the end of this week; it will be presented to the Board for approval at the June 28th meeting and submitted on June 30th.

This coming spring, the Exchange will apply for a Level 2 grant to pay for implementation until 2015 (when federal funding ends).

Even before the comment period for draft ACO regulations closed on June 6, CMS began to offer alternative ACO structures. “Pioneer ACOs” are designed to fast-track organizations and partnerships that already have the infrastructure and experience to coordinate patients’ care across settings. Pioneer ACOs will be en route for a rapid transition from a shared savings and risk payment model to population-based payment that aligns with provider incentives from other payers. CMS has extended the deadline to submit a letter of intent for the Pioneer ACO program to June 30th, with applications now due August 19th.

In California, ACOs are receiving both support and skepticism:

• CAPG recently endorsed the Pioneer ACO model.
• Building on the successful CalPERS ACO pilot, Blue Shield is partnering with providers to create two new ACOs for the SF Health Services System.
• While Scripps Health and NAMM are creating an ACO-like integrated delivery system in San Diego, they may elect not to participate in the MSSP or Pioneer ACO program.
• Although Kaiser Permanente has a fully integrated delivery system, executives have stated that they do not plan to become an official ACO in the Medicare Shared Savings Program.

Providers, plans, and politicians are working to ready the state’s healthcare system for the anticipated influx of new patients when 4.7 million Californians become eligible for Medi-Cal and subsidized coverage through the Exchange in 2014. But they have limited information about how this population currently uses care or wants to use it with new coverage.

To answer these questions, the Blue Shield Foundation surveyed over 1,000 low-income (less than 200% FPL) residents aged 19 to 64 about their healthcare usage, preferences, and plans for 2014. In the report of their findings, On the Cusp of Change, they found significant lack of choice and dissatisfaction with current care. While only 45% of those who rate their care now as good or excellent would be interested in switching to a new facility in 2014, nearly 7 in 10 of those who were less satisfied would switch.

While uninsured patients’ out-of-pocket costs will likely decrease when they gain coverage, cost was not the only or even the primary driver of patient opinions of care. Courtesy of staff, patient involvement, cleanliness, average time spent with a doctor, and having a personal doctor were the main predictors of patient satisfaction. Patients pointed to cost and seeing the same doctor at each visit, as well as convenience and ability to get an appointment, as key factors when seeking a new care location. Many prospective patients’ desires dovetail with the principles of the Patient-Centered Medical Home, which have been adopted by many counties, safety net hospitals, and clinics and endorsed by CPCA and CAPH.

LA Health Action’s Collaborative Meeting on Thursday, June 9, 2011, provided stakeholders and advocates with a window into LA County’s Ambulatory Care Restructuring process. Dr. Alex Li, who recently joined LA County’s Department of Health Services as CEO of the Office of Ambulatory Care, shared his hopes that the County could begin to address its supply and demand disconnect by partnering more actively with Community Partner Clinics and by investing greater resources in ambulatory services. Louise McCarthy, President and CEO of the Community Clinic Association of Los Angeles County (CCALAC) discussed the transition from the clinic perspective, including the need for strong communication between clinics and the County and for integration of former “Public Private Partnership” patients into Healthy Way LA.

Dr. Li and Ms. McCarthy pointed to cultural competency and quality measurement as areas in which the County was ahead of the curve, but major challenges remain. Katie Murphy, Supervising Attorney with Neighborhood Legal Services of LA County, pointed to geographic accessibility and timeliness standards as potential pitfalls for the integration effort. Preserving access for those who do not qualify for Healthy Way LA, such as patients in LA on long-term visas, was a concern raised by Donald Nollar, Medi-Cal/Health Programs Specialist at Maternal and Child Health Access. Last, Kathy Ochoa, Director of Healthcare Policy and Advocacy with SEIU-United Healthcare Workers West, called attention to the important role that the county’s ambulatory care clinics will continue to play.