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CaliforniACA – June Newsletter

Since the passage of the Patient Protection and Affordable Care Act (ACA), California has taken important steps to implement various provisions of the new legislation. Insure the Uninsured Project (ITUP) is pleased to offer monthly newsletters aimed to keep policymakers, stakeholders and the media informed of California’s progress in implementing federal health reform. This newsletter will provide brief updates as California improves its delivery systems and access to coverage for millions of its residents. Our goal is to provide “just the facts,” so please let us know if you find us editorializing.

May Revise Proposes Moving Healthy Families to Medi-Cal
The May Revise included a proposal to move approximately 900,000 HFP beneficiaries into Medi-Cal over six months starting in 2012. This transition is estimated to save the state $31M for the remainder of FY 2011-2012 and $100M/year thereafter. Many organizations have submitted their position on the proposal.  In general, stakeholder feedback has been mixed. Some feel that this is an important transition to simplify the system and implement ACA, while others argue that it will decrease access to care for these children. Read ITUP’s thoughts here and HHS’s summary of rate differentials here.

May Revise on Hospitals
Governor Jerry Brown’s May revise calls for a 1-year extension of a Medi-Cal hospital fee that, if enacted, would generate nearly $4 billion in federal matching funds and provider fees of which $320 million is designated for children’s coverage through the Medi-Cal program. The proposed fee extension, SB 335 – sponsored by the California Hospital Association – will be the second extension of a fee program originally implemented to help close last year’s budget gap in health and human services.  The current extension to this fee program expires June 30.

Mental Health in the May Revise
In the May Budget Revision, Governor Jerry Brown (D) proposed phasing out the Department of Mental Health and replacing it with the Department of State Hospitals. The proposal would complete the shift of administration of community mental health funds to counties over the next two years. Read more here.

Basic Health Plan Passes Senate
On June 2, the California Senate passed SB703 (Hernandez). This bill would create a low-cost Basic Health Plan for individuals with incomes of between 133-200% FPL as an alternative to coverage in the Exchange. The UCLA Center for Health Policy Research estimates that 829,000 individuals would be eligible to purchase into this plan. The Basic Health Plan would be funded by the federal government, at 95% of what the federal government would otherwise spend in the Exchange. The bill now moves to the Assembly. Read ITUP’s blog here.

Third Exchange Board Meeting
The California Health Benefits Exchange (HBEX) held its third meeting on May 24. Board members focused on how HBEX will integrate with other state programs and systems while complying with state and federal requirements.  HBEX is currently staffed by a mix of employees from various state agencies and consultants. The fifth board member has yet to be appointed. Materials from the meeting can be found here. Read the full meeting summary here.

Fourth Exchange Board Meeting
The fourth Exchange Board meeting was held on June 15. Board members reviewed California’s application for a $40M Level I establishment grant that would hire 75 FTE employees to staff the Exchange. Other topics of this meeting included developing effective IT, ensuring the Exchange offers the highest quality consumer experience, and creating working partnerships with other state entities. Materials can be found here. Stay tuned to the ITUP blog for the meeting summary.

Low Income Health Program Implementation Kicks Off in 5 Counties
Five counties (Kern, Merced, Riverside, San Luis Obispo, and Yolo) began their Low Income Health Programs on June 1. CMSP counties and the remaining 21 entities will begin implementation between July 1 and January 1, 2012. Click here for a county-by-county breakdown of income limits, first year enrollment projections, and anticipated expenditures. Click here for a LIHP program timeline. Read more from the ninth Stakeholder Advisory Committee meeting here.

Counties Begin Enrolling SPDs in Managed Care
June 1 marked the beginning of mandatory enrollment of 380,000 SPDs into Medi-Cal managed care in 16 counties. This shift, prompted by the five-year, $8B §1115 Waiver, may reduce state spending by $365M annually. Of SPDs enrolled, DHCS found that 31% chose plans and 69% were auto-assigned to a plan because they failed to select a plan (these are known as default enrollees). Of those who defaulted, the Department was able to link 8% to a previous provider. Children in foster care, individuals paying a portion of their Medi-Cal cost, Medi-Medis, and individuals receiving long-term care are exempted/excluded from the new mandatory program. Read more from the ninth Stakeholder Advisory Committee meeting here.

Public Hospitals Meet DSRIP Year 1 Milestones
In Year 1 (November 1, 2010 – October 31, 2011) so far, $600M in federal funding payments have been made to 17 public hospitals. All hospitals have met their Year 1 milestones and are on track to meet the necessary milestones for the next four years. Years 1 and 2 of the program will focus on building infrastructure and systems, while Years 3-5 will focus on health outcomes. Each public hospital has its own progress reporting plan and results will be made public. Read more from the ninth Stakeholder Advisory Committee meeting here.

Medi-Cal Payment Lawsuit
The future of California’s proposed Medi-Cal reimbursement cuts is still unclear, with conflicting viewpoints from the Justice and Health and Human Services Departments. As the latest development, Acting Solicitor General Neal Katyal filed a “friend of the court” brief supporting the state in Douglas v. Independent Living Center of Southern California, the lawsuit challenging California’s proposed cuts to Medi-Cal providers. The issue in the Supreme Court case concerns whether plaintiffs have standing as individuals to sue the state regarding its administration of the Medi-Cal program (not the merits of the cuts themselves). Read more.

Adult Day Health Centers
Adult day health centers provide part-time care to seniors, including treatment for chronic diseases, mental health counseling and physical therapy, and allow them to live at home. Earlier this year, legislation was passed to eliminate funding for the program, which still remains in jeopardy. Although this cut provides immediate savings for the state, a Lewin Group study found that it would actually cost California more than it would save. Alternative care costs would be shifted to Medicare, including costly emergency room visits and care at nursing homes. Read more here.

Mental Health Report in Sacramento County
Nancy Callahan of I.D.E.A Consulting produced a report outlining a plan to overhaul Sacramento County’s mental health care system. The report was produced as part of a U.S. District Court lawsuit filed by patient advocacy groups. It recommends that more county funds be devoted to community-based programs. To read the full report, click here.

In California, two new ACO programs are expected to launch in San Francisco this July. The 60-day public comment period for the proposed ACO regulations came to a close on June 6. Center for Medicare and Medicaid Services (CMS) will review those remarks from various health care organizations.  CMS addressed some concerns through development of three initiatives that facilitate provider participation in ACOs and on June 7, CMS released exceptions to the proposed regulations that would affect small ACOs in rural communities. Read ITUP’s blog on proposed regulations here.

Rate Regulation
The state Assembly passed AB 52 (Feuer), which allows the state to regulate health insurance premium hikes. Blue Shield of California and Anthem Blue Cross raised rates by 38% and 14% (down from a proposed 39%) in 2010, respectively.

Profit Caps and Premium Rebates
On June 7, Blue Shield of California announced that they will cap profits at 2% of revenue, with excess funds used towards credits to policyholders, funding for health care providers, and grants to non-profit health care organizations. Blue Shield will rebate $180 million (amount in excess of 2% in 2010), to individuals and small business policyholders receiving $167 million in the form of credits against premiums.

Health Bills Move Through CA Legislature
Health Access recently summarized health-related bills that passed full floor votes in the California Legislature on Friday, June 3. These bills aim to control costs, expand access, guarantee benefits, maximize coverage, and assist small businesses. These bills have passed either the House or the Senate and will move into Health Committees, Appropriations Committees, and will then be voted on by the floor of the second house. Read more on ITUP’s blog.

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