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ITUP’s January Newsletter


Budget Proposal Includes Steep Cuts to HHS

Unsurprisingly, this year’s budget proposal is a continuation of a years-long trend that cuts deeply into critical HHS programs. Despite the state’s improving fiscal condition, slow economic growth and lower-than-anticipated General Fund revenues were cited as reasons for the major cuts and adjustments. Key proposed changes include a major reduction in IHSS services, a large expansion in managed care for seniors, individuals in rural areas, and long-term care beneficiaries. In addition, many of the state’s programs are proposed to be consolidated within DHCS, including Healthy Families, ADAP, mental health, substance abuse, and others. Significant trigger cuts will take effect in the event that it does not pass and General Fund revenues fail to meet expectations; none of these cuts, however, will directly affect HHS programs/departments. Read more here.

Judge Tentatively Blocks Medi-Cal Cuts

In October 2011, CMS approved the state’s plan to reduce certain Medi-Cal payments by 10%. State officials have projected that the cuts will save $623 million. On Monday, U.S. District Court Judge Christina Snyder tentatively blocked a 10% cut to Medi-Cal reimbursement rates, saying the cuts could cause irreparable harm. Read more here.

Integrating California’s Safety Net

Dr. Annette Gardner, PhD of UCSF recently looked at 5 different county safety net systems in California to determine their progress in integration leading up to 2014. At a UCSF briefing in Oakland on December 13, 2011, representatives from the 5 county systems came together to review the findings and share, in person, successes and challenges within their counties. Dr. Gardner selected five disparate counties that are very involved in implementing services and systems to create seamless health care safety nets. Counties vary based on type of delivery system, community, participation in the 2005 Coverage Initiatives, and geographic location. Counties selected were San Mateo, San Diego, Contra Costa, Humboldt and San Joaquin. Read the findings here.

§1115 Waiver

New ITUP Report on County Progress

The §1115 Waiver provides a bridge to implementation of the Affordable Care Act of 2010 (ACA). The projected value to the state and counties is more than $10 billion in federal match over the next five years. This briefing paper describes the evolution from our current system to the new system outlined in the ACA, and the waiver’s crucial role in facilitating this transition.

DHCS Releases Draft Behavioral Health Needs Assessment

Today, the Department of Health Care Services (DHCS) released their draft Waiver Behavioral Health Services Needs Assessment. The Needs Assessment will be funded by the California Endowment and the Substance Use and Mental Health Services Administration. Read more here.

Dual Eligibles

Medi-Cal Procurement Office Posts Final RFS for Duals Demonstrations

California is one of 15 states that has been awarded a federal contract to develop new models of coordinated care for people eligible for both Medicare and Mediciad (Medi-Cal), also known as dual eligibles. California has about 1.15 million dual eligibles. Dual eligibles tend to have many chronic health conditions and rely on services from numerous providers. The Duals Demonstration will involve models through which one entity is coordinating care for the total needs of a person – medical and social. Currently, only a small portion of California’s dual eligibles are enrolled in organized care systems. On December 22, 2011, the draft request for solutions for duals demonstrations was released. More than 50 individuals and organizations submitted comments. You can access the final RFS here. Read more from DHCS.

Evaluating Various Enrollment Options

DHS is preparing a demonstration proposal to the Centers for Medicare & Medicaid Services (CMS) to require Medicare beneficiaries who are also eligible for Medi-Cal to enroll in Medi-Cal MCOs. One goal of California’s demonstration project is to bring multiple kinds of care — behavioral health, social support, medical care and long-term coverage — under one administrative umbrella. One of the key decisions the state faces is how to orchestrate that movement. At a basic level, there are two options — either beneficiaries choose or the state assigns. However, under either option — or a combination of both options — there are dozens of details and circumstances that make the issue much more complex than a simple “either-or” decision. California Healthline recently asked policymakers and stakeholders to consider the pros and cons of various enrollment options — voluntary, mandatory, passive, active, opt-in, opt-out. Read more here.

California Health Benefit Exchange

Summary of the First January Board Meeting

The Exchange Board’s January 17 meeting was focused on the release of the IT solicitation, communications support for outreach, and health plan management and delivery systems improvement. During the open comment period (December 20-December 30, 2011), 1,343 stakeholder comments from 36 organizations were received regarding the draft RFP for an IT vendor. Comments included compliments on various aspects of the solicitation, corrections needed (i.e. verbiage, references), clarification requests (i.e. processes) and policy issues (i.e. other program functions). As a result of the comments, additional statements were added to various sections (see specific additions in this presentation). Read more about the January Board meeting here. The Board’s second January meeting focused on EHBs (see next article).

California Assesses Potential Benchmark Plans for Essential Health Benefits

On December 16, 2011, DHHS released a bulletin on EHBs regarding the regulatory approach they may use to define EHBs under Section 1302 of the Affordable Care Act. The bulletin proposed that EHBs be defined on a state-by-state basis using a benchmark approach. The Exchange Board contracted with a vendor, Milliman, to analyze and compare the health services covered by the 10 benchmark plans in California. Milliman determined that all potential benchmark plans are comprehensive, though pediatric dental and vision services and habilitative services are not typically covered in potential benchmark plans. Read more here. In addition, HHS recently released a list of the largest three small group products by state.

ITUP Workgroup Recommendations

In 2011, ITUP hosted two issue workgroups on the Exchange and 25 regional workgroups on various health policy topics throughout California’s nine regions. Workgroups brought together policy makers, counties, health plans, employers, unions, community groups, providers, advocates, and other public and private stakeholders throughout the state. ITUP has prepared a brief that summarizes participant thoughts and recommendations regarding the creation of the California Health Benefit Exchange. Overall, participants feel that aggressive outreach, a level playing field, continuity of coverage, program simplification and cultural/linguistic appropriateness are some of the keys to a successful Exchange.

Pre-Existing Condition Insurance Plan

California’s PCIP Ranks #1 in Enrollment

As of November 30, 2011, 4,907 Californians had enrolled in PCIP. California ranks higher than the other top states, including Pennsylvania (4,379), Texas (3, 644), Florida (3,285). According to the Business Journal, California’s PCIP enrollment reached 6,307 by Jan. 12, and an additional 467 individuals will be covered starting Feb. 1. Read more here.


Workers Experience Rises in Health Care Costs and Loss of Coverage

According to a recent California HealthCare Foundation report, workers at a quarter of California businesses saw their health benefits diminish while their copayments, deductibles, and premium shares increased in 2011. More than a third of employers are considering shifting more premium costs to workers next year. Other key findings from the report include: since 2002, family premiums rose 153%, more than five times the 29% increase in California’s inflation rate; the proportion of California employers offering coverage declined from 73% to 63% in the last two years; and workers at small firms with a deductible of $1,000 or more increased to 27% from just 7% in 2006.


Rise in US Spending Reaches Historic Lows

January’s issue of Health Affairs reports that US health care spending reached historically low growth rates in 2009 and 2010.  According to analysts at CMS, the low rate of growth reflects lower utilization in health care than in previous years. Health care spending only grew 3.9% in 2010, which is just 0.1 percentage point faster than 2009.  Health spending as a share of the overall economy remained at 17.9% of the gross domestic product (GDP) as the economy rebounded and GDP grew 4.2%. This share has risen over time from 5.2% in 1960 to 17.9% in 2010. CMS attributed the low rate to the recession. Due to high unemployment, continued loss of private coverage, and increased out-of-pocket costs, many individuals chose to forgo care or seek less costly alternatives. Read more here.

Slower Moving States Have More to Gain from ACA

A new issue brief by Urban assesses state implementation progress and looks at expected benefits, dividing states according to their progress implementing Exchanges.   It also includes new state-level estimates of the coverage effects of the ACA. The study shows that slower moving states have a higher baseline uninsurance rate, on average, and would be likely to see the largest declines (i.e., most improvement) in their uninsurance rates and receive the most benefits.

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