CALIFORNIA POLICY COMMITTEE MAY 23, 2019
General Membership Briefing 2 AGENDA
Welcome & Introductions: Paul Durr, Chair CEO Sharp Community M.G. Update on 2019 Legislative Session: David Gonzalez Regulatory Briefing: Bill Barcellona RBO Regulation Risk Regulation Timely Access Compliance Changes Adjourn California Policy Committee CALIFORNIA LEGISLATIVE UPDATE MAY 23, 2019 UPCOMING KEY LEGISLATIVE DATES FOR 4 REMAINDER OF 2019 LEGISLATIVE SESSION.
May 17th: Last day for Fiscal Committees to report out bills to the Assembly and Senate Floors introduced in the house of origin.
May 31st: Last Day for each house to pass out bills from their house of origin.
June 15th: Budget passage deadline.
July 12th: Last day for policy committees to meet 5 SUSPENSE OVER THE “SUSPENSE FILES”
On May 16th the Assembly and Senate Appropriations Committees considered their “suspense files” effectively deciding the future of hundreds of bills introduced by the Legislature in 2019.
The Assembly Appropriations Committee considered over 650 Assembly Bills.
The Senate Appropriations Committee considered over 350 Senate Bills. KEY BILLS THAT SURVIVED PASSAGE FROM THE SUSPENSE FILE: AB 1249: APG CO-SPONSORED 6 LEGISLATION ON DIRECT CONTRACTING.
APG is a co-sponsor along with Cal-VEBA (a voluntary employee benefits manager for teachers.)
AB 1249: Establishes a 5-year pilot to permit direct contracting for health services between a VEBA or Taft-Hartley Trust Fund, and provider groups that utilize risk-based, or global risk payment. AB 1249 has passed: The 5-year pilot would include one pilot in northern The Assembly Committee on Health with 14 yes California, and one in southern California. APG members votes, and 1 abstention; and could contract to provide services to School District employees at locations across the state. The Assembly Appropriations Committee with 16 yes Purpose of the pilot is to demonstrate the healthcare cost votes and 2 abstentions. and quality benefits of provider risk-based payments versus fee for service.
At the end of the pilot, a report is required to be sent to the Legislature regarding the costs and clinical patient outcomes of the program. MEDI-CAL COVERAGE EXPANSION: AB 4 7 (ARAMBULA) & SB 29 (DURAZO)
Both passed the Appropriations Committees, but face significant hurdles for securing financing to implement. AB 4 (Arambula) & SB 29 (Durazo) seek full-scope Medi-Cal eligibility SB 29 was specifically amended to for all ages regardless of immigration conform to the Senate’s budget status. proposal: The Senate Budget proposal currently only includes allocations of: $98 million for ages 19 to 25; and $62.5 million for 65 and over. INDIVIDUAL MANDATE: AB 414 (BONTA) AND SB8 175 (PAN)
The Governor has proposed trailer bill language (TBL) as part of the 2019-20 Governor’s Budget that Both proposals passed the creates an individual mandate for Appropriations Committees. California residents to obtain minimum essential coverage or pay a shared responsibility penalty as originally outlined under the ACA. SB 714 (UMBERG): DMHC GLOBAL RISK 9 REGULATION. PART 1
SB 714 was introduced to address concerns relating to DMHC’s overly broad definition of “global risk” in their recently approved RKK regulation.
A consumer group stakeholder opposed earlier versions of SB 714 and proposed a different approach of specifying exemptions to the RKK regulation. SB 714 currently authorizes DMHC to establish guidelines for seeking an exemption from the RKK regulation “upon a finding that the action is in the public interest and not detrimental” to enrollees or entities regulated by DMHC, which may include the following payment arrangements: SB 714 (UMBERG): DMHC GLOBAL RISK REGULATION.10 PART 2 (SPECIFIED POTENTIAL EXEMPTIONS)
Payment received under an “alternative payment” as defined in Section 1395l(z)(3)(C) of Title 42 of the line 11 United States Code.
A bundled payment for a specified set of services that are provided within a period of ninety 90 days or less and relate to a single episode of care.
Payment received in connection with participation in an institutional risk pool.
Payment received in connection with participation in an accountable care organization (ACO) approved by DMHC.
Payment received pursuant to a payment arrangement that has not been materially modified for three or more years, if the provider has not sustained a loss of more than 10 percent of the provider’s maximum potential revenue under the arrangement over the last three years.
Payment not subject to downside risk.
Payment received under an arrangement in which the provider is paid a fixed amount for each member per month by a health plan solely for services the provider is authorized by law to provide. SB 714 (UMBERG): DMHC GLOBAL RISK 11 REGULATION. PART 3 (APG SUPPORT IF AMEND)
APG has a “support if amended” position seeking to: Re-define “prepaid or periodic charge” as a capitated payment;
Declare legislative intent to study and pass a bill that will determine the regulatory oversight structure for ACOs paid under shared savings models. SB 503 (PAN): MEDI-CAL MANAGED CARE; 12 DELEGATED ENTITIES (AUDITS) PART 1
SB 503: Amendments on March 25th include annual audit of all subcontracted providers to MCP plans. Plans must also “surprise inspect” 10% of their subcontracted providers annually. Audit reports must be sent to DHCS and also posted on the Department’s website. Sponsored by the Western Center on Law and Poverty.
According to the author: “recent events illustrate that patient care can suffer when layers of delegation and sub- delegation occur without appropriate oversight and transparency.” “A whistleblower complaint in 2017 shed light on a subcontractor falsifying documents to conceal improper denials of care.” SB 503 “makes clear that MCPs bear ultimate responsibility for those services, regardless of subcontracting, delegation, or sub-delegation.” SB 503 (PAN): MEDI-CAL MANAGED CARE; 13 DELEGATED ENTITIES (AUDITS) PART 2
APG has a “support if amended” position. The requested amendments:
Request the audit standards apply to all subcontracted providers in MMC; Take into account geographic areas where multiple plans are operating to permit compliance with one plan to be reported and accepted by other plans; Set minimal competency requirements for plan auditors; Require the same reporting format across all MMC plans and focus on the more frequently delegated actions (e.g. prior authorization); Require precise agreement between DHCS and DMHC on the applicable compliance standards and that any inconsistencies between the H&S and W&I Codes be reconciled under a master audit guideline; Permitting provider compliance in specific geographic areas be reported across all plans in order to focus on deficiencies that lead to non-compliance; and Develop a provider certification program to establish clear, ethical, administrative and performance standards in which a single independent auditor would represent all the MMC plans in a geographic area. AB 1174 (WOOD): ANESTHESIA SERVICES (PART14 1)
Follow-up legislation to AB 72 (Bonta) which related to non- contracted provider services and balance billing. AB 72 established a default payment methodology for disputes involving non-contracted provider services. Anesthesiologists claim that payers are using the default payment methodology in AB 72 as a threat during contract negotiations. AB 1174 (WOOD): ANESTHESIA SERVICES (PART15 2)
Health plans are required to notify DMHC before the end, or plan-initiated termination, of a contract including anesthesia services. Upon receiving this notice, DMHC is required to issue a finding that upon termination of the contract, the plan will have in place contracts with anesthesiologists so that: The plan and delegated groups have at least one anesthesiologist who is contracted with the relevant facility; and An enrollee requiring anesthesia services has access to a contracted anesthesiologist. AB 1174 (WOOD): ANESTHESIA SERVICES (PART16 3)
APG submitted comments objecting to the singling out of one specialty provider group from the provisions of AB 72.
Status: AB 72 was held in the Appropriations Committee, but may be taken up again in 2020. AB 5 (GONZALEZ) INDEPENDENT 17 CONTRACTORS: DYNAMEX DECISION (PART 1)
California Supreme Court issued in Under the ABC test, employer must prove Dynamex Operations West v. Superior Court ALL of the following in order for an a decision on 4/30/18 significantly individual to be considered an “independent changing the way individuals can be contractor;” considered “independent The individual is free from the control and direction of the hiring entity in contractors” under California law. connection with the performance of the work, both under the contract for the performance and in fact; Prior to Dynamex “independent The individual performs work that is contractor” status was determined outside the usual course of the hiring by the Borello test. entity’s business; and The individual is customarily engage in an independently established trade, Under Dynamex independent contractor occupation, or business of the same nature status will be determined by the “ABC” as the work performed. test. AB 5 (GONZALEZ) INDEPENDENT 18 CONTRACTORS: DYNAMEX DECISION (PART 2)
AB 5 is seeking to codify the major provisions of the Dynamex decision: Amendments to AB 5 have Numerous stakeholders (including narrowed the application of the APG) are working with the author Dynamex decision so that it no on provisions needed to make the longer applies to California licensed Dynamex decision workable. physicians.
Prong 2 is particularly problematic. Negotiations with the author continue. RX PRICING: EXEC. ORD. N-01-19 19 (PART 1)
Findings: “establishing a single-purchaser for the highest-cost prescription drugs that will yield valuable insights into the design of a broader single-payer system, and move the State one stop closer to a comprehensive solution for affordable and accessible health care for all.”
Orders: DHCS to take all necessary steps to transition all pharmacy services for Medi-Cal managed care to a fee-for-service benefit by 1/21. DGS to develop a list of prescription drugs that can be prioritized for future bulk purchasing initiatives or reexamined for potential renegotiation with the manufacturer. In developing the list, DGS must consider the 25 highest-cost prescription drugs, which collectively account for approximately half of the State’s prescription drug expenditures. RX PRICING: EXEC. ORD. N-01-19 20 (PART 2)
According to the Administration, while there are no costs or savings reflected in the budget for 2019-20, Medi-Cal is estimated to achieve General Fund savings of $393 million by 2022-23. This estimate does not include savings related to reduced reimbursements to 340B entities.
According to the Legislative Analyst’s Office, “the carve out is likely to result in net savings to the state, but of an unknown magnitude.”
Entities that receive revenue from the manufacturer rebates have expressed concerns regarding the loss of revenues from the Executive Order. CALIFORNIA REGULATORY BRIEFING
21 DMHC RBO SOLVENCY REGULATION
22 23 5TH VERSION OF THE RBO SOLVENCY REG
SB 260 requirements will be updated when the new RBO financial solvency regulation is adopted by the Department. The final date of adoption has not been set by the Office of Administrative Law. APG submitted written comments this past Monday, which were minor in nature The 5th version contained minor changes and the larger issues that concern our members were not open to comment as they had been previously raised In general, the regulation will require all capitated-delegated groups to file quarterly financials, even if enrollment is below 10,000 lives – because many of the groups out of compliance has small enrollments The Department is concerned that 21 groups are out of compliance, which is an increasing trend, and that the list includes commercial groups, not just Medi-Cal provider organizations 24 RBO FINANCIAL SOLVENCY REGULATION
The Department is also concerned about the unlimited use of sponsoring organizations to guarantee the solvency of the RBO – they will curtail such arrangements after one year under the new rule In general, the added TNE requirement, and the added information required under the financials are included because the Department is seeing an increase in 100% pass-through arrangements between delegated entities, and they have not had access to the financials of the sub-delegated organizations in the past. This must be a form of network leasing arrangements, and it concerns the regulator. NEWLY ADOPTED DMHC GLOBAL RISK REGULATION & APG-SPONSORED GLOBAL RISK PILOT BILL (AB 1249) BILL BARCELLONA
25 26 DMHC RISK REGULATION, AB 1249 & SB 714
Implications for APG members in the Global Risk Licensure Regulation
APG response Global Risk Pilot Bill (AB 1249): Criteria and standardization for industry 27 TITLE 28, SECTION 1300.49
“Global risk” means the acceptance of a prepaid or periodic charge from or on behalf of enrollees in return for the assumption of both professional and institutional risk. “Prepaid or periodic charge” for the purposes of this section means any amount of compensation, either at the start or end of a predetermined period, for assuming the risk, or arranging for others to assume the risk, of delivering or arranging for the delivery of the contracted-for health care services for subscribers or enrollees that may be fixed either in amount or percentage of savings or losses in which the entity shares. 28 TITLE 28, SECTION 1300.49
“Institutional risk” means the assumption of the cost for the provision of hospital inpatient, hospital outpatient, or hospital ancillary services to subscribers or enrollees undertaken by a person, other than services performed pursuant to the person’s own license under section 1253 of the Health and Safety Code, in return for a prepaid or periodic charge paid by or on behalf of the subscriber or enrollee. 29 TITLE 28, SECTION 1300.49
“Restricted health care service plan” means a person with a health care service plan license issued by the Department for the provision of, or the arranging, payment, or reimbursement for the provision of, health care services to subscribers or enrollees of another full service or specialized health care service plan under a contract or other arrangement whereby the person assumes both professional and institutional risk but does not directly market, solicit, or sell health care service plan contracts. 30 DMHC GUIDANCE DOCUMENT
DMHC issued a guidance document in draft form for public comment to provide clarification on how organizations would file for exemptions The draft guidance would allow exemption for certain contracts that the Director deems at lisk of harm to the public. The categories or exemption are listed under Section II: Bundled Payment, Case Rate, DRG and Per Diem contracts CMS Accountable Care Organizations CDI-Licensed health insurer arrangements Upside Risk Only Arrangements Carry-forward deficit contracts 31 EXEMPTION PROCESS
Applies to any contract entered into, amended or renewed on or after July 1, 2019 During a phase-in period of July 1 through January 31, 2020 all newly-executed global risk contracts must be filed with the Department within 30 days of execution. You do not need to receive an exemption before entering into the contract or beginning performance – HOWEVER, this is no guarantee that the DMHC will later require licensure, but it will allow an exemption for the period of the contract, or one year, if the contracting party is a licensed health plan. There is a conflict in the document over the term of the phase-in period at pages 2 and 3. It’s either December 31, 2019 or January 30, 2020 – it’s not certain. 32 HOW DO YOU FILE FOR AN EXEMPTION?
For all contracts with global risk not cited under Section II, you must file within 30 days of the effective date of the contract for an expedited exemption The Department will deem the contract exempt from the regulation and issue an Order of Exemption The Order will only be exempt during the term of the contract if the other party is a Knox Keene full or specialized health plan, or For one year from the date of the Order if the other party is NOT a Knox Keene plan Who must file? Each entity that assumes the global risk – example a full-risk arrangement between a hospital and provider group where both share in the savings from the risk pool. 33 CONTENTS OF THE EXEMPTION FILING
A copy of the contract – with all amendments, and all pages, including agreements that are reflected under multiple documents The Request for Expedited Exemption Form The Request for Confidentiality Form – specify the entire agreement or a redacted portion. Do not submit financial information at this time Email it to the Department at [email protected] or mail it to the Department with the given address in the guidance document. 34 ISSUES:
APG is seeking an alternative to the submittal of entire contract documents, asserting that all current liabilities are reflected in the RBO’s SB 260 audited financial document, and proposing the use of an “attestation” by the CEO and the auditing CPA firm. See our Comment letter for details What will happen when both hospitals and physician groups submit separate filings on the same global risk agreement? Will they match, conflict? This guidance has significant limitations through the use of the phrase “at this time” meaning that the Department’s position could change “at any time.” Will the Department follow its APL on confidentiality requests for this process? 35 STAY TUNED
APG will continue to meet with the Department and pose questions/concerns raised by our members We will provide updates and briefings through the following venues: Weekly Healthcare in California member email message Contracts Committee Policy Committee APG California Advocacy Web pages DMHC TIMELY ACCESS REGULATION
36 37 MEASURING COMPLIANCE
The DMHC requires health plans to prove compliance with the timely access to care time-elapse standards under a regulation that collects information on outcomes and networks each March 31st. The compliance filings are two-part – an updated provider network filing and PAAS survey data based on those networks The Department has to issue a regulation by the end of 2019 to codify the compliance standard and process, and this has greatly concerned the plans A new measurement process adopted by the DMHC this year eliminates the survey of other providers within a location – resulting in far lower passage rates 38 ALTERNATIVES
Some viable alternatives exist that could be adopted by the Department for the final, fixed standard for timely access compliance Survey the office location, rather than the individual provider Recognize the added access from NP and PA providers at an office location Recognize the added access factor that results from the elements of widely-adopted electronic patient portal resources – secure email, online appointment tool, etc. Credit the Group’s linked after hour’s care network APG has a meeting scheduled with the DMHC on June 10 to discuss alternatives and the Department has a draft regulation in place that it will issue shortly thereafter 39 ADJOURNMENT
Next meetings: Thursday, May 23rd Thursday, August 22nd Thursday, October 31st
Please mark your calendars