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Legislators, Advocates Urge Care in Healthy Families Transition

Legislative leaders last week joined the chorus of children’s health advocates urging state officials to move slowly and carefully in their dismantling of the Healthy Families program.

In a letter addressed to California Health and Human Services Agency Secretary Diana Dooley, Senate President Pro Tempore Darrell Steinberg (D-Sacramento) and Assembly Speaker John Pérez (D-Los Angeles) urge the Brown administration “to develop a transition timeline that is based first and foremost upon the careful and thorough completion of key readiness activities.”

Steinberg and Pérez point to specifics in the budget trailer bill, as well as the Knox-Keene Act, California’s 37-year-old legislative framework for managed health care.

To save money, the state is eliminating Healthy Families, California’s federally subsidized Children’s Health Insurance Program and moving beneficiaries into Medi-Cal managed care plans. Healthy Families provides coverage for almost 900,000 California kids whose low-income families earn too much to qualify for Medi-Cal but not enough to pay for coverage without help. Medi-Cal is California’s Medicaid program.

Because Medi-Cal reimbursement rates are lower than those paid in the Healthy Families program – and because managed care is supposed to result in more efficient, cost-effective care – the state estimates big savings from the shift: about $13 million for the rest of this fiscal year, another $54 million next year and $78 million the following year.

Children’s advocates have argued against eliminating Healthy Families, pointing out that California would lose higher funding and provider reimbursement level from CHIP, as well as about $200 million over the next couple of years from a tax on insurers that helps pay for Healthy Families. However, they lost the argument when the budget was approved.

“I think most of us are resigned to the reality of what happened with the budget and now we’re concentrating on making it work as well as possible,” said Kelly Hardy, director of health policy for Children Now, a California advocacy organization.

Hardy said advocates welcome legislators’ voices in the effort to get the state to exercise caution.

“I’m pleased that our legislative leaders have clearly spelled out their expectation that this transition be done right, rather than just done quickly,” Hardy said.

Call for Four-Step Transition

The budget trailer bill, AB 1494, calls for the Healthy Families transition — which includes shifting some responsibilities from state to county governments — to take place in four phases, the first starting no earlier than Jan. 1, 2013.

Democratic Gov. Jerry Brown’s administration is scheduled to deliver a comprehensive transition plan to the Legislature by Oct. 1, giving a timeline and detailing what will happen in each phase.

In their letter, Steinberg and Pérez write:

“Implementation plans for each of these four phases are to be developed to ensure state and county system readiness, health plan network adequacy and continuity of care with the goal of ensuring there is no disruption of services and there is continued access to coverage. While the dates specified in statute represent the earliest dates that phased transitions may occur, our intent and expectation is that the actual dates of transition will be based upon when we can be assured that the movement of children between the programs can be accomplished successfully and without any negative impact to children’s access to health care services, including access to providers.”

“Furthermore,” the letter says, “there are likely to be children with special needs or who have a serious illness or condition. We expect that the actual timeframe for transition will address these types of situations.”

In written responses to questions from California Healthline, the Department of Health Care Services said:

“We appreciate the concerns of legislative officials and stakeholders, and we will work with them to implement, and if necessary, amend our plan to accomplish our goals while ensuring quality care to children. Our top priority is to meet the health care needs of families and their children. The transition is an important step in solving the state’s budget crisis, helps the state prepare for health care reform in 2014, creates a better experience for beneficiaries and simplifies administrative issues.”

DHCS, which supports AB 1494, added, “Medi-Cal currently contracts with nearly 90% of the Healthy Families plans and providers, so children will be able to continue to receive access to quality primary and specialty care.”

Dental Changes Especially Troubling for Advocates

Along with changes in medical coverage, the shift from Healthy Families to Medi-Cal means changes in dental coverage. State officials last week staged the first of several stakeholder meetings to discuss the changes in children’s dental coverage.

“We left there feeling like we had more questions than answers,” said Eileen Espejo, director of media and health policy for Children Now.

“It feels a little disjointed about how it all is going to work both on the medical and dental side,” Espejo said.

The state’s prospects for children’s dental coverage through Medi-Cal are not currently geared around managed care. Only two counties — Los Angeles and Sacramento — have managed Medi-Cal dental coverage and both have shown poor results. In Los Angeles, only 23% in the managed dental plan saw a dentist in fiscal year 2010-2011, compared with about 50% in standard Medi-Cal coverage throughout the state. In Sacramento County, about 31% saw a dentist in that period.

“Dental managed care has received so much scrutiny because of those problems (in Sacramento and Los Angeles), we’re clearly not going in that direction right now,” Espejo said. “But there are a lot of questions about where we are headed ultimately,” Espejo added.

“On the dental side, there are no immediate plans to expand beyond Sacramento and Los Angeles counties for dental managed care,” DHCS said in a written response.

DHCS officials said the state has made significant improvements in dental managed care.

“DHCS has implemented a beneficiary dental exception for managed care members that allows them to transition to fee-for-service due to access issues. New performance measures related to utilization and reporting requirements have also been implemented. There are now financial penalties ranging from a 3% to 10% withhold of the monthly capitation rate for poor performing plans and, importantly, DHCS can terminate plans for non-compliance. DHCS is working to further align dental managed care to medical managed care,” DHCS officials said.

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