Committees Move Host of Bills, Including Rate Regulation

The Senate and Assembly appropriations committees moved fast and furiously yesterday, sending a range of health-related bills out of committee and onto the legislative floor.

That includes the most controversial item on either docket, AB 52 by Assembly members Mike Feuer (D-Los Angeles) and Jared Huffman (D-San Rafael), which would authorize the state to regulate health insurance rates.

In other news, the state controller yesterday reiterated his strong request to the Department of Health Care Services to back off from expanding a relationship with a provider of ADHC-like services, because he says that provider owes the state $339 million. Details are further below.

The big news of the day, passage of the health insurance rate regulation bill out of its last committee, happened on a 6-3 vote, along party lines.

The Legislature now has two weeks to take it up for a floor vote. The current session ends Sept. 9.

There was an indication yesterday, even with the quick passage, that the upcoming floor vote could be rife with drama.

“I know this bill is still evolving in policy,” Senate appropriations committee member Elaine Alquist (D-Santa Clara) said. “I will have to take another look at this when it goes to the floor.”

Alquist is one of the bellwether legislators on health care issues, and the fact that she continues to reserve judgment on AB 52 most likely means a spirited discussion once the measure hits the floor.

Committee member Ted Lieu (D-Torrance) wanted to comment on the bill, as well, but given the hurried nature of the hearing, kept his remarks extremely brief.

“Ditto,” Lieu said.

In addition to passage of AB 52, a number of health-related bills cleared appropriations yesterday:

  • AB 574  by Bonnie Lowenthal (D-Long Beach) got unanimous approval; it would expand the PACE program, allowing the Department of Health Care Services to contract with 15 centers rather than the currently allowed 10 centers.
  • AB 922 by Bill Monning (D-Carmel) would make the Office of the Patient Advocate a separate agency, rather than a department within the Department of Managed Health Care.
  • AB 301 by Richard Pan (D-Natomas) would extend the sunset date of the California Children’s Services program to the start of 2016.  It was approved on an 8-0 vote.
  • Two other Pan bills also passed unanimously — AB 395 would expand newborn screening to include looking for severe combined immunodeficiency (SCID) and AB 678 would establish supplemental Medi-Cal reimbursement for ground emergency medical transportation services.
  • AB 581  by John Perez (D-Los Angeles) would set up the California Healthy Food Financing Initiative, which would expand access to healthy foods in underserved communities.
  • Another Perez bill, AB 673, would require the state’s Office of Multicultural Health to include lesbian, gay, bisexual and transgender issues in its statewide health-enhancement efforts.

Controller Reiterates SCAN Position

After an exchange of letters last week about the state’s proposal to increase its contract with SCAN Health Plan, California’s controller yesterday reiterated his concerns in another letter to Department of Health Care Services Director Toby Douglas.

State auditors contend that SCAN, a Medicare Advantage plan, reaped overly large profits from rates it knew were unjustified and that the organization needs to pay back $339 million, according to State Controller John Chiang.

Chiang yesterday asked DHCS to back off from increasing its contractual business with SCAN until that money is recovered.

“Until appropriate restitution of these unconscionable profits is received,” Chiang wrote, “I would recommend that you minimize the number of persons referred to SCAN under your ADHC Transition Plan. To do so otherwise is fiscally irresponsible and an affront to the taxpayers of the State.”

From the DHCS point of view, SCAN — a not-for-profit Medicare Advantage plan focused on keeping at-risk people out of nursing homes — performs a valuable service for California.

So at a time when the state is eliminating the adult day health care program as a Medi-Cal benefit, that leaves SCAN as precisely the type of program needed by the DHCS, as it attempts to move day health care users into alternative services.

In response to Chiang’s first letter about SCAN, Douglas agreed that the recovery of that money and ensuring that overcharging doesn’t happen again are of primary importance. At the same time, he said, “…it is important to note that SCAN’s service to beneficiaries throughout its contractual obligations to the state has been appropriate in terms of the quality of care provided to Medi-Cal beneficiaries, and SCAN has the expertise to provide former ADHC clients with the services they need.”

It’s a fine policy line: When the state is trying to recover hundreds of millions of dollars that it says is ill-gotten, how can the same state decide to increase operations with that organization?

Douglas wrote that safeguards and data monitoring have been instituted with SCAN. The department, Douglas wrote, “implemented a new rate methodology that is based upon the actual cost of services provided. This resulted in a 70 percent reduction to the long-term care rate that DHCS pays.”

Chiang wrote that eliminating the ADHC benefit — which was a legislative decision, not a DHCS one — in his opinion puts frail and elderly Californians at risk, and that enriching an organization that reaped overly large profits in caring for a similar population is adding insult to injury.

“As a result, a vulnerable population of elderly residents was left with severely diminished services,” Chiang wrote yesterday, “and one of the few beneficiaries of the program elimination is, and remains, SCAN.”

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