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Senate Legislation Updates

State Legislation Impacting the Safety Net

During June’s HIPC meeting, Victor Christy, Assistant Director of Legislative Affairs from the California Health+ Advocates of the California Primary Care Association (CPCA), provided an update on state legislation impacting the safety net via teleconference. CPCA clinics include federally qualified health centers (FQHCs), community clinics and free sites, and rural health centers (RHCs). They serve 6.2 million patients and provide community services including outreach, education, nutrition, social services, homeless services, transportation, adult daycare, and disaster relief.

Christy shared three bills that have passed through the Senate and are making their way through the assembly. The first, SB 323, helps community clinics provide substance use disorder treatment services by adding Drug Medi-Cal and Specialty Mental Health to the types of services that FQHCs and RHCs can provide and be reimbursed for under contract. The second bill, SB 456, will allow FQHCs to be reimbursed for services that promote continuity of care and wellness in ways not covered by the Prospective Payment System. Finally, SB 562 proposes a single-payer healthcare system with an initial price tag of $400 billion and amendments that make the programs contingent of funding. Since HIPC, Assembly Speaker Anthony Rendon has announced that the bill has been placed on hold. Christy also spoke about two passed propositions that will provide new state funds. Proposition 56 proposed a $2 tax increase per box of cigarettes. A large portion of the revenue was intended to increase payments to providers that treat Medi-Cal patients, but there is debate as to where the money should go. The passage of proposition 64 legalizing the recreational use of marijuana provides a new tax-based revenue for the state. From this revenue, by 2022, $50 million a year will go to local health departments or non-profits for mental health treatment, substance abuse disorder treatments, and to aid communities disproportionately affected by past federal and state drug policies.

Christy mentioned two prominent assembly bills making their way through the legislative process. AB 182, the Heroin and Opioid Public Education Act, will implement a comprehensive multicultural public awareness campaign. AB 1512 will impose a tax of one cent per milligram of active opioid ingredient to be allocated to substance abuse treatment and prevention. AB 1512 will also implement an educational campaign that focuses on the risk of opioids. Both bills are a win for Santa Cruz County and act in accord with our own Safe Rx Opioid Safety Coalition.

Lastly, Christy provided an update on the May revise of Governor Brown’s 2017/18 budget. The budget continues its commitment to protect its four priorities: education growth, development of California’s first-ever Earned Income Tax Credit, minimum wage increase, and expansion of healthcare coverage. Unfortunately, the May revise will impact three important components of the budget: the 340B drug discount program, funds for a larger primary care workforce, and AB 1863. The 340B drug discount program was a federal drug discount program intended to enable eligible providers to pay lower prices on outpatient drugs for low income patients explicitly requiring covered entities to bill at their actual 340B acquisition costs. This elimination is detrimental to health centers that rely on 340B savings. In addition, the revision eliminated a $33.4 million first-year commitment of a three-year $100 million commitment meant for residency programs to address the shortage of primary care physicians. The Assembly has restored a portion of the funds but California Health+ hopes that the Conference Committee will restore the remainder. Delays in the integration of behavioral health treatment were also implemented. Assembly Bill 1863, designed to make MFTs billable at the PPS rate under the federal Medicaid program, has been delayed until July 2018. Despite these setbacks, the revision also eliminated the Newly Qualified Immigrant Benefits and Affordability program. This program planned to transition immigrants who had been in the United States for less than 5 years to a Qualified Health Plan under Covered California. Instead FQHCs can maintain continuity in patient care by continuing their billing services and receiving PPS rates under the state-only Medi-care program for this population.

SB 538

Following these legislative updates, California State Senator Bill Monning provided an update on his bill, also via teleconference. SB 538 will affect 8.5 million patients insured by business groups, labor organizations, and CalPERS. These payor groups are responsible for providing employee access to quality medical coverage at the lowest price. To do so, payor groups negotiate contracts with health plans. These health plans, however, have confidential contracts with provider networks. SB 538 seeks greater transparency to prevent provider network use of binding arbitration provisions in health plans. Currently, these provisions are imposed on the payor groups but not subject to negotiation. Those represented by business groups, labor groups, and health plan companies are in favor of the bill; provider networks and many physicians oppose it.

SB 538 will allow payor groups to determine quality and cost by selecting which affiliates of the provider group will be in their contract. Dr. Larry DeGhetaldi, Division President of the Palo Alto Medical Foundation in Santa Cruz, voiced his concern that the bill acts as an existential threat to the health systems of Santa Cruz County. According to Dr. DeGhetaldi, while well intended, the bill fails consider the coordinated care of integrated healthcare systems. SB 538 will allow health plans to cherry-pick and fragment healthcare systems. By prohibiting arbitration between provider networks and healthcare plans, SB 538 will give power to for-profit health plans. This bill will allow large health plans to sell providers while free from the oversite of protective departments such as the Department of Managed Health Care. Dr. Wells Shoemaker, preceding regional co-chair at HIP, re-emphasized that unions and other self-insured entities will piggyback onto coerced rate regulations without having to deliver the whole panorama of patient protections promised by the Knox Keene Act. Patients may lose timely access, transparency, monitoring of performance, quality, and accountability. While all are required by law, the bill allows payor groups to collect rates without protections. Dr. Donaldo Hernandez, of the Palo Alto Medical Foundation representing the California Medical Association, also mentioned concerns regarding certain provisions of the bill. Without the ability to contract with various plans, provider networks are placed at a financial disadvantage. According to Dr. Hernandez, this pushes the balance back into the hands of insurers at the detriment of providers.

In closing, Senator Bill Monning stated his belief that transparency is critical to informed patient access and that his bill will provide equal opportunities in the negotiation of contracts. According to Senator Monning, the bill should affect less than one fourth of all patients in provider networks and will not represent reform across all patient platforms.

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