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Accept a presentation on the Federal Patient Protection and Affordable Care Act Implementation in Solano County
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Published Notice Required? Yes _____ No __X__
Public Hearing Required? Yes _____ No __X__
DEPARTMENTAL RECOMMENDATION
The Department of Health and Social Services (H&SS) recommends that the Board receive a presentation on the implementation of the Patient Protection and Affordable Care Act (ACA) of 2010 in Solano County; representatives from local hospitals, community clinics and the Solano Napa Medical Society, as well as the Partnership Health plan of California, the County Medical Services Program (CMSP), and the Solano Economic Development Corporation will provide their perspective on the local impact of the healthcare reform initiative.
SUMMARY
On February 19, 2013, the Board received a presentation from the County Supervisors Association of California (CSAC) and H&SS staff regarding the ACA and its implementation in California. The CSAC presentation focused on the role of counties in the healthcare delivery system, especially related to Medi-Cal and safety net services. CSAC also presented the Governor's "two options" proposal for the expansion of the Medi-Cal program under the ACA. The presentation also provided an overview of "Covered California", the State's Health Benefits Exchange which will assist individuals to purchase low cost health insurance and provide a portal to a web-based enrollment in subsidized health insurance or public coverage. Costs of the ACA, specifically related to existing Medi-Cal eligible individuals, as well as those newly eligible was also discussed.
Part II of the ACA Presentation is focused on its local impact in Solano County. Representatives of the local healthcare organizations and business have been invited to present their perspective on the ACA, and the impact on their organizations. H&SS will provide information related to estimated fiscal impact of the ACA, including the Medi-Cal expansion on the County, the new enrollment process for Medi-Cal and low cost/subsidized insurance option and the timeline for implementation of the ACA.
DISCUSSION
Background
The ACA, enacted in 2010, enacts significant changes in Federal law in order to expand health care coverage, both public and private, control health care costs and improve the health care delivery system to achieve better health outcomes. When fully implemented, the U.S. Congressional Budget Office estimates that 94 percent of Americans will have health care coverage, and the costs of providing healthcare services will trend downwards.
The major components of the ACA include: a mandate for individuals to have health insurance, either public or private; expansion of public coverage by expanding Medi-Cal to include individuals and families up to 138 percent of the Federal Poverty Level (FPL) and by establishing healthcare exchanges in each State to assist individuals to purchase health insurance and provide subsidized coverage to individuals and families with incomes up to 400 percent of the Federal Poverty Level; a requirement that employers with 50 or more employees must offer health insurance (smaller businesses are not required to offer insurance, but will benefit from tax credits); a provision which prevents health insurers from excluding individuals from coverage who have pre-existing health conditions; a requirement that health plans offer dependent coverage for children up to age 26; limits administrative costs for health plans; performance based pay systems for healthcare providers; free preventative care for Medi-Cal and Medicare recipients, and establishment of coordinated care models, "Medi-Cal home" and "accountable care organizations" to improve health outcomes and reduce costs.
Who's covered under the ACA in California?
California has aggressively moved forward to implement the ACA, and was the first state to establish its Health Care Exchange, "Covered California", which will assist individuals and business to purchase health insurance, and provides a web-based portal for low income residents to seek free or subsidized coverage. It's estimated that approximately 7.1 million Californians lack health insurance, and approximately 2.1 million will be able to receive subsidized coverage through "Covered California". In addition, California's "Bridge to Healthcare Reform" implemented in 2001-12, has allowed the State and counties to expand coverage to those who would become eligible for Medi-Cal in 2014. Medi-Cal currently covers families up to 100 percent of the FPL (with exceptions for higher incomes for children under the age of 6 years old) and individuals who are aged, disabled or blind. Expanded Medi-Cal will cover both individuals and families up to 138 percent of the FPL. In California, it is estimated that 1.4 million individuals will be newly eligible, of whom 75 percent will be children. Implementation of the Health Benefits Exchange and other outreach efforts will likely increase the number of Medi-Cal clients who are currently eligible, but not enrolled, estimated at 1.3 million. The University of California Health Policy Research Center which generated these enrollment figures, has also estimated that 3 - 4 million Californians are likely to remain uninsured as of 2019.
The following are coverage options for low income families up to 400 percent of the FPL:
(Based on 2013 poverty guidelines the FPL for an individual is $11,490 and for a family of 4 is $23,550)
· Individuals or a family at 138% of the FPL earnings incomes of $15,856 as an individual or $32,499 for a family of 4 would qualify for Medi-Cal with no share of cost as long as they were US citizens and legal immigrants who have resided in the US for more than 5 years.
· Individuals or a family at 400% of the FPL earnings incomes of $45,960 as an individual or $94,200 for a family of 4 would qualify for subsidized private coverage through the insurance exchange; cost will range from 2% to 9.5% based on annual income; individuals with employer coverage which only offers minimal benefits, or has premiums in excess of these limits, may also qualify to purchase subsidized health insurance.
· Individuals or a family above 400% of the FPL will be required to buy private coverage, subject to market rates; failure to purchase insurance will result in penalties of up to 2.5 percent of income.
Time Table for Implementation
Portions of the ACA have been implemented in California since 2010, including:
· Expanded dependent coverage to about 435,000 Californians age 19-26 by allowing them to remain on their parents plans (2011)
· Insured 11,000 California with serious Medi-Cal conditions through the new Pre-existing Condition insurance program (2011)
· Expanded Medi-Cal managed care and implemented demonstration projects to integrate care for individuals eligible for both Medi-Cal and Medicare (Low income health program 2012)
· Established the Health Benefits Exchange, "Covered California", to assist individuals and business to purchase insurance, and provide a portal to enrollment in public programs (2013)
· Launched an education and outreach campaign for business and individuals to increase awareness of the ACA provisions, and asset individuals access both private and public coverage (2013)
· Established the basic healthcare plan coverage levels which will ensure a minimum benefit package and allow "comparison shopping" between different insurance products
· Transitioned children from Healthy Families to Medi-Cal (2013)
By January 2014, if the State moves forward as planned with ACA implementation the State is required to implement the following:
· Expanding enrollment Medi-Cal coverage for all individuals and families up to 138 percent of the FPL and programs for Individuals and families at 400% of the FPL
· Utilization of the Modified Adjusted Gross Income to determine eligibility for enrollment in Medi-Cal
· Procedures to simplify enrollment in Medi-Cal
Public Outreach Efforts
The mission of the Solano Coalition for Better Health (SCBH) established in 1988 as a nonprofit to improve health access and the overall health for all residents in Solano County. SCBH operates the Solano Kids Insurance Program (SKIP) established in 1998, by the Board of Supervisors. SKIP provides outreach and education service, assists individuals and families to access health insurance, and helps those individuals apply for MediCal, Healthy Families, CMSP, among other low cost health insurance plans. SCBH administers Solano's Healthy Kids program which provides free insurance for children who are ineligible for Medi-Cal/Healthy Families by paying premiums or enrolling them in Kaiser Cares for Kids, which provides free health insurance for more than 200 low income children in Solano. SCBH will be the lead organization to inform and educate the public regarding the ACA; plans are underway for presentations at local business groups, schools, service clubs and other organizations. In addition, SCBH is applying for Federal funding, available through the ACA, to provide outreach to the target population, including small business, self-employed and other individuals, providing information on Covered California and health insurance options now available. SCBH will present its strategy for enrolling individuals in health insurance to improve access to healthcare.
Healthcare Providers & ACA Changes
Representatives of the Community Clinics, hospitals and the Napa Solano Medical Society will discuss their role and potential impacts from the ACA as healthcare providers in Solano. La Clinica de la Raza, and Community Medical Centers along with H&SS, operates primary care and dental clinics, serving the Medi-Cal, uninsured and low income individuals in the County. All three organizations operate Federally Qualified Health Centers, and are reimbursed based on costs of services. As a condition of this Federal funding, the clinics are required to serve all clients, regardless of ability to pay. The expansion of Medi-Cal up to 138 percent of the FPL will result in more of the clinics clients having a means to pay for services. It is likely that many of the adult clients who will be newly eligible for Medi-Cal are already CMSP clients, which will have little impact on the clinics. It is anticipated that individuals and families who are eligible under current Medi-Cal rules, but who have not enrolled, will apply for Medi-Cal as a result of the ACA. The majority of these individuals today are clients currently served by the clinics or in hospitals, but their visits are uncompensated. The ACA is anticipated to improve clinic revenues as more individuals are enrolled in a program which is reimbursed by State and Federal funds. The expansion of Medi-Cal will make it easier for clients to maintain coverage, especially if their children are enrolled in Medi-Cal. The ACA implementation is intended to simplify Medi-Cal enrollment, expand who is eligible, as well as modify or eliminate the assets test. Clients with insurance are more likely to seek care on a regular basis, rather than on a drop-in or health crisis basis, the latter often results in poor health outcomes and frequent trips to the emergency rooms. Almost all private primary care providers in Solano County participate in Medi-Cal through the PHC.
Local Hospitals provide a significant amount of uncompensated care, particularly in their emergency rooms. Sutter Solano, NorthBay, and Kaiser will provide information on their anticipated impacts of ACA on their emergency room utilization, hospital bed capacity, and overall financial health of the institutions. It is generally anticipated that inappropriate or non-emergency use of the ER will be reduced as individuals enroll and access primary care. This may generate some financial savings to the hospitals as a result of reduced ER utilization.
Safety Net Healthcare Delivery Systems/Health plans
Partnership Health Plan of California
The Executive Director of the Partnership Health Plan of California (PHC) will address the issue of Medi-Cal expansion and its impact, including the capacity of the existing provider network to accommodate the newly insured. PHC was established in Solano County on May 1, 1994 as the County Organized Health System for Medi-Cal Clients. At the time, the service delivery system for low income residents was in chaos; hospitals threatened to close emergency rooms, and due to budget shortfalls, the County planned on closing its primary care clinic. Out of this crisis, the PHC was established, through the efforts of the SCBH partners. PHC has been extremely successful in the provision of services to Medi-Cal clients, providing high quality health care and preventative services, while maintain efficiencies in its operations. The PHC has expanded to Napa, Yolo, Sonoma, Mendocino, and Marin counties; and recently has expanded to 7 additional counties. PHC has studied the capacity of the healthcare system in Solano to meet the needs of the newly insured individuals as a result of the ACA and will present the challenges and opportunities for Solano under the ACA.
County Medical Services Program
The former Executive Director of County Medical Services Program (CMSP) will present information regarding how the ACA will impact the client base remaining after July 1, 2014. CMSP manages healthcare services for low income adults, currently ineligible for Medi-Cal. CMSP covers adults up to 200 percent of the FPL; under ACA, CMSP clients with incomes up to 138 percent of the FPL will be eligible for Medi-Cal, while those with incomes over that level will be eligible for subsidized insurance via "Covered California." The CMSP Governing Board has strategically planned for the transition of this program, including implementation of a low income healthcare program as a precursor to ACA implementation called the Path 2 Health program. While many low income adults will be eligible for health insurance under ACA, certain groups, due to immigration status or income verification will not be eligible; in addition, some individuals will choose not to sign up for Medi-Cal or low cost health insurance. Referred to as the "residual population" this group of clients is likely to continue to be an obligation for the County under Welfare and Institutions Code Section 17000. How to efficiently deliver health care services to this population, and how to finance this cost to the Counties will be discussed along with the future of CMSP.
Funding Health Care 2013 & changes anticipated in 2014
Medically Indigent Adult Healthcare Costs
As noted in the February 19, 2013 ACA report, counties in California have responsibility for providing healthcare to low income individuals who are not eligible for Medi-Cal, primarily childless adults who are not disabled or blind, generally referred to as Medically Indigent Adults (MIAs).
CSAC presented an overview of the role of counties in California in the provision of healthcare. Solano County is one of 35 counties in CMSP which is the primary vehicle for the County to meets its County obligations under Section 17000 of the Welfare and Institutions Code. Solano County contributes $6.8 million in 1991 Realignment funds and $809k in County General Fund (CGF) to CMSP. The County has also established a residual medically indigent adult program for those clients who may not be eligible for CMSP; expenditures have been minimal. The Governor has proposed that Counties "give back" a portion of the 1991 Realignment Health Account to fund the State's Medi-Cal program expansion. The State legislature has held public hearings on a State vs. County option for enrolling the MIAs in Medi-Cal. The general consensus in the medical community is that the State should expand the existing Medi-Cal program to include those newly eligible for Medi-Cal. Under this scenario, the immediate cost to the State for healthcare for the expanded Medi-Cal program is zero because under the ACA the federal government contributes 100% of the cost until 2016. In 2016 the State share of cost gradually increases to a maximum of ten percent by 2020. It is anticipated that costs to the State will increase under the ACA due to the administrative costs of enrolling individuals in Medi-Cal, and because the number of individuals currently eligible but not enrolled in Medi-Cal will increase (for which the State share of costs will remain at the current 50 percent). In order to offset these costs, the Governor has proposed a take back of some portion of the 1991 Realignment. Counties may realize savings in providing healthcare to MIAs as a result of the ACA; however, there is a great deal of variation in how counties meet their MIA obligations, and there is no reliable data on how much counties spend on indigent healthcare.
The Legislative Analyst Office has proposed that the legislature look back at the original allocations of the 1991 Realignment, which allocated a portion of the funds for the provision of care to MIAs, and the balance for general Public Health services. Originally, 46 percent of these funds were dedicated to the costs of MIA services. However, because 1991 realignment funding for Health programs realigned from the State to counties is funded by sales tax and Vehicle License Fees actual receipts of Realignment funds fluctuates with the economy they have trended down from 2008 to early 2012, and have only recently begun to trend back up. In FY2012/13 Solano's Health Account fund is anticipating to receive approximately $14 million in Health Realignment; 46 percent of that amount is close to the Realignment funds already used to pay for CMSP. It appears highly unlikely counties will all agree on any formula because Counties received Realignment funding based on formulas in place prior to 1991; there has been no adjustment for changing demographics or other variables. Counties that operate hospitals tend to have higher expenses and the cost for the remaining uninsured is still unknown.
Many Counties, including Solano, are very concerned with the "residual population" which will include undocumented residents, legal immigrant in the United States less than 5 years, and possibly, individuals who simply choose not to enroll in any program or purchase insurance. The number of legal residents with less than 5 years residency is estimated at approximately 900 individuals in Solano. It is speculated that many of these individuals do receive care through the clinics in Solano; however, the cost for hospital care of the uninsured has been borne by the local hospitals and is reported to be millions of dollars.
Mental Health and Substance Abuse Services
Solano County has full responsibility for the provision of behavioral health services to indigent and Medi-Cal clients. For services provided to Medi-Cal clients, H&SS is reimbursed 50 percent with federal funds. Medi-Cal expansion will result in more clients for who the County will be required to pay 50 percent of the care of cost (for those currently eligible but not enrolled currently) and will be reimbursed 90 percent of the costs of providing care to the newly eligible. The 1991 Realignment Mental Health Account provides most of the funding currently for the 50 percent match to the Federal Medi-Cal dollars. The Realignment funds are also used to pay for the costs of mental health services to MIAs. As with medical cost the formula for distribution of the 1991 Realignment funds for Mental Health related cost has not been updated for changing demographics, so each County will be impacted differently. As more individuals who are currently eligible but not enrolled in Medi-Cal seek coverage, the County will be required to provide mental health services to these clients. This increase in cost will be offset as MIAs enroll in Medi-Cal, reducing the County's risk from 100 percent of costs to 10 percent.
One additional financial risk to the County is how the Mental Health Parity and Addiction Equity Act of 2008 are interpreted under the ACA. This Federal parity law requires that all individuals receive the same level of mental health services as provided for in the "standard health benefit plan". Until the State passed and the Governor signed legislation for the implementation of 2011 Realignment, which included Public Safety, Mental Health and Substance Abuse programs the County had no obligation to provide substance abuse service to Medi-Cal clients; now, the County is 100 percent responsible for the costs of this program, and is reimbursed 50 percent of the costs for covered benefits with federal funds. The issues of program expansion and parity discussed above apply to substance abuse services. Solano currently contracts with community based providers for most substance abuse services. With limited time and experience operating under the 2011 Realignment, it is not yet known if the amount of 2011 Realignment funds are sufficient to cover the County's 50 percent share of cost.
Enrollment under ACA
The County will continue to be responsible for enrolling clients into Medi-Cal, and H&SS anticipates that approximately 6000 Solano residents will be newly eligible, and about 3000 individuals currently eligible for Medi-Cal will apply for assistance under the ACA. The cost for determining eligibility is 100 percent funded by the State and Federal dollars, which continues under the ACA. At this point in time, however, the Governor's budget has assumed that the costs associated with enrolling new clients will be offset by savings in program administration due to the simplification of program rules. While Solano welcomes simplification, past experience with simplification efforts have yielded poor results, in some cases, administrative costs have increased. While clients will no longer be required to provide information regarding their assets, income eligibility is likely to become more complicated. For most clients, income will be based upon Modified Adjusted Gross Income, as used for income tax purposes; however, for seniors and disabled persons, existing income and asset rules will still apply, essentially establishing a dual system for eligibility. In addition, counties will be required to meet new performance standards, including length of time to process applications and make eligibility determinations. Since clients will still be required to provide necessary documentation, including proof of citizenship, before the County can determine eligibility, the counties' ability to meet the new standards may be compromised. H&SS is currently in the process of analyzing available information to determine the number of new applicants to be expected when enrollment for expanded Medi-Cal begins in October 2013. Since H&SS is currently under-spending funding available for administration of the Medi-Cal program, the Department will be able to access currently available funding to help meet the new demand, whether the State provides additional funding related to implementation of the ACA or not. The Department has included these funds in the FY2013/14 Budget.
New Requirements for Employers
The ACA effective January 1, 2014 mandates individuals to have health insurance, and employers with 50 or more employees to provide a health coverage plan. Small businesses have a number of options to address the healthcare needs of their employees. The ACA as it relates to employers is outlined below:
· Employers with 50 or more employees - will be required to offer health coverage, or pay a penalty;
· Employers with less than 50 employees - will be able to access low cost health insurance plans through the exchange and comparison shop for the best coverage; will receive a tax credit of $2,000 per full time employee coverage for their employees
ALTERNATIVES
Your Board could choose not to accept this presentation; this is not recommended because the ACA will have a considerable impact on the health and wellness of Solano residents and will impact county operations and funding as well. The presentation will also serve to provide basic information to Solano residents about the ACA.
OTHER AGENCY INVOLVEMENT
Solano County has a long standing commitment to healthcare, especially for low income residents. The County is an active participant and founding member of the SCBH which is a unique organization that brings together health care providers, hospitals, health plans, community and faith based organizations, the business community, and the County to work together to improve access to care and the health of Solano's residents. Members of SCBH, along with other invited guests gave generously of their time to participate in this important discussion on healthcare in Solano County.
CAO RECOMMENDATION
APPROVE DEPARTMENT RECOMMENDATION