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As many uninsured Californians become eligible for comprehensive health insurance through coverage expansions included in the Affordable Care Act (ACA), the state’s current safety net structure comes into question. Other changes ushered in by the ACA —including standardized eligibility and enrollment processes, delivery system reforms, and shifts in financing —will also affect the system. Taken together, these reforms invite if not compel policymakers to revisit the long- standing division of responsibility between state and local governments in the financing, administration, and delivery of health services to the state’s low income residents. California’s existing safety net is fragmented and varies considerably across counties. The policy changes advanced by the federal government in the ACA have the potential to improve health care services available to low -income Californians across the state. Several state -level implementation decisions will have important implications for the imp act of ACA reform in California, particularly in relation to the roles and responsibilities of state and local governments. Unlike California’s realignment efforts in other areas, which have focused on shifting responsibilities from the state to the counti es, the ACA could result in the state assuming responsibilities now borne by county government , such as coverage for low -income, uninsured adults through an expanded Medi -Cal program and certain aspects of the eligibility and enrollment process. State fiscal imperatives may well define this reconsideration, but many unknowns signal caution. Policymakers will need to consider a number of issues—including the scope of the ACA and the complexity of county indigent care financing—as they re- evaluate California ’s long-standing division of responsibilities between local and state government. Contents Summary 2 Contents 3 Figures 4 Tables 4 Abbreviations 5 Introduction 6 California’s Health Care Safety Net Programs 7 Medi-Cal and Healthy Families 7 State Limited-Benefit Programs 8 County Indigent Care Programs 10 Other County Health Programs and Responsibilities 12 The Affordable Care Act and California 14 Coverage 14 Financing 15 Program Administration 17 Delivery Systems 17 State Implementation Decisions and the State-County Relationship 18 Maximizing Enrollment among Eligible Populations 18 Determining the Continued Need and Responsibility for Safety Net Services 19 Financing New State Costs 21 Defining State and County Roles in Program Administration 24 Delivery System Improvements 25 Conclusion 27 References 29 About the Authors 31 Acknowledgments 31 http://www.ppic.org/main/home.asp Rethinking the State-Local Relationship: Health Care 4 Figures 1 Eligibility of uninsured Californians in 2019 (enhanced outreach scenario) 15 2 Distribution of uninsured Californians in 2019 according to two s cenarios by county and region 20 Tables 1 State limited -benefit programs 9 2 County indigent care program 11 http://www.ppic.org/main/home.asp Rethinking the State-Local Relationship: Health Care 5 Abbreviations ACA Affordable Care Act ADAP AIM CalHEERS CCS CHDP CMS CMSP DHCS DSH DSRIP EWC FPL FPACT HFP LIHP MAGI MIA MISP MOE MN SAWS SCHIP SNAP SNCP TANF AIDS Drug Assistance Program Access to Infants and Mothers California Healthcare Eligibility, Enrollment and Retention System California Children’s Services Child Health and Disability Program Centers for Medicare and Medicaid Services County Medical Services Program Department of Health Care Services Disproportionate Share Hospital Delivery System Reform Incentive Pool Every Woman Counts Federal Poverty Level Family Planning, Access, Care, and Treatment Healthy Families Program Low -Income Health Program Modified Adjusted Gross Income Medically Indigent Adult Medically Indig ent Services Program Maintenance of Effort Medically Needy Statewide Automated Welfare System State Children’s Health Insurance Program Supplemental Nutrition Assistance Program Safety Net Care Pool Temporary Assistance to Needy Families http://www.ppic.org/main/home.asp Rethinking the State-Local Relationship: Health Care 6 Introduction Health care services for uninsured and low -income Californians currently are provided through a complex patchwork of programs, with responsibility shared among federal, state, and local governments. Depending on the program and population served, different levels of government play different roles in the financing, administration, and provision of coverage and care. The distribution of roles and responsibilities has varied over time, determined more by the evolving fiscal and policy considerations of state policymakers than by a guiding set of governance principles. T he federal Affordable Care Act (ACA) has the potential to dramatically change how health care to low -income populations is financed, administered, and delivered. The ACA contains various provisions intended to increase insurance coverage and reduce the number of unins ured. The two main provisions are the expansion of Medicaid —the public insurance program for low-income families and qualified adults —and the creation of state insurance exchanges with income -based federal subsidies. 1 In the California context, the ACA’s sweeping reforms invite policymakers to reconsider state and county responsi bilities for indigent health care. Indeed, the g overnor’s proposed 2013 –2014 budget requires this reconsideration by offering two alternative options for expanding Medi -Cal (California’s Medicaid program )—a state-based approach and a county -based approach. The state -based approach would build upon the current state-run Medi -Cal program and the county -based approach would build upon existing county health programs. The resul t of a state -based approach would shift responsibility for providing care to many low -income, uninsured adults from the counties to the state, which would be a departure from California’s realignment efforts to date. The county -based approach , while consistent with increasing program responsibilities for local government, would represent a substantial undertaking for counties and introduce many unknowns. Regardless of the approach, ACA implementation will prompt an assessment of state and county responsibilities for financing and administering expanded Medi -Cal coverage as well as other functions that could shift from county government to the state including eligibility determination for public insurance programs . Policymakers will need to understand the provisions and implications of federal health reform as implementation moves forward in 2013 and takes effect in 2014 . The ACA offers California policymakers an opportunity to focus on promoting the efficient and effective administration and deliv ery of health care services . But state budget constraints could narrow the focus to financing new costs associated with implementation . The way state policymakers frame the issues will have important implications for how indigent care responsibilities are defined and what the health care safety net will look like after 2014. To help inform these discussions, this report describes the current programs that serve the state’s low- income and uninsured residents with a focus on the roles of state and local governments. It then outlines key provisions of the ACA and the changes they could bring to California’s health care safety net programs. It next offers a detailed discussion of the implications of important ACA implementation decisions for the evolving role o f state and local government in the provision of services to low -income residents. It concludes by cataloging important questions and decisions that can help guide policymakers as they grapple with ACA implementation in California. 1 Other provisions to increase insurance coverage include tax incentives to encourage small businesses to offer coverage to their employees and allowing young adults to stay on their parent’s insurance until age 26. The other key component to coverage expansion is the requirement that most U.S. citizens and legal residents have health insurance, referred to as the individual mandate. http://www.ppic.org/main/home.asp Rethinking the State-Local Relationship: Health Care 7 California’s Health Care Safety Net Programs Since its creation in 1966, Medi -Cal has been the primary public insurance program for low -income Californians. At one time, low -income, uninsured residents with no children or qualifying disability —known as medically indigent adults (MIAs) —were covered by Medi -Cal and jointly funded by state and county dollars. Changes to the county -state fiscal relationship following the passage of Proposition 13 and the recession of the early 1980s precipitated a restructuring of the Medi -Cal program in 1982. Responsibility for MIAs reverted to counties with a certain percentage of Medi -Cal spending going to counties to cover the costs. This shift in responsibility for indigent care provision from the s tate to the counties prompted lawsuits with counties arguing that the shift in responsibility represented a reimbursable mandate. The state constitution requires that if state government mandates a local government to provide a new service or higher level of service that the state must provide reimbursement. Most counties , however, dropped their legal action in 1991 , when the State again restructured the financing of county indigent care by allocating a certain portion of sales tax and vehicle license fees to fund health care, mental health, and social services provided by county governments. The 1991 restructuring and its associated financing, known as realignment, continue to provide the major source of state funding for county indigent care programs. 2 The health care services current ly available to low-income and uninsured residents in California are provided through a diverse, uncoordinated mix of programs with federal, state, and local governments all playing a role. Eligibility restrictions for comprehensive public insurance programs exclude many low - income, uninsured residents. As a result, more than seven million Californians currently lack health insurance . This section describes the patchwork of safety net programs and funding sources that provide coverage and services to California’s low -income populations. Medi-Cal and Healthy Families The state operates two primary public insurance programs that offer comprehensive coverage to low -income Californians: Medi -Cal and Healthy Families. Medi- Cal, the most significant program, serves roughly eight million low -income Californians who meet income and categorical requirements related to age, disability, and family composition. Generally speaking, Medi- Cal’s income eligibility requirements are 100 percent of the federal poverty lev el (FPL)—or $23,050 for a family of four. 3 In addition to the income requirement, adults must have either dependent children or a qualifying disability in order to enroll . California policymakers have adopted optional Medicaid categories to serve low- income individuals who otherwise would not be eligible for coverage. Some examples of optional coverage programs include the 1931(b) program and the medically needy (MN) program, both of which extend Medi -Cal coverage to people who would not be eligible based o n categorical income level limits. 4 The state also finances full -scope Medi -Cal coverage for legal 2 For a more complete description of the history of medically indigent programs in California, see California HealthCare Foundation report “Caring for Medically Indigent Adults in California : A History.” 3 For c hildren under age 1 and pregnant women eligibility is 185 percent of FPL , and for children age 1 –5 eligibility is 133 percent. Other specific eligibility categories may have slightly different income eligibility requirements. 4 The 1931(b) program enables low-income parents and caretakers to receive Medi -Cal benefits even if their income exceeds the eligibility threshold by allowing certain amounts and types of income , referred to as income disregards, to not be included in eligibility determinations thus reducing monthly income to qualifying levels. The Medically Needy (MN) program also extends Medi-Cal coverage to people whose income exceeds http://www.ppic.org/main/home.asp Rethinking the State-Local Relationship: Health Care 8 immigrants who have resided in the United States for less than five years and are ineligible for federally supported services. California’s Healthy Families Program —its version of the State Children’s Health Insurance Program (SCHIP) — provides comprehensive, low -cost coverage to nearly 900,000 children with family incomes below 250 percent of FPL, about $57,625 for a family of four, who are not eligible for Me di-Cal. The Healthy Families program requires families to contribute a small monthly amount for premiums and, in some cases, co -payments for services. Children covered under the Healthy Families program are in the process of transitioning to Medi -Cal over the next 12 months . 5 Medi -Cal and Healthy Families are both state -federal programs for which the federal government provides at least half of the total financing in addition to legal and regulatory frameworks and program oversight. The state’s standard fun ding responsibility is 50 percent for Medi -Cal and 33 percent for Healthy Families. It also ensures compliance with federal regulation, oversees services delivered through private and county -run managed care plans, determines the scope of benefits offered under optional categories, and sets reimbursement rates for providers . County government is responsible for the administration of Medi -Cal and HFP, along with other public assistance programs such as CalWORKs (California’s TANF program) and CalFresh (California’s SNAP program). Eligibility determination and enrollment for these and other safety net programs is carried out by county welfare departments, which employ roughly 27,000 workers and utilize three information technology systems that comprise th e Statewide Automated Welfare System (SAWS). A product, in part, of federal rules and requirements, the current Medi -Cal enrollment process requires a significant amount of paper documentation and relies on a face -to -face and mail -in approach. But many cou nties are working to take advantage of online technologies to simplify and improve the enrollment process. In fiscal year 2010 –11, counties received roughly $1.3 billion in federal and state funds for Medi -Cal administration, which contributes a large shar e of the total administration costs for other public assistance programs including CalWORKs and CalFresh (Rosenstein et al. 2012). State Limited-Benefit Programs In addition to Medi -Cal and Healthy Famil ies, the state administers a patchwork of programs that target particular population groups, most of which are tied to certain diseases or services (Table 1). These limited- benefit programs, also k nown as “state-only” programs, target specific populations ( e.g., pregnant women are covered through the Acces s for Infants and Mothers program), services ( e.g., the Family PAC T program provides family planning services), and diseases (e.g., breast cancer screening is provided through the Every Woma n Counts program) . In most cases, limited- benefit programs serve low -income individuals who have no other insurance coverage. But there are a few programs that provide additional or “wrap -around ” health care services to groups that are insured through Medi -Cal ( e.g., California Children’s Services provide specialized car e for children with specific health conditions ) or commercial coverage (e.g., persons with HIV/AIDS can get expanded medication coverage through the AIDS Drug Assistance Program ). qualifying levels by allowing amounts spent on medical expenses to not be included in eligibility determinations. California policy allows these individuals to become Medi-Cal eligible with a monthly share of cost, something akin to a deductible. 5 The shift of children from Heal thy Families to Medi-Cal was part of the 2012 –13 state budget agreement and is estimated to reduce state spending by $73 million annually once the transition is complete. The transition, which has been approved by the U.S. Centers for Medi care and Medicaid Services, will occur in four phases throughout 2013. http://www.ppic.org/main/home.asp Rethinking the State-Local Relationship: Health Care 9 Services are financed principally by state and federal dollars, with the bulk of funding for many programs coming from the federal government. Some programs also receive funding from other sources, such as Proposition 99 (tobacco tax) revenue for AIM and Every Woman Counts. The California Children’s Services (CCS) program also relies on county funding for the state- only and Healthy Families portions of the caseload. 6 Counties are responsible for providing important services —such as case management and clinical assessment— for a few of these programs, including Child Health Disability Prevention Program (CHDP) and CCS. TABLE 1 State limited -benefit programs Program Target population Individuals served Funding source Program expenditures (FY 2011–12) Access for Infants and Mothers (AIM) Low -income pregnant women (200– 300% of FPL) 10,739 State General Fund; Federal Funds; Prop 99; Premiums State: $57.5M Federal: $71.1M California Children's Services (CCS) Children with specific health conditions, family income less than $40,000 or medical costs more than 20% annual income 43,227 State General Fund; Federal Funds; County Funds State: $25.9M Federal: $240M Child Health and Disability Program (CHDP) Low -income children, provides screenings and referrals to necessary services 45,178 State General Funds State: $2.8 M Family Planning Access Care and Treatment (Family PACT) Low -income (less than 200% of FPL)with family planning needs 1,820,000 State General Funds; Federal Funds; Drug rebates State: $141M Federal: $441M Every Woman Counts Program (EWC) Low -income women (less than 200% of FPL), provides screenings for breast and cervical cancer 319,000 State General Funds, Federal Funds (CDC); Prop 99 Funds, Breast Cancer Control Account State: $5.7M Federal: $4.5M Other: $35M AIDS Drug Assistance Program ( ADAP) Low -income individuals (less than $50,000 annual income) with AIDS/HIV positive, provides prescription drug coverage 40,988 State General Funds; Federal funds (Ryan White); ADAP special funds (drug rebates) State: $4.7M Federal: $118.8M Other: $356.7M Genetically Handicapped Persons Program Adults with specific genetic disorders, enrollment fee based on income level 830 State General Fund; Federal Funds; enrollment fees State: $21.1M Federal: $55.0M Other: $8.5M SOURCES: California Department of Health Care Services, Family Health May 2012 Local Assistance Estimates (CCS, CHDP, GHPP). California Department of Public Health, Aids Drug Assistance Program (ADAP) May 2012 Estimate Package. California Department of Public Health, Every W omen Counts May 2012 Estimate Package. UCSF Bixby Center for Global Reproductive Health, Family PACT Program Report, Fiscal Year 2010 –2011. NOTES: All enrollment totals and program expenditures are for FY 2011 –12, unless otherwise noted. CCS program enrollment totals and program expenditures only include the State -only and HFP portions of the caseload, which constitute roughly 30 percent of total enrollment. The remaining 70 percent of CCS program enrollment is covered under the Medi -Cal program and those costs are not reflected in the expenditure totals included in the table. In addition, State general fun d spending for CCS in FY 2011– 12 was considerably lower than the appropriation due to the availability of funds from other sources such as the Safety Net C are Pool. The 2012–13 program allocation for General F und spending on CCS is much higher at $68 million. CHDP enrollment and program expenditures only include the number of screenings and costs for the State- only portion of the program. Family PACT enrollment reflects FY 2010 –11 clients served reported in UCSF Family PACT Program Report and program expendi tures come from DHCS May 2012 Medi-Cal Estimate. For the EWC program, a unique caseload total is not available and so the enrollment total is based on a projection by the CDPH. For ADAP program expenditures, the state general fund expenditure reflects a $76.8M decrease from the Budget Act appropriation due to one -time funding available in FY 2011 –12 from the DHCS Safety Net Care Pool fund. GHPP enrollment and program expenditures include only the State -only caseload —the remaining caseload (715 individuals) is covered under the Medi -Cal program. 6 More than 70 percent of the CCS caseload is covered under the Medi -Cal program, with one study indicating that the CCS expenditures for children covered by Medi -Cal account for nearly 90 percent of to tal program spending. The State-only portion of the program (10% of caseload) provides coverage to children who are not eligible for either Medi- Cal or Healthy Families most often due to immigration status, and expenditures for this part of the caseload ar e disproportionately lower (Health Management Associates 2009). http://www.ppic.org/main/home.asp Rethinking the State-Local Relationship: Health Care 10 County Indigent Care Programs Counties play an important role in providing health care for low -income Californians through the operation of county indigent care programs. These programs serve uninsured adults who meet county- determined eligibility standards but are not eligible for Medi -Cal —most often because their incomes are too high , they are unauthorized immigrants, or they do not meet categorical eligibility requirements, such as having dependent children or a qualifying disability. 7 California Welfare and Institutions Code Section 17000 ,8 enacted by the state legislature in 1933, established the statutory requirement that counties function as providers of last resort for their indigent populations and continues to be the legal framework governing county responsibility for providing health care to the medically indigent . Section 17000 allows counties latitude in serving the medically indigent, the result being that case law pr escribes the boundaries of county responsibility relative to eligibility standards, cost - sharing, and covered benefits . As a result, there is significant variation across counties in the scope of services provided to the medically indigent . The 24 largest counties in the state operate independent Medically Indigent Services Programs (MISPs). T he remaining 34 counties provi de indigent care services through the County Medical Services Program (CMSP), which contracts with a private vendor to administer the program . There is considerable variation among programs operated in MISP counties, reflecting different approaches taken by counties to fulfill their indigent care obligations . The CMSP, on the other hand, establishes standard eligibility requirements, benefit coverage , and provider networks f or all participating counties. Half of the counties that operate MISPs are referred to as provider counties because they operate public hospitals and outpatient clinics that provide the bulk of indigent care services. 9 These counties, with nearly two -thirds of the state’s non- elderly, adult uninsured population, play an essential safety net role; their public hospitals provide nearly half of all hospital -based care to the state’s uninsured population and they also serve many Medi -Cal beneficiaries as well as those covered by other public or private insurance (California Association of Public Hospitals 201 1). In addition, p ublic hospitals offer critical services —such as trauma and burn care —to all Californians. There are six counties (known as “payer” counties) that do not operate hospitals or clinics and instead contract with private providers —typically nonprofit hospitals and community clinics —to provide care to those eligible for the county indigent program. 10 About one in five non- elderly adults who are currently uninsured reside in payer counties. Another six counties (known as “h ybrid” counties) operate public outpatient clinics but n ot public hospitals and so, like payer counties, must contract with private hospitals to provide inpatient care. Table 2 summarizes the eligibility standards, covered benefits, and provider networks across the different types of county organizational structures. Provider counties generally offer more generous coverage than payer and hybrid counties —more inclusive income eligibility, fewer restrictions on basic medical services, and fewer restrictions based on immigration status. For example, one- third of provider counties have income eligibility cutoffs above 300 percent of FPL and two -thir ds offer full services to unauthorized 7 Counties are able to determine the income thresholds and other eligibility requirements, such as immigration status and asset tests, to be eligible for services under county indigent care pr ograms. As a result, not all uninsured are eligible for county indigent care programs. Unauthorized immigrants are eligible for limited services under the Medi- Cal program including emergency-only services and pregnancy-related services. 8 Section 17000 re ads, in part, “Every county… shall relieve and support all incompetent, poor indigent persons … lawfully resident therein, when such persons are not supported and relieved by their relatives or friends, by their own means, or by state hospitals or other st ate or private institutions.” 9 Los Angeles County operates outpatient clinics, but also contracts with several non- county health clinics through the Public-Private Partnership (PPP) program to provide additional capacity to care for the large population of the medically indigent in the county. 10 Hospitals operated by the University of California are also considered public hospitals. Three UC hospitals —UC Irvine, UC San Diego, and UC Davis —operate in counties that are not designated as provider counties. Orange and San Diego are payer counties, while Sacramento is classified as a hybrid county. http://www.ppic.org/main/home.asp Rethinking the State-Local Relationship: Health Care 12 economic downturn because they are raised through vehicle license fees and sales tax.12 Tobacco settlement monies provide another $380 million dollars (FY 2011 –12) available for county indigent health services. County general funds also provide support for indigent health services. State realignment funding requires a county maintenance of effort to access indigent health service funds and counties may contribute additional general funding as necessa ry and available. 13 Finally, a few counties —principally larger, “provider counties” —have enacted local revenue measures to finance indigent care. 14 Federal funding is also a significant source of money for county health services, particularly for counties t hat operate public hospitals. The state’s 1115 Medicaid Waiver, California’s Bridge to Reform, provides approximately $10 billion in federal funds over the five- year period from 2010 to 2015 to support additional coverage for low - income populations, investments in the public hospital system, and financial offsets for uncompensated care provided in safety net hospitals. Under the waiver, all counties had the opportunity to create Low -Income Health Programs (LIHPs), an optional local program to provide care t o those with incomes up to 138 percent of FPL who will be eligible for Medi -Cal in 2014 as a result of ACA coverage expansions. 15 The other federal funding provided by the waiver is available only to public hospitals. The federal funds available through the waiver, as well as additional federal monies , most notably Disproportionate Share Hospital (DSH) payments for Medi -Cal and uninsur ed patients, require a “match” — county funds and public hospital contributions to both the Medi -Cal program and indigent care. In fiscal year 2011 –12, about $4 billion in county funds leveraged a like amount of federal resources to support an array of critical services, including Medi -Cal inpatient care, public hospital delivery system improvements, and county - based LIHPs. Other County Health Programs and Responsibilities In addition to their indigent care responsibilities, counties provide substance abuse and mental health services to low -income residents. Beginning with the state’s 1991 realignment, counties became responsible for the financing and delivery of specialty mental health care services required by Medi -Cal beneficiaries with severe mental illness 16 and, resources permitting, community mental health services for uninsured residents (Watson and Klurfeld 2011). Counties rely on a variety of funding sources, including another pot of realignment funding designated for mental health, state general funds allocated to Medi -Cal mental health managed care, federal Medicaid and SCHIP funds, and revenue generated from the Mental Health Services Act. (California Health Care Foundation 2011). 12 State realignment funding allocations to the counties were based on county program allocations just prior to the 1991 realign ment, however, for some programs, including indigent health services, those program allocations were rooted in historical formulas and spending patterns that dated back to the 1970s and 1980s (LAO 2001). 13 County’s maintenance of effort (MOE) represents a county match of funds and establish minimum county spending levels. County MOE requirements for the sales tax portion of state rea lignment funding for health is based on statute (Welfare and Institutions Code Section 17608.10) and totals $343 million. Statutory language in 17608.10(b) also suggests counties must contribute a 1:1 match for the vehicle lic ense fee portion of realignmen t funding provided for health, although it is not clear if this is done. 14 One example is Alameda County’s Measure A, a sales tax measure adopted by county voters in 2004 to support health care servic es to medically indigent residents. Los Angeles County has also sponsored local initiatives to support county indigent care. 15 Counties had the option to include individuals up to 200 percent of FPL under their LIHPs, but most chose to set the income e ligibility limit at 138 percent of FPL or lower. A few count ies—including Fresno, Merced, and San Luis Obispo —have chosen not to participate in the LIHP. In addition, as of August 1, 2012, LIHP implementation was still pending in Santa Barbara and Stanislaus counties. 16 Mental health services for patients with chro nic and severe mental illnesses such as schizophrenia are carved out of the Medi -Cal health program, meaning that services are provided outside the Medi -Cal managed care or fee-for-service structure, and instead fall under the purview of county mental heal th programs. http://www.ppic.org/main/home.asp Rethinking the State-Local Relationship: Health Care 24 Phasing in Costs Although efforts to facilitate early enrollment and maximize the number of Californians ready to enroll in Medi - Cal and Covered California on January 1, 2014, are under way, previous state coverage expansions demonstrate that new programs take time to ramp up . Consequently, new costs are likely to be phased in over a period of several years after ACA implementation in January 2014 . Given the federal government’s significant financial contributions in the early stages of ACA implementation, most projections suggest that significant state costs will not materialize for several years. M ost modeling efforts anticipate state budget implications through and after 2019, when federal financial support drops to 90 percent of Medicaid costs for those who become eligible under the ACA expansion. It will also take time for actual savings to materialize , given the issues associated with ramping up new coverage programs and expansions . Policymakers might want to consider a phased -in approach, whereby any state recoupment of realignment indigent care funding or county share of Medi -Cal cost is based on actu al enrollment of eligible uninsured county residents. Defining State and County Roles in Program Administration Increased enrollment in Medi-Cal could add significant ly to county workload s. At the same time , the standardized rules, streamlined processes, online application s, and electronic verifications offer an opportunity to re -envision eligibility systems and processes and transform the enrollment process for consumers and county workers alike . Changes already under way are beginning to affect state and county enrollment responsibilities . The procurement of the CalHEERS system can help facilitate enrollment of those newly eligible for coverage, promote a consistent consumer experience across counties, and enable county workers to focus their expertise to support more complex health coverage and human services cases . To this end, new state -county relationships are developing, with some counties expected to assume an expanded role to help consumers enroll in Medi -Cal or Covered California through the new customer service center established by Covered California . This state-county partnership will incorporate unprecedented performance, reporting, and accountability measures. The procedures that will govern business processes and responsibilities among Cover ed California, DHCS, and county welfare offices for determining Medi -Cal eligibility for most applicants have not been finalized . However, the Brown administration expects that counties will continue to be responsible for all Medi -Cal eligibility determina tions, including new Medi-Cal applicants whose initial contact is through Covered California , and for case management of newly eligible individuals within county SAW S systems (California Health Benefit Exchange Board 2012 a). This policy direction introduce s complexities that will need to be navigated carefully to minimize costs, risks, and consumer impact , and also to ensure federal financial support . While the federal vision of a first -class customer experience and streamlined processes is powerful, it bump s up against such practical considerations as California’s long-standing reliance on multiple systems to support the state’s county -based approach to program administration . Moreover, given the way Medi - Cal costs are shared with other public assistance programs, a more efficient and less costly approach to Medi -Cal administration could affect county staffing as well as the allocation of county funds for administration . State and county protocols —and politics —will largely determine the extent to which th e ACA’s promise of streamlined and consistent enrollment systems and processes across counties becomes a reality for millions of Californians newly eligible for coverage. http://www.ppic.org/main/home.asp Rethinking the State-Local Relationship: Health Care 25 Integrating Health Coverage with Other Safety Net Programs ACA implementation deadlines compel policymakers to focus on the complex integration of eligibility and enrollment for most health coverage programs . But the groundwork is being laid for future integration that could include other health and human services programs . Looking beyond 2014, state policymakers may want to consider opportunities to leverage the statewide CalHEERS system to reach additional populations, such as the Medi -Cal disabled population, and other human services programs such as CalF resh and CalWORK s. The CalHEERS platform provides a functional and federally funded foundation for such a horizontal integration of human services programs. Consolidating IT systems and streamlining business operations could help achieve economies of scale, reduce costs, and promote a more uniform consumer experience across counties and different health and human services programs . At the same time, broad centralization of administrative responsibilities runs counter to realignment’s historic devolution of responsibility to local government and to the Brown administration’s support of local control . Moreover, the prospect of social services realignment and expanded county responsibilities for human services programs could complicate efforts to centralize eligibility and enrol lment systems more broadly, given complex cost allocation, business process, and technology issues. D elivery System Improvements Leveraging State Purchasing Power While the state is not a provider of health care services, it is a major purchaser of coverage and services , and that role will be enlarged with the coverage expansions brought about by the ACA . Currently, the state purchases coverage for more than 8 million individuals enrolled in Medi -Cal and HFP. The state also purchases health benefits for 1.3 million active and retired state and local employees and their dependents through the CalPERS program, making it the largest employer purchaser of health coverage in California. In 2014, the state will becom e an even bigger purchaser, as many individuals and small businesses buy coverage through Covered California . In total , state government could become the purchaser of health care for 13 million Californians. The ACA provides new opportunities for policymakers to leverage state purchasing power to have a broader impact on the health care system . Quality measurement, payment and delivery reform, and consumer engagement are examples of areas where aligned contracting strategies among public and private purchasers can help foster delivery system improvements that result in better quality and lower costs . Supporting Traditional Safety Net Providers As state policymakers deploy new tools to meet broader delivery system and quality goals, they will need to conside r safety net providers, who will be an important source of care for both the newly covered and remaining uninsured . On the one hand, p olicymakers will need to encourage the meaningful participation of safety net providers —particularly county-operated public hospital systems—in more -integrated delivery systems while also supporting the ir financial capacity to care for the uninsured . Public hospital systems will have the challenge of competing in a n environment of expanded coverage and consumer choice, a marketplace that increasingly emphasizes outpatient care delivery , and a reimbursement protocol based on patient outcomes rather than volume of services . In short, public systems will be compelled to operate more like private institutions, while at the sa me time retaining their mission and capacity to serve the uninsured. California’s Bridge to Reform waiver devotes significant resources to strengthen the state’s public hospital systems by advancing two principal goals: first, to improve the quality of care, patient experience, and outcomes through more coordinated, integrated delivery strategies; and second, to position public hospital http://www.ppic.org/main/home.asp Rethinking the State-Local Relationship: Health Care 26 systems as attractive providers of choice for newly covered populations and effective partners for developing provider networks. Covered California has made a number of decisions that promote safety net provider participation in the qualified health plans it contracts with - for example, by defining “essential community providers” and network adequacy standards (California Health Benefit Exchange Board 2012b). But new models of care and the ACA coverage expansion do not address the expectation that county -operated public hospitals and health systems will continue to serve the large number of people expected to remain uninsured. While public hosp ital systems can expect to generate new revenue from the ACA’s coverage expansion, they are also slated to experience reductions in offsetting disproportionate share hospital (DSH) payment s. Further research and analysis can help state policymakers assess anticipated safety net hospital revenue gains and losses under full ACA implementation and the resource needs to care for the residually uninsured . 37 Such information can help the state ensure that the federal distribution of DSH reductions does not disadvantage California’s safety net hospitals . Integrating Systems of Care By advancing new health care delivery models that emphasize care coordination and integrati on and providing new tools and resources to catalyze innovation, the ACA offers state policymakers an opportunity to explore a more comprehensive approach to health improvement . ACA reforms will contribute to local discussions already occurring regarding the coordination of mental health, substance abuse, and other services to low -level inmates for whom counties assumed responsibility as a part of the 2011 public sa fety realignment. Relatedly, counties have been testing an array of innovative strategies to coordinate physical and behavioral health care across providers and systems. These county-based efforts can help inform policymaker and practitioner understanding of the opportunities for and barriers to integrating systems of care for physical health, mental, health, and substance abuse services in the ACA context . California largely separates substance abuse and mental health services from physical health care and principally vests counties with responsibility for the financing and treatment of severely mentally ill Med- Cal and uninsured patients . This approach creates barriers to integration of care within local s ystems and results in gaps in treatment provided and populations served (Technical Assistance Collaborative 2012). The county responsibility for these services will need to be reassessed in the ACA context of significant Medi-Cal growth and the integration of mental health and substance abuse services as essential health benefits, which includes the requirement of parity in the coverage of medical and behavioral health care. In this same context, policymakers will need to assess the ability of county financing to provide the non -federal share of Medi -Cal support for the newly eligible Medi -Cal enrollees . This issue is particularly urgent for counties that currently contribute little in supp ort of mental health services to the indigent (Wulsin 2012). P olicymakers may be reluctant to revisit the division of state and county responsibilities for behavioral health services, even though the ACA provides a context for clarifying the county role in delivering and financing these services and the state role in assuring uniform Medi -Cal benefits and performance standards . If policymakers decide not to undo the separation between physical and mental health/substance abuse services, th ey will need to consider how the state in its role as purchaser of care can help align financial incentives across systems to improve care coordination and health ou tcomes (Technical Assistance Collaborative 2012) . 37 Research pending, Katherine Neuhau sen, M.D., Robert Wood Johnson Foundation Clinical Scholar, Department of Family Medicine University of California Los Angeles. http://www.ppic.org/main/home.asp Rethinking the State-Local Relationship: Health Care 27 Conclusion The ACA fundamentally changes California’s health care landscape , particularly for low-income residents . Under the ACA, the state Medi -Cal program and Covered California could extend coverage to upwards of four million low er-income individuals who today may only have access to a patchwork of state and county programs to meet their healthcare needs . Simplified and standardized rules for eligibility , along with multiple pathways to coverage, including a self- service online application, contrast sharply with today’s complex eligibility rules and enrollment processes that rely on in -person visits to county welfare offices . New ACA reimbursement and delivery models will help promote coordinated and integrated care that emphasizes and rewards health improvement. This too will be importan t for Medi -Cal and uninsured populations , many of whom have complex medical needs , and for the safety net providers that have traditionally serv ed these populations. At the same time, ACA implementation comes at a time of economic uncertainty and budget restraint . Federal reform’s coverage expansions will impose new state costs. Moreover, notwithstanding the ACA’s promise of “near- universal coverage, ” upwards of 3 million Californians will remain uninsured as a result of federal exclusions, state policy and practice decisions, and individual choice . And while Medi -Cal eligibility simplification and a new statewide enrollment portal offer the potential to re- create eligibility and enrollment processes for health as well as other social services programs, the new paradigm offered by the A CA runs counter to traditional state and county administrative relationships. The changes ushered in by the ACA invite if not compel policymakers to revisit long -standing policy and practice and the apportionment of responsibilities for the administration, financing, and delivery of medically indigent health care services. There are several critical policy questions .  Will state and local government deploy the comprehensive education, outreach, and enrollment strategies required to maximize the number of insured residents?  H ow will the state finance new costs associated with populations previously supported thr ough county indigent programs if the Medi -Cal expansion follows a state -based approach ? Will the state also assume responsibility for the financing of care to all low -income populations, including those who remain uninsured? If county indigent care funding is recouped to support the expanded state role , will Section 17000 be repealed or modified commensurate with reduced state funding , or will such funding no longer be required in light of the ACA Medi -Cal expansion?  What is the future of county indigent care programs, and where does responsibility lie for the residually uninsured? If counties retain their role as providers of last resort, what service models can most effectively serve those who remain uninsured and how will their care be financed?  Under the county -based approach for Medi -Cal expansions, will counties be able to build upon their existing county indigent care programs and LIHPs to offer comprehensive Medi -Cal coverage to the expansion population that meets federal and state requirements? How will this differ across counties, particularly counties that have more restrictive indigent care programs and/or have chosen not to implement LIHPs? Will counties have the opportunity to opt- out of the expansion?  Should state limited -benefit programs be maintained as a residual safety net of services or scaled back to encourage those newly eligible to enroll in more comprehensive coverage options? http://www.ppic.org/main/home.asp Rethinking the State-Local Relationship: Health Care 28  How can the state most effectively leverage its expanded role as a purchaser of health care to advance broader health care system improvement goals of better health, better care, and lower costs? H ow can state policy ensure the meaningful participation of safety net providers in a reformed health care system?  Does a centralized model work better than a distributed model to optimize the operational efficiency of public health program eligibility , enrollment , and case management functions ?  Given the constitutionally protected nature of Vehicle License Fees, which comprise the majority of current state funding for county indigent care, what new or expanded responsibilities could counties assume to of fset new state costs anticipated by the ACA’s coverage expansions? What opportunities does such a swap provide to better align and integrate services to improve outcomes for low -income Californians? To fully address these and other questions, policymakers will need more complete information than is currently available. Policymakers need federal guidance in a number of areas, including the extent of state flexibility in the Medicaid expansion, enhanced financial support for administrative systems changes, an d federal support for state limited- benefit programs. State and county policymakers will need to work together to come up with other information, such as a complete and co nsistent accounting of current county indigent care funding sources and expenditures , and county -specific data regarding the size, characteristics, and distribution of the residually uninsured, as well as the resources associated with their care needs . Still other informational needs —for example, an analysis of financial projections for DSH hospitals after ACA coverage expansions and anticipated DSH reductions —could be addressed by independent research . Unlike state -county discussions in other policy areas, the realignment conversation sparked by federal health reform is not exclusively about devolving responsibility from the state to county governments . Rather, the ACA calls for an expanded role for both the state —as a provider of coverage—and the counties (particularly provider counties )—as deliverers of care. Unless the state decides to assume full responsibility for low- income populations, including those who remain uninsured, it is likely that a shared governance model for the financing and delivery of care for the residually uninsured will be devised. And, given the complex interplay between health coverage and human services programs, future eligibility systems and business processes might evolve to reflect a new partnership, with the state assuming responsibility for a consolidated automated system for public insurance —and also , potentially, for human services—programs, and the counties assuming responsibility for business processes. State fiscal considerations are likely to play an important role in the implementation of federal health reform. But the ACA offers policymakers an opportunity to marry the transactional discussion around financing new state costs with the policy conversation around aligning the financing, delivery and administration of in digent health care to improve coverage, access to care, and health outcomes . http://www.ppic.org/main/home.asp Rethinking the State-Local Relationship: Health Care 29 References Buettgens, Matthew, John Holahan, and Caitlin Carrol. 2011. Health Reform Across the States: Increased Insurance Coverage and Federal Spending on the Exchanges and M edicaid. Washington D C: Urban Institute. California Association of Public Hospitals. 2011. The Delivery System Reform Incentive Program: Transforming Care Across Public Hospital Systems . Policy Brief. Oakland, CA. California Health Benefit Exchange Board. 2012a. September 18, 2012 Minute Meetings. California Health Benefit Exchange Boar d. 2012b. August 23, 2012 Minute Meetings. California HealthCare Foundation. 2009. California County Indigent Care Program Profiles. Available at www.chcf.org/~/media/MEDIALIBRARYFiles/PDF/P/PDFProfilesIndigent2009.pdf . County Medical Services Program . “CMSP Eligibility All Counties by Aid Code by Month.” Available at www.cmspcounties.org/pdf_files/data/CMSP -1112.pdf. Gruber, Jonathan, and Ian Perry. 2011. Realizing Health Reform’s Potential: Will the Affordable Care Act Make Health Insurance Affordable? New York: Commonwealth Fund. Health Manag ement Associates. 2009. Considerations for Redesign of the California Children’s Services Program. Available at www.dhcs.ca.gov/provgovpart/Documents/WaiverRenewal/ConsiderationsforRedesignofthe%2 0CCSProgram.pdf . Holahan, John, and Irene Headen. 2010. Medicaid Coverage and Spending in Health Reform: National and State -by-State Results for Adults at or Below 133% FPL. Washington DC: Kaiser Family Foundation. Jacobs, Ken, Dave Graham -Squire, Gerald F. Kominski , Dylan H. Roby, Nadereh Pourat, Christina M. Kinane, Greg Watson, Daphna Gans and Jack Needleman. 2012. Remaining Uninsured in California under the Affordable Care Act: Regional and County Estimates . UC Berkeley Center for Labor Research and Education and UCLA Center for Health Policy Research. Kaiser Family Foundation. 2012. Implementing the ACA’s Medicaid Related Health Reform Provisions After the Supreme Court’s Decision. Washington DC. Kelch, Deborah. 2005. Caring for Medically Indigent Adults in California: A History . Oakland: California HealthCare Foundation. Kelch, Deborah. 2011. The Crucial Role of Counties in the Health of Californians: An Overview. Oakland : California HealthCare Foundation. Kominski, Gerald F., Ken Jacobs, Dylan H. Roby, Dave Grah am-Squire, Christina M. Kinane, Greg Watson, Daphna Gans, and Jack Needleman. 2012. Health Insurance Coverage in California under the Affordable Care Act: Presentation to the California Health Benefit Exchange Board. UC Berkeley Center for Labor Research a nd Education and UCLA Center for Health Policy Research. Lavarreda, Shana Alex , and Livier Cabezas. 2011. Two-Thirds of Califor nia’s Seven Million Uninsured May Obtain Coverage Under Health Care Reform. Health Policy Research Brief . Los Angeles : UCLA Cente r for Health Policy Research. Legislative Analyst’s Office. 2001. Realignment Revisited: An Evaluation of the 1991 Experiment in State-County Relations. Available at www.lao.ca. gov/2001/realignment/020601_realignment.html . Lewin Group. 2010. “The Impact of the Medicaid Expansions and Other Provisions of Health Reform on State Medicaid Spending.” Staff Working Paper #12. Available at www.lewin.com/~/media/Lewin/Site_Sections/Publications/Lewin_Impact_of_Medicaid_Expansions_on_State_Spen ding.pdf . Long, Peter, and Jonathan Gruber. 2011. “Projecting the Impact of the Affordable Care Act on California.” Health Affairs 30 (1): 63 –70. Lucia, Laurel, Ken Jacobs, Miranda Dietz, Dave Graham -Squire, Nadereh Pourat, and Dylan H. Roby. 2012. After Millions of Californians Gain Health Cover age Under the Affordable Care Act, W ho Will Remain Uninsured? UC Berkeley Center for Labor Research and Education and UCLA Center for Health Policy Research. http://www.ppic.org/main/home.asp Rethinking the State-Local Relationship: Health Care 30 Rosenstein, Stan, Caroline Davis, and David Fosdick. 2012. Financing County Medi-Cal Eligibility and Enrollment in California . Oakland : California HealthCare Foundation. Sommers, Benjamin , and Sara Rosenbaum. 2011. “Issues in Health Reform: How Changes in Eligibility May Move Millions Back and Forth Between Medicaid and Insurance Exchanges.” Health Affai rs 20 (2): 228 –36. Technical Assistance Collaborative and Hum an Services Research Institute. 2012. California Mental Health and Substance Use System Needs Assessment, Final Report . Available at www.dhcs.ca.gov/provgovpart/Documents/1115WaiverBehavioralHealthServicesNeedsAss essment3 112.pdf. Watson , Sara, and Alison Klurfeld. 2011. California’s Mental Health System. Los Angeles : Insure the Uninsured Project. Wulsin, Lucien . 2012. Mental Health and Substance Abuse In California’s Public Health Programs . Los Angeles: Insure the Unins ured Project. http://www.ppic.org/main/home.asp Rethinking the State-Local Relationship: Health Care 31 About the Author s Kim Belshé recently joined First 5 LA as their Executive Director after serving as a senior policy advisor at PPIC. She also serves on the five- member board of the California Health Benefit Exchange . Belshé was secretary of the California Health and Human Services Agency throughout Governor Arnold Schwarzenegger’s tenure. She previously held a number of leadership positions in state government, including deputy secretary of the then -Health and Welfare Agency and director of the Department of Health Services for Governor Pete Wilson. She holds an M.P.P from Princeton University. Shannon McConville is a research associate a t PPIC. Before joining PPIC, she was a research training fellow in the Health Services and Policy Analysis program at the University of California, Berkeley; a senior research associate at the Department of Health Research and Policy at Stanford University; and a project manager at the Lewis Center for Regional Policy Studies at the Universit y of California, Los Angeles. Her research interests include health care access , utilization, and outcomes among vulnerable populations. She holds an M.P. P. degree from the University of California, Los Angeles . Acknowledgments The authors thank Heather Hough, Ryken Grattet, Lynette Ubois, and Lucien Wulsin, for offering careful and insightful comments on earlier drafts of this paper and Mary Severance for excellent editorial support. We are also extremely grateful to several people who were generous enough to share their time and provide their expertise and insights to inform this paper including Len Finoc chio, David Maxwell-Jolly, Frank Mecca, Cathy Senderling -McDonald, Melissa Stafford -Jones, Judith Reigel, Betsy Armstrong, Elizabeth Landsberg, Anthony Wright, and Linda Leu. PUBLIC POLICY INSTITUTE OF CALIFORNIA Board of Directors Gary K. Hart, Chair Former State Senator and Secretary of Education State of California Mark Baldassare President and CEO Public Policy Institute of California Ruben Barrales Former President and CEO San Diego Regional Chamber of Commerce María Blanco Vice President, Civic Engagement California Community Foundation Brigitte Bren Attorney Robert M. Hertzberg Vice Chairman Mayer Brown, LLP Walter B. Hewlett Chair, Board of Directors William and Flora Hewlett Foundation Donna Lucas Chief Executive Officer Lucas Public Affairs Mas Masumoto Author and farmer Steven A. Merksamer Senior Partner Nielsen, Merksamer, Parrinello, Gross & Leoni, LLP Kim Polese Chairman ClearStreet, Inc. Thomas C. Sutton Retired Chairman and CEO Pacific Life Insurance Company The Public Policy Institute of California is dedicated to informing and improving public policy in California through independent, objective, nonpartisan research on major economic, social, and political issues. The institute’s goal is to raise public awar eness and to give elected representatives and other decisionmakers a more informed basis for developing policies and programs. The institute’s research focuses on the underlying forces shaping California’s future, cutting across a wide range of public poli cy concerns, including economic development, education, environment and resources, governance, population, public finance, and social and health policy. PPIC is a private operating foundation. It does not take or support positions on any ballot measures or on any local, state, or federal legislation, nor does it endorse, support, or oppose any political parties or candidates for public office. PPIC was established in 1994 with an endowment from William R. Hewlett. Mark Baldassare is President and Chief Executive Officer of PPIC. Gary K. Hart is Chair of the Board of Directors. Short sections of text, not to exceed three paragraphs, may be quoted without written permission provided that full attribution is given to the source. Research publications reflect the views of the authors and do not necessarily reflect the views of the staff, officers, or Board of Directors of the Public Policy Institute of California. Copyright © 2013 Public Policy Institute of California All rights reserved. San Francisco, CA PUBLIC POLICY INSTITUTE OF CALIFORNIA 500 Washington Street, Suite 600 San Francisco, California 94111 phone: 415.291.4400 fax: 415.291.4401 www.ppic.org PPIC SACRAMENTO CENT ER Senator Office Building 1121 L Street, Suite 801 Sacramento, California 95814 phone: 916.440.1120 fax: 916.440.1121" } ["___content":protected]=> string(102) "

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" ["_permalink":protected]=> string(94) "https://www.ppic.org/publication/rethinking-the-state-local-relationship-health-care/r_213kbr/" ["_next":protected]=> array(0) { } ["_prev":protected]=> array(0) { } ["_css_class":protected]=> NULL ["id"]=> int(8859) ["ID"]=> int(8859) ["post_author"]=> string(1) "1" ["post_content"]=> string(0) "" ["post_date"]=> string(19) "2017-05-20 02:41:30" ["post_excerpt"]=> string(0) "" ["post_parent"]=> int(4262) ["post_status"]=> string(7) "inherit" ["post_title"]=> string(8) "R 213KBR" ["post_type"]=> string(10) "attachment" ["slug"]=> string(8) "r_213kbr" ["__type":protected]=> NULL ["_wp_attached_file"]=> string(12) "R_213KBR.pdf" ["wpmf_size"]=> string(6) "530364" ["wpmf_filetype"]=> string(3) "pdf" ["wpmf_order"]=> string(1) "0" ["searchwp_content"]=> string(60722) "Rethinking the State-Local Relationship: Health Care February 2013 Kim Belshé and Shannon McConville http://www.ppic.org/main/home.asp Rethinking the State-Local Relationship: Health Care 2 Summary Federal health reform offers California an opportunity to transform its health care safety net system. Health care services for uninsured and low -income Californians are provided through a complex patchwork of programs, with responsibility shared among the federal, state, and local government. As many uninsured Californians become eligible for comprehensive health insurance through coverage expansions included in the Affordable Care Act (ACA), the state’s current safety net structure comes into question. Other changes ushered in by the ACA —including standardized eligibility and enrollment processes, delivery system reforms, and shifts in financing —will also affect the system. Taken together, these reforms invite if not compel policymakers to revisit the long- standing division of responsibility between state and local governments in the financing, administration, and delivery of health services to the state’s low income residents. California’s existing safety net is fragmented and varies considerably across counties. The policy changes advanced by the federal government in the ACA have the potential to improve health care services available to low -income Californians across the state. Several state -level implementation decisions will have important implications for the imp act of ACA reform in California, particularly in relation to the roles and responsibilities of state and local governments. Unlike California’s realignment efforts in other areas, which have focused on shifting responsibilities from the state to the counti es, the ACA could result in the state assuming responsibilities now borne by county government , such as coverage for low -income, uninsured adults through an expanded Medi -Cal program and certain aspects of the eligibility and enrollment process. State fiscal imperatives may well define this reconsideration, but many unknowns signal caution. Policymakers will need to consider a number of issues—including the scope of the ACA and the complexity of county indigent care financing—as they re- evaluate California ’s long-standing division of responsibilities between local and state government. Contents Summary 2 Contents 3 Figures 4 Tables 4 Abbreviations 5 Introduction 6 California’s Health Care Safety Net Programs 7 Medi-Cal and Healthy Families 7 State Limited-Benefit Programs 8 County Indigent Care Programs 10 Other County Health Programs and Responsibilities 12 The Affordable Care Act and California 14 Coverage 14 Financing 15 Program Administration 17 Delivery Systems 17 State Implementation Decisions and the State-County Relationship 18 Maximizing Enrollment among Eligible Populations 18 Determining the Continued Need and Responsibility for Safety Net Services 19 Financing New State Costs 21 Defining State and County Roles in Program Administration 24 Delivery System Improvements 25 Conclusion 27 References 29 About the Authors 31 Acknowledgments 31 http://www.ppic.org/main/home.asp Rethinking the State-Local Relationship: Health Care 4 Figures 1 Eligibility of uninsured Californians in 2019 (enhanced outreach scenario) 15 2 Distribution of uninsured Californians in 2019 according to two s cenarios by county and region 20 Tables 1 State limited -benefit programs 9 2 County indigent care program 11 http://www.ppic.org/main/home.asp Rethinking the State-Local Relationship: Health Care 5 Abbreviations ACA Affordable Care Act ADAP AIM CalHEERS CCS CHDP CMS CMSP DHCS DSH DSRIP EWC FPL FPACT HFP LIHP MAGI MIA MISP MOE MN SAWS SCHIP SNAP SNCP TANF AIDS Drug Assistance Program Access to Infants and Mothers California Healthcare Eligibility, Enrollment and Retention System California Children’s Services Child Health and Disability Program Centers for Medicare and Medicaid Services County Medical Services Program Department of Health Care Services Disproportionate Share Hospital Delivery System Reform Incentive Pool Every Woman Counts Federal Poverty Level Family Planning, Access, Care, and Treatment Healthy Families Program Low -Income Health Program Modified Adjusted Gross Income Medically Indigent Adult Medically Indig ent Services Program Maintenance of Effort Medically Needy Statewide Automated Welfare System State Children’s Health Insurance Program Supplemental Nutrition Assistance Program Safety Net Care Pool Temporary Assistance to Needy Families http://www.ppic.org/main/home.asp Rethinking the State-Local Relationship: Health Care 6 Introduction Health care services for uninsured and low -income Californians currently are provided through a complex patchwork of programs, with responsibility shared among federal, state, and local governments. Depending on the program and population served, different levels of government play different roles in the financing, administration, and provision of coverage and care. The distribution of roles and responsibilities has varied over time, determined more by the evolving fiscal and policy considerations of state policymakers than by a guiding set of governance principles. T he federal Affordable Care Act (ACA) has the potential to dramatically change how health care to low -income populations is financed, administered, and delivered. The ACA contains various provisions intended to increase insurance coverage and reduce the number of unins ured. The two main provisions are the expansion of Medicaid —the public insurance program for low-income families and qualified adults —and the creation of state insurance exchanges with income -based federal subsidies. 1 In the California context, the ACA’s sweeping reforms invite policymakers to reconsider state and county responsi bilities for indigent health care. Indeed, the g overnor’s proposed 2013 –2014 budget requires this reconsideration by offering two alternative options for expanding Medi -Cal (California’s Medicaid program )—a state-based approach and a county -based approach. The state -based approach would build upon the current state-run Medi -Cal program and the county -based approach would build upon existing county health programs. The resul t of a state -based approach would shift responsibility for providing care to many low -income, uninsured adults from the counties to the state, which would be a departure from California’s realignment efforts to date. The county -based approach , while consistent with increasing program responsibilities for local government, would represent a substantial undertaking for counties and introduce many unknowns. Regardless of the approach, ACA implementation will prompt an assessment of state and county responsibilities for financing and administering expanded Medi -Cal coverage as well as other functions that could shift from county government to the state including eligibility determination for public insurance programs . Policymakers will need to understand the provisions and implications of federal health reform as implementation moves forward in 2013 and takes effect in 2014 . The ACA offers California policymakers an opportunity to focus on promoting the efficient and effective administration and deliv ery of health care services . But state budget constraints could narrow the focus to financing new costs associated with implementation . The way state policymakers frame the issues will have important implications for how indigent care responsibilities are defined and what the health care safety net will look like after 2014. To help inform these discussions, this report describes the current programs that serve the state’s low- income and uninsured residents with a focus on the roles of state and local governments. It then outlines key provisions of the ACA and the changes they could bring to California’s health care safety net programs. It next offers a detailed discussion of the implications of important ACA implementation decisions for the evolving role o f state and local government in the provision of services to low -income residents. It concludes by cataloging important questions and decisions that can help guide policymakers as they grapple with ACA implementation in California. 1 Other provisions to increase insurance coverage include tax incentives to encourage small businesses to offer coverage to their employees and allowing young adults to stay on their parent’s insurance until age 26. The other key component to coverage expansion is the requirement that most U.S. citizens and legal residents have health insurance, referred to as the individual mandate. http://www.ppic.org/main/home.asp Rethinking the State-Local Relationship: Health Care 7 California’s Health Care Safety Net Programs Since its creation in 1966, Medi -Cal has been the primary public insurance program for low -income Californians. At one time, low -income, uninsured residents with no children or qualifying disability —known as medically indigent adults (MIAs) —were covered by Medi -Cal and jointly funded by state and county dollars. Changes to the county -state fiscal relationship following the passage of Proposition 13 and the recession of the early 1980s precipitated a restructuring of the Medi -Cal program in 1982. Responsibility for MIAs reverted to counties with a certain percentage of Medi -Cal spending going to counties to cover the costs. This shift in responsibility for indigent care provision from the s tate to the counties prompted lawsuits with counties arguing that the shift in responsibility represented a reimbursable mandate. The state constitution requires that if state government mandates a local government to provide a new service or higher level of service that the state must provide reimbursement. Most counties , however, dropped their legal action in 1991 , when the State again restructured the financing of county indigent care by allocating a certain portion of sales tax and vehicle license fees to fund health care, mental health, and social services provided by county governments. The 1991 restructuring and its associated financing, known as realignment, continue to provide the major source of state funding for county indigent care programs. 2 The health care services current ly available to low-income and uninsured residents in California are provided through a diverse, uncoordinated mix of programs with federal, state, and local governments all playing a role. Eligibility restrictions for comprehensive public insurance programs exclude many low - income, uninsured residents. As a result, more than seven million Californians currently lack health insurance . This section describes the patchwork of safety net programs and funding sources that provide coverage and services to California’s low -income populations. Medi-Cal and Healthy Families The state operates two primary public insurance programs that offer comprehensive coverage to low -income Californians: Medi -Cal and Healthy Families. Medi- Cal, the most significant program, serves roughly eight million low -income Californians who meet income and categorical requirements related to age, disability, and family composition. Generally speaking, Medi- Cal’s income eligibility requirements are 100 percent of the federal poverty lev el (FPL)—or $23,050 for a family of four. 3 In addition to the income requirement, adults must have either dependent children or a qualifying disability in order to enroll . California policymakers have adopted optional Medicaid categories to serve low- income individuals who otherwise would not be eligible for coverage. Some examples of optional coverage programs include the 1931(b) program and the medically needy (MN) program, both of which extend Medi -Cal coverage to people who would not be eligible based o n categorical income level limits. 4 The state also finances full -scope Medi -Cal coverage for legal 2 For a more complete description of the history of medically indigent programs in California, see California HealthCare Foundation report “Caring for Medically Indigent Adults in California : A History.” 3 For c hildren under age 1 and pregnant women eligibility is 185 percent of FPL , and for children age 1 –5 eligibility is 133 percent. Other specific eligibility categories may have slightly different income eligibility requirements. 4 The 1931(b) program enables low-income parents and caretakers to receive Medi -Cal benefits even if their income exceeds the eligibility threshold by allowing certain amounts and types of income , referred to as income disregards, to not be included in eligibility determinations thus reducing monthly income to qualifying levels. The Medically Needy (MN) program also extends Medi-Cal coverage to people whose income exceeds http://www.ppic.org/main/home.asp Rethinking the State-Local Relationship: Health Care 8 immigrants who have resided in the United States for less than five years and are ineligible for federally supported services. California’s Healthy Families Program —its version of the State Children’s Health Insurance Program (SCHIP) — provides comprehensive, low -cost coverage to nearly 900,000 children with family incomes below 250 percent of FPL, about $57,625 for a family of four, who are not eligible for Me di-Cal. The Healthy Families program requires families to contribute a small monthly amount for premiums and, in some cases, co -payments for services. Children covered under the Healthy Families program are in the process of transitioning to Medi -Cal over the next 12 months . 5 Medi -Cal and Healthy Families are both state -federal programs for which the federal government provides at least half of the total financing in addition to legal and regulatory frameworks and program oversight. The state’s standard fun ding responsibility is 50 percent for Medi -Cal and 33 percent for Healthy Families. It also ensures compliance with federal regulation, oversees services delivered through private and county -run managed care plans, determines the scope of benefits offered under optional categories, and sets reimbursement rates for providers . County government is responsible for the administration of Medi -Cal and HFP, along with other public assistance programs such as CalWORKs (California’s TANF program) and CalFresh (California’s SNAP program). Eligibility determination and enrollment for these and other safety net programs is carried out by county welfare departments, which employ roughly 27,000 workers and utilize three information technology systems that comprise th e Statewide Automated Welfare System (SAWS). A product, in part, of federal rules and requirements, the current Medi -Cal enrollment process requires a significant amount of paper documentation and relies on a face -to -face and mail -in approach. But many cou nties are working to take advantage of online technologies to simplify and improve the enrollment process. In fiscal year 2010 –11, counties received roughly $1.3 billion in federal and state funds for Medi -Cal administration, which contributes a large shar e of the total administration costs for other public assistance programs including CalWORKs and CalFresh (Rosenstein et al. 2012). State Limited-Benefit Programs In addition to Medi -Cal and Healthy Famil ies, the state administers a patchwork of programs that target particular population groups, most of which are tied to certain diseases or services (Table 1). These limited- benefit programs, also k nown as “state-only” programs, target specific populations ( e.g., pregnant women are covered through the Acces s for Infants and Mothers program), services ( e.g., the Family PAC T program provides family planning services), and diseases (e.g., breast cancer screening is provided through the Every Woma n Counts program) . In most cases, limited- benefit programs serve low -income individuals who have no other insurance coverage. But there are a few programs that provide additional or “wrap -around ” health care services to groups that are insured through Medi -Cal ( e.g., California Children’s Services provide specialized car e for children with specific health conditions ) or commercial coverage (e.g., persons with HIV/AIDS can get expanded medication coverage through the AIDS Drug Assistance Program ). qualifying levels by allowing amounts spent on medical expenses to not be included in eligibility determinations. California policy allows these individuals to become Medi-Cal eligible with a monthly share of cost, something akin to a deductible. 5 The shift of children from Heal thy Families to Medi-Cal was part of the 2012 –13 state budget agreement and is estimated to reduce state spending by $73 million annually once the transition is complete. The transition, which has been approved by the U.S. Centers for Medi care and Medicaid Services, will occur in four phases throughout 2013. http://www.ppic.org/main/home.asp Rethinking the State-Local Relationship: Health Care 9 Services are financed principally by state and federal dollars, with the bulk of funding for many programs coming from the federal government. Some programs also receive funding from other sources, such as Proposition 99 (tobacco tax) revenue for AIM and Every Woman Counts. The California Children’s Services (CCS) program also relies on county funding for the state- only and Healthy Families portions of the caseload. 6 Counties are responsible for providing important services —such as case management and clinical assessment— for a few of these programs, including Child Health Disability Prevention Program (CHDP) and CCS. TABLE 1 State limited -benefit programs Program Target population Individuals served Funding source Program expenditures (FY 2011–12) Access for Infants and Mothers (AIM) Low -income pregnant women (200– 300% of FPL) 10,739 State General Fund; Federal Funds; Prop 99; Premiums State: $57.5M Federal: $71.1M California Children's Services (CCS) Children with specific health conditions, family income less than $40,000 or medical costs more than 20% annual income 43,227 State General Fund; Federal Funds; County Funds State: $25.9M Federal: $240M Child Health and Disability Program (CHDP) Low -income children, provides screenings and referrals to necessary services 45,178 State General Funds State: $2.8 M Family Planning Access Care and Treatment (Family PACT) Low -income (less than 200% of FPL)with family planning needs 1,820,000 State General Funds; Federal Funds; Drug rebates State: $141M Federal: $441M Every Woman Counts Program (EWC) Low -income women (less than 200% of FPL), provides screenings for breast and cervical cancer 319,000 State General Funds, Federal Funds (CDC); Prop 99 Funds, Breast Cancer Control Account State: $5.7M Federal: $4.5M Other: $35M AIDS Drug Assistance Program ( ADAP) Low -income individuals (less than $50,000 annual income) with AIDS/HIV positive, provides prescription drug coverage 40,988 State General Funds; Federal funds (Ryan White); ADAP special funds (drug rebates) State: $4.7M Federal: $118.8M Other: $356.7M Genetically Handicapped Persons Program Adults with specific genetic disorders, enrollment fee based on income level 830 State General Fund; Federal Funds; enrollment fees State: $21.1M Federal: $55.0M Other: $8.5M SOURCES: California Department of Health Care Services, Family Health May 2012 Local Assistance Estimates (CCS, CHDP, GHPP). California Department of Public Health, Aids Drug Assistance Program (ADAP) May 2012 Estimate Package. California Department of Public Health, Every W omen Counts May 2012 Estimate Package. UCSF Bixby Center for Global Reproductive Health, Family PACT Program Report, Fiscal Year 2010 –2011. NOTES: All enrollment totals and program expenditures are for FY 2011 –12, unless otherwise noted. CCS program enrollment totals and program expenditures only include the State -only and HFP portions of the caseload, which constitute roughly 30 percent of total enrollment. The remaining 70 percent of CCS program enrollment is covered under the Medi -Cal program and those costs are not reflected in the expenditure totals included in the table. In addition, State general fun d spending for CCS in FY 2011– 12 was considerably lower than the appropriation due to the availability of funds from other sources such as the Safety Net C are Pool. The 2012–13 program allocation for General F und spending on CCS is much higher at $68 million. CHDP enrollment and program expenditures only include the number of screenings and costs for the State- only portion of the program. Family PACT enrollment reflects FY 2010 –11 clients served reported in UCSF Family PACT Program Report and program expendi tures come from DHCS May 2012 Medi-Cal Estimate. For the EWC program, a unique caseload total is not available and so the enrollment total is based on a projection by the CDPH. For ADAP program expenditures, the state general fund expenditure reflects a $76.8M decrease from the Budget Act appropriation due to one -time funding available in FY 2011 –12 from the DHCS Safety Net Care Pool fund. GHPP enrollment and program expenditures include only the State -only caseload —the remaining caseload (715 individuals) is covered under the Medi -Cal program. 6 More than 70 percent of the CCS caseload is covered under the Medi -Cal program, with one study indicating that the CCS expenditures for children covered by Medi -Cal account for nearly 90 percent of to tal program spending. The State-only portion of the program (10% of caseload) provides coverage to children who are not eligible for either Medi- Cal or Healthy Families most often due to immigration status, and expenditures for this part of the caseload ar e disproportionately lower (Health Management Associates 2009). http://www.ppic.org/main/home.asp Rethinking the State-Local Relationship: Health Care 10 County Indigent Care Programs Counties play an important role in providing health care for low -income Californians through the operation of county indigent care programs. These programs serve uninsured adults who meet county- determined eligibility standards but are not eligible for Medi -Cal —most often because their incomes are too high , they are unauthorized immigrants, or they do not meet categorical eligibility requirements, such as having dependent children or a qualifying disability. 7 California Welfare and Institutions Code Section 17000 ,8 enacted by the state legislature in 1933, established the statutory requirement that counties function as providers of last resort for their indigent populations and continues to be the legal framework governing county responsibility for providing health care to the medically indigent . Section 17000 allows counties latitude in serving the medically indigent, the result being that case law pr escribes the boundaries of county responsibility relative to eligibility standards, cost - sharing, and covered benefits . As a result, there is significant variation across counties in the scope of services provided to the medically indigent . The 24 largest counties in the state operate independent Medically Indigent Services Programs (MISPs). T he remaining 34 counties provi de indigent care services through the County Medical Services Program (CMSP), which contracts with a private vendor to administer the program . There is considerable variation among programs operated in MISP counties, reflecting different approaches taken by counties to fulfill their indigent care obligations . The CMSP, on the other hand, establishes standard eligibility requirements, benefit coverage , and provider networks f or all participating counties. Half of the counties that operate MISPs are referred to as provider counties because they operate public hospitals and outpatient clinics that provide the bulk of indigent care services. 9 These counties, with nearly two -thirds of the state’s non- elderly, adult uninsured population, play an essential safety net role; their public hospitals provide nearly half of all hospital -based care to the state’s uninsured population and they also serve many Medi -Cal beneficiaries as well as those covered by other public or private insurance (California Association of Public Hospitals 201 1). In addition, p ublic hospitals offer critical services —such as trauma and burn care —to all Californians. There are six counties (known as “payer” counties) that do not operate hospitals or clinics and instead contract with private providers —typically nonprofit hospitals and community clinics —to provide care to those eligible for the county indigent program. 10 About one in five non- elderly adults who are currently uninsured reside in payer counties. Another six counties (known as “h ybrid” counties) operate public outpatient clinics but n ot public hospitals and so, like payer counties, must contract with private hospitals to provide inpatient care. Table 2 summarizes the eligibility standards, covered benefits, and provider networks across the different types of county organizational structures. Provider counties generally offer more generous coverage than payer and hybrid counties —more inclusive income eligibility, fewer restrictions on basic medical services, and fewer restrictions based on immigration status. For example, one- third of provider counties have income eligibility cutoffs above 300 percent of FPL and two -thir ds offer full services to unauthorized 7 Counties are able to determine the income thresholds and other eligibility requirements, such as immigration status and asset tests, to be eligible for services under county indigent care pr ograms. As a result, not all uninsured are eligible for county indigent care programs. Unauthorized immigrants are eligible for limited services under the Medi- Cal program including emergency-only services and pregnancy-related services. 8 Section 17000 re ads, in part, “Every county… shall relieve and support all incompetent, poor indigent persons … lawfully resident therein, when such persons are not supported and relieved by their relatives or friends, by their own means, or by state hospitals or other st ate or private institutions.” 9 Los Angeles County operates outpatient clinics, but also contracts with several non- county health clinics through the Public-Private Partnership (PPP) program to provide additional capacity to care for the large population of the medically indigent in the county. 10 Hospitals operated by the University of California are also considered public hospitals. Three UC hospitals —UC Irvine, UC San Diego, and UC Davis —operate in counties that are not designated as provider counties. Orange and San Diego are payer counties, while Sacramento is classified as a hybrid county. http://www.ppic.org/main/home.asp Rethinking the State-Local Relationship: Health Care 12 economic downturn because they are raised through vehicle license fees and sales tax.12 Tobacco settlement monies provide another $380 million dollars (FY 2011 –12) available for county indigent health services. County general funds also provide support for indigent health services. State realignment funding requires a county maintenance of effort to access indigent health service funds and counties may contribute additional general funding as necessa ry and available. 13 Finally, a few counties —principally larger, “provider counties” —have enacted local revenue measures to finance indigent care. 14 Federal funding is also a significant source of money for county health services, particularly for counties t hat operate public hospitals. The state’s 1115 Medicaid Waiver, California’s Bridge to Reform, provides approximately $10 billion in federal funds over the five- year period from 2010 to 2015 to support additional coverage for low - income populations, investments in the public hospital system, and financial offsets for uncompensated care provided in safety net hospitals. Under the waiver, all counties had the opportunity to create Low -Income Health Programs (LIHPs), an optional local program to provide care t o those with incomes up to 138 percent of FPL who will be eligible for Medi -Cal in 2014 as a result of ACA coverage expansions. 15 The other federal funding provided by the waiver is available only to public hospitals. The federal funds available through the waiver, as well as additional federal monies , most notably Disproportionate Share Hospital (DSH) payments for Medi -Cal and uninsur ed patients, require a “match” — county funds and public hospital contributions to both the Medi -Cal program and indigent care. In fiscal year 2011 –12, about $4 billion in county funds leveraged a like amount of federal resources to support an array of critical services, including Medi -Cal inpatient care, public hospital delivery system improvements, and county - based LIHPs. Other County Health Programs and Responsibilities In addition to their indigent care responsibilities, counties provide substance abuse and mental health services to low -income residents. Beginning with the state’s 1991 realignment, counties became responsible for the financing and delivery of specialty mental health care services required by Medi -Cal beneficiaries with severe mental illness 16 and, resources permitting, community mental health services for uninsured residents (Watson and Klurfeld 2011). Counties rely on a variety of funding sources, including another pot of realignment funding designated for mental health, state general funds allocated to Medi -Cal mental health managed care, federal Medicaid and SCHIP funds, and revenue generated from the Mental Health Services Act. (California Health Care Foundation 2011). 12 State realignment funding allocations to the counties were based on county program allocations just prior to the 1991 realign ment, however, for some programs, including indigent health services, those program allocations were rooted in historical formulas and spending patterns that dated back to the 1970s and 1980s (LAO 2001). 13 County’s maintenance of effort (MOE) represents a county match of funds and establish minimum county spending levels. County MOE requirements for the sales tax portion of state rea lignment funding for health is based on statute (Welfare and Institutions Code Section 17608.10) and totals $343 million. Statutory language in 17608.10(b) also suggests counties must contribute a 1:1 match for the vehicle lic ense fee portion of realignmen t funding provided for health, although it is not clear if this is done. 14 One example is Alameda County’s Measure A, a sales tax measure adopted by county voters in 2004 to support health care servic es to medically indigent residents. Los Angeles County has also sponsored local initiatives to support county indigent care. 15 Counties had the option to include individuals up to 200 percent of FPL under their LIHPs, but most chose to set the income e ligibility limit at 138 percent of FPL or lower. A few count ies—including Fresno, Merced, and San Luis Obispo —have chosen not to participate in the LIHP. In addition, as of August 1, 2012, LIHP implementation was still pending in Santa Barbara and Stanislaus counties. 16 Mental health services for patients with chro nic and severe mental illnesses such as schizophrenia are carved out of the Medi -Cal health program, meaning that services are provided outside the Medi -Cal managed care or fee-for-service structure, and instead fall under the purview of county mental heal th programs. http://www.ppic.org/main/home.asp Rethinking the State-Local Relationship: Health Care 24 Phasing in Costs Although efforts to facilitate early enrollment and maximize the number of Californians ready to enroll in Medi - Cal and Covered California on January 1, 2014, are under way, previous state coverage expansions demonstrate that new programs take time to ramp up . Consequently, new costs are likely to be phased in over a period of several years after ACA implementation in January 2014 . Given the federal government’s significant financial contributions in the early stages of ACA implementation, most projections suggest that significant state costs will not materialize for several years. M ost modeling efforts anticipate state budget implications through and after 2019, when federal financial support drops to 90 percent of Medicaid costs for those who become eligible under the ACA expansion. It will also take time for actual savings to materialize , given the issues associated with ramping up new coverage programs and expansions . Policymakers might want to consider a phased -in approach, whereby any state recoupment of realignment indigent care funding or county share of Medi -Cal cost is based on actu al enrollment of eligible uninsured county residents. Defining State and County Roles in Program Administration Increased enrollment in Medi-Cal could add significant ly to county workload s. At the same time , the standardized rules, streamlined processes, online application s, and electronic verifications offer an opportunity to re -envision eligibility systems and processes and transform the enrollment process for consumers and county workers alike . Changes already under way are beginning to affect state and county enrollment responsibilities . The procurement of the CalHEERS system can help facilitate enrollment of those newly eligible for coverage, promote a consistent consumer experience across counties, and enable county workers to focus their expertise to support more complex health coverage and human services cases . To this end, new state -county relationships are developing, with some counties expected to assume an expanded role to help consumers enroll in Medi -Cal or Covered California through the new customer service center established by Covered California . This state-county partnership will incorporate unprecedented performance, reporting, and accountability measures. The procedures that will govern business processes and responsibilities among Cover ed California, DHCS, and county welfare offices for determining Medi -Cal eligibility for most applicants have not been finalized . However, the Brown administration expects that counties will continue to be responsible for all Medi -Cal eligibility determina tions, including new Medi-Cal applicants whose initial contact is through Covered California , and for case management of newly eligible individuals within county SAW S systems (California Health Benefit Exchange Board 2012 a). This policy direction introduce s complexities that will need to be navigated carefully to minimize costs, risks, and consumer impact , and also to ensure federal financial support . While the federal vision of a first -class customer experience and streamlined processes is powerful, it bump s up against such practical considerations as California’s long-standing reliance on multiple systems to support the state’s county -based approach to program administration . Moreover, given the way Medi - Cal costs are shared with other public assistance programs, a more efficient and less costly approach to Medi -Cal administration could affect county staffing as well as the allocation of county funds for administration . State and county protocols —and politics —will largely determine the extent to which th e ACA’s promise of streamlined and consistent enrollment systems and processes across counties becomes a reality for millions of Californians newly eligible for coverage. http://www.ppic.org/main/home.asp Rethinking the State-Local Relationship: Health Care 25 Integrating Health Coverage with Other Safety Net Programs ACA implementation deadlines compel policymakers to focus on the complex integration of eligibility and enrollment for most health coverage programs . But the groundwork is being laid for future integration that could include other health and human services programs . Looking beyond 2014, state policymakers may want to consider opportunities to leverage the statewide CalHEERS system to reach additional populations, such as the Medi -Cal disabled population, and other human services programs such as CalF resh and CalWORK s. The CalHEERS platform provides a functional and federally funded foundation for such a horizontal integration of human services programs. Consolidating IT systems and streamlining business operations could help achieve economies of scale, reduce costs, and promote a more uniform consumer experience across counties and different health and human services programs . At the same time, broad centralization of administrative responsibilities runs counter to realignment’s historic devolution of responsibility to local government and to the Brown administration’s support of local control . Moreover, the prospect of social services realignment and expanded county responsibilities for human services programs could complicate efforts to centralize eligibility and enrol lment systems more broadly, given complex cost allocation, business process, and technology issues. D elivery System Improvements Leveraging State Purchasing Power While the state is not a provider of health care services, it is a major purchaser of coverage and services , and that role will be enlarged with the coverage expansions brought about by the ACA . Currently, the state purchases coverage for more than 8 million individuals enrolled in Medi -Cal and HFP. The state also purchases health benefits for 1.3 million active and retired state and local employees and their dependents through the CalPERS program, making it the largest employer purchaser of health coverage in California. In 2014, the state will becom e an even bigger purchaser, as many individuals and small businesses buy coverage through Covered California . In total , state government could become the purchaser of health care for 13 million Californians. The ACA provides new opportunities for policymakers to leverage state purchasing power to have a broader impact on the health care system . Quality measurement, payment and delivery reform, and consumer engagement are examples of areas where aligned contracting strategies among public and private purchasers can help foster delivery system improvements that result in better quality and lower costs . Supporting Traditional Safety Net Providers As state policymakers deploy new tools to meet broader delivery system and quality goals, they will need to conside r safety net providers, who will be an important source of care for both the newly covered and remaining uninsured . On the one hand, p olicymakers will need to encourage the meaningful participation of safety net providers —particularly county-operated public hospital systems—in more -integrated delivery systems while also supporting the ir financial capacity to care for the uninsured . Public hospital systems will have the challenge of competing in a n environment of expanded coverage and consumer choice, a marketplace that increasingly emphasizes outpatient care delivery , and a reimbursement protocol based on patient outcomes rather than volume of services . In short, public systems will be compelled to operate more like private institutions, while at the sa me time retaining their mission and capacity to serve the uninsured. California’s Bridge to Reform waiver devotes significant resources to strengthen the state’s public hospital systems by advancing two principal goals: first, to improve the quality of care, patient experience, and outcomes through more coordinated, integrated delivery strategies; and second, to position public hospital http://www.ppic.org/main/home.asp Rethinking the State-Local Relationship: Health Care 26 systems as attractive providers of choice for newly covered populations and effective partners for developing provider networks. Covered California has made a number of decisions that promote safety net provider participation in the qualified health plans it contracts with - for example, by defining “essential community providers” and network adequacy standards (California Health Benefit Exchange Board 2012b). But new models of care and the ACA coverage expansion do not address the expectation that county -operated public hospitals and health systems will continue to serve the large number of people expected to remain uninsured. While public hosp ital systems can expect to generate new revenue from the ACA’s coverage expansion, they are also slated to experience reductions in offsetting disproportionate share hospital (DSH) payment s. Further research and analysis can help state policymakers assess anticipated safety net hospital revenue gains and losses under full ACA implementation and the resource needs to care for the residually uninsured . 37 Such information can help the state ensure that the federal distribution of DSH reductions does not disadvantage California’s safety net hospitals . Integrating Systems of Care By advancing new health care delivery models that emphasize care coordination and integrati on and providing new tools and resources to catalyze innovation, the ACA offers state policymakers an opportunity to explore a more comprehensive approach to health improvement . ACA reforms will contribute to local discussions already occurring regarding the coordination of mental health, substance abuse, and other services to low -level inmates for whom counties assumed responsibility as a part of the 2011 public sa fety realignment. Relatedly, counties have been testing an array of innovative strategies to coordinate physical and behavioral health care across providers and systems. These county-based efforts can help inform policymaker and practitioner understanding of the opportunities for and barriers to integrating systems of care for physical health, mental, health, and substance abuse services in the ACA context . California largely separates substance abuse and mental health services from physical health care and principally vests counties with responsibility for the financing and treatment of severely mentally ill Med- Cal and uninsured patients . This approach creates barriers to integration of care within local s ystems and results in gaps in treatment provided and populations served (Technical Assistance Collaborative 2012). The county responsibility for these services will need to be reassessed in the ACA context of significant Medi-Cal growth and the integration of mental health and substance abuse services as essential health benefits, which includes the requirement of parity in the coverage of medical and behavioral health care. In this same context, policymakers will need to assess the ability of county financing to provide the non -federal share of Medi -Cal support for the newly eligible Medi -Cal enrollees . This issue is particularly urgent for counties that currently contribute little in supp ort of mental health services to the indigent (Wulsin 2012). P olicymakers may be reluctant to revisit the division of state and county responsibilities for behavioral health services, even though the ACA provides a context for clarifying the county role in delivering and financing these services and the state role in assuring uniform Medi -Cal benefits and performance standards . If policymakers decide not to undo the separation between physical and mental health/substance abuse services, th ey will need to consider how the state in its role as purchaser of care can help align financial incentives across systems to improve care coordination and health ou tcomes (Technical Assistance Collaborative 2012) . 37 Research pending, Katherine Neuhau sen, M.D., Robert Wood Johnson Foundation Clinical Scholar, Department of Family Medicine University of California Los Angeles. http://www.ppic.org/main/home.asp Rethinking the State-Local Relationship: Health Care 27 Conclusion The ACA fundamentally changes California’s health care landscape , particularly for low-income residents . Under the ACA, the state Medi -Cal program and Covered California could extend coverage to upwards of four million low er-income individuals who today may only have access to a patchwork of state and county programs to meet their healthcare needs . Simplified and standardized rules for eligibility , along with multiple pathways to coverage, including a self- service online application, contrast sharply with today’s complex eligibility rules and enrollment processes that rely on in -person visits to county welfare offices . New ACA reimbursement and delivery models will help promote coordinated and integrated care that emphasizes and rewards health improvement. This too will be importan t for Medi -Cal and uninsured populations , many of whom have complex medical needs , and for the safety net providers that have traditionally serv ed these populations. At the same time, ACA implementation comes at a time of economic uncertainty and budget restraint . Federal reform’s coverage expansions will impose new state costs. Moreover, notwithstanding the ACA’s promise of “near- universal coverage, ” upwards of 3 million Californians will remain uninsured as a result of federal exclusions, state policy and practice decisions, and individual choice . And while Medi -Cal eligibility simplification and a new statewide enrollment portal offer the potential to re- create eligibility and enrollment processes for health as well as other social services programs, the new paradigm offered by the A CA runs counter to traditional state and county administrative relationships. The changes ushered in by the ACA invite if not compel policymakers to revisit long -standing policy and practice and the apportionment of responsibilities for the administration, financing, and delivery of medically indigent health care services. There are several critical policy questions .  Will state and local government deploy the comprehensive education, outreach, and enrollment strategies required to maximize the number of insured residents?  H ow will the state finance new costs associated with populations previously supported thr ough county indigent programs if the Medi -Cal expansion follows a state -based approach ? Will the state also assume responsibility for the financing of care to all low -income populations, including those who remain uninsured? If county indigent care funding is recouped to support the expanded state role , will Section 17000 be repealed or modified commensurate with reduced state funding , or will such funding no longer be required in light of the ACA Medi -Cal expansion?  What is the future of county indigent care programs, and where does responsibility lie for the residually uninsured? If counties retain their role as providers of last resort, what service models can most effectively serve those who remain uninsured and how will their care be financed?  Under the county -based approach for Medi -Cal expansions, will counties be able to build upon their existing county indigent care programs and LIHPs to offer comprehensive Medi -Cal coverage to the expansion population that meets federal and state requirements? How will this differ across counties, particularly counties that have more restrictive indigent care programs and/or have chosen not to implement LIHPs? Will counties have the opportunity to opt- out of the expansion?  Should state limited -benefit programs be maintained as a residual safety net of services or scaled back to encourage those newly eligible to enroll in more comprehensive coverage options? http://www.ppic.org/main/home.asp Rethinking the State-Local Relationship: Health Care 28  How can the state most effectively leverage its expanded role as a purchaser of health care to advance broader health care system improvement goals of better health, better care, and lower costs? H ow can state policy ensure the meaningful participation of safety net providers in a reformed health care system?  Does a centralized model work better than a distributed model to optimize the operational efficiency of public health program eligibility , enrollment , and case management functions ?  Given the constitutionally protected nature of Vehicle License Fees, which comprise the majority of current state funding for county indigent care, what new or expanded responsibilities could counties assume to of fset new state costs anticipated by the ACA’s coverage expansions? What opportunities does such a swap provide to better align and integrate services to improve outcomes for low -income Californians? To fully address these and other questions, policymakers will need more complete information than is currently available. Policymakers need federal guidance in a number of areas, including the extent of state flexibility in the Medicaid expansion, enhanced financial support for administrative systems changes, an d federal support for state limited- benefit programs. State and county policymakers will need to work together to come up with other information, such as a complete and co nsistent accounting of current county indigent care funding sources and expenditures , and county -specific data regarding the size, characteristics, and distribution of the residually uninsured, as well as the resources associated with their care needs . Still other informational needs —for example, an analysis of financial projections for DSH hospitals after ACA coverage expansions and anticipated DSH reductions —could be addressed by independent research . Unlike state -county discussions in other policy areas, the realignment conversation sparked by federal health reform is not exclusively about devolving responsibility from the state to county governments . Rather, the ACA calls for an expanded role for both the state —as a provider of coverage—and the counties (particularly provider counties )—as deliverers of care. Unless the state decides to assume full responsibility for low- income populations, including those who remain uninsured, it is likely that a shared governance model for the financing and delivery of care for the residually uninsured will be devised. And, given the complex interplay between health coverage and human services programs, future eligibility systems and business processes might evolve to reflect a new partnership, with the state assuming responsibility for a consolidated automated system for public insurance —and also , potentially, for human services—programs, and the counties assuming responsibility for business processes. State fiscal considerations are likely to play an important role in the implementation of federal health reform. But the ACA offers policymakers an opportunity to marry the transactional discussion around financing new state costs with the policy conversation around aligning the financing, delivery and administration of in digent health care to improve coverage, access to care, and health outcomes . http://www.ppic.org/main/home.asp Rethinking the State-Local Relationship: Health Care 29 References Buettgens, Matthew, John Holahan, and Caitlin Carrol. 2011. Health Reform Across the States: Increased Insurance Coverage and Federal Spending on the Exchanges and M edicaid. Washington D C: Urban Institute. California Association of Public Hospitals. 2011. The Delivery System Reform Incentive Program: Transforming Care Across Public Hospital Systems . Policy Brief. Oakland, CA. California Health Benefit Exchange Board. 2012a. September 18, 2012 Minute Meetings. California Health Benefit Exchange Boar d. 2012b. August 23, 2012 Minute Meetings. California HealthCare Foundation. 2009. California County Indigent Care Program Profiles. Available at www.chcf.org/~/media/MEDIALIBRARYFiles/PDF/P/PDFProfilesIndigent2009.pdf . County Medical Services Program . “CMSP Eligibility All Counties by Aid Code by Month.” Available at www.cmspcounties.org/pdf_files/data/CMSP -1112.pdf. Gruber, Jonathan, and Ian Perry. 2011. Realizing Health Reform’s Potential: Will the Affordable Care Act Make Health Insurance Affordable? New York: Commonwealth Fund. Health Manag ement Associates. 2009. Considerations for Redesign of the California Children’s Services Program. Available at www.dhcs.ca.gov/provgovpart/Documents/WaiverRenewal/ConsiderationsforRedesignofthe%2 0CCSProgram.pdf . Holahan, John, and Irene Headen. 2010. Medicaid Coverage and Spending in Health Reform: National and State -by-State Results for Adults at or Below 133% FPL. Washington DC: Kaiser Family Foundation. Jacobs, Ken, Dave Graham -Squire, Gerald F. Kominski , Dylan H. Roby, Nadereh Pourat, Christina M. Kinane, Greg Watson, Daphna Gans and Jack Needleman. 2012. Remaining Uninsured in California under the Affordable Care Act: Regional and County Estimates . UC Berkeley Center for Labor Research and Education and UCLA Center for Health Policy Research. Kaiser Family Foundation. 2012. Implementing the ACA’s Medicaid Related Health Reform Provisions After the Supreme Court’s Decision. Washington DC. Kelch, Deborah. 2005. Caring for Medically Indigent Adults in California: A History . Oakland: California HealthCare Foundation. Kelch, Deborah. 2011. The Crucial Role of Counties in the Health of Californians: An Overview. Oakland : California HealthCare Foundation. Kominski, Gerald F., Ken Jacobs, Dylan H. Roby, Dave Grah am-Squire, Christina M. Kinane, Greg Watson, Daphna Gans, and Jack Needleman. 2012. Health Insurance Coverage in California under the Affordable Care Act: Presentation to the California Health Benefit Exchange Board. UC Berkeley Center for Labor Research a nd Education and UCLA Center for Health Policy Research. Lavarreda, Shana Alex , and Livier Cabezas. 2011. Two-Thirds of Califor nia’s Seven Million Uninsured May Obtain Coverage Under Health Care Reform. Health Policy Research Brief . Los Angeles : UCLA Cente r for Health Policy Research. Legislative Analyst’s Office. 2001. Realignment Revisited: An Evaluation of the 1991 Experiment in State-County Relations. Available at www.lao.ca. gov/2001/realignment/020601_realignment.html . Lewin Group. 2010. “The Impact of the Medicaid Expansions and Other Provisions of Health Reform on State Medicaid Spending.” Staff Working Paper #12. Available at www.lewin.com/~/media/Lewin/Site_Sections/Publications/Lewin_Impact_of_Medicaid_Expansions_on_State_Spen ding.pdf . Long, Peter, and Jonathan Gruber. 2011. “Projecting the Impact of the Affordable Care Act on California.” Health Affairs 30 (1): 63 –70. Lucia, Laurel, Ken Jacobs, Miranda Dietz, Dave Graham -Squire, Nadereh Pourat, and Dylan H. Roby. 2012. After Millions of Californians Gain Health Cover age Under the Affordable Care Act, W ho Will Remain Uninsured? UC Berkeley Center for Labor Research and Education and UCLA Center for Health Policy Research. http://www.ppic.org/main/home.asp Rethinking the State-Local Relationship: Health Care 30 Rosenstein, Stan, Caroline Davis, and David Fosdick. 2012. Financing County Medi-Cal Eligibility and Enrollment in California . Oakland : California HealthCare Foundation. Sommers, Benjamin , and Sara Rosenbaum. 2011. “Issues in Health Reform: How Changes in Eligibility May Move Millions Back and Forth Between Medicaid and Insurance Exchanges.” Health Affai rs 20 (2): 228 –36. Technical Assistance Collaborative and Hum an Services Research Institute. 2012. California Mental Health and Substance Use System Needs Assessment, Final Report . Available at www.dhcs.ca.gov/provgovpart/Documents/1115WaiverBehavioralHealthServicesNeedsAss essment3 112.pdf. Watson , Sara, and Alison Klurfeld. 2011. California’s Mental Health System. Los Angeles : Insure the Uninsured Project. Wulsin, Lucien . 2012. Mental Health and Substance Abuse In California’s Public Health Programs . Los Angeles: Insure the Unins ured Project. http://www.ppic.org/main/home.asp Rethinking the State-Local Relationship: Health Care 31 About the Author s Kim Belshé recently joined First 5 LA as their Executive Director after serving as a senior policy advisor at PPIC. She also serves on the five- member board of the California Health Benefit Exchange . Belshé was secretary of the California Health and Human Services Agency throughout Governor Arnold Schwarzenegger’s tenure. She previously held a number of leadership positions in state government, including deputy secretary of the then -Health and Welfare Agency and director of the Department of Health Services for Governor Pete Wilson. She holds an M.P.P from Princeton University. Shannon McConville is a research associate a t PPIC. Before joining PPIC, she was a research training fellow in the Health Services and Policy Analysis program at the University of California, Berkeley; a senior research associate at the Department of Health Research and Policy at Stanford University; and a project manager at the Lewis Center for Regional Policy Studies at the Universit y of California, Los Angeles. Her research interests include health care access , utilization, and outcomes among vulnerable populations. She holds an M.P. P. degree from the University of California, Los Angeles . Acknowledgments The authors thank Heather Hough, Ryken Grattet, Lynette Ubois, and Lucien Wulsin, for offering careful and insightful comments on earlier drafts of this paper and Mary Severance for excellent editorial support. We are also extremely grateful to several people who were generous enough to share their time and provide their expertise and insights to inform this paper including Len Finoc chio, David Maxwell-Jolly, Frank Mecca, Cathy Senderling -McDonald, Melissa Stafford -Jones, Judith Reigel, Betsy Armstrong, Elizabeth Landsberg, Anthony Wright, and Linda Leu. PUBLIC POLICY INSTITUTE OF CALIFORNIA Board of Directors Gary K. Hart, Chair Former State Senator and Secretary of Education State of California Mark Baldassare President and CEO Public Policy Institute of California Ruben Barrales Former President and CEO San Diego Regional Chamber of Commerce María Blanco Vice President, Civic Engagement California Community Foundation Brigitte Bren Attorney Robert M. Hertzberg Vice Chairman Mayer Brown, LLP Walter B. Hewlett Chair, Board of Directors William and Flora Hewlett Foundation Donna Lucas Chief Executive Officer Lucas Public Affairs Mas Masumoto Author and farmer Steven A. Merksamer Senior Partner Nielsen, Merksamer, Parrinello, Gross & Leoni, LLP Kim Polese Chairman ClearStreet, Inc. Thomas C. Sutton Retired Chairman and CEO Pacific Life Insurance Company The Public Policy Institute of California is dedicated to informing and improving public policy in California through independent, objective, nonpartisan research on major economic, social, and political issues. The institute’s goal is to raise public awar eness and to give elected representatives and other decisionmakers a more informed basis for developing policies and programs. The institute’s research focuses on the underlying forces shaping California’s future, cutting across a wide range of public poli cy concerns, including economic development, education, environment and resources, governance, population, public finance, and social and health policy. PPIC is a private operating foundation. It does not take or support positions on any ballot measures or on any local, state, or federal legislation, nor does it endorse, support, or oppose any political parties or candidates for public office. PPIC was established in 1994 with an endowment from William R. Hewlett. Mark Baldassare is President and Chief Executive Officer of PPIC. Gary K. Hart is Chair of the Board of Directors. Short sections of text, not to exceed three paragraphs, may be quoted without written permission provided that full attribution is given to the source. Research publications reflect the views of the authors and do not necessarily reflect the views of the staff, officers, or Board of Directors of the Public Policy Institute of California. Copyright © 2013 Public Policy Institute of California All rights reserved. San Francisco, CA PUBLIC POLICY INSTITUTE OF CALIFORNIA 500 Washington Street, Suite 600 San Francisco, California 94111 phone: 415.291.4400 fax: 415.291.4401 www.ppic.org PPIC SACRAMENTO CENT ER Senator Office Building 1121 L Street, Suite 801 Sacramento, California 95814 phone: 916.440.1120 fax: 916.440.1121" ["post_date_gmt"]=> string(19) "2017-05-20 09:41:30" ["comment_status"]=> string(4) "open" ["ping_status"]=> string(6) "closed" ["post_password"]=> string(0) "" ["post_name"]=> string(8) "r_213kbr" ["to_ping"]=> string(0) "" ["pinged"]=> string(0) "" ["post_modified"]=> string(19) "2017-05-20 02:41:30" ["post_modified_gmt"]=> string(19) "2017-05-20 09:41:30" ["post_content_filtered"]=> string(0) "" ["guid"]=> string(50) "http://148.62.4.17/wp-content/uploads/R_213KBR.pdf" ["menu_order"]=> int(0) ["post_mime_type"]=> string(15) "application/pdf" ["comment_count"]=> string(1) "0" ["filter"]=> string(3) "raw" ["status"]=> string(7) "inherit" ["attachment_authors"]=> bool(false) }