Legislation


SB 171 – California

Status: Enacted
Year Introduced: 2017
Link: https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201720180SB171

Medi-Cal: Medi-Cal managed care plans: Among other things, this bill would implement various provisions in regard to those federal regulations, as amended May 6, 2016, governing Medicaid managed care plans. The bill, commencing July 1, 2019, would require a Medi-Cal managed care plan to comply with a minimum 85% MLR and to calculate and report the MLR for each MLR reporting year, as defined, consistent with the MLR calculation and reporting requirements imposed under those federal regulations. The bill would require, effective for contract rating periods commencing on or after July 1, 2023, a Medi-Cal managed care plan to provide a remittance to the state if the ratio does not meet the minimum ratio of 85% for that reporting year consistent with those federal regulations. The bill would require the department to determine the remittance amount on a plan-specific basis for each rating region of the plan and to calculate the federal and nonfederal share amounts associated with each remittance. The bill would generally provide that these MLR requirements do not apply to a health care service plan under a subcontract with a Medi-Cal managed care plan to provide covered health care services to Medi-Cal beneficiaries enrolled in the Medi-Cal managed care plan. The bill would require the department to post specified information on its Internet Web site, including any required remittances owed by a Medi-Cal managed care plan. The bill would require the department to seek any federal approvals it deems necessary to implement these MLR provisions. The bill would require these provisions to be implemented only to the extent that any necessary federal approvals are obtained and federal financial participation is available and is not otherwise jeopardized.

This bill, commencing with the 2017–18 state fiscal year, would require the department to require each Medi-Cal managed care plan, as defined, to increase contract services payments, as defined, to the designated public hospital systems, as defined, by an amount determined under a prescribed directed payment methodology to be developed by the department, and would authorize these directed payments to separately account for inpatient and noninpatient hospital services and require these directed payments to be developed and applied separately for classes of designated public hospital systems. The bill would require the department, in consultation with the designated public hospital systems, to establish the classes of designated public hospital systems, as specified. The bill would require a Medi-Cal managed care plan to annually provide to the department an accounting of the amount paid or payable to a designated public hospital system to demonstrate its compliance with the directed payment requirements. The bill would authorize the department, after providing notice of its determination to the affected Medi-Cal managed care plan and allowing a reasonable period to cure the deficiencies, to reduce the default assignment into a Medi-Cal managed care plan by up to 25% in the applicable county, as specified, if the Medi-Cal managed care plan is not in compliance with the directed payment requirements.

The bill, commencing with the 2017–18 state fiscal year, would require the department, in consultation with the designated public hospital systems and applicable Medi-Cal managed care plans, to establish a program under which a designated public hospital system may earn performance-based quality incentive payments from Medi-Cal managed care plans, as specified, and would require payments to be earned by each designated public hospital system based on its performance in achieving identified targets for quality of care. The bill would require the department to establish uniform performance measures and parameters for the designated public hospital systems to select the applicable measures, and would require these performance measures to advance at least one goal identified in the state’s Medicaid quality strategy.

The bill would authorize a designated public hospital system and their affiliated governmental entities, or other public entities, to voluntarily provide the nonfederal share of the portion of the capitation rates associated with the directed payments and for the quality incentive payments through an intergovernmental transfer. The bill would authorize the department to accept these elective funds and, in its discretion, to deposit the transfer in the Medi-Cal Inpatient Payment Adjustment Fund, a continuously appropriated fund, thereby making an appropriation.

The bill would provide that these provisions shall cease to be operative on the first day of the state fiscal year beginning on or after the date the department determines, after consultation with the designated public hospital systems, that implementation of these provisions is no longer financially and programmatically supportive of the Medi-Cal program, as specified.


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