State Health Reform Update: What Will the New Governor Do? Michael Daponde, DSR Health Law Felicia Sze, Athene Law, LLP California Society of Healthcare Attorneys Annual Meeting and Spring Seminar April 5, 2019
Overview of Topics • Blue Tidal Wave in Sacramento (already a Blue Wave) including a Governor who prioritizes health care • Health Care for All • Single Payer • Individual Mandate • Medi-Cal Expansion • Pharmaceutical Pricing/Purchasing • Balance Billing/Hospital Charges • Social Determinants of Health • Community Paramedicine/Alternate Destination • Behavioral Health Issues • Medi-Cal Outlook: Eyes on 2020 2
Blue Wave – See a Pattern Here? Democrat Republican Governor Newsom Senate 28 10 Assembly 61 19 Lieutenant Governor Kounalakis Secretary of State Padilla Attorney General Becerra State Treasurer Ma State Controller Yee Superintendent of Thurmond Public Instruction Insurance Lara Commissioner 3
Gubernatorial Highlights • Appointed first-ever California Surgeon General, Nadine Burke Harris, pediatrician from SF County • Appointed Mark Ghaly, pediatrician from LA County, as Secretary of Health and Human Services Agency • Other appointments yet to come • Department of Health Care Services • Department of Public Health • Department of Managed Health Care 4
Health Care for All • 93% of Californians have health coverage: uninsured at historic low • How do we get everyone covered? • Universal coverage, single payer, Medicare for all: what does this all mean? • Proposals to achieve universal coverage: • Single-payer health care • Individual mandate • Medi-Cal expansion to undocumented individuals 5
Single Payer • Healthy California for All Commission • Conversion of Council on Health Care Delivery Systems • Stated mission to begin transition toward single-payer system • January 7, 2019 Letter to Federal Government • SB 562 (2017) – Single-Payer Bill • Lacked funding mechanism 6
Single Payer • Existing System = Multi-Payer • Medicare – federal, individuals • Medi-Cal – state, federal • Covered California – individuals, federal (state individual mandate will add state funding) • Commercial – employers, employees (includes ERISA plans governed by federal law) • Other – CalPERS, Federal Employees Health Benefits Program, Veterans Administration… 7
Pharma – the first step • Executive Order • Why? • Drug prices increased 20% per year since 2012 • Pharmaceutical industry needs strong counterparty at bargaining table • Single purchaser of high cost drugs precursor to single-payer system • Statewide pharmaceutical bulk purchasing program already exists 8
Pharma • Executive Order • What? • Transition all Medi-Cal pharmacy benefits to fee-for-service by January 2021 • Department of General Services to compile list of priority drugs • Encourage local governments to participate • Framework for private purchasers 9
Pharma • Executive Order • Impact? • Removal of safe harbor protection for rebates – proposed federal regulation • 340B • Continued play for the difference between 340B pricing and Medi-Cal rates v. Medi-Cal drug rebates • Potentially increased administrative burden on covered entities 10
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AB 1611: Background • Significant press coverage about balance billing at SF General • Largely non-contracted • While not subject to 501r, still subject to CA Hospital Fair Pricing Policies/financial assistance • Increased focus on hospital charges due to recent CMS requirement that chargemasters be posted online • Existing case law ( Prospect Medical Group v. Northridge Emergency Medical Group (2009)) interprets the Knox Keene Act to limit balance billing by emergency service providers • AB 72 addressed non-contracted providers at contracted facilities 12
AB 1611: What • Imposes charge limitation on hospital emergency/poststabilization services at no more than the greater of the average contract rate or 150% of the Medicare rate. • Average contract rate is average paid by plan for the same or similar services in the geographic region • Limits patient cost-sharing for emergency services to in- network cost-sharing • Provides for payment by health care service plans and insurance plans to non-contracted providers to the greater of the average contract rate or 150% of the Medicare rate 13
AB 1611: Impact • Still too early to tell, lots of outstanding questions • Application to plan types where federal law preempts state law (e.g., ERISA) • Compare Nevada law • Impact on hospital revenues 14
Social Determinants of Health • Defined by World Health Organization: • “[T]he circumstances in which people are born, grow up, live, work, and age, and the systems put in place to deal with illness. These circumstances are in turn shaped by a wider set of forces: economics, social policies, and politics.” • Homelessness/Housing • CMS indicated that it wants to address “housing, nutrition, and other social needs” • Whole Person Care 15
Community Paramedicine/Alternate Destination • AB 3115 of 2018 passed Legislature, vetoed by Governor Brown • AB 1544 of 2019 • Would permit a local EMS agency to develop a community paramedicine or triage to alternate destination program • Two models are conceptually different • Increased interest from CMS in alternate destination/treat in place, not community paramedicine • Lacks Governor Brown backstop this year 16
Medi-Cal Update/Outlook • Mega-Reg Implementation • Network provider • Network adequacy • Grievances and appeals • Care coordination • 2020 on the Horizon • 1115 Waiver Renewal • 1915 Waiver Renewal • Managed Care RFPs • Potential federal action on budget (including healthcare related taxes) 17
Questions? Michael Daponde Felicia Sze DSR Health Law Athene Law, LLP Daponde Simpson Rowe PC 5432 Geary St., #200 500 Capitol Mall, Suite 2260 San Francisco, CA 94121 Sacramento, CA 95814 felicia@athenelaw.com mdaponde@dsrhealthlaw.com (415) 686-7531 (916)840-5609 www.dsrhealthlaw.com www.athenelaw.com 18
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