California's Bridge to Reform

This demonstration restructures the financing of the State share of Medicaid expenditures for governmental hospitals, continues the authority of the State to selectively contract with hospitals for negotiated rates, and creates a Safety Net Care Pool (SNCP) to fund payments to providers for the unreimbursed cost of caring for the uninsured, a Coverage Initiative (CI), and Designated State Health Programs (DSHP). The Demonstration was originally approved in August 2005 for a five year period, ending August 31, 2010. Effective November 1, 2010, the Demonstration was extended for an additional five years, and several features were added. Under the renewed Demonstration, the State is authorized to create a Low Income Health Program (LIHP), for the purpose of expanding coverage in more counties than in Demonstration as originally approved. The LIHP covers individuals through two programs. The Medicaid Coverage Expansion covers individuals age 19-64 with incomes at or below 133% FPL. The State must require the counties to reduce cost sharing and strengthen services relative to the original CI, in anticipation that these individuals will transition to the more significant coverage options available in 2014 under the Affordable Care Act. The second component consists of the existing CI (now the Health Care Coverage Initiative, or HCCI), redesignated to cover individuals with incomes between 130 and 200% FPL. The extended Demonstration permits the State to mandatorily enroll Seniors and People with Disabilities (SPDs) into managed care plans for primary and acute care services, with safeguards and protections to ensure SPD-specific network readiness and access to quality care. The State's existing Medicaid managed care programs for families with children and foster care children, and selected specific managed care programs (California Health Insuring Organizations, Health Plan of San Mateo, Santa Barbara San Luis Obispo Regional Health Authority, and Two Plan Geographic Managed Care), are subsumed into the Demonstration. The SNCP budget was expanded to $15.33 billion for the five year extension period (compared to 7.66 billion in the initial approval period), to ensure support for the provision of health care by county hospitals, clinics, and other providers. The additional funds will also support the establishment of new infrastructure investment payments and an incentive payment pool for public hospitals (the Delivery System Reform Incentive Pool), and funding for additional DSHP. To assure budget neutrality, total SNCP spending over the five years may not exceed the amount saved through the use of managed care, combined with the difference between the upper payment limit amounts the State could (but does not) pay to institutional providers subject to the upper payment limit.