1. Legislative and Policy Update Dietmar Grellmann Sr. Vice President, Managed Care & Professional Services California Hospital Association November 21, 2013

2. Supermajority in the Legislature Democratic Caucus achieved the two-thirds supermajority in both houses through special elections this year Dems : 53 Reps: 25 Dems : 28 Reps: 12 SENATE: 40 ASSEMBLY: 80 Powers of Supermajority: Raise taxes, amend the constitution, place propositions on ballot, suspend rules. No minority party consent required.

3. This Year’s Statistics 2256 bills introduced 800 bills signed 96 bills vetoed 10% veto rate 3

4. 2013 Health Legislation Volume health bills introduced 206 bills passed by Legislature 84 bills signed into law by Governor 72 January Sept. 13 Oct. 13 Numbers are approximated, CAHP, CHA and CAPG track & categorize differently

5. ACA Implementation Special Session Both “special” and “regular” sessions occurred simultaneously during 2013:  3 core principles: continuity w/ federal law, level playing field in and out of Exchange, & maintain state-level consumer protection:  Very compressed timeline over the winter and early spring  Successful resolution of implementation issues left open at the end of 2012 session

6. Special Sessions Called for Health Care Reform ACA: AB 1X (Perez) & SB 1X (Hernandez) Health Plan Coverage: AB 2x (Pan) and SB 2x (Hernandez) Exchange: SB 3x bridge option for low- cost coverage to individuals in the Exchange 6

7. 7 “We Care California” Coalition Held Rally at Capitol  Close to 10,000 People Rally  AB 900 (Alejo) to restore Medi-Cal Cuts and Access to Care  Backdrop: Budget deficits & cuts; AB 97 of 2011 imposed 10% or higher rate cuts  Litigation – Injunction – Appeals – Denials – More Appeals

8. 8 Two Paths to a Partial Solution to AB 97 Medi-Cal Cuts  Access is Key: 42 U.S.C. §1396a(a)(30)(A)  DHCS Announcement: Exempts rural DP/SNF from AB 97 cuts due to decreased access to care  SB 239 (Hernandez) Lifts rate freeze & restores all DP/NF cuts prospectively; Claw- back remains  Other Provider Rate Cuts Remain in Place

9. State Budget Trailer Bills Impact Health Care Policy – $96.3 Billion Health care related trailer bills: AB 82: Medi-Cal Expansion – Partially restored Medi-Cal Dental benefits Mandatory enrollment into Managed Care SB 82: Appropriates $142 Million for Mental health crisis centers & mobile crisis teams 9

10. 10 SB 239 Creats a 30-Month Hospital Fee Program  SB 239 (Hernandez)  3-year fee program from 2013 forward  Creates framework for future fee programs  Stable funding for children’s health care coverage  Lifts rate freeze and restores Medi-Cal rates to DP/SNFs

11. New Requirements for Districts, Drugs & Home Care  AB 130 (Alejo): Limits on Retirement Plan Benefits for Health Care District CEOs.  AB 1202 (Skinner): OSHA facility standards for antineoplastic drugs  AB 1217 (Lowenthal): DSS licensing and registry for home care agencies and staff 11

12. Hospital Facilities Bills Focus on Secondary Costs & Wages SB 563 (Galgiani) requires costs for producing construction plans. SB 615 (Galgiani), would have required prevailing wages for certain hospital construction. Vetoed 12

13. Two-year Bills Remain AB 333 (Wieckowski) Amendments to the Medical Waste Management Act. AB 676 (Fox): Hospital Discharge Care Coordination AB 975 (Wieckowski): Health Facilities Community Benefit & Charity Care SB 718 (Yee): Workplace Violence 13

14. Out-of-Pocket Maximums SB 639 applies to individual & small group market products:  Limits individual and small group products to annual OOP of 6,350/12,700 annually  Allows plans to use quarterly rate-adjustment indexing  Limits small group deductibles to 2,000/4,000  Compliance date triggers vary – complicated  Pediatric Dental is a work in progress

15. Non-English Translation Standards (SB 353) requires translation of documents in individual and small group markets if you advertise in a non-threshold, non-English speaking language to anyone:  Applications, Welcome letters or notices of initial coverage, grievance process notices  Not applicable to specialized plans  Does not apply to the large group market  Not the same list of documents required to be translated under the Language Access regulation

16. Minimum Stop Loss Standards (SB 161) sets minimum dollar standards at which stop loss policies can indemnify small employer self-funded plans:  “small employers” are 100 or less employees  standards increase after 1/1/2016:  $40,000 individual attachment point  Aggregate attachment point of either:  (i) $5,000 times the total number of group members; (ii) 120 % of expected claims; (iii) $40,000;

17. New Coverage Mandates for 2014  AB 219: Copayment limits for Oral Chemo - $200 cap on OOP limits. Signing message makes it clear that the law will sunset so that unintended consequences can be evaluated  AB 460: Nondiscrimination in infertility treatment – refers back to existing law on non-discrimination  SB 126: Autism coverage – continues sunset date of SB 946 bill, extended to 2017 when EHBs are revisited under federal review

18. Up Next: Bills that were Vetoed And Bills that Stalled

19. 19 Last Day Veto of Prevailing Wages & Other Defeats  SB 615 (Galgiani): Vetoed  Out-of-Network Billing: SB 351 (Hernandez)  Out-of-Network Notices: SB 266 (Lieu)  MICRA attempt

20. Provider Oversight & Scope SB 352: PA supervision of Medical Assistants SB 493: Advanced Practice Pharmacists SB 494: Empanelment expansion for NPs and PAs at 1,000 additional lives per midlevel practitioner SB 670: Medical Board investigative authority in drug-related patient deaths AB 154: Midlevel autonomy from physician supervision for abortions AB 1000: Patient direct referral to physical therapists AB 1308: Midwife autonomy from physician supervision

21. Regulatory Activity Exchange Premium Payment Grace Periods  3 month period. 1 st month covered  pend claims under months 2-3.  Allowed under Federal rule, but prohibited by State law – what to do?  Reconciled California law (requiring all 3 mos.) with the federal rule. Allowed to suspend coverage during mos. 2-3.  Formal DMHC regulations to follow

22. 22 The 2014 Initiative Landscape 2014 Initiatives:  Charitable Hospital Executive Compensation  Fair Health Pricing  The Medi-Cal Funding & Accountability Act of 2014  MICRA  Health Plan Rate Review

23. QUESTIONS? Dietmar Grellmann dgrellmann@calhospital.org 916.552.7572