Creation of a rural health care district that contracts coverage to a single HMO, provides greater Medi-Cal reimbursements, doctor incentives and transportation.
SCOTT GRUENDL FOR SENATE
1st District of California
Legislative Proposal #3:
The California Rural Health Care Initiative
Premises:
1. Health Care in rural California has become a crisis as more and more California Counties have no Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs), or other private health service organizations available to residents.
2. California has taken steps to regulate such private health organizations, but these actions have not addressed the dearth of service providers in rural areas.
3. The current health market in California cannot provide any or affordable coverage to several of the State's counties.
4. The Legislature paid health benefits in cash to State employees residing in rural areas in 98/99 because there was no private health coverage organization available where those employees live.
5. There are less than seven private health organizations doing business in California.
6. Nine of the thirteen counties in the 1st Senatorial District have no private health coverage available at all.
7. Rural California is suffering from a lack of health care professionals.
8. The California Department of Health Services, in their authority over the Medi-Cal Program, pays medical providers a reimbursement rate too low below the market average.
9. Medical services are becoming regionalized and the State should support this evolution by requiring transportation reimbursements to become part of health insurance coverage.
10. Fraud associated with public health services is embarrassingly high and its reduction will lead to improvement in public funded medical services.
The Current Law and The Current Problem
The California Legislature has taken a keen interest in the regulation of HMOs and other health organizations. Most legislation that has been debated or passed addresses the consumer and doctor relationship with the health care organization. Bills introduced to date speak to such issues as patient rights and doctor control over treatments. Very little legislation has attempted to address the lack of health care organizations in rural California.
As these organizations leave rural California one by one, some laws were looked at that would force these organizations to provide coverage to all California counties. I those instances where such tactics have been tried, the cost of coverage was significantly higher than that of consumers living in urban California.
Resolution to this lack of health care coverage can take advantage of market forces through intervention that sustains the market. A true application of single-payer health care can take place in California utilizing the existing market and placing controls upon it so that profits can occur, but coverage costs to the consumer remain reasonable.
I believe that health care in rural California can be achieved through the following goals:
1. Form a Rural Health Care District consisting of nine California counties.
2. Patient and doctor involvement with setting cost reimbursements and levels of care, both for private industry and for Medi-Cal.
3. Contract all health care coverage in the district through a single health coverage organization.
4. Create opportunities for doctors and strengthen healthcare systems by providing an incentive for doctors to remain in rural California.
5. Establish transportation for patients utilizing regional medical services.
Never before has the State of California looked so closely at a single-payer form of health care coverage. Voters in the past have turned down initiatives for universal health care on a statewide basis. We continually hear that the insurance industry and the health industry are not ready for this approach. We can introduce and model such an approach on a smaller scale by addressing the lack of coverage in rural California. We allow private health care to continue, but we create an environment profitable enough to sustain the private market.
The California Rural Health Care Initiative
Sponsored by Scott Gruendl for Senate
California 1st Senate District
Purpose:
To provide private health care coverage and to strengthen medical services available to Californians living in rural areas. This Act is designed to achieve the following specific goals:
1. Establish the Rural Health Care District
-Establish a district consisting of those counties that have no private health care organization coverage. This district shall include:
-those counties that had no coverage as of Fiscal Year 1998/99. These counties are Modoc, Lassen, Plumas, Sierra, Nevada, parts of Placer, parts of El Dorado, Amador, Alpine, Calaveras, and Mono.
-Private health care coverage within this district would be contracted to a single private health care coverage organization.
-The contractor would be protected from competition from other health care insurance companies within the boundaries of the district.
2. Patient and Doctor Involvement in Decisions
-Create a Board of Directors for the District that shall govern the costs of services, recruit and select contractors and manage the contract.
-The members of the Board of Directors shall consist of seven persons whom reside in the district.
-A minimum of three members shall come from each of the northern and southern portions of the district.
-A minimum of two members must be medical doctors who live and work within the district and all members must be patients receiving services from within the district.
-All members shall be appointed initially by the Governor for a term of four years beginning January 1, 2001. Thereafter, one member shall continue to be appointed by the Governor and the remaining members shall be elected three seats from each portion of the district.
3. One Health Care Insurance Company
-All health care coverage would be contracted to a single health care insurance organization for all residents within the district.
-This contract would have a term of three years, beginning July 1, 2001.
-The contract would be re-bid every three years and open to all private health coverage organizations doing business within the State.
-The contract shall be created and managed by the Board of Directors.
4. Strengthening the Health Care Systems in Rural Areas
-Doctors living in and providing services within the district shall be eligible for a financial incentive consisting of interest free facility construction loans, interest free home loans and a ten year monetary bonus.
-State guaranteed and interest free construction loans to facilities within the district that provide services regionally.
5. Improving Transportation for Patients
-Identify medical transportation models for rural areas that can be used by rural government to plan for public and subsidized transportation.
-Establish a statewide grant-funding program to strengthen public transportation based on regional medical service needs.
-Modify the Insurance Code to require transportation cost reimbursement for all transportation related to receiving any medical services.
Summary:
This initiative offers California its first approach to single payer health care as a way to address the lack of coverage available in our rural areas. The measure accomplishes this by utilizing the existing market in California and creating a district in which only one private entity may provide services. Thus, the provision of services becomes profitable, as the entity will not have to compete with others within the district. The district would consist of Modoc, Lassen, Plumas, Sierra, Nevada, parts of Placer, parts of El Dorado, Amador, Alpine, Calaveras and Mono Counties. This single contract for healthcare service will be managed by an elected body that will oversee its implementation within district. The contract would dictate maximum costs and would be re-opened every three years to all insurance coverage organizations doing business within the State.
Additionally, the initiative provides a financial incentive for doctors to live and work in the district by offering interest free office and home loans and a cash bonus after ten years. The act also provides for the accessibility to transportation by patients outside of regional medical service areas by providing regional grants and by requiring insurance companies to pay transportation costs for access to medical services incurred by their clients.
This Act may be cited as the "California Rural Health Care Act " (CRHCA).
I
Establishment of Rural Health Care District
1. The State of California hereby creates the Rural Health Care District.
2. The Rural Health Care District shall consist of the following counties in their entirety: Modoc, Lassen, Plumas, Sierra, Nevada, that section of Placer and El Dorado that is East of Highway 49, Amador, Alpine, Calaveras and Mono.
3. The State of California shall limit health care coverage company activity within this district to only those companies that hold a contract with said district.
4. The State of California shall allow counties to join and leave the district as determined necessary.
II
Governance of the Rural Health Care District
1. The Rural Health Care District shall be governed by an elected Board of Directors.
2. The Board of Directors shall consist of seven members, three of which must reside in the northern portion of the district (Modoc, Lassen, Plumas, Sierra Nevada and that section of Placer Counties) and three must reside in the southern portion of the district (That section of El Dorado, Amador, Alpine, Calaveras and Mono Counties).
3. Two of the members shall be licensed medical doctors that reside and work within the district.
4. All members of the Board shall be consumers of medical services that are available within the district.
5. The Board shall be appointed initially by the Governor on January 1, 2001. The Governor shall then appoint one member every four years thereafter and the remaining six members shall be elected, three from the southern portion of the district and three from the northern portion of the district, every four years.
6. The Board shall create a schedule of reasonable health care costs for residents residing within the district.
7. The Board shall create the contract to be used for the single health care coverage organization.
8. The Board shall solicit from potential health care coverage organizations and select the preferred organization to begin the contract starting July 1, 2001.
III
Contracting for Health Care Coverage Within the Rural Health Care District
1. The State of California shall only allow one health care coverage organization to contract for residents residing within the district.
2. The State of California shall prohibit other health care coverage organizations from conducting business within the district.
3. The Board of Directors for the Rural Health Care District shall cause a contract for health care coverage to be created.
4. The California Attorney General shall certify the contract is approved as to form.
5. The contract shall have a term of no more than three years beginning July 1, 2001.
6. Every three years beginning July 1, 2001, the Board of Directors shall seek bids from all health care coverage organizations conducting business in the State of California.
IV
Contract Management
1. The Board of Directors of the Rural Health Care District shall be responsible for the ongoing management of the contract with the health care coverage organization.
2. The contractor and the Board of Directors may agree to amend the contract from time to time during the term of the contract as mutually agreed upon.
3. The Board of Directors shall create performance incentives for the contractor to achieve during the lifetime of the contract as mutually agreed during negotiations of the agreement. Such performance incentives shall include both monetary bonuses and fines for meeting or failing to meet established objectives.
4. Grievances from the contractor or the Board of Directors shall be heard by the appropriate committees of the Legislature and acted upon accordingly.
5. Contracts must be renegotiated every three years beginning July 1, 2001, at which time all health care coverage organizations conducting business in the State of California shall have the opportunity to participate in a selection process conducted by the Board of Directors.
6. The contract shall be governed by the laws of the State of California.
V
Consumer and Contractor Relationship
1. No monies associated with health care coverage shall pass through the district or the State of California.
2. Monies for health care coverage shall be managed by the contractor and all such financial relationships shall exist only between the health care coverage organization and the consumer.
3. The contractor shall provide a monthly report of charges and services to the Board of Directors whom shall review these reports for quality assurance purposes.
4. The State of California, through the district's Board of Directors, shall control costs that the health care coverage organizations may charge within the boundaries of the district.
5. The controlled costs shall be delineated in the contract. The Board of Directors and the health care coverage organization may negotiate these amounts from time to time as necessary and mutually agreed upon.
6. All decisions made by the Board of Directors may only occur after all public testimony has been received and considered. The Board of Directors shall provide regular informational updates to all consumers in the district, including through a Internet based web site.
VI
Cost Reimbursement for Public Health Care Programs
1. The Rural Health Care Act recognizes that Medi-Cal reimbursement rates for medical services within the district are too far below the market average and as a result, there is a lack of providers willing to accept Medi-Cal patients. To address this problem the Board of Directors shall review the reimbursement rates for public programs and assure that they are within three percent of the market average.
2. The State of California shall reduce the amount of time to reimburse to a period of less than sixty days.
VII
Reducing Public Health Care Program Fraud
1. The State of California, through the Department of Health Services, shall increase the number of Medi-Cal Fraud Investigators by fifteen percent in all areas of California.
2. The Department shall initiate a study of the causes of Fraud and the magnitude of fraud no later than June 30, 2001.
3. The Department shall submit the completed report to the Federal Bureau of Investigation for review and shall incorporate any input from this organization.
4. The Department shall submit to the state legislature no later than January 1, 2001, a plan that responds to the findings of the study and shall implement this plan by June 30, 2001.
VIII
Rural Health Care Provider Incentive
1. The Rural Health Care Act recognizes the lack of professional health care providers within the boundaries of the district. To address this problem, the Act includes the Rural Health Care Provider Incentive (RPI) which provides for monetary incentives for providers to locate services within the district.
2. Professional health care providers who locate services within the district will be eligible for zero interest financial loans to establish business.
3. Professional health care providers who locate services within the district will be eligible for zero interest financial loans to buy their primary home within the boundaries of the district.
4. Professional health care providers who locate services within the district for a period of ten years shall receive a $50,000 grant that may be spent on service enhancement or stability.
5. The state shall make available to health care facilities within the district, interest free loans for construction and improvement.
IX
Transportation Accessibility for Medical Services
1. The State of California shall make available, beginning in January 1, 2001, a grant program for counties that increases public transportation for medical services.
2. Eligibility for such monies shall be based on the ability of the local jurisdiction to enhance the transportation utilized by patients travelling to and from their doctor or specialist.
3. The Insurance Code shall be modified to require the reimbursement of transportation costs for all medical services by private health care insurance companies.
4. The State of California shall cause public health care programs to reimburse transportation costs or enhance transportation services for persons utilizing such programs.
X
Exemptions to the Conditions of the Act
1. The establishment of the rural health care district does not imply restriction upon any public entity or public provider of medical services, except for where coordinated between the district and such entities. The district does apply to all private health care entities.
2. Consumers residing within the district may purchase health care coverage from a carrier other than the contractor so long as the consumer can demonstrate:
a) Good cause (special coverage, special treatment).
b) The alternate carrier can deliver services to the area that the consumer lives.
3. All exemptions shall be approved by the Board of Directors whom shall set a time limit for the exemption, at which time the exemption shall be reviewed.
XI
Definitions
+ HMO - Health Maintenance Organization. A private insurance company providing health care coverage for its customers through a network of primary care providers and specialists.
+ PPO - Preferred Provider Organization. A private insurance company that provides health care coverage for customers who choose their own primary care provider.
+ Carrier - A private insurance company offering alternatives to HMO and PPO coverage.
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