REPORT TO SHASTA COUNTY BOARD OF SUPERVISORS

BOARD MEETING DATE:  May  16, 2017
CATEGORY:  Consent - Health and Human Services-9.

SUBJECT:

Agreements with California Department of Health Care Services and Partnership HealthPlan of California

Supervisorial District No. :  All

DEPARTMENT CONTACT:  Donnell Ewert, Director, Health and Human Services Agency (530) 245-6269

STAFF REPORT APPROVED BY:  Donnell Ewert, Director, Health and Human Services Agency

RECOMMENDATION

Approve and authorize the Chairman to sign the following documents related to Fiscal Years (FY) 2015-16 and 2016-17 Intergovernmental Transfer (IGT):  (1) An agreement with the California Department of Health Care Services (DHCS) pursuant to sections 14164 and 14301.4 of the Welfare and Institutions Code (WIC) for the transfer amount not to exceed $3,108,084 for the period July 1, 2015 through June 30, 2016, and $3,143,604 for the period July 1, 2016 through June 30, 2017, to be used as local matching funds to enable Partnership HealthPlan of California (PHC) to obtain Medi-Cal managed care capitation rate increases; (2) an agreement with DHCS for a 20 percent assessment fee pursuant to section 14301.4 of the WIC to reimburse DHCS for administrative costs associated with the operation of the IGT program, estimated at $621,617 for the period July 1, 2015 through June 30, 2016 and estimated at $628,721 for the period July 1, 2016 through June 30, 2017; (3) a retroactive third amendment, effective July 1, 2015, to the agreement with PHC allowing PHC to retain three percent administrative fee for the FY 2015-16 and 2016-17 IGT and for payment of Medi-Cal managed care capitation rate increases by PHC and payable to Shasta County Health and Human Services Agency (HHSA) to support the local safety net through improved behavioral health services, care coordination, oral health services, and/or access to specialty care for Medi-Cal beneficiaries and other underserved populations, for the period July 1, 2015 through September 30, 2019; and (4) approve and authorize the HHSA Director to sign: (a) a Memorandum of Understanding (MOU) with PHC, effective upon the date PHC provides an estimated net amount of $2,476,954 for FY 2015-16 and $2,497,679 for FY 2016-17 in IGT funds to County, and County provides an administrative fee in the estimated amount of $1,000,000 to PHC, which outlines the roles and responsibilities related to the FY 2015-16 and FY 2016-17 IGT; and (b) amendments and other documents, including retroactive, with DHCS and PHC to facilitate the FY 2015-16 and FY 2016-17 IGT that do not result in substantial or functional change to the original intent of the agreement(s) and otherwise comply with Administrative Policy 6-101, Shasta County Contracts Manual.

SUMMARY

The proposed agreements: (1) permit the transfer of $3,108,084 and $3,143,604 from Shasta County to California Department of Health Care Services (DHCS) to be used as local matching funds to obtain federal Medicaid funding; (2) authorize a 20 percent assessment fee estimated $621,617 and $628,721 to reimburse DHCS for the costs of operating the Intergovernmental Transfer (IGT) program; (3) amend Shasta County Health and Human Services Agency’s (HHSA) agreement with Partnership HealthPlan of California (PHC) to permit PHC to retain a three percent administration fee and to pass through an estimated net amount of $2,476,954 and $2,497,679 additional federal Medicaid funding to Shasta County to enable the County to provide health care services to Shasta County residents; and (4) outline the roles and responsibilities related to FY 2015-16 and FY 2016-17 IGT funds use plan. On February 7, 2017 the Board approved a Letter of Interest for the FYs 2015-16 and 2016-17 IGT sent to DHCS.

DISCUSSION

The IGT process is a funding strategy under Section 1903(w) (a) of the Social Security Act whereby states and/or local governments can utilize state or local funds to increase federal matching dollars for Medicaid programs. California currently receives a 50 percent match for services provided through Medi-Cal, the California Medicaid program. Currently, the State claims federal funds for use in the Medi-Cal system at a level that is less than the maximum allowable federal funding level. The difference between the maximum allowable federal funding level and the actual amount drawn down by the State is referred to as “headroom.” This “headroom” of unused federal reimbursement is available to be drawn down through an IGT by counties and other public entities covered by a Medi-Cal managed care plan.

PHC, a County Organized Health System, began providing managed health care services for low-income individuals and families eligible for Medi-Cal in Shasta County on September 1, 2013.  Shasta County is, therefore, eligible to participate in an IGT for FY 2015-16 and FY 2016-17.  The additional Medicaid funds must be used for the provision of health care services to Shasta County residents and cannot be transferred into the County’s General Fund. Per PHC policy, HHSA must use the additional federal Medicaid funds to improve behavioral health services, care coordination, oral health services, and/or access to specialty care for Medi-Cal beneficiaries. For many years, California Counties covered by Medi-Cal managed care plans have had the opportunity to secure federal matching funds for their local health care expenditures on behalf of the Medi-Cal population. The mechanism for securing these funds involved an IGT, whereby the County transfer’s funds to DHCS, and DHCS then uses the funds to draw down additional federal funding from the federal Center for Medicare and Medicaid Services (CMS), which is then transferred to the Medi-Cal Managed Care health plan for that county. The Medi-Cal Managed Care health plan then makes payments to its contracted Medi-Cal providers which results in the County getting back the transferred funds, along with the matching federal funds that are contained in the Medi-Cal expenditures, less a 20 percent DHCS administration fee, managed care organization (MCO) taxes, and a three percent managed care plan administrative fee. Shasta County first became a Medi-Cal managed care county in September 2013, and 2015-16 and 2016-17 are the third and fourth years for which Shasta County can obtain IGT funds. The eight counties that joined PHC at that time share a regional amount of headroom, which is available to counties, district public hospitals, and fire districts that render medical care. The amount of headroom that each entity can use is determined by how much benefitted medical care was rendered to the Medi-Cal population but was uncompensated by PHC. Based on HHSA’s uncompensated expenditures on behalf of Medi-Cal beneficiaries for PHC benefits during FY 2015-16 and FY 2016-17, HHSA will transfer $3,108,084 and $3,143,604 in non-federal funds to DHCS in order to receive back from PHC the original amount transferred plus an additional estimated amount of $2,476,954 and $2,497,679 to support health services and programs for Medi-Cal enrollees in FY 2017-18 and 2018-19.  It is estimated that the transfer of funds from Shasta County to DHCS will occur in late-July or early August 2017, and the funds returning to Shasta County will be transferred from PHC to Shasta County approximately eight weeks later.

The revenues derived from the IGT must be spent on health care services, which are described in Attachment A of the draft MOU with PHC. This proposed spending plan must be approved by the IGT Commission (including two Shasta County members and full governing Commission of PHC). The main foci are reducing placements of mentally ill individuals in locked facilities, preventing mental health crises and unnecessary utilization of the local hospital emergency departments, integration of substance use disorder treatment into primary care, increasing treatment options for seriously emotionally disturbed children, improving services for parents with children in the foster care system, preventing adverse childhood experiences, piloting substance use treatment services within a federally qualified health center, promoting bonding of mothers with their infants by reducing postpartum depression and perinatal substance use, providing care coordination services for homeless childless adults, enhancing psychiatric services, and refreshing mental health facilities to convey hope and professionalism to patients. The spending plan includes a reasonable reserve of the IGT funding in a dedicated account for sustainability purposes and to cover any emergent issues that may arise between funding cycles.  

ALTERNATIVES

The Board could choose not to approve one or more of the agreements and/or the amendment. The Board could also choose to not authorize the HHSA Director to sign the MOU and/or any further amendments or other documents.

OTHER AGENCY INVOLVEMENT

County Counsel has approved the agreements, amendment, and MOU as to form.  Risk Management has reviewed and approved the agreements, amendment, and MOU. HHSA staff have worked closely with PHC consultants and staff for guidance in processing the FY 2015-16 and FY 2016-17 IGT.  The recommendations have been reviewed by the County Administrative Office.

FINANCING

Non-federal funds must be used in an IGT financial transaction. HHSA will use Mental Health and Public Health county realignment funds. Upon receiving the net proceeds from PHC, the original amounts transferred out of Mental Health and Public Health will be returned to the originating cost center and/or fund, and the remainder will be used to implement the FY 2015-16 and FY 2016-17 IGT funds spending plan. There is no additional General Fund impact with approval of the recommendations.