California Groups Sue State Over Duals Demonstration
July 28, 2014 03:04 PM
On July 2, in Westside Center for Independent Living v. DHCS, the Los Angeles County Medical Association joined three independent living centers, two dual-eligible beneficiaries, and an ophthalmologist in filing a lawsuit (the Petition) against California, calling on the Sacramento Superior Court to halt the state’s dual eligible demonstration, the Coordinated Care Initiative (CCI). California responded by filing an answer (the State’s Response) to the lawsuit on the same day. The National Council on Medicaid Home Care – a NAHC affiliate- discusses the key elements of the lawsuit and California’s response below.
Notices and Other Documentation
Insufficient notice. The Petition alleged that insufficient notice was given. The relevant California statute states that prior to contacting with health plans, DHCS must [a]t least 90 days prior to enrollment, inform dual-eligible beneficiaries through a notice written at not more than a sixth-grade reading level that includes, at a minimum”: (1) “how the Medi-Cal system of care will change,” (2) “when the changes will occur,” and (3) “who they can contact for assistance with choosing a managed care health plan or with problems they encounter. [Petition, page 14]
The Petition alleged that not only was the 90-day notice written at a level exceeding a sixth-grade reading level, it also does not state when the changes will occur, instead merely stating that beneficiaries will “soon” receive additional information. For details, see page 14, here.
Materials written at too high of a reading level. The Petition also alleged that, contrary to statutory requirement, DHCS’ enrollment materials are written at higher than a sixth grade reading level. The Petition alleged that many of the beneficiaries cannot understand these materials, creating “widespread confusion” once these beneficiaries find themselves passively enrolled.
Opt-out mechanism unclear. According to the Petition, the California legislature had given dual eligibles the right to opt-out of the Demonstration voluntarily. The legislation allowed for passive, or automatic enrollment for beneficiaries, but also provided a mechanism for eligible beneficiaries to opt-out of passive enrollment and the CCI entirely.
The Petition alleged that statutorily, DHCS is required to state in its enrollment materials that the beneficiary is allowed to keep her current Medicare or Medicare Advantage benefits and opt out of CCI as long as the enrollee returns a form (the Health Plan Choice Form) stating this. However, the Health Plan Choice form does not contain a “check box by which a dual-eligible beneficiary can clearly communicate” this. The 60-day notice also fails to clearly and plainly state that the beneficiary is entitled to keep her current Medicare or Medicaid Advantage benefits. For details, see pages 13-16, here. The Petition further cited a CMS Key Findings Report that stated that beneficiaries erroneously interpreted the notices to mean that they could continue to receive their existing benefits if they did not respond to the notices. For details, see pages 16-17, here.
Old Petitions Still In Use. Eligible beneficiaries are still being enrolled based on the old notices.
The State’s Response. In the State’s Response, California asserted that DHCS has revised the notices as a result of “widespread collaboration” with stakeholders, and that these new notices will be used starting July 29. Therefore, the state asserted that Plaintiffs’ arguments relating to the notices are moot.
Alternatively, the State argued that the old notices complied with the law. California argued that CMS had approved the notices and the notices had been sufficiently tested on beneficiaries. Additionally, the State’s Response argued that the fact that enrollees disenrolled in a higher proportion of the total population than other states shows that the enrollees in fact did understand the notices, and how to opt out. The State argued that the law did not require the state to provide “a specific month, day, and year” of when more information will be available to beneficiaries, and that merely saying that it will be available “soon” is sufficient. For details, see pages 16-20, here.
The Petition. The Petition alleged that the dual demonstration was rendered inoperative by its own legislation. Section 10 of S.B. 1008, which authorized the initial implementation of the CCI, was signed into law in June 2012. According to the Petition, the law stated that key sections and articles of the law would “become inoperative” if by February 1, 2013, three provisions were not met. Those provisions were: “federal approval, or notification indicating pending approval, of a mutual ratesetting process, shared federal savings, and a six-month enrollment period in the demonstration project.”
By February 1, 2013, CMS had not approved any of these provisions. Additionally, CMS informed DHCS that the former would not support either shared federal savings or the six-month enrollment period. In this way, the subsequent Memorandum of Understanding (MOU) signed between DHCS and CMS in March 2013 to establish the CCI was enacted by the Director of DHCS “without and in excess of jurisdiction and authority.”
The State’s Response. The State’s Response asserted that S.B. 1008 has been repealed by S.B. 94. Additionally, California asserted that Section 10 was not a “sunset provision.” Instead, the broader legislative intent in the subsequent section, Section 11, states that the CCI should “expand statewide within three years of the demonstration project.” For details, see page 12-14, here.
Dr. William Averill, Executive Board Member of the Los Angeles County Medical Association (LACMA), stated: “The volume of patients and the confusing passive enrollment of the most vulnerable patients in unacceptable. The cost to healthcare quality will be shouldered by those who can least afford to carry the weight of bureaucracy.” Alan Troy, Executive Director of Westside Independent Living Center, another plaintiff in the case, stated, “Ironically, we find that [the enrollment documents] has been structured to prevent any real choice, and therefore threatens the basic rights of people in our community to choose the healthcare coverage that best fits their needs.” For LACMA’s press release containing these quotes, click here.
Mark A. Johnson from Hooper, Lundy & Bookman, counsel for ophthalmologist Dr. Puig-Llano, stated: “This suit is especially important for home care providers because it will fundamentally change the processes that they will have to undertake in order to ensure reimbursement for services to dual eligible beneficiaries. Any lapses in care due to poor notices or inadequate networks could result in serious adverse consequences to the clients served by home care providers.”
The Petition’s criticisms of the CCI come on the heels of previous stakeholder criticisms, discussed in previous Council briefs, hereand here. The Council will continue to monitor the lawsuit. Home care providers are encouraged to keep abreast of developments in the dual eligible demonstrations, and to contact the Council with any questions or concerns.