BILL NUMBER: SB 1755 CHAPTERED
BILL TEXT
CHAPTER 691
FILED WITH SECRETARY OF STATE SEPTEMBER 29, 2006
APPROVED BY GOVERNOR SEPTEMBER 29, 2006
PASSED THE SENATE AUGUST 30, 2006
PASSED THE ASSEMBLY AUGUST 24, 2006
AMENDED IN ASSEMBLY AUGUST 21, 2006
AMENDED IN ASSEMBLY AUGUST 9, 2006
AMENDED IN ASSEMBLY AUGUST 7, 2006
AMENDED IN ASSEMBLY JUNE 20, 2006
AMENDED IN SENATE APRIL 20, 2006
AMENDED IN SENATE APRIL 6, 2006
INTRODUCED BY Senator Chesbro
FEBRUARY 24, 2006
An act to amend Section 14571 of, to add Sections 14521.1 14522.3,
14526.1, 14528.1, 14550.5, 14571.1, 14571.2, and 14571.5 to, and to
repeal and add Section 14525 of, the Welfare and Institutions Code,
relating to Medi-Cal.
LEGISLATIVE COUNSEL'S DIGEST
SB 1755, Chesbro Medi-Cal: adult day health care services.
The California Adult Day Health Care Act provides for the
licensure and regulation of adult day health centers, with
administrative responsibility for this program shared between the
State Department of Health Services and the California Department of
Aging pursuant to an interagency agreement.
The Adult Day Health Medi-Cal Law establishes adult day health
care services as a Medi-Cal benefit for Medi-Cal beneficiaries who
meet certain criteria. Under existing law, participation in an adult
day health care program requires prior authorization by the State
Department of Health Services.
This bill would revise the eligibility criteria for adult day
health care services.
The bill would allow initial and subsequent treatment
authorization requests to be granted for up to six calendar months.
It would require that treatment authorization requests be initiated
by the adult day health care center and include specified elements,
and that authorization or reauthorization of a treatment request be
granted only if the participant meets certain medical necessity
criteria.
The bill would require that a participant's personal health care
provider, as defined, have and retain responsibility for the
participant's care. The bill would impose specified duties on an
adult day health care center with respect to a participant who does
not have a personal health care provider.
Existing law requires adult day health centers to offer, and
provide directly on the premises, specified services.
This bill would require adult day health centers to offer, and
provide directly on the premises, in accordance with the participant'
s individual plan of care, and subject to authorization, specified
core services to each participant during each day of the participant'
s attendance at the center, including nursing services, personal care
or social services, therapeutic activities, and one meal.
Existing law requires the department to develop a rate methodology
for adult day health care services. Existing law requires the
department to establish a reasonable rate for the initial assessment.
This bill would require that the rate for the initial assessment
be separately billable and that it take into account specified
factors. It would require that subsequent assessments be billed at a
lesser amount and that the department establish utilization controls
for assessment days to ensure the appropriate use of assessment and
reassessment activity.
This bill would require the department, in addition, effective
August 1, 2010, to establish a reimbursement methodology and a
reimbursement limit for adult day health care services on a
prospective cost basis for services that are provided to each
participant, pursuant to his or her individual plan of care, as
specified. The bill would require that these provisions be
implemented only to the extent that federal financial participation
is available.
The bill would require that federally qualified health centers be
reimbursed on a prospective payment system rate basis pursuant to
specified provisions of law for the provision of adult day health
care services.
The bill would require the department to report annually to the
relevant policy and fiscal committees of the Legislature, as part of
the budget submitted by the Governor to the Legislature each January,
on the implementation of the changes described above to the adult
day health care program, including the impact of those changes on the
number of centers and participants.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 14521.1 is added to the Welfare and
Institutions Code, to read:
14521.1. (a) Effective January 1, 2007, the department shall
report annually to the relevant policy and fiscal committees of the
Legislature, as part of the budget submitted by the Governor to the
Legislature each January, on the implementation of changes made to
the adult day health care program by the act adding this section,
including the impact of those changes on the number of centers and
participants.
(b) Where a conflict exists between existing regulations and adult
day health care laws in effect on and after January 1, 2007, the
department shall, until new regulations are adopted, issue guidance
to adult day health care providers through provider bulletins to
clarify the adult day health care laws and regulations that are in
effect.
SEC. 2. Section 14522.3 is added to the Welfare and Institutions
Code, to read:
14522.3. The following definitions shall apply for the purposes
of this chapter:
(a) "Activities of daily living" (ADL) means activities performed
by the participant for essential living purposes, including bathing,
dressing, self-feeding, toileting, ambulation, and transferring.
(b) "Instrumental activities of daily living" (IADL) means
functions or tasks of independent living, including hygiene,
medication management, transportation, money management, shopping,
meal preparation, laundry, accessing resources, and housework.
(c) "Personal health care provider" means the participant's
personal physician, physician's assistant, or nurse practitioner,
operating within his or her scope of practice.
(d) "Care coordination" means the process of obtaining information
from, or providing information to, the participant, the participant'
s family, the participant's primary health care provider, or social
services agencies to facilitate the delivery of services designed to
meet the needs of the participant, as identified by one or more
members of the multidisciplinary team.
(e) "Facilitated participation" means an interaction to support a
participant's involvement in a group or individual activity, whether
or not the participant takes active part in the activity itself.
(f) "Group work" means a social work service in which a variety of
therapeutic methods are applied within a small group setting to
promote participants' self-expression and positive adaptation to
their environment.
(g) "Professional nursing" means services provided by a registered
nurse or licensed vocational nurse functioning within his or her
scope of practice.
(h) "Psychosocial" means a participant's psychological status in
relation to the participant's social and physical environment.
SEC. 3. Section 14525 of the Welfare and Institutions Code is
repealed.
SEC. 4. Section 14525 is added to the Welfare and Institutions
Code, to read:
14525. Any adult eligible for benefits under Chapter 7
(commencing with Section 14000) shall be eligible for adult day
health care services if that person meets all of the following
criteria:
(a) The person is 18 years of age or older and has one or more
chronic or postacute medical, cognitive, or mental health conditions,
and a physician, nurse practitioner, or other health care provider
has, within his or her scope of practice, requested adult day health
care services for the person.
(b) The person has functional impairments in two or more
activities of daily living, instrumental activities of daily living,
or one or more of each, and requires assistance or supervision in
performing these activities.
(c) The person requires ongoing or intermittent protective
supervision, skilled observation, assessment, or intervention by a
skilled health or mental health professional to improve, stabilize,
maintain, or minimize deterioration of the medical, cognitive, or
mental health condition.
(d) The person requires adult day health care services, as defined
in Section 14550, that are individualized and planned, including,
when necessary, the coordination of formal and informal services
outside of the adult day health care program to support the
individual and his or her family or caregiver in the living
arrangement of his or her choice and to avoid or delay the use of
institutional services, including, but not limited to, hospital
emergency department services, inpatient acute care hospital
services, inpatient mental health services, or placement in a nursing
facility or a nursing or intermediate care facility for the
developmentally disabled providing continuous nursing care.
(e) Notwithstanding the criteria established in subdivisions (a)
to (d), inclusive, of this section, any person who is a resident of
an intermediate care facility for the developmentally
disabled-habilitative shall be eligible for adult day health care
services if that resident has disabilities and a level of functioning
that are of such a nature that, without supplemental intervention
through adult day health care, placement to a more costly
institutional level of care would be likely to occur.
SEC. 5. Section 14526.1 is added to the Welfare and Institutions
Code, to read:
14526.1. (a) Initial and subsequent treatment authorization
requests may be granted for up to six calendar months.
(b) Treatment authorization requests shall be initiated by the
adult day health care center, and shall include all of the following:
(1) The signature page of the history and physical form that shall
serve to document the request for adult day health care services. A
complete history and physical form, including a request for adult day
health care services signed by the participant's personal health
care provider, shall be maintained in the participant's health
record. This history and physical form shall be developed by the
department and published in the inpatient/outpatient provider manual.
The department shall develop this form jointly with the statewide
association representing adult day health care providers.
(2) The participant's individual plan of care, pursuant to Section
54211 of Title 22 of the California Code of Regulations.
(c) Every six months, the adult day health care center shall
initiate a request for an updated history and physical form from the
participant's personal health care provider using a standard update
form that shall be maintained in the participant's health record.
This update form shall be developed by the department for that use
and shall be published in the inpatient/outpatient provider manual.
The department shall develop this form jointly with the statewide
association representing adult day health care providers.
(d) Authorization or reauthorization of an adult day health care
treatment authorization request shall be granted only if the
participant meets all of the following medical necessity criteria:
(1) The participant has one or more chronic or post acute medical,
cognitive, or mental health conditions that are identified by the
participant's personal health care provider as requiring one or more
of the following, without which the participant's condition will
likely deteriorate and require emergency department visits,
hospitalization, or other institutionalization:
(A) Monitoring.
(B) Treatment.
(C) Intervention.
(2) The participant has a condition or conditions resulting in
both of the following:
(A) Limitations in the performance of two or more activities of
daily living or instrumental activities of daily living, as those
terms are defined in Section 14522.3, or one or more from each
category.
(B) A need for assistance or supervision in performing the
activities identified in subparagraph (A) as related to the condition
or conditions specified in paragraph (1) of subdivision (d). That
assistance or supervision shall be in addition to any other nonadult
day health care support the participant is currently receiving in his
or her place of residence.
(3) The participant's network of non-adult day health care center
supports is insufficient to maintain the individual in the community,
demonstrated by at least one of the following:
(A) The participant lives alone and has no family or caregivers
available to provide sufficient and necessary care or supervision.
(B) The participant resides with one or more related or unrelated
individuals, but they are unwilling or unable to provide sufficient
and necessary care or supervision to the participant.
(C) The participant has family or caregivers available, but those
individuals require respite in order to continue providing sufficient
and necessary care or supervision to the participant.
(4) A high potential exists for the deterioration of the
participant's medical, cognitive, or mental health condition or
conditions in a manner likely to result in emergency department
visits, hospitalization, or other institutionalization if adult day
health care services are not provided.
(5) The participant's condition or conditions require adult day
health care services specified in subdivisions (a) to (d), inclusive,
of Section 14550.5, on each day of attendance, that are
individualized and designed to maintain the ability of the
participant to remain in the community and avoid emergency department
visits, hospitalizations, or other institutionalization.
(e) Reauthorization of an adult day health care treatment
authorization request shall be granted when the criteria specified in
subdivision (d) have been met and the participant's condition would
likely deteriorate if the adult day health care services were denied.
SEC. 6. Section 14528.1 is added to the Welfare and Institutions
Code, to read:
14528.1. (a) The personal health care provider, as defined in
Section 14552.3, shall have and retain responsibility for the
participant's care.
(b) If the participant does not have a personal health care
provider during the initial assessment process to determine
eligibility for adult day health care, the adult day health care
center staff physician may conduct the initial history and physical
for the participant.
(c) The adult day health care center shall make all reasonable
efforts to assist the participant in establishing a relationship with
a personal health care provider.
(d) If the adult day health care center is unable to locate a
personal health care provider for the participant, or if the
participant refuses to establish a relationship with a personal
health care provider, the adult day health care center shall do both
of the following:
(1) Document the lack of personal health care provider
relationship in the participant's health record.
(2) Continue to document all efforts taken to assist the
participant in establishing a relationship with a personal health
care provider.
(e) (1) A personal physician for one or more of an adult day
health care center's enrolled participants may serve as the adult day
health care staff physician.
(2) When a personal physician serves as the staff physician, the
physician shall have a personal care services arrangement with the
adult day health care center that meets the criteria set forth in
Section 1395nn(e)(3)(A) of Title 42 of the United States Code.
(3) A personal care physician, an adult day health care staff
physician, or an immediate family member of the personal care
physician or adult day health care staff physician, shall comply with
ownership interest restrictions as provided under Section 654.2 of
the Business and Professions Code.
SEC. 7. Section 14550.5 is added to the Welfare and Institutions
Code, to read:
14550.5. Adult day health care centers shall offer, and provide
directly on the premises, in accordance with the participant's
individual plan of care, and subject to authorization pursuant to
Section 14526, the following core services to each participant during
each day of the participant's attendance at the center:
(a) One or more of the following professional nursing services:
(1) Observation, assessment, and monitoring of the participant's
general health status and changes in his or her condition, risk
factors, and the participant's specific medical, cognitive, or mental
health condition or conditions upon which admission to the adult day
health care center was based.
(2) Monitoring and assessment of the participant's medication
regimen, administration and recording of the participant's prescribed
medications, and intervention, as needed, based upon the assessment
and the participant's reactions to his or her medications.
(3) Oral or written communication with the participant's personal
health care provider, other qualified health care or social service
provider, or the participant's family or other caregiver, regarding
changes in the participant's condition, signs, or symptoms.
(4) Supervision of the provision of personal care services for the
participant, and assistance, as needed.
(5) Provision of skilled nursing care and intervention, within
scope of practice, to participants, as needed, based upon an
assessment of the participant, his or her ability to provide
self-care while at the adult day health care center, and any health
care provider orders.
(b) One or both of the following core personal care services or
social services:
(1) One or both of the following personal care services:
(A) Supervision of, or assistance with, activities of daily living
or instrumental activities of daily living.
(B) Protective group supervision and interventions to assure
participant safety and to minimize the risk of injury, accident,
inappropriate behavior, or wandering.
(2) One or more of the following social services provided by the
adult day health care center social worker or social worker
assistant:
(A) Observation, assessment, and monitoring of the participant's
psychosocial status.
(B) Group work to address psychosocial issues.
(C) Care coordination.
(c) At least one of the following therapeutic activities provided
by the adult day health care center activity coordinator or other
trained adult day health care center personnel:
(1) Group or individual activities to enhance the social,
physical, or cognitive functioning of the participant.
(2) Facilitated participation in group or individual activities
for those participants whose frailty or cognitive functioning level
precludes them from active participation in scheduled activities.
(d) One meal per day of attendance, in accordance with Section
54331 of Title 22 of the California Code of Regulations.
SEC. 8. Section 14571 of the Welfare and Institutions Code is
amended to read:
14571. The department, in consultation with the California
Association for Adult Day Services, shall develop a rate methodology.
The methodology shall take into consideration all allowable costs
associated with providing adult day health care services. Once a
methodology has been approved by the department, it shall be the
basis of future annual rate reviews.
Payment shall be for services provided in accordance with an
approved individual plan of care. Billing shall be submitted directly
to the department. Additionally, the department shall establish a
separately billable and reasonable rate of reimbursement for the
initial assessment that takes into account the intensity of services
and the skill level of the health professionals required to conduct
the mandated three-day assessment of new participant needs and living
environment. Subsequent assessments, as needed or required, shall be
billed at a lesser amount. The department shall establish
utilization controls for assessment days to ensure the appropriate
use of assessment and reassessment activity.
Nothing in this section shall preclude the department from
entering into specific prospective budgeting and reimbursement
agreements with providers.
SEC. 9. Section 14571.1 is added to the Welfare and Institutions
Code, to read:
14571.1. The Legislature finds and declares all of the following:
(a) Adult day health care is a necessary component in achieving an
integrated home- and community-based long-term care system
consistent with the principles of the decision of the United States
Supreme Court in Olmstead v. L.C. by Zimring (1999) 527 U.S. 581.
(b) The federal Centers for Medicare and Medicaid Services has
directed the State of California to segregate certain skilled
services from the all-inclusive per diem rate currently in use for
adult day health care centers and to bill for those services using
separate billing codes and reimbursement rates.
(c) The reimbursement methodology for adult day health care
services that is established by the department should provide for
fair and equitable reimbursement to adult day health care centers for
services that are provided to each participant.
SEC. 10. Section 14571.2 is added to the Welfare and Institutions
Code, to read:
14571.2. (a) Subject to the provisions of this section, the
department shall establish, effective August 1, 2010, a reimbursement
methodology and a reimbursement limit for adult day health care
services on a prospective cost basis for services that are provided
to each participant, pursuant to his or her individual plan of care.
The prospective reimbursement methodology shall be determined by the
department after consultation with the California Association for
Adult Day Services and other interested stakeholders.
(b) The following definitions shall apply for purposes of this
section:
(1) "Daily core services" means the services described in Section
14550.5.
(2) "Separately billable services" means services designated by
the department, after consultation with the California Association
for Adult Day Services, and shall include, but not be limited to, the
following:
(A) Physical therapy services.
(B) Occupational therapy services.
(C) Speech and language pathology services.
(D) Mental heath services.
(E) Registered dietician services.
(F) Transportation services.
(c) The prospective reimbursement methodology for the daily core
services provided by each adult day health care center shall be
determined by the department based on the reasonable cost of
providing all of the adult day health care services included within
the core services and adjusted to the particular rate year. Services
and costs included in the calculation of the daily core services rate
shall include, but not be limited to, all of the following:
(1) Fixed or capital-related costs representing depreciation,
leases and rentals, interest, leasehold improvements, and other
amortization.
(2) Labor costs other than those for the separately billable
services, including direct and indirect labor and contracted staff
hours required by law or regulation.
(3) All other costs exclusive of fixed or capital-related costs,
leases or rentals, interest, leasehold improvements, and other
amortization.
(4) Add-ons, adjustments, and audit adjustments determined
annually in the calculation of the core rate to allow for changes
specified in subdivision (h), until those changes are reflected in
the cost report.
(5) Cost components required to comply with licensing and
certification laws and regulations.
(d) (1) The daily reimbursement rates for the separately billable
services shall be determined based upon the reasonable cost of
providing each service, how each of the individual billable services
is defined, and which professional is providing the service, subject
to the scope of his or her license. These reimbursement rates shall
not exceed the Medi-Cal rates for the same service on file at the
time the service is rendered.
(2) In establishing the total reimbursement limit, direct patient
care labor costs may be paid at a specified discrete percentile to
ensure maintenance of quality of care.
(e) The department shall determine a reimbursement limit
applicable to each adult day health center peer group established
pursuant to subdivision (m), taking into account total overall
average costs per day of attendance for providing the entire array of
adult day health care services, including the daily core services
and the separately billable services. The department shall determine
a reimbursement limit applicable to each adult day health care center
peer group established pursuant to subdivision (m) based on cost
containment principles applied to other acute care and long-term care
providers.
(f) By July 1, 2007, the department shall develop, after
consultation with the California Association for Adult Day Services,
all of the following:
(1) An adult day health care center cost report meeting the
requirements of subdivision (j) and a list of individual components
to be included in the core rate calculation.
(2) The methodology and documentation necessary to establish the
reimbursement rate for the separately billable services.
(3) The reimbursement rates for transportation services. Payments
for transportation services shall be subject to the limit on the
daily reimbursement and shall be reimbursed whether the center
provides transportation directly, by use of contracted
transportation, or both. The department shall review methodologies
for payment for transportation services. The review of payment
methodologies shall include a survey of other states' adult day
health care transportation systems, and transportation reports or
expert consultation relevant to nonemergency medical transportation
services in the community.
(g) (1) By January 1, 2008, the department shall facilitate the
training of providers in collaboration with the California
Association for Adult Day Services. The adult day health care centers
shall be trained in the all of the following elements:
(A) The use of the modified cost report, supplemental reports, and
the accounting and reporting manual.
(B) Plan of care documentation required to support the separately
billable rate components.
(C) Medical necessity and eligibility requirements and
documentation.
(2) By January 1, 2008, the department, after consultation with
the California Association for Adult Day Services, shall establish
facility peer groupings as specified in subdivision (m).
(h) By July 1, 2008, the department, after consultation with the
California Association for Adult Day Services, shall establish a
methodology for calculation of the reimbursement limit, rates for the
daily core services, and applicable percentiles limiting specific
cost categories within the core rate.
(i) (1) By March 30, 2010, a preliminary estimate of the
reimbursement limit, the reimbursement rate for individual adult
health care services, and separately billable services shall be
established and provided to the California Association for Adult Day
Services and other interested stakeholders. The department shall
allow an appropriate stakeholder comment period following this
action.
(2) The information supplied to all interested stakeholders in
paragraph (1) shall be compared to what would have been paid under
the rate methodology in effect for the 2009-10 fiscal year.
(3) Based on the rate comparisons, a methodology to provide for a
multiyear phasein of the new prospective payment may be implemented.
(4) At the time of implementation, no adult day health care center'
s payment shall be decreased by more than 10 percent below the rate
paid in the rate year immediately preceding the first year that the
rate methodology prescribed in this section is implemented. In the
second and third rate years, no adult day health care center
reimbursement rate shall be decreased by more than 10 percent below
the adult day health care center's reimbursement rate on file at the
time of the application of the next year's reimbursement rate.
(j) (1) The department, with input from the California Association
for Adult Day Services and all interested stakeholders, shall
develop the cost reporting form and determine the costs that are to
be included and excluded from the annual cost reporting methodology.
(2) Cost reporting shall be consistent with Section 1861 of the
federal Social Security Act (42 U.S.C. Sec. 1395x) and Part 413 of
Title 42 of the Code of Federal Regulations.
(3) Cost reporting shall include itemization of the costs of all
adult day health care services such that information necessary to
determine costs associated with the core bundle of services and each
of the separately billable services can be collected.
(4) The cost report or supplemental report to the cost report, as
determined by the frequency the data will be required for calculation
of the core rate, shall collect staffing level and salary data for
all direct and indirect patient care staff, arranged through either
employment or contract.
(5) All adult day health care centers participating in the
Medi-Cal program shall maintain books and records according to
generally accepted accounting principles and the uniform accounting
systems adopted by the state, and shall submit annual cost reports
directly to the department.
(k) (1) The department may exclude any cost report or portion
thereof that it deems to be inaccurate, incomplete, or
unrepresentative, consistent with the policies established in
paragraph (2) of subdivision (j). For facilities that fail to file
cost reports with the department pursuant to this section, the
department shall reimburse those facilities at 10 percent below the
lowest reimbursement limit established in the facility's peer group
pursuant to subdivision (d).
(2) Cost report data shall be validated by using comparisons to
salary surveys and health industry administrative data maintained by
the Office of Statewide Health Planning and Development and other
state agencies. If cost report data is not statistically valid for a
given peer group, survey statistics shall be used as a proxy to
substitute for the cost report data.
(3) Cost report data for any adult day health care center that has
closed or is no longer a Medi-Cal participating facility shall be
excluded from the rate calculation.
(4) The specific process for maintaining cost data and submitting
cost reports shall be developed after consultation with the
California Association for Adult Day Services.
(l) Field audits shall be performed by the department in
accordance with all of the following laws and regulations:
(1) Section 1861 of the Social Security Act (42 U.S.C. Sec. 1395x)
and Title XVIII of the Social Security Act (42 U.S.C. Sec. 1395 et
seq.).
(2) Sections 413.9, 483.10, and 433.32, and Part 413, of
Title 42 of the Code of Federal Regulations.
(3) Centers for Medicare and Medicaid Services Publication 15-1
(federal Department of Health and Human Services Manual).
(4) Chapter 5 (commencing with Section 54001) of Division 3 of
Title 22 of, and Chapter 10 (commencing with Section 78001) of
Division 5 of, the California Code of Regulations.
(5) Sections 14170 and 14171.
(6) Relevant portions of the California Medicaid State Plan.
(m) (1) In accordance with field audit requirements, adult day
health care centers shall be placed in a minimum of three designated
peer groupings. Each adult day health care center in each of the
designated peer groupings shall be audited on an annual basis.
(2) If for any reason a field audit was not performed, the average
audit adjustment of the peer grouping shall be applied.
(3) The peer groupings shall include, at minimum, geographic
differences and size of facility. The need for additional groupings
shall be periodically reevaluated to ensure that the peer groupings
remain relevant on a statewide basis.
(4) The department shall analyze and evaluate the data obtained
through peer grouping analysis in order to determine if additional
peer groupings or data elements are necessary for refinement of the
peer groupings.
(5) After analyzing the data pursuant to paragraph (4), the
department may increase the number of peer groupings or change the
criteria to reflect pertinent factors affecting peer grouping costs.
(n) (1) An audit adjustment or adjustments, either specific to an
adult day health care center or by peer grouping, reflecting the
difference between reported and audited costs and participant days
for field audited centers, shall be applied to all adult day health
care centers for purposes of establishing the core services
reimbursement rate and the reimbursement limit for the following rate
year. Audit adjustments shall include all of the following:
(A) The results of settled appeals. The department shall consider
only the findings of audit appeal reports that are issued more than
180 days prior to the beginning of the new rate year.
(B) In the case of peer grouping audit adjustments, audited costs
shall be modified by a factor reflecting share-of-cost overpayments
and share-of-cost underpayments.
(C) The results of federal audits, when reported to the state,
shall be applied in determining audit adjustments.
(D) (i) An adjustment or adjustments to reported costs of adult
day health care centers shall be made to reflect changes in state or
federal laws and regulations that would affect those costs, including
increases in the minimum wage or increases in minimum staffing
requirements.
(ii) The costs described in clause (i) shall be reflected as an
add-on to the new rate or rates.
(iii) To the extent not prohibited by federal law or regulations,
add-ons to the rate or rates shall continue until those costs are
included in cost reports used to set the new rate or rates.
(2) Adjusted costs shall be divided into categories and treated as
follows:
(A) Fixed or capital-related costs shall include costs that
represent depreciation, leases and rentals, interest, leasehold
improvements, and other amortization. No update shall be applied.
(B) Property taxes, where identified, shall be updated at a rate
of 2 percent annually.
(C) Labor costs, which shall be defined as a ratio of salary,
wage, and benefits costs to the total costs of each adult day health
care center, shall be updated based upon the labor study conducted by
the department and using industry-specific wage data as reported by
the adult day health care centers. The separately billable services
shall be updated by applying the median market-based rate specific to
the specialty service category.
(D) All other costs shall include all other costs less fixed or
capital-related costs, property taxes, and labor costs. This cost
category shall be updated using the California Consumer Price Index.
(3) Prior to the implementation of this methodology, the
department shall take measures to ensure appropriate training of
state audit staff.
(o) The department shall provide updates on the rate methodology
to the appropriate fiscal and policy committees of the Legislature.
The appropriation for services paid under this rate methodology shall
be included in the annual Budget Act.
(p) Adult day health care centers may appeal findings that result
in an adjustment to the rate or rates pursuant to Section 14171 and
to Article 1.5 (commencing with Section 51016) of Chapter 3 of
Division 3 of Title 22 of the California Code of Regulations.
(q) (1) Notwithstanding Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code, the
department shall implement this section by means of a provider
bulletin or similar instruction without taking regulatory action. By
August 1, 2013, the department shall adopt regulations in accordance
with the requirements of Chapter 3.5 (commencing with Section 11340)
of Part 1 of Division 3 of Title 2 of the Government Code.
(2) The department shall notify and consult with interested
stakeholders in implementing, interpreting, or making specific the
provisions described in this section.
(r) The department shall implement this section only to the extent
that federal financial participation is obtained.
(s) The department may file a state plan amendment to implement
the requirements of this section. Immediately upon filing any such
state plan amendment, the department shall provide the fiscal
committees of the Legislature with a copy of the state plan
amendment.
SEC. 11. Section 14571.5 is added to the Welfare and Institutions
Code, to read:
14571.5. Federally qualified health centers shall be reimbursed
on a prospective payment system rate basis pursuant to Section
14132.100 for the provision of adult day health care services.