BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 369
                                                                  Page  1

          Date of Hearing:   April 28, 2009

                            ASSEMBLY COMMITTEE ON HEALTH
                                  Dave Jones, Chair
                    AB 369 (Yamada) - As Amended:  April 13, 2009
           
          SUBJECT  :   Adult day health care centers.

           SUMMARY  :   Creates an exemption to the existing Medi-Cal  
          certification moratorium which will allow the opening of two  
          new, publicly financed Adult Day Health Centers (ADHCs).  
          Exempts from the current moratorium a state-owned and operated  
          property, for which planning began before 2002 that is funded by  
          state bonds and federal grants to serve California veterans. 

           EXISTING LAW  :

          1)Establishes the California ADHC Act which requires licensure  
            and regulation of ADHC centers with administrative  
            responsibility shared between the State Department of Public  
            Health (DPH), the California Department of Aging (CDA), and  
            the Department of Health Care Services (DHCS) pursuant to an  
            interagency agreement.

          2)Requires ADHC centers to be licensed by DPH as health care  
            facilities and permits certification for Medi-Cal payments by  
            CDA.

          3)Establishes DHCS as the principal agency to oversee Medi-Cal  
            policy, rates, audits, investigations, eligibility and  
            utilization.
           
          4)Authorizes DPH to implement one year moratoriums on  
            certification and enrollment in the Medi-Cal Program of new  
            adult day health care centers on a statewide or regional basis  
            with certain statutory exceptions.  These exceptions include:

             a)   Applicants for Programs of All-Inclusive Care for the  
               Elderly;

             b)   Applicants for organizations currently designated as  
               federally qualified health centers;

             c)   Applicants centrally located in counties with no other  
               certified ADHCs;








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             d)   Applicants serving discharged nursing home patients in  
               San Francisco;

             e)   Applicants requesting expansion or relocation within a  
               county with a specified ratio of persons over the age of 65  
               receiving Medi-Cal; and,

             f)   Applicants currently licensed and located in a county  
               whose population exceeds 9,000,000 serving a specified  
               population from a regional center.

           FISCAL EFFECT  :   This bill has not yet been analyzed by a fiscal  
          committee.



           COMMENTS  :   

           1)PURPOSE OF THIS BILL  .  This bill, according to the sponsor,  
            the California Association for Adult Day Services (CAADS),  
            creates an exemption to the ADHC moratorium on Medi-Cal  
            certification to permit two ADHCs operated by the California  
            Department of Veterans Affairs (CDVA) to become eligible for  
            Medi-Cal reimbursement.  CDVA is constructing two large  
            veteran's campuses, one in Ventura County and another in  
            Lancaster, which will include multi-level housing and medical  
            services intended to incorporate ADHC within their planned  
            care continuum.  The availability of ADHC, notes the sponsor,  
            is a key component of these publicly funded operations, and  
            the Medi-Cal moratorium has had the unintended effect of  
            preventing ADHC services within the new facilities.

           2)BACKGROUND  .  ADHC is an organized day program of therapeutic,  
            social, and health activities and services provided to elderly  
            persons with functional impairments, either physical or  
            mental, at risk of institutional placement.  The sponsor notes  
            that ADHCs employ a multidisciplinary team approach providing  
            multiple services under one roof.  These services include  
            skilled nursing care, physical therapy, social services,  
            meals, speech therapy, and socialization in order to reduce  
            the risk factors which could lead to placement into more  
            expensive care settings.  California offers ADHC as an  
            optional Medi-Cal benefit to reduce utilization of nursing  
            homes, emergency rooms, and hospitals.  According to CAADS  








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            roughly 42,000 Medi-Cal beneficiaries are now served by 350  
            ADHCs in this state.
           
          3)ADHC MORITORIUM  .  The 2004-05 California State Budget  
            authorized the DHCS to impose a moratorium on the  
            certification of new ADHCs after August 2004.  The moratorium  
            was implemented in response to the very rapid growth in ADHCs  
            in certain regions of the state and, according to this bill's  
            sponsor, because of reduced state staff resources available to  
            provide training and support for new providers.  The  
            moratorium has been renewed every year since 2004.  However,  
            the Legislature has, over the last five years, authorized  
            several exemptions to allow expansion of specific ADHC  
            operations.  ADHC centers were initially required to be  
            nonprofit, charitable facilities until 1994 when legislation  
            (SB 1492 (Mello), Chapter 1121, Statutes of 1994) authorized  
            for-profit companies to develop ADHCs.  In recent years the  
            number of centers has grown from 72 to nearly 350 stand alone  
            operations.  This rapid growth brought higher state costs,  
            according to this committee's analysis of prior legislation,  
            and DHCS became increasingly concerned that some centers  
            provided only minimal services and failed to comply with state  
            requirements.  In 2004, the federal Centers for Medicare and  
            Medicaid Services directed California to shift ADHC from an  
            optional Medi-Cal benefit to a home and community based waiver  
            program.  The rapid growth, compliance concerns, and change in  
            structure led the Legislature to impose the moratorium.

           4)VENTURA AND LANCASTER FACILITIES  .  In 2002, according to the  
            CDVA Web site, planning for three large veteran's facilities,  
            one in Ventura County, one in Lancaster, and one in West Los  
            Angeles, was initiated following passage of the Veterans Home  
            Bond Act of  2000 (AB 2559 (Wesson), Chapter 216, Statutes of  
            2002).  The three facilities are financed with federal  
            veteran's home grants and state bond funding totaling $229  
            million, of which 60% is from federal sources.  All three  
            sites are intended to provide multilevel housing and medical  
            services for eligible veterans.  The two sites nearest  
            completion, Ventura and Lancaster, incorporate ADHC services  
            as well as assisted living and nursing care units within their  
            continuum of care design.  CAADS indicates that both projects  
            had sought approval for up to 100 licensed ADHC slots, but  
            anticipate only 20 enrollees at each facility for the first  
            few years of operation.  Absent this legislation, residents of  
            the two facilities will, according to the sponsor, be placed  








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            in the campus Medi-Cal nursing home with higher state costs  
            and less personal independence for the beneficiary.

           5)SUPPORT  .  The California Alliance for Retired Americans writes  
            that this bill will improve the care of veteran's living on  
            campus by authorizing this limited Medi-Cal exemption.   
            Without access to these ADHCs, veterans living on the Ventura  
            and Lancaster campuses will be forced into more costly campus  
            nursing homes.  This relocation would waste state funds by not  
            utilizing lower cost ADHC services and would pointlessly  
            diminish the quality of the veteran's lives.  

           6)PREVIOUS AND RELATED LEGISLATION  . 

           AB 827 (Hancock) of 2008 would have exempted from the  
            moratorium ADHCs seeking a change of ownership, relocation, or  
            increase in capacity under specified conditions.  AB 827 was  
            held in the Assembly Appropriations Committee.

          SB 1103 (Committee on Budget and Fiscal Review), Chapter 228,  
            Statutes of 2004, gave authority to DHCS to impose a  
            moratorium on the certification of new ADHC providers  
            effective in August of 2004.

          SB 428 (Perata), 2003, would have put in place a pre-licensure  
            review process, implemented a one year moratorium, and imposed  
            new licensing fees to fund the additional DPH workload. 

           REGISTERED SUPPORT / OPPOSITION  :   

           Support 
           
          California Association of Adult Day Services (sponsor)
          California Alliance for Retired Americans
          Aging Services of California

           Opposition 
           
          None on file.
           

          Analysis Prepared by  :    John Miller / HEALTH / (916) 319-2097