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; AB 369 Page 2 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 AB 369 Page 3 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 AB 369 Page 4 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