BILL ANALYSIS
AB 2645
Page 1
ASSEMBLY THIRD READING
AB 2645 (Chesbro)
As Introduced February 19, 2010
Majority vote
HEALTH 18-0 APPROPRIATIONS 15-0
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|Ayes:|Monning, Fletcher, |Ayes:|Fuentes, Conway, Ammiano, |
| |Ammiano, Carter, Conway, | |Coto, Davis, Bonnie |
| |Caballero, Emmerson, Eng, | |Lowenthal, Hall, Harkey, |
| |Gaines, Hayashi, | |Miller, Nielsen, Norby, |
| |Hernandez, Jones, Bonnie | |Skinner, Solorio, |
| |Lowenthal, Nava, | |Torlakson, Hill |
| |V. Manuel Perez, Salas, | | |
| |Smyth, Audra Strickland | | |
| | | | |
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SUMMARY : Expands current law which imposes a reimbursement rate
freeze on specified skilled nursing facilities (SNFs) to include
institutions for mental disease (IMDs) licensed as SNFs.
EXISTING FEDERAL LAW :
1)Defines an IMD as a hospital, nursing facility, or other
institution of 17 or more beds that is primarily engaged in
providing diagnosis, treatment, or care of persons with mental
diseases, including medical attention, nursing care, and
related services.
2)Establishes the IMD exclusion, which prohibits federal
financial participation through Medicaid (Medi-Cal in
California) for individuals in an IMD between the ages of 22
and 65. These individuals may still be eligible for
state-only Medi-Cal.
EXISTING STATE LAW :
1)Requires the Department of Health Care Services (DHCS) to
contract with SNFs that have been designated by the Department
of Mental Health as IMDs to provide services to residents.
2)Establishes the Bronzan-McCorquodale Act, also known as
"Realignment," which shifted responsibility for the provision
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of mental health services from the state to counties.
Provides funding for local programs with revenues from
increased vehicle licensing fees and sales taxes.
3)Imposes a rate freeze on the following long term care
facilities: SNFs, intermediate care facilities, rural
swing-bed facilities, subacute and pediatric subacute care
units that are distinct parts of general acute care hospitals,
and adult day health centers.
4)Requires IMDs licensed as SNFs to be reimbursed for services
at the rate established by DHCS. Mandates, effective July 1,
2008, an annual 4.7% increase in the reimbursement rate for
IMDs.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, annual county savings in the range of $3 million to
$5 million for the first year a rate freeze for IMDs is in
effect. The accumulation of future county savings would depend
on changes in the SNF rate freeze statute.
COMMENTS : The sponsor of this bill, the California Mental
Health Directors Association (CMHDA), notes that federal law
statutorily prohibits federal Medicaid funds from being used for
the treatment of individuals who are in facilities that are
licensed as IMDs. Due to this federal "IMD exclusion" and
California's existing Realignment policies that make counties
responsible for the provision of mental health services,
California counties must pay for 100% of the cost of services
for patients in IMDs. Current state law requires counties to
indefinitely pay DHCS-licensed SNF IMDs a 4.7% increase to their
annual rates. CMHDA maintains that this rate increase is
unsustainable for counties given that every dollar spent by
counties on the escalating costs of SNF IMD care, the most
restrictive level of care available in the community, is one
less dollar available to counties for other community-based
services. While the State Budget Act of 2009 (AB 5 X4 (Evans)),
Chapter 5, Statutes of 2009-10, Fourth Extraordinary Session)
froze nursing home rates for many licensed facilities at 2008-09
levels, the rate freeze excluded SNF IMDs. CMHDA argues that,
without the change in law proposed by this bill, counties must
use significantly reduced funding streams to pay for IMD-level
care. This bill is intended to enable counties that are
currently facing serious economic difficulties to allocate the
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dollars they save from the rate freeze toward other
community-based programs and services.
IMDs are a type of SNF with 17 or more beds that provide 24-hour
nursing care and supervision to mentally ill persons in need of
continuous psychiatric and nursing care. Federal law excludes
these facilities from eligibility for federal Medicaid funds
when serving Medicaid clients. This federal IMD exclusion
applies only to adult Medicaid beneficiaries between the ages of
21 and 65. In California, IMDs include facilities in the
following licensing categories, if the facility has 17 beds or
more: acute psychiatric hospitals, psychiatric health
facilities, SNFs with a certified special treatment program, and
mental health rehabilitation centers. According to the
Department of Public Health, which licenses SNFs, there are 15
IMDs statewide that would be affected by the rate freeze
proposed in this bill.
The California Association of Health Facilities (CAHF),
representing IMD providers in the state, opposes this bill
unless it is amended to impose a one year rate freeze for IMDs,
effective July 1, 2010, through June 30, 2011. CAHF argues
that, while it recognizes the economic realities that counties
face during these fiscal times, freezing IMD rates permanently
does not make sense given the increasing costs of providing
services. CAHF contends that a one year rate freeze seems to be
reasonable in light of current budgetary issues. Lastly, CAHF
asserts that there needs to be some basis to adjust IMD rates
going forward and adds that since IMDs are licensed SNFs and
have similar operating costs, it makes sense to tie rate
increases to the actual cost increases for SNFs.
Analysis Prepared by : Cassie Rafanan / HEALTH / (916)
319-2097
FN: 0004236