BILL ANALYSIS
SENATE HEALTH
COMMITTEE ANALYSIS
Senator Elaine K. Alquist, Chair
BILL NO: AB 2645
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AUTHOR: Chesbro
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AMENDED: June 21, 2010
HEARING DATE: June 23, 2010
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CONSULTANT:
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Bain
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SUBJECT
Mental health: skilled nursing facilities: reimbursement
rate
SUMMARY
Requires the reimbursement rate for services in
institutions for mental disease (IMDs) that are skilled
nursing facilities (SNF) to be the same as the rates in
effect on July 1, 2009 from July 1, 2010 to June 30, 2012.
Would take effect as an urgency statute.
CHANGES TO EXISTING LAW
Existing law:
Existing law provides for the licensure and regulation of
health facilities, including skilled nursing facilities
(SNF), by the Department of Public Health.
Under existing law, IMDs were required to be reimbursed at
the same as the rates in effect on July 31, 2004, subject
to an increase of 6.5 percent annually from July 1, 2005
through June 30, 2008, as long as contracts require IMDs to
continue to be licensed as SNFs. Effective July 1, 2008,
Continued---
STAFF ANALYSIS OF ASSEMBLY BILL 2645 (Chesbro) Page
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rates are required to increase 4.7 percent annually.
This bill:
Requires the reimbursement rate for services in IMDs that
are SNFs to be the same as the rates in effect on July 1,
2009. This requirement would apply on and after July 1,
2010 through June 30, 2012. Would take effect immediately
as an urgency statute.
FISCAL IMPACT
According to the Assembly Appropriations Committee
analysis, annual county savings in the range of $3 million
to $5 million for the first year a rate freeze for IMDs is
in effect.
STAFF ANALYSIS OF ASSEMBLY BILL 2645 (Chesbro) Page
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BACKGROUND AND DISCUSSION
This bill is sponsored by the California Mental Health
Directors Association (CMHDA), which states current state
law requires counties to indefinitely pay SNF-IMDs a 4.7
percent increase to their annual rates, that this rate is
unsustainable for counties, and that this increase
represents the only part of the mental health system that
is guaranteed a significant cost-of-living adjustment each
year. CMHDA states that every dollar spent by counties on
the escalating costs of SNF-IMD care is one less dollar
available to counties for other community-based services,
that less spending on community-based care means fewer
federal dollars are drawn down by counties, and that
SNF-IMDs are the most restrictive level of care.
CMHDA states the health budget trailer bill of 2009 (ABX4 5
(Evans)), Chapter 5, Statutes of 2009-10) froze rates for
many licensed facilities at 2008-09 levels, but the rate
freeze excluded SNF-IMDs. CMHDA argues that, without the
change in law proposed by this bill, counties must use
significantly reduced realignment funding to pay for
IMD-SNF level care. CMHDA also 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," California counties must pay for 100 percent of
the cost of services for patients in IMDs. CMHDA concludes
this bill will enable counties that are currently facing
serious economic difficulties to allocate the dollars they
save from the rate freeze toward other community-based
programs and services.
Background
Federal law defines IMDs as a hospital, nursing facility,
or other institution of more than 16 beds, that is
primarily engaged in providing diagnosis, treatment, or
care of persons with mental diseases, including medical
attention, nursing care, and related services. In
California, IMDs include facilities in the following
licensing categories, if the facility has 17 or more beds:
acute psychiatric hospitals, psychiatric health facilities,
SNFs with a certified special treatment program (STP), and
mental health rehabilitation centers. According to the
information from the sponsor, there are 23 SNF-IMDs
STAFF ANALYSIS OF ASSEMBLY BILL 2645 (Chesbro) Page
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statewide that would be affected by the rate freeze
proposed in this bill. These facilities range in size from
37 to 208 beds.
IMD SNF rates are based on the location (one of three
regions in the state) and size of the
facility (whether the facility had 60 or more beds) and
range (effective July 1, 2009) from a low of $136.22 per
day to a high of $190.23 per day.
Federal law excludes these facilities from eligibility for
federal Medicaid funds when serving adult Medicaid
beneficiaries between the ages of 21 and 65.
IMD rates
AB 1629 (Frommer), Chapter 875, Statutes of 2004, imposes a
quality assurance fee (QAF) on SNFs for the purpose of
drawing down additional federal funds to provide a Medi-Cal
rate increase to SNFs. In addition, AB 1629 contained a
$107 million General Fund appropriation to fund an increase
in the 2004-05 SNF Medi-Cal reimbursement rates. Because
AB 1629 would have had a significant fiscal impact on
county mental health department reimbursement to IMD-SNF,
AB 360 (Frommer), Chapter 508, Statutes of 2005, was
enacted the following year to exempt SNFs certified by the
DMH for a special treatment program that is an IMD from AB
1629. AB 360 instead required that rates for IMDs be the
same as Medi-Cal rates in effect on July 1, 2004, and
prescribed the following rate increase schedule for IMDs:
Effective July 1, 2005 through June 30, 2008, an increase
of 6.5 percent annually.
Effective July 1, 2008, an increase of 4.7 percent
annually.
Arguments in support
The Regional Council of Rural Counties (RCRC) writes in
support that the 4.7 percent annual IMD rate increase is
unsustainable for rural counties as they struggle with
higher caseloads and diminishing state General Fund support
and reimbursement. RCRC writes this bill mirrors the
action taken by the Legislature to freeze nursing home
rates for many licensed facilities at 2008-09 levels and
extends it to IMD-SNFs.
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The California Association of Health Facilities (CAHF)
writes that it would support this bill if it were amended
to impose a two-year rate freeze for SNF-IMDs for the
2010-11 and 2011-12 rate years. The most recent amendments
to this measure incorporate the amendments requested by
CAHF.
Prior legislation
ABX4 5 (Evans), Chapter 5, Statutes of 2009, freezes the
reimbursement rate at the 2008-09 year level that is paid
by Medi-Cal to intermediate care facilities, intermediate
care facilities for the developmentally disabled, skilled
nursing facilities that are distinct-part of a hospital,
rural swing-bed facilities, facilities owned by the
Department of Mental Health or the Department of
Developmental Services, and free-standing pediatric
sub-acute care units. In addition, AB 1183 repealed a
provision that would have provided a maximum annual
increase in the weighted average Medi-Cal SNF reimbursement
rate of not more than five percent for 2009-10 and 2010-11,
based on the previous year's reimbursement rate. Under
ABX4 5, the weighted average Medi-Cal SNF reimbursement
rates for 2009-10 and 2010-11 rate years will instead not
be increased over the weighted average Medi-Cal
reimbursement rate in effect for 2008-09 rate year.
AB 360 (Frommer), Chapter 508, Statutes of 2005, among
other provisions, exempts SNFs that provide pediatric
sub-acute services and IMDs from a requirement to pay a QAF
and prescribes a rate-increase schedule for these
facilities.
AB 1629 (Frommer), Chapter 875, Statutes of 2004,
established the QAF, established the Medi-Cal Long-Term
Care Reimbursement Act, and contained an appropriation to
fund an increase in the 2004-05 SNF Medi-Cal reimbursement
rates.
PRIOR ACTIONS
Assembly Health: 18-0
Assembly Appropriations:15-0
Assembly Floor: 75-0
STAFF ANALYSIS OF ASSEMBLY BILL 2645 (Chesbro) Page
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POSITIONS
Support: California Mental Health Directors Association
(sponsor)
Association of Community Human Service Agencies
California State Association of Counties
California Council of Community Mental Health
Agencies
County of Los Angeles Board of Supervisors
County of San Luis Obispo Behavioral Health
Department
County of Del Norte
County of Humboldt Department of Health and Human
Services
County of San Bernardino
Disability Rights California
Regional Council of Rural Counties
Oppose: None received
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