BILL ANALYSIS                                                                                                                                                                                                    

                                                                  AB 2675
                                                                  Page  1

          Date of Hearing:   April 13, 2010

                            ASSEMBLY COMMITTEE ON HEALTH
                              William W. Monning, Chair
                AB 2675 (Chesbro) - As Introduced:  February 19, 2010
          SUBJECT  :  Health facilities: licensee orientation.

           SUMMARY  :  Requires an applicant, or an applicant's designee, for  
          initial licensure of an intermediate care  
          facility/developmentally disabled - habilitative (ICF/DD-H) or  
          an intermediate care facility/developmentally disabled - nursing  
          (ICF/DD-N), to attend an additional eight-hour orientation  
          program related to business management.  Specifically,  this  
          bill  :   

          1)Requires an applicant, or an applicant's designee for initial  
            licensure of an ICF/DD-H or an ICF/DD-N, to attend an  
            additional eight-hour orientation program approved by the  
            State Department of Developmental Services (DDS).

          2)Requires the additional eight-hour orientation program to  
            outline the statutory and regulatory requirements related to  
            business management.  Requires the orientation program to  
            include, but need not be limited to, all of the following:

             a)   Cost reporting;
             b)   General accounting principles; 
             c)   The State Department of Health Care Services' (DHCS)  
               audit process; and,
             d)   The regional center vendorization process.

           EXISTING LAW  :

          1)Establishes the State Department of Public Health (DPH) and  
            deems DPH responsible for the licensing and regulation of  
            health facilities, including ICFs/DD-H and ICFs/DD-N.

          2)Establishes DDS and sets forth its powers and duties relating  
            to the administration of the state developmental centers and  
            entering into contracts with regional centers for the  
            provision of ICF/DD-H and ICF/DD-N services to consumers in  
            the community.

          3)Establishes DHCS and deems DHCS responsible for the  


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            certification review process to ensure that ICFs/DD-H and  
            ICFs/DD-N meet the federal standards of participation in the  
            Medi-Cal Program.

          4)Establishes the Lanterman Developmental Disabilities Services  
            Act which provides the right of Californians with  
            developmental disabilities to receive treatment and  
            habilitation services and supports in the least restrictive  

          5)Establishes the Supreme Court decision in  Olmstead v. L.C.   
            (1999) 527 U.S. 581 (  Olmstead ), which interprets Title II of  
            the Americans with Disabilities Act to require federal, state,  
            and local governments to develop more opportunities for  
            individuals with disabilities through accessible systems of  
            cost-effective community-based services.

          6)Requires an applicant, or an applicant's designee for initial  
            licensure of an ICF/DD-H and ICF/DD-N, to attend an eight-hour  
            orientation program containing the following components  
            approved by DDS:

             a)    The scope of responsibility for operation including  
               regulatory requirements and statutes governing the facility  
             b)   Local planning;
             c)   Regional center and other community support services;
             d)   All federal and state agencies responsible for licensing  
               and certification, and data collection; and,
             e)   Government and private agencies responsible for ensuring  
               the rights of the developmentally disabled.

          7)Requires that the ICF/DD-H and ICF/DD-N orientation program be  
            conducted by relevant community services and provider  

          8)Requires that organizations conducting the ICF/DD-H and  
            ICF/DD-N orientation program be responsible for keeping a  
            record of all attendees and to provide DDS with the  
            information within 15 working days or upon request.

          9)Requires that instructors of the ICF/DD-H and ICF/DD-N  
            orientation program have knowledge or experience in the  
            subject area to be taught and to meet any of the following  


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             a)   Possession of a four-year degree relevant to the course  
               or courses to be taught;
             b)   Be a health professional with a valid and current  
               license to practice in California; and,
             c)   Have at least two years experience in California as an  
               administrator of a long-term health care facility that  
               provides services to persons with developmental  
               disabilities within the last eight years.

          10)Requires that, if the licensee can demonstrate to the  
            satisfaction of DDS that the licensee, or a representative of  
            the licensee, has taken the orientation program any year prior  
            to opening a new facility, the licensee will not be required  
            to repeat the program to open the facility.

           FISCAL EFFECT  :  This bill has not yet been heard by a fiscal  

           COMMENTS  :    

           1)PURPOSE OF THIS BILL  .  According to the author, in California,  
            the majority of persons with developmental disabilities now  
            reside in the community and small ICFs/DD are continuing to  
            open throughout the state.  The author maintains that,  
            typically, those seeking to operate ICFs/DD have programmatic  
            expertise but lack the necessary business skills to  
            successfully run their operations.  The author maintains that  
            feedback from new ICF/DD operators and oversight agencies find  
            that new licensees are struggling to manage the financial  
            aspects of their businesses.  The author argues that adding  
            eight hours to the existing course requirements for initial  
            licensure for ICFs/DD-H and ICFs/DD-N will address this issue  
            by allowing instructors with expertise in accounting and  
            business practices, specific to ICFs/DD, to educate would-be  
            providers about key business operations.

           2)BACKGROUND  .  ICFs/DD-H and ICFs/DD-N are health facilities  
            that provide 24-hour personal care, developmental and  
            habilitative training and health services in small community  
            settings to adults and children with developmental  
            disabilities.  While the Licensing and Certification Division  
            of DPH licenses these facilities, the Health Facilities  
            Program Section at DDS reviews and approves program plans for  
            potential facilities and approves the orientation required by  


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            each licensure applicant.  The DHCS' Medi-Cal Field Offices  
            conducts financial audits of these facilities. 

          In accordance with the Lanterman Act and the federal American  
            with Disabilities Act  Olmstead  decision, across the country,  
            states have been closing large institutions for people with  
            developmental disabilities and transitioning them into  
            community settings.  According to the California Alliance for  
            Inclusive Communities, nine states have eliminated public  
            institutions altogether.  With the closure and relocation of  
            the Agnews Development Center in San Jose, a large state  
            institution that housed at one time nearly 350 people with  
            developmental disabilities, California is in the process of  
            following this trend.  The number of people with developmental  
            disabilities receiving care in small 4 to 15 bed ICFs/DD-H and  
            ICFs/DD-N is increasing.  According to DPH, there are  
            currently 776 licensed ICFs/DD-H and 405 licensed ICFs/DD-N in  
            the state, with 54 program plans under review for potential  
            facilities that are not yet licensed.

          According to DHCS, many ICF/DD-H and ICF/DD-N providers have  
            struggled with the cost reporting required by DHCS.  DHCS  
            maintains that during financial audits, DHCS has determined  
            that many cost reporting invoices are incorrect.  This has  
            become problematic because DHCS calculates Medi-Cal rates for  
            ICF/DD providers base upon a sample of provider cost reports.   
            If the cost reports are not accurate, then the Medi-Cal rates  
            calculated don't reflect the true cost of doing business.

          Currently, there are two non-profit organizations that are  
            approved by DDS to conduct the existing mandated ICF/DD-H and  
            ICF/DD-N orientation program, the Quality Care Health  
            Foundation, the educational arm of the California Association  
            of Health Facilities (CAHF), the sponsor of this bill, and the  
            Developmental Services Network.  According to CAHF, the costs  
            to ICF/DD-H and ICF/DD-N licensure applicants to participate  
            in the currently mandated eight-hour orientation program is  
            $359.00.  Under the provisions of this bill, CAHF estimates  
            that adding an additional eight hours to the orientation  
            program will make the total cost to ICF/DD-H and ICF/DD-N  
            licensure applicants for the orientation program approximately  

           3)SUPPORT  .  According to CAHF, in 1996 the Legislature  
            recognized the need to educate licensees of small ICFs/DD  


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            about the rules and regulations governing their operation.  As  
            a result, potential ICF/DD providers are currently required to  
            complete a statutorily mandated eight-hour orientation prior  
            to licensure.  According to CAHF, the eight-hour course  
            focuses on California's developmental disabilities system and  
            ICF/DD programmatic and regulatory requirements.  CAHF argues  
            that, while there is a brief overview of business-related  
            regulatory requirements, a practical discussion of business  
            considerations is lacking which could lead to poorly crafted  
            business plans that may ultimately place some ICF/DD providers  
            at greater risk of financial insolvency.  CAHF, asserts that  
            adding eight hours of business management training to the  
            existing course requirement will address this issue.  

          4)PREVIOUS LEGISLATION  .  AB 2488, Chapter 471, Statutes of 1996,  
            establishes an eight-hour orientation program for licensure of  
            applicants of ICF/DD-H and ICF/DD-N that outlines the  
            applicable state rules and regulations and scope of  
            responsibility for facility operation.


          California Association of Health Facilities (sponsor)

          None on file.

          Analysis Prepared by  :    Tanya Robinson-Taylor / HEALTH / (916)