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 AB 2675 Page 2 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 environment. 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 type; 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 organizations. 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 criteria: AB 2675 Page 3 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 committee. 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 AB 2675 Page 4 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 $718.00. 3)SUPPORT . According to CAHF, in 1996 the Legislature recognized the need to educate licensees of small ICFs/DD AB 2675 Page 5 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. REGISTERED SUPPORT / OPPOSITION : Support California Association of Health Facilities (sponsor) Opposition None on file. Analysis Prepared by : Tanya Robinson-Taylor / HEALTH / (916) 319-2097