BILL ANALYSIS                                                                                                                                                                                                    



                                                                       



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          |SENATE RULES COMMITTEE            |                   SB 853|
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                              UNFINISHED BUSINESS


          Bill No:  SB 853
          Author:   Senate Budget and Fiscal Review Committee
          Amended:  10/6/10 
          Vote:     27 - Urgency

           
          PRIOR VOTES NOT RELEVANT

           ASSEMBLY FLOOR  :  Not available 


           SUBJECT  :    Health Budget Trailer Bill

           SOURCE  :     Author


           DIGEST  :     Assembly Amendments  delete the Senate version of  
          the bill which expressed the intent of the Legislature to  
          enact statutory changes relating to the Budget Act of 2010,  
          and add the current content relating to health.

          This bill is now the Health Budget Trailer bill which  
          contains provisions necessary to implement the 2010-11  
          Budget.

           ANALYSIS  :    This is the Omnibus Health Trailer Bill, which  
          contains necessary changes to enact modifications in the  
          Budget Bill for 2010-11.  It makes the following key  
          changes:

           Department of Health Care Services
           
          1.  Skilled Nursing Facility Quality Assurance and  
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             Accountability  .  This bill reauthorizes the Quality  
             Assurance Fee on nursing homes, established through AB  
             1629 (Frommer), Chapter 875, Statutes of 2004, and makes  
             the following changes which are General Fund neutral:

             A.     Rate Increases  .  Provides for a two-year rate  
                adjustment of up to 3.9 percent in 2010-11 and up to  
                2.4 percent in 2011-12 by extending the sunset of the  
                Quality Assurance Fee to July 30, 2012.  Provides for  
                a larger revenue base in which to apply the Quality  
                Assurance Fee by trending forward the net revenue of  
                nursing facilities, including Medi-Cal, Medicare, and  
                private pay, using historical increases in net  
                revenue.  

             B.     Continuing Care Retirement Communities  .  This bill  
                continues to exclude these facilities from paying any  
                Quality Assurance Fee.  These entities operate under  
                a different type of license and serve few Medi-Cal  
                patients.

             C.     Multi-Level Residential Community (MLRC)  
                Facilities  .  As contained in the Governor's May  
                Revision, this bill extends the Quality Assurance Fee  
                to MLRC facilities for those beds that are licensed  
                and certified to provide nursing home level care.   
                This will affect approximately 76 facilities.

                   These facilities have received rate increases as a  
                result of 
             AB 1629, Statutes of 2004, but have not previously been  
                required to pay the Quality Assurance Fee.  As such,  
                other nursing homes have been subsidizing the MLRC  
                rate increases.  Specifically, the Department of  
                Health Care Services (DHCS) states that over 50  
                percent of the MLRCs are reimbursed by Medi-Cal and  
                in the aggregate have received approximately $46  
                million in rate increases since 2004 without paying  
                the fee.

                   This bill also expresses the Legislature's intent  
                that consistent with current law, a Multi-Level  
                Residential Facility that has been assessed a Quality  
                Assurance Fee shall pay the fee within 60 days of the  

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                date rates are increased in accordance with Section  
                1322.28 of the Health and Safety Code and paid to  
                these facilities.

             D.     Limits Medi-Cal Reimbursement for Legal Costs  .  As  
                proposed by the Administration, this bill limits  
                reimbursement of legal fees incurred by nursing  
                facilities engaged in the defense of legal actions  
                filed by governmental agencies or departments against  
                the facilities where any of the following apply:  (1)  
                a decision has been rendered in favor of the  
                governmental agency or department; (2) the  
                determination of the governmental agency or  
                department otherwise stands; and (3) a settlement or  
                similar resolution has been reached, as specified.

             E.     Limits Medi-Cal Reimbursement for Liability  
                Insurance  .  This bill limits Medi-Cal reimbursement  
                for liability insurance to the 75th percentile  
                computed on a specified geographic peer group basis. 

             F.     Labor-Driven Operating Allocation (LDOA)  .  This  
                bill eliminates the LDOA since quality assurance and  
                accountability measures will be phased-in.

             G.     Quality Assurance and Accountability Provisions  .   
                This bill begins to phase-in a Quality Assurance and  
                Accountability Supplemental Payment System to provide  
                supplemental payments to nursing facilities that  
                improve the quality and accountability of care  
                rendered to residents and penalizing those facilities  
                that do not meet measurable standards.  This bill  
                provides specific methodologies to be used in  
                calculating the supplemental payments to be made and  
                the penalties to be imposed.

                   The quality benchmarks established in this bill  
                include a 3.2 nursing hours-to-patient ratio;  
                immunizations; physical restraints; facility-acquired  
                pressure ulcers; direct care retention; and resident  
                and family satisfaction surveys.  

                   Additional benchmarks will be added, including  
                federal health care reform measures identified by the  

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                federal Centers for Medicare and Medicaid Services,  
                the use of chemical restraints, and direct care staff  
                retention if not addressed in 2011-12.

                   This bill also establishes a stakeholder work  
                group to provide assistance to the Administration to  
                develop recommendations regarding the Quality  
                Assurance and Accountability Payment System.

             H.     3.2 Nursing Hours-to-Patient Ratio  .  This bill  
                requires that nursing homes that do not meet this  
                existing ratio and are in non-compliance will be  
                assessed a penalty of $15,000 for noncompliance on  
                five percent to 49 percent of audited days, and  
                $30,000 for noncompliance on 49 percent or more of  
                audited days.

             I.     Establishes Special Funds for Quality Assurance  
                and Accountability System  .  This bill creates the  
                Skilled Nursing Facility Minimum Staffing Penalty  
                Account and requires the Department of Public Health  
                (DPH) to deposit penalty payments collected from  
                nursing facilities into the account.  DPH is required  
                to transfer, on a monthly basis, moneys in the  
                account to the Skilled Nursing Facility Quality and  
                Accountability Fund.

                   It establishes the Skilled Nursing Facility  
                Quality and Accountability Fund and beginning in  
                2011-12; one percent of the rate increase will be  
                allocated to this Fund.  

                   The Skilled Nursing Facility Quality and  
                Accountability Fund is continuously appropriated to  
                DHCS to provide supplemental payments to nursing  
                homes; provide for specified administrative support;  
                and provide $1.9 million for the Long-Term Care  
                Ombudsman Program activities.

                   If supplemental payments are not made by May 1,  
                2012, then funds accumulated in the Skilled Nursing  
                Facility Quality and Accountability Fund will be  
                allocated back into nursing home rates.


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             J.     Long-Term Care Ombudsman  .  This bill expresses the  
                Legislature's intent that the $1.9 million (Skilled  
                Nursing Facility Quality and Accountability Fund)  
                appropriation contained in the bill is in addition to  
                the $4.168 million proposed in the Governor's May  
                Revision for 2010-11.  It also directs the DHCS to  
                seek approval from the federal Centers for Medicare  
                and Medicaid Services to obtain federal Medicaid  
                funds for this purpose.

          2.  Medi-Cal Program:  Hospital Rate Freeze and Transition  
             to Diagnosis-Related Groups  .  This bill freezes Medi-Cal  
             reimbursement paid to Private Hospitals for one-year,  
             retroactive to January 1, 2010.  It establishes a  
             process for implementation of a new rate setting  
             methodology which uses Diagnosis-Related Groups.  This  
             is to save $169 million ($84.5 million General Fund) for  
             2010-11.

          3.  Medi-Cal Program:  Physician Administered Drug Rate  
             Reduction  .  This bill authorizes DHCS to implement a new  
             Medi-Cal reimbursement rate for physician administered  
             drugs, to be the lower of (1) the Medi-Cal reimbursement  
             for pharmacy providers (i.e., Average Wholesale Price  
             minus 17 percent); or (2) the federal Medicare rate  
             (Average Sales Price plus six percent), unless federal  
             law requires a higher reimbursement level.  This becomes  
             effective as of February 1, 2011, and is to save $12.8  
             million ($6.4 million General Fund).

          4. Medi-Cal Program:  Radiology Rate Reduction  .  This bill  
             reduces Medi-Cal reimbursement for radiology services to  
             80 percent of federal Medicare rates, effective October  
             1, 2010, to save $27.2 million ($13.6 million General  
             Fund).

          5.  Medi-Cal Program:  Roger's Amendment Sunset Extension  .   
             This bill extends the sunset for one year (to January  
             2012) on the State statute that implements the federal  
             "Roger's Amendment", enacted as part of the Federal  
             Deficit Reduction Act of 2005.  It sets a limit on the  
             amount that a Medi-Cal Managed Care plan can reimburse a  
             non-contracted hospital that provides emergency services  
             to one of the plan's members.  It requires hospitals to  

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             accept as payment in full no more than the amounts that  
             it could collect under the Fee-for-Service Medi-Cal  
             Program.

             The DHCS estimates that annual savings are as much as  
             $19.7 million (total funds) from this action.

          6.  Medi-Cal Program:  County Medi-Cal Eligibility  
             Administration  .  This bill establishes a process for  
             DHCS and county welfare departments to exchange  
             information and develop a methodology for the  
             administration of Medi-Cal eligibility processing.  It  
             also suspends the cost-of-doing business for 2010-11 for  
             a savings of $21.6 million ($10.8 million General Fund).

          7.  Medi-Cal Program:  Limit on Non-Legend Acetaminophen  .   
             Under federal law, non-legend drugs ("over-the-counter")  
             are considered an optional benefit under Medicaid  
             (Medi-Cal).  Medi-Cal has covered over-the-counter drugs  
             for many years as an inexpensive alternative to  
             prescription drugs.  

             This bill provides that non-legend acetaminophen (such  
             as Adult Tylenol) products selected by DHCS would no  
             longer be a covered benefit under Medi-Cal.  There are  
             prescription substitutions available for the  
             acetaminophen-containing products and these would  
             continue to be a covered benefit in Medi-Cal.  Dual  
             eligibles individuals (Medicare and Medi-Cal) could  
             obtain these products with a prescription through  
             Medicare Part D, as well.  Children's liquid Tylenol  
             would not be affected by this change and will continue  
             to be a covered Medi-Cal benefit.  Cough and cold  
             medications also continue as a Medi-Cal benefit as is  
             current practice.  The Budget Bill assumes a savings of  
             $3.1 million (General Fund) from this change.

          8.  Medi-Cal Program:  Payment of Medicare Part B Premiums.    
             Prior to September 2008, DHCS paid federal Medicare Part  
             B premiums for individuals who qualify for both Medi-Cal  
             and Medicare (dual eligibles) even when they had not met  
             their share-of-cost within the Medi-Cal Program.

             To address a budget deficit, AB 1183 (Assembly Budget  

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             Committee), Chapter 758, Statutes of 2008, eliminated  
             Medicare Part B premium payments for elderly and  
             disabled enrollees having an unmet share-of-cost in  
             excess of $500. 

             This bill, as proposed by the Governor, eliminates DHCS  
             payment of Medicare Part B premiums for individuals who  
             do not meet their share-of-cost obligation for the  
             remainder of the program (i.e., unmet share-of-cost of  
             $500 or less).  Approximately 951 average monthly  
             eligibles would be affected by this change.  The Budget  
             Bill reflects a reduction of $1 million (General Fund)  
             from this action.

          9.  Medi-Cal Program:  Annual Eligibility for Children  .  The  
             Budget Act of 2008 adopted semi-annual eligibility  
             reporting requirements for children in Medi-Cal  
             shortened from annual eligibility renewal requirements,  
             with a sunset of July 1, 2011.  Annual eligibility was  
             restored in 2009 in response to maintenance-of-effort  
             requirements included in the federal American  
             Reinvestment and Recovery Act (ARRA), but set to sunset  
             at the time that federal ARRA was originally designated  
             to sunset (i.e., December 31, 2010).  The federal  
             Patient Protection and Affordable Care Act (H.R. 3590)  
             of 2010 provides for similar maintenance-of-effort  
             requirements.  Specifically, it requires States to  
             maintain Medicaid (Medi-Cal) eligibility standards,  
             methodologies, and procedures until a Health Insurance  
             Exchange is operational in the State.

             This bill clarifies that annual eligibility for children  
             will remain in effect to meet the federal  
             maintenance-of-effort requirements.  This conforms to  
             the Governor's May Revision.

          10.  Medi-Cal Program:  Family Planning, Access, Care, and  
             Treatment (FPACT) Program  .  This program presently  
             operates under a federal waiver which is set to end as  
             of August 31, 2010.  Recent federal law changes would  
             enable California to operate this program under a  
             Medi-Cal State Plan Amendment which would provide  
             savings of $5.0 million General Fund.  This bill  
             provides for the FPACT Program to be operated under a  

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             State Plan Amendment in lieu of a waiver.

          11.  Medi-Cal Program:  Managed Care Rates  .  DHCS  
             administratively implemented a risk-adjustment factor  
             for the 2009-10 rate year in the Two-Plan Counties and  
             the affected plans did not realizes the full impact of  
             this adjustment until December 2009.  This  
             risk-adjustment factor warrants additional analysis  
             before it is further expanded.

             This bill establishes that prior to October 1, 2011, the  
             Medi-Cal risk-adjusted countywide capitation rate being  
             used by DHCS shall comprise no more than 20 percent of  
             the total capitation rate paid to each Medi-Cal Managed  
             Care plan establishes that prior to 
          October 1, 2011, the Medi-Cal risk-adjusted countywide  
             capitation rate being used by the DHCS shall comprise no  
             more than 20 percent of the total capitation rate paid  
             to each Medi-Cal Managed Care plan.

          12.  Medi-Cal Program:  Extension of AB 1422, Statutes of  
             2009  .  The Medi-Cal provider gross premium tax,  
             authorized by AB 1422 (Bass), Chapter 157, Statutes of  
             2009, establishes a funding source for essential  
             preventative and primary health care services provided  
             through the Healthy Families program by adding Medi-Cal  
             Managed Care plans to the list of insurers subject to  
             California's gross premiums tax of 2.35 percent for the  
             period of January 1, 2009, through December 31, 2010.   
             This bill extends the sunset to June 30, 2011.

          13.  Medi-Cal Program:  Geographic Managed Care Rate  
             Negotiations Reassigned to DHCS  .  This bill reassigns  
             the responsibility for negotiating Medi-Cal Geographic  
             Managed Care rates from the California Medical  
             Assistance Commission to DHCS.  

          14.  Medi-Cal Program:  Timely Filing Rule for Medi-Cal  
             Providers  .  Federal law requires that when a Medicaid  
             enrollee has third party health care coverage or  
             insurance, the State Medicaid agency shall be the payer  
             of last resort.  When other coverage is identified, DHCS  
             and its vendors determine which claims Medi-Cal paid  
             that were eligible for reimbursement under that  

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             coverage.

             Federal and State law authorizes DHCS to seek  
             reimbursement for claims up to three years after the  
             date of service.  Upon notification of claims subject to  
             other coverage, providers should submit claims for  
             payment to the insurer.  However, some insurers are  
             denying claims based on "timely filing" restrictions -  
             typically 30 to 180 days - delineated in each individual  
             contract with the provider.  When an insurer denies a  
             claim as untimely, DHCS loses revenue due to its  
             inability to recoup Medi-Cal moneys from the provider.
             
             This bill requires a three-year "look back" when  
             providers submit claims which were originally paid by  
             Medi-Cal.  This statutory change is a cost avoidance  
             measure that retains $10 million (total funds) in  
             savings.

          15.  California Discount Prescription Drug Program  .  This  
             program, established by AB 2911 (Nunez), Chapter 619,  
             Statutes of 2006, has never been implemented due to  
             budget constraints.  This bill delays implementation and  
             sunsets the program in 2015.

          16.  Medi-Cal Program:  State Administrative Support for 1115  
             Medi-Cal Waiver  .  This bill authorizes the Department of  
             Managed Health Care (DMHC) to assess managed care plans  
             a total of $994,000 for deposit into the existing  
             Managed Care Fund to support positions authorized in the  
             Budget Bill for DMHC to administer specified components  
             of the 1115 Medi-Cal Waiver which will provide  
             California approximately $10 billion in federal funds  
             over a five-year period.  This bill also requires DHCS  
             and DMHC to have an interagency agreement to coordinate  
             specified activities related to the mandatory enrollment  
             of seniors and persons with developmental disabilities  
             into Medi-Cal Managed Care.

          17.  Medi-Cal Program:  Reporting on Waivers  .  This bill  
             requires DHCS to provide the fiscal and policy  
             committees of the Legislature with updates in March and  
             October of each year on all of California's Medi-Cal  
             Waivers.

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          18.  Medi-Cal Program:  Oversight of California Medi-Cal  
             Management Information System (CA-MMIS)  .  DHCS is  
             procuring a new Fiscal Intermediary for Medi-Cal  
             referred to as the California Medi-Cal Management  
             Information System (CA-MMIS).  In order to have  
             oversight of this system implementation, this bill  
             requires DHCS to submit quarterly reports to the  
             Legislature, Legislative Analyst's Office, Office of the  
             State Chief Information Officer (OCIO), and the Bureau  
             of State Audits.  This bill also makes the project  
             subject to review by the OCIO, and requires the Bureau  
             of State Audits to review all project documents and  
             reports and make recommendations as necessary.'

          19.  Medi-Cal Program:  Legislative Intent Language for  
             Hospital Quality Assurance Fee  .  This bill expresses the  
             Legislature's intent to utilize the Quality Assurance  
             Fee paid by specified hospitals to expand children's  
             health care services in future years, if and when the  
             Quality Assurance Fee is in effect in strong budget and  
             economic times.

          20.  DHCS:  California Children's Services (CCS) Program  .   
             This bill requires DHCS to seek foundation funding to  
             develop studies of the CCS Program to be provided to the  
             Legislature and stakeholders by May 2011.  These studies  
             are to address (1) systems analysis of core business  
             processes and practices; (2) provider certification and  
             enrollment processes; (3) medical eligibility  
             processing; (4) oversight of quality of care; (5) best  
             practices for case management; and (6) use of advanced  
             information technology tools.

           Department of Public Health
           
          21.  DPH:  HIV Rapid Testing  .  This bill deletes the  
             requirement that HIV testing sites must receive funding  
             from the DPH in order to conduct rapid HIV tests.   
             Current law requires sites to receive State funding;  
             however, reductions to the Office of AIDS due to  
             Governor's vetoes in 2009 have affected approximately 40  
             counties and their ability to conduct rapid HIV tests as  
             they have lost all of their State funding.  This change  

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             will enable them to continue to provide rapid HIV  
             testing.  The Administration concurs with this change.

          22.  DPH:  AIDS Drug Assistance Program in Use as Certified  
             Public Expenditure  .  This bill requires DHCS and DPH to  
             ensure the integrity of the AIDS Drug Assistance Program  
             (ADAP) in meeting its maintenance of effort requirements  
             to receive federal funds and to obtain all drug rebates,  
             in the event that State expenditures for the ADAP are  
             identified to be used as a certified public expenditure  
             for the purpose of obtaining federal financial  
             participation under the Medi-Cal Program for purposes of  
             the 1115 Medicaid Waiver.

          23.  DPH:  Required Estimate Packages  .  This bill requires  
             DPH to include in the Governor's January and May  
             Revision budget submittals to the Legislature detailed  
             estimate packages for the following programs:  (a)  
             Women, Infant and Children's Supplemental Food Program;  
             (2) Licensing and Certification Division; and (3) the  
             Every Woman Counts Program.

          24. DPH:  Every Woman Counts Program  .  This bill requires  
             DPH to provide the Legislature with quarterly reports  
             that include expenditure data available for this  
             program.

          25.  DPH:  Vacancy Report  .  This bill requires DPH to provide  
             the fiscal committees of the Legislature and the  
             Legislative Analyst's Office with an annual vacancy  
             report by no later than January 20th of each year.  
          
           Managed Risk Medical Insurance Board (MRMIB)
           
          26.  Children's Health Insurance Program Reauthorization Act  
             (CHIPRA) of 2009  .  As proposed by the Administration,  
             this bill provides MRMIB with emergency regulation  
             authority for purposes of implementing the federal  
             CHIPRA and related program activities through 2011-12,  
             in order to facilitate prompt completion of tasks and  
             avoid delays.  The emergency regulation authority  
             applies specifically and only to CHIPRA activities.

           Department of Developmental Services (DDS)

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          27.  DDS:  Additional 1.25 Percent Reduction (total of 4.25  
             percent)  .  Existing law requires Regional Centers to  
             reduce Purchase of Services payments made to providers  
             by three percent from February 1, 2009 to June 30, 2011,  
             inclusive.  Existing law also provides exemptions from  
             reduction for certain services, including Supported  
             Employment, the SSP (State Supplementary Payment)  
             supplement for independent living, and services with  
             usual and customary rates as established in regulation.   
             Other services may be exempt from this reduction if a  
             Regional Center demonstrates that a non-reduced payment  
             is necessary to protect the health and safety of a  
             consumer and DDS has granted approval.

             As proposed in the Governor's May Revision, this bill  
             increases this reduction by 1.25 percent for a total of  
             4.25 percent, and continues the above existing law  
             exemptions.  In addition, this bill permits a Regional  
             Center, with certain restrictions as specified, to  
             temporarily modify personnel requirements, functions,  
             qualifications, or staff training requirements of  
             providers. 

             The 4.25 percent reduction in the Purchase of Services  
             reimbursement saves $141 million ($70.4 million General  
             Fund) for 2010-11.  It should be noted that Regional  
             Center Operations expenditures are also reduced by 4.25  
             percent for a savings of $22.4 million ($15.4 million  
             General Fund) as reflected in the Budget Bill.

          28.  DDS:  Intermediate Care Facilities for Developmentally  
             Disabled (ICF-DD) Facility Billing to Obtain Additional  
             Federal Funds  .  The Budget Act of 2007 required DDS and  
             DHCS to obtain federal CMS approval to reconfigure  
             (bundle) the rate paid to ICF-DD facilities to include  
             Day Program and Transportation services expenditures  
             received by residents of these facilities for the  
             purpose of receiving federal fund support.  
           
             Federal CMS approval was recently obtained and  
             resolution of a billing mechanism for past-years has  
             just occurred.  A net reduction of $53.5 million  
             (General Fund) is reflected in the Budget Bill for this  

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             purpose. 

             Due to this availability of federal funding, this bill  
             provides for the liquidation until June 30, 2011,  
             certain funds appropriated in the Budget Act of 2007,  
             and authorizes DDS to make specified supplemental  
             payments to ICF-DD providers for day treatment and  
             transportation services.  This bill also makes related  
             conforming changes to ensure the integrity of the  
             Individual Program Plan process, to capture all federal  
             funds available, and to clarify the roles and  
             responsibilities of the billing process. 

          29.  DDS:  Lanterman Developmental Center  .  The  
             Administration has submitted a transition plan for  
             Lanterman Developmental Center to the Legislature  
             through the budget process.  (The Administration  
             submitted the Agnews Developmental Center closure using  
             this same approach as contained in existing state  
             statute.)  It is anticipated that closure of Lanterman  
             will take at least two or more years.  

             Through a public and collaborative process, the  
             Administration and Budget Committees have developed  
             statute language to include references to Lanterman  
             Developmental Center, as was done with Agnews  
             Developmental Center.  This includes the following:

             A.    Requires the Secretary of Health and Human  
                Services to verify protocols as specified for the  
                health and human safety of individuals transitioning  
                from Lanterman.

             B.    Requires DHCS to provide appropriate reimbursement  
                to health plans participating in Medi-Cal and serving  
                consumers transitioned from Lanterman to ensure  
                health care coverage.

             C.    Provides for State staff to work in the community  
                as specified to ensure continuity of care for the  
                consumers.  Specifically, for the Lanterman  
                Developmental Center, the use of department employees  
                is in effect for up to two years following the  
                transfer of the last resident of Lanterman, unless a  

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                later enacted statute deletes or extends this  
                provision.

             D.    Allows for DDS to operate an outpatient clinic  
                throughout the transition of Lanterman.

             E.    Provides for the expansion of Adult Residential  
                Facilities for Persons with Special Health Care Needs  
                so this residential model can specifically be used  
                for the orderly closure of Lanterman Developmental  
                Center.

          30.  DDS:  Written Notice for Exemption or Exception  .  As a  
             result of reductions in the Budget Act of 2009 and the  
             Budget Bill of 2010-11, it was agreed that consumers  
             participating in the Regional Center system needed to be  
             informed of the Regional Center's exemption process for  
             the purchase of services.

             This bill requires each Regional Center to notify  
             consumers receiving services at their Regional Center  
             regarding the purchase of services exemption process, as  
             specified.

           Department of Mental Health
           
          31.  DMH:  Office of Patients Rights Contract  .  This bill  
             extends the contract length for the Office of Patients  
             Rights from three years to five years in order to  
             increase efficiency and reduce costs for the State.

          32.  DMH:  Mental Health Services Act (MHSA) Report on State  
             Administration  .  This bill requires DMH to include in  
             its Proposition 63 reports to the Legislature a detailed  
             accounting of the proposed MHSA funds for State  
             Administration.

          33.  DMH:  State Hospitals  .  This bill allows for DMH to  
             contract with providers for the provision of emergency  
             health care services for patients residing at the State  
             Hospitals and specifies maximum reimbursement rates of  
             payment for these services, including those provided  
             under contract with the DMH and those that are not under  
             contract.  The Budget Bill reflects savings of $2  

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             million (General Fund) for this purpose.

           California Health and Human Services (CHHS) Agency
           
          34.  CHHS Agency:  Health Information Exchange and Federal  
             Funds  .  The CHHS Agency received a four-year $38.7  
             million federal grant for California's Health  
             Information Exchange.  The majority of these funds are  
             to be available in the first two years of the grant,  
             based on the State's performance in spending funds and  
             building health information exchange capacity.

             Under California's plan, the CHHS Agency is the federal  
             grantee and retains responsibility for administering the  
             grant and all grant deliverables.  The CHHS Agency is to  
             coordinate electronic health activities in the State and  
             work with the Legislature, State departments, and  
             stakeholders to support and recommend policy needs for  
             Health Information Technology in California.

             Cal eConnect (CeC) is California's "governance entity"  
             which is a nonprofit responsible for meeting the  
             requirements the CHHS Agency sets in contract and  
             subsequent amendments.  CeC was selected through a  
             Request for Information process.  Generally, CeC will be  
             responsible for establishing ground rules by which  
             health information can be exchanged appropriately among  
             clinicians, hospitals, health plans, patients, and  
             government agencies.

             SB 337 (Alquist), Chapter 180, Statutes of 2009,  
             established a framework in statute for the functions  
             outlined above.

             This bill further clarifies the duties of the CHHS  
             Agency and the governance entity by modifying the  
             membership of the initial governing board.  This bill  
             requires an implementation plan to be developed and  
             submitted to the Legislature by November 1, 2010, and  
             also specifies certain annual reporting requirements to  
             the Legislature regarding expenditures and plan  
             implementation status.  

             This bill provides that all deliverables, as defined in  

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                                                                SB 853
                                                                Page  
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             the scope of work, shall upon delivery and acceptance by  
             the CHHS Agency become the property of the State and may  
             be copyrighted by the State.

             This bill requires the CHHS Agency to require the  
             State-designated entity to develop specified policies  
             and procedures to provide the public with transparency  
             of the actions of the entity.

             This bill also specifies that the State governance  
             entity shall establish and begin providing health  
             information exchange services no later than January 1,  
             2012.

           FISCAL EFFECT  :    Appropriation:  Yes   Fiscal Com.:  Yes    
          Local:  Yes

          CTW:mw  10/6/10   Senate Floor Analyses 

                       SUPPORT/OPPOSITION:  NONE RECEIVED

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