BILL ANALYSIS
SB 1392
Page 1
Date of Hearing: June 29, 2010
ASSEMBLY COMMITTEE ON HEALTH
William W. Monning, Chair
SB 1392 (Steinberg) - As Amended: June 17, 2010
SENATE VOTE : Not relevant
SUBJECT : Mental health: community mental health services.
SUMMARY : Expedites the timeframes and processes by which the
Department of Mental Health (DMH) disburses various sources of
mental health funds to counties and creates a separate trust
fund administered by the Department of Health Care Services
(DHCS) to distribute federal mental health funds to counties.
Specifically, this bill :
1)Deletes a provision in existing law requiring DMH to
distribute a maximum of 95% of total state General Fund (GF)
Realignment allocations to counties each fiscal year upon
passage of the annual Budget Act.
2)Establishes, effective July 1, 2011, the Specialty Mental
Health Services Federal Trust Fund (Fund) to be continuously
appropriated to DHCS without regard to fiscal year.
3)Requires monies in the Fund to be distributed by DHCS to
counties based on their claims for specialty mental health
services that have been processed by DHCS, as specified.
4)Makes various legislative findings and declarations including
that this bill is necessary to facilitate the efficiency and
cost effectiveness of community mental health services and
prevent avoidable future county budget cuts to mental health.
EXISTING LAW :
1)Establishes DMH, which directs and coordinates statewide
efforts for the treatment of mental disabilities.
2)Establishes the Medi-Cal Program, administered by DHCS, which
provides health benefits to low-income children, their
parents, or caretaker relatives, pregnant women, elderly,
blind or disabled persons, and other individuals who meet
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specified eligibility criteria.
3)Establishes the Bronzan-McCorquodale Act, also known as
"Realignment," which shifted responsibility for the provision
of mental health services from the state to counties. Funds
Realignment programs using revenues from vehicle licensing
fees and sales taxes.
4)Requires public mental health services to be provided to
specified priority target populations in systems of care that
are client-centered, culturally competent, and fully
accountable and specifies the minimum array of services that
must be provided to target populations.
5)Provides for DMH to implement specialty mental health services
for Medi-Cal beneficiaries through fee-for-service or
capitated rate contracts with county mental health plans
(MHPs).
6)Authorizes DMH, contingent on passage of the annual Budget
Act, to distribute total state GF allocations to counties in
12 monthly increments but requires the total amount advanced
to each county to not exceed 95% of the county's total
allocation for that year.
7)Directs DMH and DHCS to consult with a statewide organization
representing counties to establish a mechanism to facilitate
timely availability of the state GF allocations described in
4) above.
8)States legislative intent that DMH and DHCS consult and
collaborate closely regarding administrative functions related
to the delivery and provision of specialty mental health
services provided under Medi-Cal.
9)Establishes the Mental Health Services Act (MHSA), enacted by
voters in 2004 as Proposition 63, to provide funds, through a
1% income tax on personal income above $1 million, to counties
to expand services and develop innovative programs and
integrated service plans for mentally ill children, adults,
and seniors who meet the existing priority target population
eligibility criteria.
10)Requires each county mental health department to prepare and
submit to DMH a three-year program and expenditure plan for
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MHSA funding.
FISCAL EFFECT : This bill has not yet been analyzed by a fiscal
committee.
COMMENTS :
1)PURPOSE OF THIS BILL . The author states that this bill
removes unnecessary mental health funding delays at the state
level to enable counties to appropriately access funding in a
timely manner and prevent avoidable budget cuts. The author
notes that the sharp budget reductions in the last few years
to county-administered mental health services have had
numerous negative impacts on California communities. The
author maintains that, too often, people with serious mental
illnesses are showing up in emergency rooms with acute mental
health needs instead of at mental health programs that provide
earlier and more appropriate care. The author points to
numerous audits, most recently by the federal Centers for
Medicaid and Medicare Services (CMS) in 2008 and 2010, that
have unearthed state inefficiencies in the administration of
mental health dollars to the counties. The author intends for
this bill to hold state departments accountable for these
inefficiencies while streamlining the processes by which the
state reimburses and distributes funds for community mental
health services to provide counties with cash flow relief.
2)BACKGROUND . In 1991, a major change occurred in the funding
of human service programs in California with enactment of the
Bronzan-McCorquodale Act, referred to as "Realignment."
Realignment shifted financial and administrative
responsibility for the state's mental health, public health,
and some social service programs, from the state to local
governments and provided counties with dedicated revenue
sources from vehicle license fees and state sales tax to pay
for these changes. In order to fund these program transfers,
each county created three separate program accounts for mental
health, health, and social services. The Governor's proposed
May Revision of the 2010-11 State Budget includes a proposal
to reduce county mental health realignment funds by
approximately 60% for proposed savings of $602 million.
The complex formula through which the state allocates GF
revenues to counties is prescribed in statute. Once the State
Budget is passed, DMH distributes to counties their GF
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appropriation. As mandated by current law, the lump sum
distributions to each county equate to 95% of the
appropriation. DMH distributes the remaining 5% in lump sum
payments to the counties at the beginning of the following
fiscal year. DMH reports that, usually, in any one fiscal
year, counties receive the 5% allocation withheld from the
prior fiscal year and the 95% allocation of the current fiscal
year. Counties may "roll-over" to the subsequent fiscal year
GF distributions received but not spent. Currently, DMH
indicates that counties are reporting that $12.8 million in
distributions available in fiscal year (FY) 2008-09 will not
be spent and are being rolled over into FY 2009-10.
3)MEDI-CAL MENTAL HEALTH SERVICES . A large majority of
consumers who utilize California's community mental health
services are enrolled in Medi-Cal. Mental health services are
delivered in the Medi-Cal program through a system distinct
from other Medi-Cal services. Medi-Cal beneficiaries with a
severe and/or persistent mental illness who meet certain
medical necessity, diagnostic, and impairment criteria obtain
specialty mental health care through county-administered
mental health plans (MHPs), which provide the services
directly or through contract providers. Specialty mental
health services are "carved out" of the Medi-Cal program,
meaning they are not under the purview of DHCS, but are the
responsibility of DMH and county mental health departments.
General mental health care needs for Medi-Cal beneficiaries,
which are those needs that can be met by a general health care
practitioner, remain the responsibility of DHCS.
As the agency charged with administering Medi-Cal, DHCS has an
interagency agreement with DMH to administer specialty mental
health services and county MHPs have a contract with DMH
through which they are reimbursed for providing these
services. In California, the state contributes 50% and the
federal government contributes 50% toward the cost of the
Medi-Cal program. County MHPs are reimbursed a percentage of
their actual expenditures, and this reimbursement is referred
to as the federal financial participation (FFP). Currently,
county MHPs submit claims for specialty mental health services
to DMH for processing and are forwarded to DHCS for payment.
A county MHP submits a form certifying that it incurred the
expenditures associated with the submitted claims. DMH edits
the claims to compare the claimed amount to a schedule
referred to as the "state maximum allowance" (SMA) and
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approves the lower of what is billed by the county or the SMA.
DMH then electronically transfers the batch of edited claims
to DHCS for further processing. DHCS adjudicates the claims
to determine whether the services provided meet federal and
state program requirements.
After reconciling the claims against DMH's edits, DHCS
determines whether the claims are approved, denied, or
suspended. DHCS then electronically returns the entire batch
of claims to DMH with a determination of how much FFP is due
to the county MHPs DHCS then submits an invoice to the State
Controller for FFP. Once FFP is received by DHCS it passes
the federal funds through DMH back to the MHPs. According to
DMH, due to the recent implementation of an updated claim
processing system, the current timeframe for a claim to be
processed by both DMH and DHCS and paid to a MHP is
approximately 30 days from submission. DMH points out that
this new claims processing average of 30 days is a significant
improvement over the claiming and payment cycle of 120 days
that was noted in a 2007 Department of Finance audit. DMH
also adds that it will soon begin filing claims payment
schedules electronically with the State Controller, which is
expected to reduce claims processing and payment times by
another five to seven days.
This bill establishes a separate trust fund administered by DHCS
for the purpose of expediting federal reimbursement of mental
health claims to counties. According to DMH, eliminating its
role in the claims payment process would require DHCS and DMH
to redesign and retool what they consider to be a currently
successful system without any guarantee of timely
implementation. In addition, DMH notes that eliminating its
role in the payment process would bypass crucial accounting
and reconciliation checks and balances.
4)RECENT CMS AUDITS . Two audits conducted by CMS in 2008 and,
most recently, in 2010 reviewed the financial management of
the reimbursement procedures used for Medi-Cal mental health
services delivered through county MHPs. Currently, each
county MHP is required to submit cost reports to DMH by
December 31st following the close of its fiscal year. CMS
reported the following among their findings in their audits:
a) The State's cost-reimbursement methodologies for mental
health services that are claimed are not approved by CMS,
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are not consistent with CMS policy, and may result in
inaccurate expenditure reporting;
b) Their reviews found inconsistencies and weaknesses in
the county and State oversight and auditing of the cost
report process;
c) The State is improperly claiming administrative
expenditures associated with Medi-Cal mental health
services provided by counties; and,
d) DHCS does not appear to provide adequate oversight over
the Medi-Cal mental health program, specifically over the
processing of DMH invoices.
In response to these audits, DHCS agreed to submit, for CMS
approval, a document which articulates the procedures and
methodologies it will use to determine those MHP costs
eligible for FFP; concurred with CMS' recommendation to
increase training provided to MHPs and oversight of the cost
reports submitted by the MHPs to ensure consistency and
accuracy; agreed to correct any identified deficiencies in
administrative cost claiming by June 30, 2010; developed
invoice review procedures using a data base to track DMH
invoices, identify duplicate payment amounts, and address over
billing issues; and, implemented a quarterly invoice
reconciliation process between the two agencies.
5)MHSA . In November 2004, voters passed the MHSA or Proposition
63. MHSA imposes a 1% state income surtax on incomes
exceeding $1 million. MHSA requires the State Controller to
transfer specified amounts of state funding into the Mental
Health Services Fund. Revenues deposited into the Mental
Health Services Fund must be used to create new county mental
health programs and expand existing ones. Adult systems of
care, children's services, preventive and early intervention,
workforce and training, and technology improvements are all
programs that receive MHSA funds. DMH indicates that, given
the state's struggling economy, funding for MHSA is projected
to decrease on a cash basis by $50.8 million in the current
year and $27 million in the budget year.
MHSA requires each county mental health program to prepare and
submit a three-year plan to DMH that must be updated annually
and approved by DMH after review and comment by the Mental
Health Services Oversight and Accountability Commission. In
their three-year plans, counties are required to submit a
listing of all work plans for which MHSA funding is being
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requested that identifies how the funds will be spent and
which populations will be served.
According to DMH, based on terms of current contracts between
DMH and the counties, 75% of counties' current year
allocations of MHSA funding is disbursed upon approval of
plans submitted by the counties. The additional 25% is held
until counties submit required revenue and expenditure reports
describing how the money has been spent in accordance with the
MHSA and county plans. DMH notes that the 75/25 split only
applies to plans submitted and approved in any current fiscal
year.
This bill changes the 75/25 formula to require counties to
receive 100% of their MHSA allocation upfront. DMH states
that withholding the 25% is intended as an incentive to
counties that file the required reports in a timely manner
and, without these reports, DMH would not be able to fulfill
its program implementation and oversight responsibilities that
are required by the MHSA. Counties point out that the
timeliness of county MHSA report submissions depends largely
on DMH providing forms to counties that are accurate and free
of errors.
6)RELATED LEGISLATION . AB 754 (Chesbro) of 2009 clarifies the
obligations and timeframes for DMH and DHCS to promptly
reimburse county MHPs for their Medi-Cal specialty mental
health claims. AB 754 is pending on the Senate inactive file.
7)PRIOR LEGISLATION .
a) SB 152 (Cox) of 2009 would have required counties to be
reimbursed for their specialty mental health claims within
90 days after submission to DMH and would have required
interest to accrue starting on the 91st day of an unpaid
claim. SB 152 is a two-year bill pending in the Assembly
Health Committee.
b) SB 1349 (Cox), which was substantially similar to SB
152, died on the Assembly Appropriations Committee Suspense
File.
8)SUPPORT . Supporters, representing counties and mental health
services providers, write that this bill will remove some
state inefficiencies that delay the flow of mental health
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funds to the counties. The California Council of Community
Mental Health Agencies states that providing cash flow relief
to counties means that the doors of many of the community
mental health providers that contract with them will remain
open instead of closing down or disrupting services. The
California Mental Health Directors Association notes that
deleting DMH's statutory authority to withhold 5% of the
state's appropriation to counties for the Medi-Cal specialty
mental health program until the end of the budget year will
remove an unnecessary and administratively burdensome practice
that does not reflect historical patterns or agreements with
counties. The California State Association of Counties states
that currently, without a state budget, DMH is unable to
distribute FFP to counties for providing specialty mental
health services and this bill will ensure that federal cash
flow to counties continues during periods when the state
budget is delayed by establishing a new trust fund from which
FFP can continuously flow. The Regional Council of Rural
Counties and Urban Counties Caucus add that this bill will
provide counties with full access to 100% of their MHSA funds
upon approval of their MHSA plan and allow them to use more of
these funds as local match to draw down more FFP.
9)AUTHOR'S AMENDMENTS . The author intends to offer the
following amendments in committee to clarify the intent of
this bill:
a) Correct an inaccurate reference to Medicare:
On page 3, line 15, delete "Medicare" and insert " Medicaid "
b) Make conforming changes to the statutes governing
Medi-Cal specialty mental health services to mirror the
requirement in the bill to delete DMH's 5% withholding
authority under Realignment:
On page 3, line 34 insert: "Section 5778 of the Welfare and
Institutions Code is amended to read:
(c)(1) The department shall allocate the and distribute
annually the full appropriated amount to each MHP for the
managed mental health care program, exclusive of the EPSDT
specialty mental health services program, provided under
the Medi-Cal mental health services waiver. contracted
amount at the beginning of the contract period to the MHP.
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The allocated funds shall be considered to be funds of the
plan to be used as specified in this part. that may be held
by the department. The department shall develop a
methodology to ensure that these funds are held as the
property of the plan and shall not be reallocated by the
department or other entity of state government for other
purposes.
(4) The MHPs shall have sufficient funds on deposit with the
department as the matching funds necessary for federal
financial participation to ensure timely payment of claims
for acute psychiatric inpatient services and associated
administrative days. The department and the State
Department of Health Care Services, in consultation with a
statewide organization representing counties, shall
establish a mechanism to facilitate timely availability of
those funds. Any funds held by the state on behalf of a
plan shall be deposited in a mental health managed care
deposit fund and shall accrue interest to the plan. The
department shall exercise any necessary funding procedures
pursuant to Section 12419.5 of the Government Code and
Sections 8776.6 and 8790.8 of the State Administrative
Manual regarding county claim submission and payment."
c) Delete incorrect language establishing a monthly
distribution of MHSA funding and instead require DMH to
distribute 100% of the total approved MHSA funding to each
county for each year:
On page 4, delete lines 13-39 and, on page 5, delete lines
1-25. On page 5, line 25, insert: "Section 5891 of the
Welfare and Institutions Code is amended to read:
(c) Notwithstanding subdivision (b), subject to the
availability of funding in the Mental Health Services Fund,
as determined by the Department of Finance, the State
Department of Mental Health shall distribute one hundred
percent of the total approved funding to each county for
the provision of programs and other related activities set
forth in Part 3 (commencing with Section 5800), Part 3.2
(commencing with Section 5830), Part 3.6 (commencing with
Section 5840) and Part 4 (commencing with Section 5850) of
this division."
REGISTERED SUPPORT / OPPOSITION :
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Support
California Council of Community Mental Health Agencies
California Mental Health Directors Association
California State Association of Counties
Regional Council of Rural Counties
Sacramento County Board of Supervisors
San Bernardino County Board of Supervisors
Urban Counties Caucus
Opposition
None on file.
Analysis Prepared by : Cassie Rafanan / HEALTH / (916)
319-2097