BILL ANALYSIS
SENATE HEALTH
COMMITTEE ANALYSIS
Senator Elaine K. Alquist, Chair
BILL NO: SB 1392
S
AUTHOR: Steinberg
B
AMENDED: August 18, 2010
HEARING DATE: August 26, 2010
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CONSULTANT:
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Tadeo
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PURSUANT TO S.R. 29.10
SUBJECT
Mental health: community mental health services
SUMMARY
Expedites the disbursement of various sources of mental
health funds from the Department of Mental Health (DMH) to
counties. Requires DMH to distribute in a single lump sum
the total approved funding to each county for the provision
of programs and other activities related to the Mental
Health Services Act (MHSA), subject to the availability of
funding as determined by the Department of Finance.
CHANGES TO EXISTING LAW
Existing federal law:
Establishes the Medicaid program to provide comprehensive
health benefits to low-income persons.
Establishes the Early Periodic Screening Diagnosis
Treatment (EPSDT) program, to provide physical and mental
health services to Medicaid beneficiaries under the age of
21. EPSDT is an entitlement program which states must
administer as a condition of receiving federal Medicaid
Continued---
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funds.
Existing state law:
Establishes the Department of Mental Health (DMH), which
directs and coordinates statewide efforts for the treatment
of mental illness.
Establishes the Medi-Cal program, administered by the
Department of Health Care Services (DHCS), which provides
comprehensive health benefits to low-income children, their
parents or caretaker relatives; pregnant women; elderly,
blind, or disabled persons; nursing home residents; and,
refugees who meet specified eligibility criteria.
Establishes the Bronzan-McCorquodale Act, also known as
"Realignment," which shifts 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.
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.
Provides for DMH to implement managed mental health care
for Medi-Cal beneficiaries through fee-for-service or
capitated rate contracts with county mental health plans
(MHPs), as well as other entities. Counties have the right
of first refusal for these contracts.
Requires state agencies to pay properly submitted,
undisputed invoices within 45 days of receipt, or
automatically calculate and pay appropriate late payment
penalties, as specified. This does not apply to claims for
reimbursement for health care services provided under the
Medi-Cal program, unless the Medi-Cal health care services
provider is a small business or nonprofit organization.
Authorizes DMH, contingent on passage of the annual Budget
Act, to distribute total state General Fund (GF)
allocations to counties in 12 monthly increments, but
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requires the total amount advanced to each county to not
exceed 95 percent of the county's total allocation for that
year.
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.
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.
Establishes the Mental Health Services Act (MHSA), enacted
by voters in 2004 as Proposition 63, to provide funds,
through a 1 percent 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.
Requires each county mental health department to prepare
and submit to DMH a three-year program and expenditure plan
for MHSA funding.
This bill:
Deletes the provision requiring DMH to distribute a maximum
of 95 percent of total state GF realignment allocations to
counties each fiscal year upon passage of the annual Budget
Act, and makes conforming changes to existing law governing
Medi-Cal specialty mental health services to mirror this
requirement in the bill.
Requires DMH to annually distribute 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 mental health services
waiver.
Requires DMH to distribute in a single lump sum the total
approved funding to each county for the provision of
programs and other activities related to the Mental Health
Services Act (MHSA), subject to the availability of funding
as determined by the Department of Finance.
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Clarifies that MHSA funding distributions must be based on
the amount specified in each county's three-year funding
plan or update, as required by existing law, and specifies
that the provisions of this bill in no way change the
authority to approve, deny, or request further information
regarding a county's three-year plan or update.
Makes various legislative findings and declarations
including that this bill is needed to facilitate the
efficiency and cost effectiveness of community mental
health services and prevent avoidable future county budget
cuts to mental health.
FISCAL IMPACT
According to the Assembly Appropriations Committee analysis
of SB 1392, establishing a lump sum distribution of MHSA
funding will result in the earlier release of $275 million
(100 percent MHSA special funds) from a total annual
allocation of $1.1 billion, and ending the practice of
withholding 5 percent of Mental Health Managed Care Funds
will result in the earlier release of approximately $5
million each year.
BACKGROUND AND DISCUSSION
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 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 that have unearthed state inefficiencies in the
administration of mental health dollars to the counties,
most recently by the federal Centers for Medicaid and
Medicare Services in 2008 and 2010. According to the
author, this bill is intended 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.
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Allocation of General Funds (GF)
The complex formula through which the state allocates GF
revenues to counties for mental health services is
prescribed in statute. Once the state budget is passed,
DMH distributes GF appropriations to counties. As mandated
by current law, the lump sum distributions to each county
equate to 95 percent of the appropriation. DMH distributes
the remaining 5 percent 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 percent allocation withheld from the prior
fiscal year and the 95 percent allocation of the current
fiscal year. Counties may "roll-over" GF distributions
received but not spent to the subsequent fiscal year.
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.
Mental Health Services Act (MHSA)
The MHSA, or Proposition 63, imposes a 1 percent state
income surtax on incomes exceeding $1 million and requires
each county 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 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 percent of
counties' current year allocations of MHSA funding is
disbursed upon approval of plans submitted by the counties.
The additional 25 percent 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 percent split only applies
to plans submitted and approved in any current fiscal year.
Medi-Cal mental health services
Generally, Medi-Cal is responsible for providing both
physical and mental health care services to beneficiaries.
Medi-Cal services are provided by a combination of
fee-for-service providers and Medi-Cal managed care plans.
Specialty mental health services, defined in regulation,
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include medically necessary inpatient and outpatient
services delivered by a mental health professional to
patients who meet certain diagnostic and impairment
criteria. 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. These
services are provided by counties through contracts with
DMH, using a managed care model of service delivery. Each
county mental health department is responsible for
providing specialty mental health services to Medi-Cal
recipients in its county, and may provide those services
itself, or through contracted providers.
Since this carve-out was implemented, the services provided
by the county plans have been further expanded to include
services provided under the Medicaid Early and Periodic
Screening, Diagnosis, and Treatment (EPSDT) program. The
program covers screening, diagnosis, and treatment
services, and any service that falls under the federal
definition of "medical necessity," including mental health
services, even if the service is not covered by a state's
Medicaid program, for Medicaid recipients up to the age of
21.
Medi-Cal mental health care services claims and payments
A large majority of consumers who utilize California's
community mental health
services are enrolled in Medi-Cal. 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.
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 percent
and the federal government contributes 50 percent toward
the cost of the Medi-Cal program. County MHPs are
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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 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 claims
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 claims 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.
Centers for Medicare & Medicaid Services (CMS)
Audits conducted by the Department of Health and Human
Services 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
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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:
The state's cost-reimbursement methodologies for
mental health services that are claimed are not
approved by CMS, are not consistent with CMS policy,
and may result in inaccurate expenditure reporting;
Their reviews found inconsistencies and weaknesses
in the county and state oversight and auditing of the
cost reporting process;
The state is improperly claiming administrative
expenditures associated with Medi-Cal mental health
services provided by counties; and,
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.
Related bills
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.
This bill is on the Senate inactive file.
SB 152 (Cox) of 2009 would require the State Controller to
reimburse cities and counties for certain mental health
services within 90 days after DMH receives a claim for
reimbursement and provides that interest shall be paid from
the DMH budget if the claim is not paid on time. This bill
is pending in the Assembly Health Committee.
Prior legislation
AB 1780 (Galgiani), Chapter 320, Statutes of 2008, codifies
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an administrative structure for the review, oversight,
appeals processes, reimbursement, and claiming procedures
of the EPSDT program.
SB 1349 (Cox) of 2008 would have required mental health
services claims submitted by counties to be reimbursed
within 90 days after DMH receives the claim and interest to
accrue starting on the 91st day of an unpaid claim. This
bill was held in the Assembly Appropriations Committee.
SB 604 (Cox) of 2007 would have required the Controller to
pay interest after 90 days, charged at the Pooled Money
Investment Account rate, on local government claims for
costs incurred for services to state prisons or prisoners.
This bill was held in the Assembly Appropriations
Committee.
AB 308 (Galgiani) of 2007 would have required the DMH to
prepare regulations to assure prompt payment to counties
for provision of services under the EPSDT. This bill was
held in the Senate Health Committee.
Arguments in support
Proponents for the previous version of the bill state that
recent reductions in funding to counties for community
mental health services have resulted in numerous negative
service impacts. Proponents argue that SB 1392 would help
counties appropriately access existing funds and prevent
avoidable future county budget costs to mental health.
Proponents add that SB 1392 is intended to ensure the
distribution of the full state appropriation for the
Medi-Cal Specialty Mental Health Managed Care program to
counties in a timely manner. Proponents contend that SB
1397 is also designed to streamline the process for state
distribution of MHSA funds to counties.
Arguments in opposition
The Department of Finance states, for the previous version
of the bill, that SB 1497 could create cash flow issues for
the state.
COMMENTS
Assembly amendments. As it left the Senate, SB 1392 would
have required the Department of Housing and Community
Development to include in its annual report for
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each Proposition 1C program the amount of funds it awarded
and disbursed in the prior year on a per-project and
aggregate basis.
The Assembly amendments delete these provisions and instead
contain provisions to expedite the disbursement of various
sources of mental health funds from DMH to counties:
Requires DMH to distribute in a single lump sum the
total approved funding to each county for the
provision of programs and other activities related to
the MHSA, subject to the availability of funding as
determined by the Department of Finance.
Deletes the provision requiring DMH to distribute a
maximum of 95 percent of total state GF realignment
allocations to counties each fiscal year upon passage
of the annual Budget Act.
Requires DMH to annually distribute 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
mental health services waiver.
PRIOR ACTIONS
Assembly Floor: 66-10
Assembly Appropriations12-5
Assembly Health 18-0
POSITIONS
Support (prior version): California Chapter of the
American College of Emergency
Physicians
California Council of Community Mental
Health Agencies
California Mental Health Directors
Association
California State Association of Counties
Contra Costa County Board of Supervisors
Los Angeles County Board of Supervisors
National Alliance on Mental Illness,
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California
Regional Council of Rural Counties
Sacramento County Board of Supervisors
Service Employees International Union
Urban Counties Caucus
Oppose (prior version): Department of Finance
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