BILL ANALYSIS Ó
AB 574
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Date of Hearing: May 4, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 574 (Bonnie Lowenthal) - As Amended: March 23, 2011
Policy Committee: HealthVote:19-0
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill deletes outdated provisions authorizing the Program of
All-Inclusive Care for the Elderly (PACE) as a Medicaid
demonstration project and authorizes the Department of Health
Care Services (DHCS) to contract with up to 10 additional PACE
programs to provide comprehensive community-based care to the
frail elderly.
FISCAL EFFECT
1)It is unknown how many and when additional PACE programs will
apply to contract with DHCS. It is unlikely that any costs
would be realized immediately, as there are currently only
five programs in the state, and several applications in
process. The following costs would occur in future years,
assuming 10 new PACE programs apply to contract with DHCS and
operate in the state:
a) Potential future administrative cost pressure to DHCS of
up to $200,000 ($100,000 GF) to review applications for new
PACE programs and monitor ongoing contracts.
b) Potential future staffing costs of up to $90,000
(special fund) annually to the Department of Public Health
for facility licensure.
1)Potential for future Medi-Cal cost savings, or increased
Medi-Cal costs, to the extent enrollment in PACE is expanded
in the state. The cost impacts would depend on the likelihood
that PACE enrollees would otherwise enter nursing homes.
COMMENTS
AB 574
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1)Rationale . According to the author, the purpose of this bill
is to establish the long-term implementation of the PACE model
in California by increasing the limit on providers from 10 to
20. The author states this bill is also intended to modernize
the statutes relative to the PACE programs by deleting
outdated references to its prior status as a federal
demonstration program.
2)PACE . PACE programs are a comprehensive, community-based
model of care for frail, chronically ill older adults whose
significant functional and cognitive impairments make them
nursing home-eligible. The first PACE program, On Lok, which
was started in the Chinatown section of San Francisco in 1971,
eventually evolved into a nationally recognized and replicated
model of integrated care and services. PACE programs receive
a capitated (per member per month) payment from Medicare and
Medicaid, and are fully at risk for all inpatient, outpatient,
and nursing home care that a PACE enrollee requires. PACE
programs also provide other support services such as adult day
care, meals, home care, transportation, and social services.
There are currently 75 PACE programs operating in the country,
and the state DHCS currently contracts with five PACE programs
throughout the state. DHCS reports that five additional
organizations in California are in various stages of
development of new PACE programs.
3)The impact of PACE on Medi-Cal costs . The impact of PACE on
Medi-Cal costs is unclear. Federal regulations require that
monthly Medicaid capitation payments to PACE must be less than
what otherwise would have been paid under the Medicaid state
plan if the participants were not enrolled in PACE. This
requirement has been interpreted as payments that don't exceed
the cost of a nursing home level of care, and the capitated
rates paid to PACE programs have been set as a proportion of
nursing home rates. However, no firm evidence exists about
the proportion of PACE participants who would immediately
enter nursing homes in the absence of PACE.
A study commissioned by the Centers for Medicare and Medicaid
Services on the effects of PACE on Medicare and Medicaid
expenditures indicates that enrollees in PACE were associated
with higher Medicaid expenditures than similar enrollees in
other Medicaid home and community-based services waiver
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programs, but experienced lower expenditures than if they
were enrolled in a nursing home.
Analysis Prepared by : Lisa Murawski / APPR. / (916) 319-2081