BILL ANALYSIS Ó
SENATE HEALTH
COMMITTEE ANALYSIS
Senator Ed Hernandez, O.D., Chair
BILL NO: AB 574
A
AUTHOR: Lowenthal
B
AMENDED: June 22, 2011
HEARING DATE: July 6, 2011
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CONSULTANT:
7
Trueworthy
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SUBJECT
Program of All-Inclusive Care for the Elderly
SUMMARY
Increases the maximum number of allowable contracts between
the Department of Health Care Services (DHCS) and Program
for All-Inclusive Care for the Elderly (PACE) organizations
from 10 to 15 and makes other technical changes.
CHANGES TO EXISTING LAW
Existing law:
Establishes the Medicare program under the federal Social
Security Act of 1965, which provides for health care
services to qualified older or disabled individuals.
Establishes the Medi-Cal program, under the DHCS, to
provide 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 PACE demonstration projects, which combine
resources from both the Medicaid and Medicare programs to
Continued---
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provide a comprehensive medical/social service delivery
system using an interdisciplinary team approach, in centers
that provide and coordinates all needed preventive,
primary, acute and long-term care services.
Authorizes 10 PACE demonstration projects within specific
geographical boundaries within California to develop
risk-based, capitated long-term care pilot programs, and
prescribes that those services are an optional Medi-Cal
benefit.
Requires DHCS to establish Medi-Cal capitation rates to be
paid to each PACE organization that are no less than 90
percent of the Fee-For-Service (FFS) equivalent cost,
including the department's administrative cost.
Establishes that PACE contracts are established on a nonbid
basis and are exempt from the Public Contract Code.
Establishes DHCS Office of Long-Term Care as the oversight
entity for PACE programs in California, and outlines the
administration and regulation of the programs.
Allows DHCS and, as applicable, the California Department
of Aging and the State Department of Social Services, to
grant exemptions from duplicative, conflicting, or
inconsistent requirements to PACE.
Also permits DHCS to grant exemptions on a statewide basis
as appropriate, or to a PACE organization on an
organization-wide basis, in instances where an exemption
for a single license is expanded to other locations.
Prohibits the federal requirements of the PACE model, as
provided under federal law, from being waived or modified.
Allows DHCS to immediately suspend or revoke an exemption
if it determines that a PACE program granted an exemption
is operating in a manner contrary to the terms and
conditions of the exemption.
This bill:
Increases the number of separate contracts DHCS may enter
into with PACE organizations from 10 to 15.
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Requires DHCS to establish PACE, and removes language
authorizing the PACE program as a demonstration project.
Revises legislative findings regarding the PACE program to
cite the insufficiency of existing services to meet the
needs of frail elderly persons at risk of
institutionalization, to state that capitated "risk-based"
financing provides an alternative to traditional FFS
payment, and to cite the federal and state history of the
establishment of On Lok as a cost-effective Medicare and
Medicaid demonstration program.
Makes other technical and conforming changes.
FISCAL IMPACT
According to the Assembly Appropriations Committee
analysis, 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.
The analysis estimates 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 General Fund) to
review applications for new PACE programs and monitor
ongoing contracts; and
b) Potential future staffing costs of up to $90,000
(special fund) annually to the Department of Public
Health for facility licensure.
BACKGROUND AND DISCUSSION
According to the author, AB 574 allows for the long-term
implementation of the PACE model in California by
increasing the allowable number of providers from 10 to 15.
In addition, the author states AB 574 modernizes state
statute relative to the PACE programs by deleting out-dated
references to PACE as a federal demonstration project.
Current law limits the number of PACE programs in
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California to 10 programs. California currently has five
PACE programs in existence. According to the author, two
organizations are in the licensure process and several
organizations have expressed an interest in establishing
new PACE programs, including innovative programs in rural
areas.
According to the author, DHCS has accepted and is now
reviewing applications from three providers and has
received letters of intent to submit applications from
three more.
PACE
The PACE program is modeled after the acute and long-term
care services of On Lok Senior Health Services in San
Francisco. The dual recognition by Medicare and Medi-Cal
allows integration of comprehensive services, including
acute and long-term care services. PACE offers and manages
all the medical, social and rehabilitative service needs of
enrollees to preserve or restore independence, to allow
them to remain in their homes and communities, and to
maintain their quality of life. The PACE service package
must include all Medicare and Medicaid services provided by
the state. In addition, PACE organizations provide any
service determined necessary by an interdisciplinary team.
Minimum services that must be provided in PACE centers
include primary care services, social services, restorative
therapies, personal care and supportive services,
nutritional counseling, recreational therapy, and meals.
Services are available 24 hours a day, 7 days a week, and
365 days a year. Generally, these services are provided in
an adult day health center setting, but may also include
in-home and other referral services that enrollees may
need. This includes such services as medical specialists,
laboratory and other diagnostic services, and nursing home
care. Participants must be at least 55 years old, live in
the PACE service area, and be certified as eligible for
nursing home care. Enrollment in PACE is voluntary.
PACE receives a fixed monthly payment per enrollee from
Medicare and Medicaid. The amounts are the same during the
contract year, regardless of the services an enrollee may
need. Persons enrolled in PACE may also have to pay a
monthly premium, depending on their eligibility for
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Medicare and Medicaid. This is unlike any other managed
care plan in California. Also unlike any other Medi-Cal
managed care plan, PACE plans are authorized to accept
full-risk capitation without obtaining a Knox-Keene license
from the Department of Managed Health Care.
California currently has five PACE organizations operating
in in Los Angeles, Oakland, Sacramento, San Francisco, San
Jose, and San Diego as follows:
------------------------------------------------------------
| PACE Organizations | Counties Served | Number |
| | | of |
| | |Participan|
| | | ts |
|----------------------+--------------------------+----------|
|On Lok Lifeways |San Francisco, Alameda, | 1,010 |
| |Santa Clara | |
|----------------------+--------------------------+----------|
|AltaMed Senior Buena |Los Angeles | 673 |
|Care | | |
|----------------------+--------------------------+----------|
|Sutter Senior Care |Sacramento, Yolo | 212 |
|----------------------+--------------------------+----------|
|Center for Elders |Alameda, Contra Costa | 436 |
|Independence | | |
|----------------------+--------------------------+----------|
|St. Paul's Community |San Diego |105 |
|Eldercare | | |
------------------------------------------------------------
Current law includes out-dated references to PACE as a
federal demonstration project. The Balanced Budget Act of
1997 made the PACE model a permanent provider under
Medicare and a state option under Medicaid. The author
states that AB 574 will modernize the PACE statute while
retaining the program model and standards.
The Assembly Committee on Aging and Long-Term Care
conducted an oversight hearing of the PACE program in May
2010. According to the background material, the majority
of PACE participants are eligible for both Medi-Cal and
Medicare. However, a significant number of PACE
participants are Medi-Cal-only beneficiaries. For example,
14 percent of PACE participants served by the Center for
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Elders Independence are only eligible for Medi-Cal and 22
percent of PACE participants are Medi-Cal-only at AltaMed
in Los Angeles.
Seniors and persons with disabilities in Medi-Cal
In November of 2010, California received approval from
Centers for Medicare and Medicaid Services (CMS) to begin a
mandatory enrollment of approximately 600,000 seniors and
persons with disabilities into Medi-Cal managed care plans
as part of a comprehensive Section 1115 Medicaid waiver,
entitled "Bridge to Reform." Enrollees who do not select a
plan are enrolled by default based a numerical algorithm or
past provider relationship. Covered counties include all
of the counties with PACE Programs. The implementing
legislation, SB 208 (Steinberg), Chapter 714, Statutes of
2010, specifically includes the PACE program as one of the
default choices, if available and if the enrollee is
eligible.
Prior legislation
AB 577 (Lowenthal), Chapter 456, Statutes of 2009, provides
additional clarification to the exemption process and
allows DHCS to grant exemptions on an organization-wide
basis in addition to the individual program exemptions
allowed under AB 847 (Berg) of 2005 and aligns state law
with federal PACE requirements. AB 577 was amended to
delete the provision allowing DHCS to contract with 20 PACE
sites.
AB 847 (Berg), Chapter 315, Statutes of 2005, authorizes
DHCS to grant PACE sites exemptions to licensing and
regulatory requirements in order to streamline the
licensing process for sites with multiple centers.
AB 798 (Committee on Aging and Long-Term Care), Chapter
112, Statutes of 2003, establishes PACE as a Medi-Cal
benefit, making PACE a permanent provider in California.
AB 2583 (Shelley), Chapter 483, Statutes of 1998, expands
the number of authorized PACE sites in California from five
to ten.
AB 1601 (Connelly), Chapter 821, Statutes of 1990,
establishes authority for DHCS to contract with up to five
PACE demonstration projects.
Arguments in support
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Supporters state that PACE has been a remarkably successful
program since its inception. The supporters maintain that
by creating a truly integrated model of care and providing
comprehensive medical and long-term care services to
individuals with dynamic health issues, PACE has made it
possible for more than 90 percent of its participants to
remain at home. Supporters argue PACE is a proven model
that has been adopted by several states as a key element in
their continuum of long-term services and support.
Aging Services of California states AB 574 modernizes the
PACE statute and authorizes 10 additional PACE programs.
With the anticipated dramatic shifts in the state's
demographics and the "graying" of the state, steps should
be taken now to ensure appropriate capacity. Supporters
further argue that the authority to approve more programs
will allow the state to meet the needs of even more frail
elderly persons.
PRIOR ACTIONS
Assembly Aging and Long-Term Care:6- 0
Assembly Health: 19- 0
Assembly Appropriations: 17- 0
Assembly Floor: 79- 0
POSITIONS
Support:AARP
Aging Services of California
AltaMed Health Services Corporation
Alzheimer's Association
California Association of Physician Groups
California Commission on Aging
California Hospital Association
Center for Elders Independence
Hope Through Housing Foundation
Humboldt Resource Center
Los Angeles Jewish Home
On Lok Senior Health Services
Riverside County Office on Aging
SCAN Health Plan
St. Paul's Senior Homes & Services
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Oppose:None on file.
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