BILL ANALYSIS Ó
------------------------------------------------------------
|SENATE RULES COMMITTEE | AB 574|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
------------------------------------------------------------
THIRD READING
Bill No: AB 574
Author: Lowenthal (D), et al
Amended: 8/15/11 in Senate
Vote: 21
SENATE HEALTH COMMITTEE : 9-0, 07/06/11
AYES: Hernandez, Strickland, Alquist, Anderson, Blakeslee,
De León, DeSaulnier, Rubio, Wolk
SENATE APPROPRIATIONS COMMITTEE : 9-0, 08/25/11
AYES: Kehoe, Walters, Alquist, Emmerson, Lieu, Pavley,
Price, Runner, Steinberg
ASSEMBLY FLOOR : 79-0, 05/31/11 - See last page for vote
SUBJECT : Program of All-Inclusive Care for the Elderly
SOURCE : CalPACE
DIGEST : The bill increases the maximum number of
allowable contracts between the Department of Health Care
Services (DHCS) and the Program for All-Inclusive Care for
the Elderly (PACE) from 10 programs to 15 programs, and
updates statute to reflect PACE's status change from a
demonstration project to a state optional benefit.
ANALYSIS : Existing law:
1. Establishes the Medicare program under the federal
Social Security Act of 1965, which provides for health
CONTINUED
AB 574
Page
2
care services to qualified older or disabled
individuals.
2. 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.
3. Establishes the PACE demonstration projects, which
combine resources from both the Medicaid and Medicare
programs to 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.
4. 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.
5. 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.
6. Establishes that PACE contracts are established on a
nonbid basis and are exempt from the Public Contract
Code.
7. 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.
8. 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.
9. Also permits DHCS to grant exemptions on a statewide
CONTINUED
AB 574
Page
3
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.
10. Prohibits the federal requirements of the PACE model,
as provided under federal law, from being waived or
modified.
11. 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:
1.Increases the number of separate contracts DHCS may enter
into with PACE organizations from 10 to 15.
2.Requires DHCS to establish PACE, and removes language
authorizing the PACE program as a demonstration project.
3.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.
4.Makes other technical and conforming changes.
Background
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
CONTINUED
AB 574
Page
4
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
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 |
| | |Participant|
| | |s |
|----------------------+-------------------------+-----------|
|On Lok Lifeways |San Francisco, Alameda, |1,010 |
| |Santa Clara | |
|----------------------+-------------------------+-----------|
|AltaMed Senior Buena |Los Angeles |673 |
|Care | | |
CONTINUED
AB 574
Page
5
|----------------------+-------------------------+-----------|
|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
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.
CONTINUED
AB 574
Page
6
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13
2013-14 Fund
DHCS administration $100 - $200$200 -
$400 $200 - $400 General/*
Federal
Potential increase or
unknown, potentially significant costs
General/**
decrease in costs to or cost
avoidanceFederal/
transition beneficiaries
Private
to a PACE program from
fee-for-service or
Medi-Cal managed care
* 50 percent General Fund, 50 percent federal funds
**Medi-Cal costs shared 50 percent General Fund, 50 percent
federal funds; Medicare funded 100 percent federal funds;
beneficiary premiums when appropriate.
SUPPORT : (Verified 8/25/11)
CalPACE (source)
AARP
Aging Services of California
AltaMed Health Services Corporation
Alzheimer's Association
California Association of Physician Groups
California Center for Rural Policy
California Commission on Aging
California Hospital Association
Center for Elders Independence
Hope Through Housing Foundation
Humboldt Resource Center
Los Angeles Jewish Home
CONTINUED
AB 574
Page
7
On Lok Senior Health Services
Riverside County Office on Aging
SCAN Health Plan
St. Paul's Senior Homes & Services
ARGUMENTS IN SUPPORT : 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 that this bill
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.
ASSEMBLY FLOOR : 79-0, 05/31/11
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall,
Bill Berryhill, Block, Blumenfield, Bonilla, Bradford,
Brownley, Buchanan, Butler, Charles Calderon, Campos,
Carter, Cedillo, Chesbro, Conway, Cook, Davis, Dickinson,
Donnelly, Eng, Feuer, Fletcher, Fong, Fuentes, Furutani,
Beth Gaines, Galgiani, Garrick, Gatto, Gordon, Grove,
Hagman, Halderman, Hall, Harkey, Hayashi, Roger
Hernández, Hill, Huber, Hueso, Huffman, Jeffries, Jones,
Knight, Lara, Logue, Bonnie Lowenthal, Ma, Mansoor,
Mendoza, Miller, Mitchell, Monning, Morrell, Nestande,
Nielsen, Norby, Olsen, Pan, Perea, V. Manuel Pérez,
Portantino, Silva, Skinner, Smyth, Solorio, Swanson,
Torres, Valadao, Wagner, Wieckowski, Williams, Yamada,
John A. Pérez
NO VOTE RECORDED: Gorell
CONTINUED
AB 574
Page
8
CTW:nl 8/26/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****
CONTINUED