BILL ANALYSIS Ó Senate Appropriations Committee Fiscal Summary Senator Christine Kehoe, Chair AB 641 (Feuer) Hearing Date: 8/31/2011 Amended: 8/23/2011 Consultant: Katie Johnson Policy Vote: Health 6-3 _________________________________________________________________ ____ BILL SUMMARY: AB 641 would: 1) Eliminate the citation review conference process as an option available to a long term care (LTC) facility when appealing a citation assessed by the California Department of Public Health (CDPH). The bill would also permit CDPH to recommend the federal government assess a federal civil monetary penalty for a violation at a California LTC facility. 2) Require the Department of Health Care Services (DHCS) to consider whether an undue hardship exists at application for or renewal of Medi-Cal benefits for home and facility care services and would permit same-sex couples and registered domestic partners to access similar asset transfer benefits as opposite-sex couples. _________________________________________________________________ ____ Fiscal Impact (in thousands) Major Provisions 2011-12 2012-13 2013-14 Fund Reduction in CDPH redirect $470 annually to other assignments Special* workload Increase in penalty potentially significant Special** revenue Lost Medi-Cal potentially significant, likely in theGeneral/*** share-of-cost revenue high hundreds of thousands to Federal millions of dollars * State Department of Public Health Licensing and Certification Program Fund **State and Federal Health Facilities Citation Penalty Account ***50 percent federal, 50 percent General Fund _________________________________________________________________ ____ AB 641 (Feuer) Page 1 STAFF COMMENTS: This bill meets the criteria for referral to the Suspense File. Staff notes that a previous version of this bill, which only contained part of the provisions affecting long-term care, was sent to the Senate Floor pursuant to Senate Rule 28.8. The bill was subsequently amended on the Senate Floor, and re-referred to the Senate Health Committee pursuant to Senate Rule 29.10(b), where it was approved 6-3 on August 29 and referred to this Committee pursuant to Joint Rule 10.5. Therefore, although this bill meets the criteria for referral to the Suspense File, this Committee may only: 1) hold the bill in Committee, or 2) return the bill as approved by the Committee to the Senate Floor. The bill may not be referred to the Suspense File or amended at this time. CRC Process Elimination Existing law permits a LTC facility to contest a citation as follows: for class "A" or "AA" citations 1) request a citation review conference (CRC), 2) further contest CDPH's decision made through the citation review process in superior court, 3) only contest the citation in superior court, bypassing the CRC process. For class "B" citations 1) request a CRC, 2) further contest CDPH's decision made through the CRC process through an adjudicative hearing with an administrative law judge (ALJ) or through a binding arbitration process, 3) only through either an ALJ or binding arbitration without having first appealed the decision to a CRC. This bill would eliminate the CRC process. CDPH currently spends approximately $470,000 on CRCs. However, the department indicates that staff is redirected from other priority assignments in order to complete CRC workload. This bill would therefore reduce department workload and permit CRC staff to focus on other licensing and certification activities. It is not expected that there would be an increase in ALJ or superior court hearings. On June 17, 2010, the California State Auditor released a report entitled: Department of Public Health: It Reported Inaccurate Financial Information and Can Likely Increase Revenues for the State and Federal Health Facilities Citation Penalties Account. The audit investigated the department's processes for issuing citations to LTC facilities, collecting monetary penalties, and tracking related financial information. It concluded the AB 641 (Feuer) Page 2 following: as of February 2010, more than 600 citations were backlogged awaiting CRCs. The department may have incentivized facilities to appeal citations due to delays in processing appeals and its history in reducing monetary penalties. Thus, this bill would substantially decrease department workload and could result in increased penalty revenue for both the State and Federal Health Facilities Citation Penalties Accounts. Additionally, this bill would permit CDPH to recommend that the federal government take action against a facility that violated federal law. To the extent that CDPH recommends to the federal government that it is appropriate to assess federal penalties in addition to state citations, and the federal government chooses to do so, there could be increased revenue for the federal government. Medi-Cal Benefits In June 2011, the Centers for Medicare and Medicaid Services (CMS) issued guidance to advise states of choices and options regarding spousal and domestic partner protections related to liens, transfer of assets, and estate recovery. The guidance stated, "because of the flexibility afforded to States in determining undue hardship, we believe that States may adopt criteria, or even presumptions, that recognize that imposing transfer of assets penalties on the basis of the transfer of ownership interests in a shared home to a same-sex spouse or domestic partner would constitute an undue hardship." This bill would require the Department of Health Care Services (DHCS) to consider, at initial application or redetermination, whether an undue hardship exists prior to finding that an applicant or recipient is subject to a period of ineligibility for medical assistance for home and facility care. It would specify that no person would be subject to a period of ineligibility for medical assistance if the department finds that an undue hardship exists. This bill would require DHCS to seek federal approval, with an effective date of January 1, 2012, for these provisions and would specify that they would only be implemented upon federal approval and if federal financial participation is available. This bill would define the circumstances in which an undue hardship would exist as: AB 641 (Feuer) Page 3 1) Any or all ownership interest in the shared principal residence to his or her same-sex or registered domestic partner. 2) Other interest in resources other than a principal residence are transferred to his or her same-sex or registered domestic partner, within the allowable amounts. 3) Income or the right to receive income is transferred to the same-sex spouse or registered domestic partner, within the allowable amounts. These provisions are consistent with those currently available for opposite-sex couples. However, #2 and #3 appear to go beyond federal guidance. It is unknown whether or not CMS would approve #2 and #3. There would likely be minimal fiscal effect with both #1 and #2 since the principal residence is already an exempt asset in most cases and individuals currently spend down their resources. There could be a fiscal effect in the hundreds of thousands to millions of dollars in General Fund and federal funds due to a loss in Medi-Cal share-of-cost revenue for #3 if it were approved by CMS and if federal funds were available. Since 2000, over 63,000 couples have registered with the Secretary of State's Office as domestic partners. Further, when same-sex marriage was legal in California, approximately 18,000 couples were married. Approximately 15 percent of the California population is aged, blind, or disabled. Currently, many of the 66,000 individuals receiving Medi-Cal long term care services pay a "share-of-cost" in order to receive long term care services at an average cost of about $800 per month, or $9,600 annually. Although it is unknown how many of Medi-Cal's long-term care services recipients pay a share-of-cost versus those who do not pay a share-of-cost and how many are in registered domestic partnerships or have same-sex spouses, if, upon the implementation of this bill, approximately 100 - 150 individuals were to cease paying their share-of-cost over a year, Medi-Cal would then pay about $960,000 - $1.4 million more annually. These increased Medi-Cal costs would be shared 50 percent General Fund and 50 percent federal funds. Actual costs would depend on the number of registered domestic partners and same-sex married couples with one individual receiving Medi-Cal long term care in an institution and the amount of share-of-cost revenue that would AB 641 (Feuer) Page 4 be lost. To the extent that more individuals would achieve eligibility or become eligible faster, there could be unknown increased costs to Medi-Cal. However, since the Medi-Cal long term care population has remained virtually stagnant since the 1980s, it is unlikely that there would be a significant impact. In order to significantly reduce the potential fiscal impact associated with these provisions, staff recommends removing #3.