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 
          _________________________________________________________________
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          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 








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          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:








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             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 








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          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.