BILL ANALYSIS Ó SENATE HEALTH COMMITTEE ANALYSIS Senator Ed Hernandez, O.D., Chair BILL NO: AB 667 A AUTHOR: Mitchell B AMENDED: June 9, 2011 HEARING DATE: June 22, 2011 6 CONSULTANT: 6 Trueworthy 7 SUBJECT Medi-Cal: subacute care program SUMMARY Establishes medical necessity standards for the Medi-Cal subacute care program. CHANGES TO EXISTING LAW Existing law: Establishes the Medi-Cal program, under the Department of Health Care Services (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 Medi-Cal subacute care program in order to more effectively use Medi-Cal dollars while ensuring needed services for patients who meet subacute care criteria. Establishes level of care, reimbursement, scope and duration of benefits, staff-to-patient ratios, and standards for participation in the Medi-Cal subacute care Continued--- STAFF ANALYSIS OF ASSEMBLY BILL 667 (Mitchell) Page 2 program. This bill: Makes various legislative findings and declarations relating to subacute care hospitals, including, that California has 400 children under the age of 21 who rely on life-sustaining technology in 10 pediatric subacute care hospitals. Also declares that the regulatory criteria related to the subacute care program have not been updated since the program's inception 16 years ago. Defines "pediatric subacute services" in the Medi-Cal program as health care services needed by a person under the age of 21 who uses medical technology that compensates for the loss of vital bodily functions. Requires that medical necessity for pediatric subacute care must be substantiated by one of the following: a) Tracheostomy with dependence on mechanical ventilation for a minimum of six hours each day; b) Dependence on tracheostomy care requiring suctioning at least every six hours, and room air mist or oxygen as needed and dependence on one of the following six treatment procedures: i) Dependence on tracheostomy care requiring suctioning at least every six hours and room air mist or oxygen; ii) Continuous intravenous therapy, as specified; iii) Peritoneal dialysis; iv) Tube feeding; v) Other medical technologies that require the services of a professional nurse; or vi) Biphasic Positive Airway Pressure (BiPAP) as specified and lacking cognitive or physical ability to protect the airway. c) Dependence on tracheostomy care requiring STAFF ANALYSIS OF ASSEMBLY BILL 667 (Mitchell) Page 3 suctioning at least every six hours and room air mist or oxygen and one of the conditions in b) ii) through vi) above; d) Dependence on skilled-nursing care in the administration of any three of (b) above; or, e) Dependence on BiPAP and Continuous Positive Airway Pressure (CPAP), as specified, and one of the conditions in b) i) through vi) above. Establishes that the medical necessity in this bill is intended solely for the evaluation of a potential eligible patient for pediatric subacute care who would otherwise be receiving an acute level of care. Deletes the requirement that subacute patient care be defined by DHCS based on a study established in 1980, and makes other technical and clarifying changes. FISCAL IMPACT The Assembly Appropriations Committee analysis states that AB 667 would provide potential state cost savings of up to $9 million ($4.5 million General Fund) to the extent additional children are transferred from an acute level of care to a subacute level of care. BACKGROUND AND DISCUSSION According to the author, AB 667 would codify current regulations and clarify the specific conditions that qualify a child for pediatric subacute admission to include newer technology and assistive devices for pediatric patients. The author states that the criteria used to evaluate and authorize admissions into a Medi-Cal subacute program have not been adjusted since the program's inception. Children whose needs could be adequately provided for in a pediatric subacute facility are often not transferred because they do not meet the criteria specified in regulations. The author states that these children then remain in an acute hospital, at a substantially higher cost STAFF ANALYSIS OF ASSEMBLY BILL 667 (Mitchell) Page 4 to Medi-Cal. The author states California has 10 pediatric subacute care hospitals providing cost-effective health care services to approximately 400 children under the age of 21 who require medical technology due to loss of vital bodily functions. The author further states that all pediatric subacute patients need 24-hour nursing and special services such as inhalation therapy, tracheostomy care, intravenous feeding tubes, and, complex wound care. The author points out that subacute facilities are unique because they provide a child-friendly environment that enables increased interaction among the children. Medi-Cal subacute care program Established in July of 1983, the Medi-Cal subacute care program serves patients in licensed health facilities who meet subacute care criteria. Pediatric subacute care is a level of care needed by a person under the age of 21 who uses a medical technology that compensates for the loss of a vital bodily function. Specific reimbursement rates have been developed for providers of subacute care, and daily reimbursement rates for subacute facilities vary depending on the type of the facility and whether the patient is ventilator dependent or non-ventilator dependent. Related bills SB 804 (Corbett) would require DHCS to allow congregate living health facilities, as defined, that solely provide pediatric subacute care services and do not provide Medicare services, to participate in the subacute care program. SB 804 was referred to the Senate Health committee, and the hearing was canceled at the request of the author. AB X1 19 (Blumenfield) would extend the current quality assurance fee imposed on nursing homes to freestanding pediatric subacute care facilities beginning August 1, 2011. AB X1 19 is pending before the Assembly Floor. Prior legislation AB 36 (Quakenbush), Chapter 1030, Statutes of 1993, establishes a program to provide medically appropriate care for technology dependent children on a cost basis, if the overall cost to the state would decrease. AB 36 STAFF ANALYSIS OF ASSEMBLY BILL 667 (Mitchell) Page 5 establishes cost-based reimbursement for this program and the services required to be provided at the facility, and authorizes adoption of the regulations that this bill seeks to codify. Arguments in support The Subacute Saratoga Hospital and the Children's Recovery Center, the sponsor of this bill, writes that pediatric subacute patients are medically fragile; these patients require 24-hour nursing and special services such as inhalation therapy, tracheostomy care, intravenous feeding tubes, and complex wound care. Prior to the creation of the subacute program, patients were treated in high-cost intensive care units of children's hospitals or state developmental centers. According to the sponsor, current admission criteria are contained in regulations and include a limited number of qualifying conditions. These regulations have not been updated to reflect enhanced and improved technology such as BiPAP or CPAP, which did not exist at the time regulations were developed. The sponsor argues these devices are now commonly used as an alternative to a tracheostomy. The California Hospital Association (CHA) writes that pediatric subacute care is a cost-effective alternative to hospital-based care for critically ill children. CHA argues the clarification to medical necessity criteria in AB 667 will support the appropriate and timely discharge of children from the hospital setting to subacute care. Supporters contend that since pediatric subacute rates are approximately one-fifth of those paid for care in a pediatric intensive care unit of an acute hospital or a state developmental center, substantial Medi-Cal savings will also accrue every time a child is successfully placed in one of these facilities. Children would also benefit greatly from the specialty care, the rehabilitation/developmental services, and the more family-friendly environment offered in this setting. PRIOR ACTIONS Assembly Health: 18- 0 Assembly Appropriations:17- 0 STAFF ANALYSIS OF ASSEMBLY BILL 667 (Mitchell) Page 6 Assembly Floor: 70- 0 POSITIONS Support: Subacute Saratoga Hospital and the Children's Recovery Center (sponsor) California Hospital Association Oppose: None on file. -- END --