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---



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          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 




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               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 




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          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 




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          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




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          Assembly Floor:     70- 0


                                    POSITIONS  
                                        
          Support:  Subacute Saratoga Hospital and the Children's 
          Recovery Center (sponsor)
                    California Hospital Association

          Oppose:   None on file.


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