BILL ANALYSIS Ó
AB 784
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Date of Hearing: May 3, 2011
ASSEMBLY COMMITTEE ON HEALTH
William W. Monning, Chair
AB 784 (Yamada) - As Introduced: February 17, 2011
SUBJECT : Adult day health care centers.
SUMMARY : Creates an exemption to the existing Medi-Cal
certification moratorium which will allow the opening of two
new, publicly financed Adult Day Health Centers (ADHCs).
Exempts from the current moratorium a state-owned and operated
property, for which planning began before 2002. Construction is
funded by state bonds and federal grants to serve California
veterans.
EXISTING LAW :
1)Establishes the California ADHC Act which requires licensure
and regulation of ADHCs with administrative responsibility
shared between the State Department of Public Health (DPH),
the California Department of Aging (CDA), and the Department
of Health Care Services (DHCS) pursuant to an interagency
agreement.
2)Requires ADHCs to be licensed by DPH as health care facilities
and permits certification for Medi-Cal payments by CDA.
3)Establishes DHCS as the principal agency to oversee Medi-Cal
policy, rates, audits, investigations, eligibility, and
utilization.
4)Authorizes DPH to implement one year moratoriums on
certification and enrollment in the Medi-Cal Program of new
adult day health care centers on a statewide or regional basis
with certain statutory exceptions. These exceptions include:
a) Applicants for Programs of All-Inclusive Care for the
Elderly;
b) Applicants for organizations currently designated as
federally qualified health centers;
c) Applicants centrally located in counties with no other
certified ADHCs;
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d) Applicants serving discharged nursing home patients in
San Francisco;
e) Applicants requesting expansion or relocation within a
county with a specified ratio of persons over the age of 65
receiving Medi-Cal; and,
f) Applicants currently licensed and located in a county
whose population exceeds 9,000,000 serving a specified
population from a regional center.
FISCAL EFFECT : This bill has not yet been analyzed by a fiscal
committee.
COMMENTS :
1)PURPOSE OF THIS BILL . This bill, according to the author, is
intended to create an exemption to the ADHC moratorium on
Medi-Cal certification to permit two ADHCs operated by the
California Department of Veterans Affairs (CDVA) to become
eligible for Medi-Cal reimbursement. CDVA is constructing two
large veteran's campuses, one in Ventura County and another in
Lancaster, which will include multi-level housing and medical
services intended to incorporate ADHC within their planned
care continuum. According to the author, in 2004 a moratorium
on new ADHC Medi-Cal certification was instituted as part of
that year's health budget trailer bill, SB 1103 (Committee on
Budget and Fiscal Review), Chapter 228, Statutes of 2004.
Since the enactment of this moratorium, legislation is
required to exempt ADHCs and receive this funding. The author
argues that planning for the veterans facilities in Ventura
and Lancaster began two years before the moratorium was
enacted. The author further states that the state had signed
a contract with the federal government to build these two
veterans' facilities that included future individual ADHCs and
construction. The building of the facilities was underway by
the time the moratorium was enacted. The author argues the
State is bound by contract with our federal government to open
the two facilities and the two ADHCs. The author asserts that
it is the State's fiscal responsibility to fund the centers in
a cost effective manner. By paying for the ADHC operations
with Medi-Cal funds and drawing down federal matching funds,
the State would offset the cost of these two ADHCs by about
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$142,000 annually.
The author further states the while understanding the magnitude
of the potential elimination of ADHC in the 2011-12 budget,
the author's intent is to pursue the prioritization of
veteran's enrollment into the newly created Keeping Adults
Free From Institutions (KAFI) program, specifically in the
William J. "Pete" Knight Veterans Home of California,
Lancaster; and the Veterans Home of California, Ventura.
These State Veterans Homes are unlikely to close and have
structured adult-day health facilities co-located on the
veterans home campuses. Including veterans in the as
yet-to-be-designed KAFI program will provide opportunities to
leverage federal veterans benefits with shrinking state
general fund support for adult supportive services. While the
bill in its current form does not speak to that intent, the
author is working with all stakeholders and legislators to
ensure inclusion of these Veterans facilities into transition
priorities.
2)BACKGROUND . ADHC is an organized day program of therapeutic,
social, and health activities and services provided to elderly
persons with functional impairments, either physical or
mental, at risk of institutional placement. ADHCs employ a
multidisciplinary team approach providing multiple services
under one roof. These services include skilled nursing care,
physical therapy, social services, meals, speech therapy, and
socialization in order to reduce the risk factors which could
lead to placement into more expensive care settings.
California offers ADHC as an optional Medi-Cal benefit to
reduce utilization of nursing homes, emergency rooms, and
hospitals. Roughly 37,000 Medi-Cal beneficiaries are now
served by 321 ADHCs in this state.
3)ADHC MORATORIUM . SB 1103 authorizes DHCS to impose a
twelve-month moratorium on the certification of new ADHCs
after August 2004. DHCS has interpreted this authority to be
renewable annually at the discretion of the Director. This
authority has been exercised every year and has been extended
through fiscal year 2010-11. The Health Budget Trailer Bill
of 2005 ƯAB 131 (Committee on Budget), Chapter 80, Statutes of
2005] added additional exceptions.
According to DHCS the moratorium was implemented to capture the
enrollment of ADHCs at that time and to limit any increases in
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licensed capacity until ADHC reform was accomplished. The
moratorium was established to be moderate in nature, and allow
for increases in capacity, change of ownership and relocation.
It has exceptions for new ADHCs in unserved areas and for
increases in underserved areas. It was in response to the
very rapid growth in ADHCs. For example the growth rate
jumped from 7% in 1997-98 to 25% in 1998-99 and continued in
the double digits until the moratorium.
4)VENTURA AND LANCASTER FACILITIES . In 2002, according to the
CDVA Website, planning for three large veteran's facilities,
one in Ventura County, one in Lancaster, and one in West Los
Angeles, was initiated following passage of the Veterans Home
Bond Act of 2000 ƯAB 2559 (Wesson), Chapter 216, Statutes of
2002]. The construction of the three facilities are financed
with federal veteran's home grants and state bond funding
totaling $229 million, of which 60% is from federal sources.
All three sites are intended to provide multilevel housing and
medical services for eligible veterans. The two sites nearest
completion, Ventura and Lancaster, incorporate ADHC services
as well as assisted living and nursing care units within their
continuum of care design. Both projects had sought approval
for up to 100 licensed ADHC slots, but anticipate only 20
enrollees at each facility for the first few years of
operation.
5)REIMBURSEMENT RATE REFORMS . In December 2003, the federal
Centers for Medicare and Medicaid Services (CMS) notified
California to shift ADHC from an optional Medi-Cal benefit to
either a home and community based waiver program or apply for
a State Plan Amendment (SPA) with specified changes to the
program. SB 1755(Chesbro), Chapter 691, Statutes of 2006,
enacted these reforms including modifications to the
reimbursement rate methodology. The expected implementation
date for the new rate methodology is August 1, 2011.
6)COST CONTAINMENT MEASURES .
a) Rate freeze new medical necessity and eligibility
criteria . The 2009-10 Health Budget Trailer Bill, ƯAB 5 X4
(Evans), Chapter 5, Statutes of 2009-10 Fourth
Extraordinary Session] enacted a rate freeze for 2009-10
and every year thereafter at the 2008-09 levels. The
budget reductions also included new limits on the criteria
for eligibility, effective, March 1, 2010. It is estimated
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that the new criteria could reduce the number of eligible
persons by 20%. An order granting an injunction of these
reductions was granted by the federal court on February 24,
2010.
b) Treatment Authorization Requests . Services must be
approved by a DHCS field office and reapproved every six
months through a Treatment Authorization Request (TAR). On
site TAR reviews were scheduled to be implemented in
November 2009 and result in savings beginning December 2009
by reducing eligibility by 20%. This has been delayed and
will be revised in May 2010.
7)ELIMINATION OF ADHC SERVICES. In the 2010-11 budget Governor
Schwarzenegger proposed to completely eliminate ADHC as a
covered Medi-Cal benefit, effective June 1, 2010 but it was
rejected by the Legislature. Governor Brown also proposed a
budget that assumed elimination of ADHC services, effective
June 1, 2011, for a reduction of $3.4 million ($1.7 million
General Fund) in the current-year, and $353.2 million ($176.6
million General Fund) in 2011-12. Trailer bill language is
required for enactment.
The Budget Conference Committee proposed a compromise as
follows: Due to severe fiscal constraints and the need to
focus limited resources towards our most medically fragile
individuals, the following compromise is proposed:
a) Eliminate the ADHC Benefit as a Medi-Cal Optional
Benefit. Trailer bill language would specify this
elimination.
b) Proceed with legislation in the 2011-12 Session to
develop a federal Waiver to provide a more narrow scope of
services, and to specify level of medical acuity for
enrollment into this Waiver Program. Budget Bill Language
would specify this purpose.
c) Appropriate $170 million ($85 million General Fund) in
the Budget Bill to provide for a transition for existing
ADHC enrollees to other Medi-Cal appropriate services, and
to facilitate when applicable, transition to newly
developed Waiver services.
8)SUPPORT . The Congress of California Seniors (CCS) writes in
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support that ADHC is a place for seniors to go and receive
care they need. CCS argues that this bill will allow CDVA to
use Medi-Cal to pay for ADHC at the Ventura and Lancaster
campuses rather than pay operating expenses out of State
General Fund.
9)PREVIOUS AND RELATED LEGISLATION .
a) AB 1593 (Yamada) of 2010 would have created an exemption
to the existing Medi-Cal certification moratorium to allow
the opening of two new, publicly financed ADHCs. AB 1593
was vetoed by the Governor:
"I am returning Assembly Bill 1593 without my
signature. I vetoed a similar measure last year,
and my concerns about the new and potentially
significant General Fund costs for adding these two
facilities remains."
b) AB 2073 (Bonnie Lowenthal) of 2010 revises the Medi-Cal
eligibility criteria in the ADHC Program. AB 2073 died in
the Assembly Appropriations Committee.
c) AB 369 (Yamada) of 2009 would have created an exemption
to the existing Medi-Cal certification moratorium to allow
the opening of two new, publicly financed ADHCs. AB 396
was vetoed by the Governor. The veto message is as follows:
"This measure is premature and would add new General
Fund costs to the Medi-Cal program when significant
reductions are currently being implemented.
Furthermore, the new facilities are still under
construction and not scheduled to provide services
until at least July 2011.
I encourage the author to examine ways to provide
these services in the most cost-effective manner and
propose them through the annual budget process."
d) AB 827 (Hancock) of 2008 would have exempted from the
moratorium ADHCs seeking a change of ownership, relocation,
or increase in capacity under specified conditions. AB 827
was held in the Assembly Appropriations Committee.
e) SB 1103 (Committee on Budget and Fiscal Review), Chapter
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228, Statutes of 2004, gives authority to DHCS to impose a
moratorium on the certification of new ADHC providers
effective in August of 2004.
f) SB 428 (Perata) of 2003, would have put in place a
pre-licensure review process, implemented a one year
moratorium, and imposed new licensing fees to fund the
additional DPH workload. SB 428 was vetoed by the
Governor. The veto message is as follows:
"This measure would significantly amend Adult Day
Health Care (ADHC) statutes to impose a one-year
moratorium on future applications for licensure as
an ADHC provider, to create a preapplication
process, and to revise fees to finance the
preapplication process.
While I commend the author and sponsor for coming
forward with this proposal to rein in future ADHC
costs, SB 428 represents significant workload
increases for the Department of Health Services and
the Department of Aging, without which the
preapplication process cannot be implemented.
Further, due to timing of the proposed fee increases
after the implementation work has been performed,
both DHS and Aging would have to use General Fund
money initially to finance needed additional staff.
Additionally, the proposed one-year moratorium will
not result in Medi-Cal program savings until future
years because the bill would require processing of
the applications currently pending.
Given our current fiscal situation, I cannot support
this measure's increased workload on State
agencies."
10)POLICY ISSUE. Currently, trailer bill language to
implement the elimination of ADHC, a transition plan and
a new reduced waiver program, is in the process of being
developed. The new program is entitled, (KAFI). Given
that the budget action was to eliminate ADHC and develop
a new waiver program with half of the amount of funding,
is it appropriate to authorize new AHDC programs?
REGISTERED SUPPORT / OPPOSITION :
AB 784
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Support
The Congress of California Seniors
Opposition
None on file.
Analysis Prepared by : Marjorie Swartz / HEALTH / (916) 319