BILL ANALYSIS Ó AB 1297 Page 1 Date of Hearing: April 5, 2011 ASSEMBLY COMMITTEE ON HEALTH William W. Monning, Chair AB 1297 (Chesbro) - As Introduced: February 18, 2011 SUBJECT : Medi-Cal: mental health. SUMMARY : Expedites federal reimbursement to counties for their Medi-Cal specialty mental health claims by conforming the procedures and timeframes required by the Department of Mental Health (DMH) to federal Medicaid requirements and the approved Medicaid state plan and waivers. Specifically, this bill : 1)Clarifies that the standards and guidelines that DMH uses for the administration of specialty mental health services provided by county mental health plans (MHPs) must be based on federal Medicaid requirements and the approved Medicaid state plan and waivers. 2)Requires, for purposes of federal reimbursement, the reimbursement amounts for specialty mental health services to be consistent with federal Medicaid requirements and the approved Medicaid state plan and waivers. 3)Deletes existing law requiring the reimbursement rates for specialty mental health claims to be applied only to reimbursement for direct client services, and, instead, requires the rates to conform to federal Medicaid requirements and the approved Medicaid state plan and waivers. 4)Eliminates the 15% administrative cap on the costs to MHPs for providing specialty mental health services as specified in existing law, and, instead, requires the administrative costs to be claimed in a manner consistent with federal Medicaid requirements and the approved Medicaid state plan and waivers. 5)Requires MHPs to submit specialty mental health claims within the timeframes specified in federal Medicaid requirements and the approved Medicaid state plan and waivers. EXISTING LAW : 1)Establishes DMH, which directs and coordinates statewide efforts for the treatment of mental disabilities. AB 1297 Page 2 2)Establishes the Medi-Cal Program, administered by the Department of Health Care Services (DHCS), to provide health benefits to low-income children, their parents, or caretaker relatives, pregnant women, elderly, blind or disabled persons, and other individuals who meet specified eligibility criteria. 3)Requires MHPs to provide specialty mental health services to Medi-Cal beneficiaries and seek the maximum federal reimbursement possible for services rendered to the mentally ill. 4)Requires the standards and guidelines for the administration of specialty mental health services to Medi-Cal eligible persons to be based on federal Medicaid requirements. 5)Provides that rates for reimbursing specialty mental health and drug services under the Medi-Cal Program and rendered to Medi-Cal beneficiaries shall be based on the amounts allowed under federal law. 6)Requires DMH, in the 1993-94 fiscal year and fiscal years thereafter, to establish the amount of reimbursement for services provided by MHPs to Medi-Cal eligible individuals, subject to the approval of the Director of DHCS. 7)Requires the reimbursement rates for specialty mental health claims to be applied only to reimbursement for direct client services. 8)Limits reimbursement of administrative costs to MHPs for providing specialty mental health services to 15% of the total cost of direct client services. 9)Requires, in state regulations, MHPs to submit specialty mental health claims within six months. Federal regulations require a 12-month timeframe for submission. FISCAL EFFECT : This bill has not yet been analyzed by a fiscal committee. COMMENTS : 1)PURPOSE OF THIS BILL . According to the sponsor, the California Mental Health Directors Association (CMHDA), this AB 1297 Page 3 bill seeks to eliminate unnecessary state-only Medi-Cal requirements in the provision of Medi-Cal specialty mental health services to ensure that the state accesses all available federal resources, particularly during these economically challenging times. CMHDA notes that California has established a number of state-only requirements for county MHPs to follow in their provision of these services and these state-specific requirements needlessly limit the amount of federal Medicaid reimbursement that is available. CMHDA adds that these requirements contradict existing state law, which requires counties to maximize available federal funds for services rendered to mentally ill Medi-Cal beneficiaries. This bill is intended to simplify the state's standards and guidelines for these services, including federal reimbursement amounts and claims submission timelines, to ensure that they are consistent with federal Medicaid requirements and California's approved Medicaid state plan and waivers. CMHDA estimates that the changes in this bill will help counties capture an additional $50-$100 million in federal funds. 2)BACKGROUND . Specialty mental health services are "carved out" in the Medi-Cal Program and provided by MHPs. Specialty mental health services are services that are provided by mental health specialists, such as psychiatrists, psychologists, licensed clinical social workers, licensed marriage and family therapists, or psychiatric technicians, rather than by a primary care physician or other physical health care provider. Individuals are entitled to specialty mental health services if the service is both covered under the Medi-Cal Program and deemed medically necessary. Services include mental health assessments, group or individual therapy, medication support services, intensive day treatment, crisis intervention and stabilization, and residential treatment services. Each county MHP is responsible for maintaining a provider network, authorizing services, determining provider payment rates, and paying most providers. Providers bill on a fee-for-service basis and are paid directly by each MHP. MHPs submit claims to DMH for processing. A MHP submits a form to DMH certifying that it incurred the expenditures associated with submitted claims. DMH compares the claimed amount to a schedule called the State Maximum Allowance (SMA) that describes the maximum amount a county may be reimbursed for each specialty mental health service function described above AB 1297 Page 4 and approves the lower of what is billed or the SMA. DMH then submits the batch of edited claims to DHCS for further processing. DHCS processes the claims to determine whether the services provided meet federal and state requirements. DHCS determines whether the claims are approved, denied, or suspended. Once this is determined, it electronically returns the entire batch of claims to DMH with a determination of how much federal reimbursement is due to the MHPs. DHCS then submits an invoice to the State Controller for federal funds. Once federal reimbursement funds are received by DHCS, it passes them through DMH back to the MHPs. 3)MEDICAID 1915(b) WAIVER AND STATE PLAN . The scope and features of the specialty mental health services provided at the county level are determined by the state's Medicaid 1915(b) waiver, the federally-approved Medicaid state plan, and state plan amendments (SPAs). According to a report by the California HealthCare Foundation, entitled "Medicaid Waivers: California's Use of a Federal Option," the state's 1915(b) mental health waiver, originally approved in 1995, allowed the state to consolidate the financing and organization of inpatient and outpatient mental health services in California by developing local managed care organizations (county MHPs) in almost every county for Medi-Cal recipients. This waiver has been approved six times since its inception. In addition, California has two approved Medicaid SPAs that modify the scope of specialty mental health benefits offered by the MHPs. These SPAs are currently being updated by DMH and DHCS, at the request of the federal Centers for Medicare and Medicaid Services (CMS), to reflect current coverage and service functions. The first SPA, approved by CMS in October 1989, added targeted case management services to the list of services, and the second, approved by CMS in July 1993, added rehabilitative mental health services, thereby broadening the range of personnel and locations available to provide these services to eligible beneficiaries. 4)SMAs . SMAs are published annually by DMH to provide the maximum amount a county may be reimbursed for each specialty mental health service function. Counties are alerted to the SMAs through information notices sent by DMH. For example, AB 1297 Page 5 DMH's most recent information notice reflects that counties' current federal reimbursement for 24-hour hospital inpatient services is set at a maximum of $1,172.71 per day. According to CMHDA, this amount may not reflect the actual costs to counties to provide this service, and it does not take into consideration that CMS does not set a maximum dollar amount for this service or any other type of Medi-Cal service mode. CMHDA notes that the SMAs for all services (except inpatient, psychiatric health facility, and adult crisis residential) have been frozen since fiscal year 2006-07 in order to limit State General Fund payments for the Early and Periodic Screening, Diagnosis, and Treatment Program, which provides physical and mental health services to Medi-Cal beneficiaries under the age of 21. This bill seeks to eliminate the use of SMAs in determining the federal reimbursement due to counties by only requiring the use of federal allowable amounts for the purposes of federal reimbursement. With respect to administrative costs, this bill deletes the provision of current law that limits reimbursement for counties' administrative activities for providing these services to 15% and, instead, requires their administrative costs to be claimed in a manner consistent with federal Medicaid requirements and the state's Medicaid plan and waivers. 5)CLAIMS SUBMISSION TIMELINES . DMH regulations specify that counties must submit claims for specialty mental health services within six months. However, federal regulations require Medi-Cal claims to be submitted no later than 12 months from the date of service. This bill eliminates DMH's use of an administratively-established submission deadline of six months for these claims and, instead, requires counties to submit claims within the timeframes specified in federal Medicaid requirements and California's approved Medicaid state plan and waivers, i.e. 12 months. 6)SUPPORT . Supporters, led by the California State Association of Counties (CSAC), state that this bill will ensure timely federal reimbursement to counties for their provision of specialty mental health services by aligning state requirements with existing federal requirements to help maximize federal funds for these services, all without impacting the state's General Fund. CSAC adds that expanding the timeframe for counties to submit specialty mental health AB 1297 Page 6 claims from the state's six month limit to the federal standard of 12 months will give counties the flexibility in submitting claims that complex health care scenarios demand. REGISTERED SUPPORT / OPPOSITION : Support California Mental Health Directors Association (sponsor) Amador County Health Services California State Association of Counties Contra Costa County Mental Health Administration Humboldt County Department of Health and Human Services Regional Council of Rural Counties Sacramento County Board of Supervisors San Mateo County Board of Supervisors Stanislaus County Behavioral Health and Recovery Services Tri-City Mental Health Center Tuolumne County Behavioral Health Department Opposition None on file. Analysis Prepared by : Cassie Royce / HEALTH / (916) 319-2097