BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 1297
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          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.








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          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 








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            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 








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            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, 








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            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 








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            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