BILL ANALYSIS Ó AB 1297 Page 1 Date of Hearing: May 4, 2011 ASSEMBLY COMMITTEE ON APPROPRIATIONS Felipe Fuentes, Chair AB 1297 (Chesbro) - As Introduced: February 18, 2011 Policy Committee: HealthVote:19-0 Urgency: No State Mandated Local Program: No Reimbursable: No SUMMARY This bill limits requirements governing federal reimbursement to county Medi-Cal mental health plans to requirements outlined in federal law and in the approved Medicaid state plan and waivers. FISCAL EFFECT 1)Costs to the state Department of Mental Health (DMH), not likely to exceed $50,000, to modify regulations governing reimbursement to county Medi-Cal mental health plans. 2)Unknown, significant increased federal funding to counties from loosening state restrictions on leveraging federal funds. Counties estimate that statewide, they may be able to claim additional federal finding in the range of $50-100 million. COMMENTS 1)Rationale . According to the sponsor, the California Mental Health Directors Association (CMHDA), this bill seeks to eliminate unnecessary state-only Medi-Cal requirements in the provision of Medi-Cal specialty mental health services. CMHDA notes that California has established a number of state-only requirements that needlessly limit the amount of federal Medicaid reimbursement that is available, such as shorter billing periods and lower reimbursement amounts than are allowed under federal law. 2)Background . Mental health services in the Medi-Cal program are "carved out" of regular Medi-Cal services. The Mental Health Managed Care program provides specialty mental health AB 1297 Page 2 services to Medi-Cal-eligible adults through county Mental Health Plans (MHPs). 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. 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. 3)State Restrictions Loosened . In some cases, the state DMH has imposed requirements on county MHPs beyond what federal law requires, in an attempt to provide greater oversight of expenditures. There are three specific provisions that limit the amount of federal reimbursement counties can claim: a) The state has created a Schedule of Maximum Allowances (SMAs) that are effectively maximum rates for each service category (in state regulation), which are in some cases lower than the federal maximum payments. b) The state restricts the time to submit claims for six months (in state regulation), which is shorter than the 12 months allowed under federal law. c) The state imposes a statutory administrative cost cap of 15%, whereas federal law has no such cap. By preventing state requirements for claiming FFP from exceeding federal requirements, this bill provides counties the ability to leverage federal funding for costs that exceed the state's SMA and would allow counties to submit claims after the state's six-month limit. It also eliminates the statutory 15% administrative cap, which counties indicate is needed due to increased administrative duties that have been imposed since the cap was put in to place. Seven counties provided county-specific estimates of the increases in federal funding expected as a result of this bill: Marin ($3 million), Orange ($4 million), San Francisco ($12 million), San Mateo ($5.4 million), Sutter-Yuba ($2.2 AB 1297 Page 3 million), and Solano ($2.1 million). Analysis Prepared by : Lisa Murawski / APPR. / (916) 319-2081