BILL ANALYSIS �
SENATE HEALTH
COMMITTEE ANALYSIS
Senator Ed Hernandez, O.D., Chair
BILL NO: AB 1297
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AUTHOR: Chesbro
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AMENDED: June 9, 2011
HEARING DATE: June 22, 2011
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CONSULTANT:
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Bain
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SUBJECT
Medi-Cal: mental health
SUMMARY
Requires, for purposes of federal reimbursement for
specialty mental health services, the provider
reimbursement amounts to be consistent with federal
Medicaid requirements for calculating federal upper payment
limits (UPL). Requires the reimbursement methodology to be
based on certified public expenditures (CPEs) and to
conform to Medicaid requirements. Requires claims for
reimbursement for service to be submitted within longer
timeframes required by federal Medicaid requirements and
the approved Medicaid State Plan and waivers, instead of
shorter timeframes in state regulation. This bill would
also delete the requirement that administrative costs be
claimed separately and be limited to 15 percent of the
total cost of direct client services.
CHANGES TO EXISTING LAW
Existing law:
Establishes the Medi-Cal program, administered by the
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Department of Health Care Services (DHCS), under which
qualified low-income persons are provided with health care
services, including mental health services. The Medi-Cal
program is partially governed and funded under federal
Medicaid provisions. Under existing law, the Department of
Mental Health (DMH) is required to provide specialty mental
health services for Medi-Cal recipients.
Standards and guidelines
Existing law makes legislative findings and declarations
that there is a need to establish a standard set of
guidelines that governs the provision of managed Medi-Cal
mental health services at the local level, consistent with
federal law. Existing law requires, in order to ensure
quality and continuity, and to efficiently utilize mental
health services under the Medi-Cal program, that MHPs to be
developed for the provision of mental health services that
are consistent with guidelines established by DMH.
This bill would require the guidelines to be based on
federal Medicaid requirements and the approved Medicaid
State Plan and waivers, to ensure full and timely federal
reimbursement to mental health plans (MHPs) for services
that are rendered and reimbursed consistent with federal
Medicaid requirements.
Existing law requires, to the extent permitted by federal
law, MHPs to be governed by the following guidelines:
� State and federal Medi-Cal funds identified for the
diagnosis and treatment of mental disorders must be used
solely for those purposes.
� Administrative costs must be clearly identified and must
be limited to reasonable amounts in relation to the scope
of services and the total funds available.
� Administrative requirements cannot impose costs that
exceed the funds available for administrative purposes.
This bill would also require the administrative
requirements to be based on and limited to federal Medicaid
requirements and the approved Medicaid State Plan and
waivers.
Medi-Cal mental health reimbursement changes
Existing law requires counties to provide services to
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Medi-Cal beneficiaries and to seek the maximum federal
reimbursement possible for services rendered to mentally
ill patients. Existing law requires the standards and
guidelines for the administration of mental health services
to Medi-Cal eligible persons to be based on federal
Medicaid requirements.
This bill would delete the requirement that the standards
and guidelines be based on federal Medicaid requirements,
and instead require the standards and guidelines to be no
more restrictive than federal Medicaid requirements, as
specified in the approved Medicaid State Plan and
applicable waivers, to ensure full and timely federal
reimbursement to counties for services that are rendered
and claimed consistent with federal Medicaid requirements.
Existing law requires, subject to the approval of the
director of the Department of Health Care Services (DHCS),
the director of DMH to establish the amount of
reimbursement for services provided by county mental health
programs to Medi-Cal eligible individuals.
This bill would require, for purposes of federal
reimbursement, the reimbursement amounts to be consistent
with federal Medicaid requirements for calculating UPLs, as
specified in the approved Medicaid State Plan and waivers.
Existing law requires the rate-setting methodology to
contain incentives relating to economy and efficiency in
service delivery.
This bill would instead require the reimbursement
methodology to be based upon CPEs, which encourage economy
and efficiency in service delivery.
Existing law requires DMHC and DHCS to jointly develop a
new rate-setting methodology for use in the Short-Doyle
Medi-Cal system that maximizes federal funding and
utilizes, as much as practicable, federal Medicare
reimbursement principles. Existing law requires DHCS and
DMH to work with the counties and CMS in the development of
the required methodology. Existing law requires rates
developed through the methodology to apply only to
reimbursement for direct client services.
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This bill would instead require reimbursement amounts
developed through the methodology to conform to federal
Medicaid requirements and the approved Medicaid State Plan
and waivers.
Administrative cost claiming and limitation
Existing law requires administrative costs in the
Short-Doyle Medi-Cal system to be claimed separately, and
to be limited to 15 percent of the total cost of direct
client services.
This bill would delete the requirement that administrative
costs be claimed separately and be limited to 15 percent of
the total cost of direct client services. This bill would
instead require administrative costs incurred by counties
for activities necessary for the administration of the MHP
to be reimbursed in a manner consistent with federal
Medicaid requirements and the approved Medicaid State Plan
and waivers.
Existing law requires the cost of performing utilization
review to be claimed separately, and not to be included in
administrative costs.
This bill would also require quality assurance to be
reimbursed separately, and not to be included in
administrative costs.
Reimbursement timeframes
Existing regulations require claims for specialty mental
health services to be submitted to DMH no later than six
months after the month of service, except for good cause.
This bill would require claims for reimbursement for
service to be submitted by MHPs within the timeframes
required by federal Medicaid requirements and the approved
Medicaid State Plan and waivers. (Federal Medicaid
regulations require providers to submit claims no later
than 12 months from the date of service.)
FISCAL IMPACT
According to the Assembly Appropriations Committee
analysis:
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1)Costs to DMH, not likely to exceed $50,000, to modify
regulations governing reimbursement to county Medi-Cal
MHPs.
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 funding in the
range of $50 to $100 million.
BACKGROUND AND DISCUSSION
This bill is sponsored by the California Mental Health
Directors Association (CMHDA) to eliminate unnecessary
state imposed Medi-Cal requirements in the provision of
Medi-Cal specialty mental health services, and 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-specific 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 to $100
million in federal fund for mental health services.
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
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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, 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 determination is made,
DHCS 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.
Statewide Maximum Allowance
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,
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
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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 (GF) payments for the
Early and Periodic Screening, Diagnosis, and Treatment
Program (EPSDT), 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. Instead, this
bill would require reimbursement amounts to be consistent
with federal Medicaid requirements for calculating federal
UPLs. Federal UPLs are the maximum amount a provider can
be paid under Medicare payment principles. In addition,
this bill would require the reimbursement methodology for
MHPs to be based on CPEs and to conform to Medicaid
requirements. CPEs enable government providers to certify
and receive federal reimbursement for costs that they incur
that above the amounts the provider receives from Medicaid
reimbursement.
Claims submission timelines
DMH regulations specify that counties must submit claims
for specialty mental health services within six months,
except when there is good cause. 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 the state's
administratively-established submission deadline of six
months for these claims and, instead, requires counties to
submit claims within the 12-month timeframe specified in
federal Medicaid requirements.
Administrative costs
Existing law requires administrative costs to be claimed
separately, and to be limited to 15 percent of the total
cost of direct client services. This bill would delete the
requirement that administrative costs be claimed separately
and be limited to 15 percent of the total cost of direct
client services. Instead, this bill would instead require
administrative costs incurred by counties for activities
necessary for the administration of the MHP to be
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reimbursed in a manner consistent with federal Medicaid
requirements and the approved Medicaid State Plan and
waivers. CMHDA states that counties, as the government
entities that certify the full public expenditure of funds
in order to draw down federal financial participation,
counties are entitled to be fully reimbursed by the federal
government for the cost of providing services.
Related Bills
AB 102 (Committee on Budget), the second health budget
trailer bill of this year's session, would, among other
provisions, transfer from DMH to DHCS the state
administration of Medi-Cal specialty mental health managed
care, EPSDT and applicable functions related to federal
Medicaid requirements, effective July 1, 2012. DHCS, with
DMH, by July 15, 2011, is required to convene a series of
stakeholder meetings and forums to receive input from
clients, family members, providers, counties, and
representatives of the Legislature concerning the
transition and transfer of Medi-Cal specialty mental health
managed care and the EPSDT Program to inform the creation
of a state administrative transition plan and a
programmatic transition plan. AB 102 passed both houses of
the Legislature and is currently in engrossing and
enrolling.
Arguments in support
The California State Association of Counties (CSAC) writes
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 GF. CSAC
adds that expanding the timeframe for counties to submit
specialty mental health 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.
PRIOR ACTIONS
Assembly Health: 19- 0
Assembly Appropriations:17- 0
Assembly Floor: 70- 0
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COMMENTS
1. Administrative cost limit. Existing law requires
administrative costs to be claimed separately, and to be
limited to 15 percent of the total cost of direct client
services. This bill would delete the requirement that
administrative costs be claimed separately and be limited
to 15 percent of the total cost of direct client services.
Instead, this bill would instead require administrative
costs incurred by counties for activities necessary for the
administration of the MHP to be reimbursed in a manner
consistent with federal Medicaid requirements and the
approved Medicaid State Plan and waivers.
DMH indicates if a county's actual administrative costs are
less than 15 direct of direct service costs, FFP is
calculated using the county's actual administrative costs.
If the county's actual administrative costs are more than
15 percent of direct service costs, FFP is calculated using
15 percent of direct service costs, meaning the county does
not receive FFP for those costs in excess of the 15 percent
cost limit. DMH data from 2007-08 indicates 18 of the
state's 58 counties exceed the 15 percent cost limit.
County administrative costs vary significantly by county.
Total statewide spending on administration was 11.74
percent in 2007-08, but four counties (Fresno, Inyo, Modoc
and Napa) had administrative costs exceeding 30 percent,
and four counties (Calaveras, Madera, San Francisco and San
Joaquin) had administrative costs of between 20 and 25
percent) while 10 counties (Humboldt, Kings, Lake, Los
Angeles, Mariposa, Mendocino, Trinity, Tulare and Tuolumne)
had administrative costs below 10 percent.
CMHDA argues the 15 percent cap is arbitrary, that federal
law establishes limits on what can be claimed as county
administrative costs, that counties are able under federal
law to draw down additional federal funds if the cap were
not in place, and that eliminating the 15 percent cap does
not affect the state GF. However, an administrative cost
limit ensures that a significant percentage of funds are
spent providing direct patient care, instead of
administration. Additionally, the provisions of this bill
shifting to CPEs will increase federal spending on direct
medical services, thus making compliance with the 15
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percent administrative cost cap more likely. As part of
federal health care reform, health plans in the private
insurance market have to meet a federal medical loss ratio
requirement which requires plans providing coverage in the
individual and small group market to spend at least 80
percent of premium dollars on health care expenditures.
Existing DMHC regulations require health plans, if the
administrative costs of an established plan exceed 15
percent, to demonstrate to the director of DMHC (if called
upon to do so) that its administrative costs are not
excessive administrative costs and are justified under the
circumstances and/or that it has instituted procedures to
reduce administrative costs which are proving effective.
Medi-Cal managed care contracts with health plans prohibit
plan administrative costs from exceeding this DMHC
standard, but do not prohibit FFP if administrative costs
exceed the cap. While counties could draw down additional
federal funds for administrative costs if this cap were
eliminated, it is not clear how the elimination of this cap
would affect spending on direct services. It is also not
clear why the variation in county administrative spending
exists, and why this cap needs to be eliminated rather than
changed.
2. Certified public expenditures and the required match.
This bill requires the reimbursement methodology for
Medi-Cal specialty mental health services to be based upon
CPEs. Additionally, this bill requires, for purposes of
federal reimbursement, the reimbursement amounts to be
consistent with federal Medicaid requirements for
calculating federal UPL, as specified in the approved
Medicaid State Plan and waivers. The use of CPEs and
references to the federal UPL will enable county MHP to
drawn down additional federal funds. In order to ensure
that the state match for these federal additional funds
(generated by CPEs) to pay up to the federal UPL is
provided by county funds, staff recommends an amendment to
clarify that the match used to draw down federal matching
funds comes from county funds.
3. Drafting provision. This bill uses different phrasing
relating to compliance with federal Medicaid requirements
and the approved Medicaid State Plan. For example, this
bill requires the standards and guidelines for the
administration of mental health services to Medi-Cal
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eligible persons to be no more restrictive than federal
Medicaid requirements, while another provision of this bill
requires, for purposes of federal reimbursement, the
reimbursement amounts to be consistent with federal
Medicaid requirements. Committee staff recommends
conforming the language to the "consistent with" standard.
POSITIONS
Support: County Mental Health Directors Association
(sponsor)
Advanced Medical Technology Association
California Alliance of Child and Family Services
California Council of Community Mental Health
Agencies
California Psychiatric Association
California State Association of Counties
County Alcohol and Drug Program Administrators
Association of California
Los Angeles County Board of Supervisors
National Association of Social Workers,
California
Regional Council of Rural Counties
Sacramento County Board of Supervisors
San Mateo County Board of Supervisors
Oppose: None on file.
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