BILL ANALYSIS Ó Senate Appropriations Committee Fiscal Summary Senator Christine Kehoe, Chair AB 1297 (Chesbro) Hearing Date: 8/15/2011 Amended: 7/11/2011 Consultant: Katie Johnson Policy Vote: Health 9-0 _________________________________________________________________ ____ BILL SUMMARY: AB 1297 would require provider reimbursement for specialty mental health services to be consistent with federal Medicaid requirements for calculating federal upper payment limits (UPL), remove statewide maximum allowances, extend the period for claims submission, and require the reimbursement methodology to be based on certified public expenditures and to conform to federal Medicaid requirements. _________________________________________________________________ ____ Fiscal Impact (in thousands) Major Provisions 2011-12 2012-13 2013-14 Fund Removal of SMA limits-- likely $50,000 - $100,000 Federal* increased state likely $50,000 - $100,000 General/ mental health costs due County to reimbursing up to UPL Start-up administrative $150 $150 General/** expenditures Federal *Increased federal financial participation; corresponding General Fund and county funds cost pressures. **50 percent General Fund, 50 percent federal funds _________________________________________________________________ ____ STAFF COMMENTS: This bill meets the criteria for referral to the Suspense File This bill would require provider reimbursement for specialty mental health services to be consistent with federal Medicaid requirements for calculating federal upper payment limits (UPL). This bill would also require claims for reimbursement to be submitted within the longer timeframe permitted by federal law AB 1297 (Chesbro) Page 1 rather than the shorter timeframes set forth in state regulation. This bill would require the reimbursement methodology to be based on certified public expenditures (CPEs) and to conform to federal Medicaid requirements. This bill would require standards and guidelines for the administration of mental health services to Medi-Cal eligible individuals to be consistent with federal Medicaid requirements, as specified in the approved Medicaid state plan and waivers to ensure full and timely federal reimbursement to counties. This bill would require the Department of Mental Health (DMH) and the Department of Health Care Services (DHCS) to consult with the California Mental Health Directors Association when developing a reimbursement methodology and that reimbursement amounts and administrative costs be claimed in a manner consistent with federal Medicaid requirements and the approved Medicaid state plan and waivers. Increasing reimbursement up to the federal UPLs would increase all components of payment proportionally to counties for Medi-Cal mental health services and would effectively eliminate the statewide maximum allowances (SMAs) imposed by DMH that were put in place in order to limit the state's General Fund contribution to Medi-Cal mental health services. This means that there would be increased federal financial participation, but that state and counties would need to pay more in order to fully match those federal funds. These services are currently paid for as follows: for EPSDT, 10 percent county funds, 40 percent General Fund, and 50 percent federal funds; for adult specialty mental health care, 50 percent county funds and 50 percent federal funds. There would be increased cost pressure on the General Fund to contribute to its share of the payment up to the higher UPL levels, likely between $50 million to $100 million. In some instances, the SMA is equal to the federal UPLs. Costs would stay the same for those services. DHCS is currently negotiating a state plan amendment (SPA) with the federal government to establish a supplemental payment program for mental health services in order to allow counties to draw down additional federal matching funds based on available CPEs. The non-federal share would be paid 100 percent by county AB 1297 (Chesbro) Page 2 funds with no General Fund component. The SPA would be retroactive to January 1, 2009, but it is unclear when federal approval would be granted. AB 100 (Committee on Budget), Chapter 5, Statutes of 2011, allocates up to $862 million from the Mental Health Services Fund in FY 2011-2012 in order to fully fund existing mental health programs, including Early and Periodic Screening, Diagnosis, and Treatment (EPSDT), Medi-Cal Specialty Mental Health Managed Care, and mental health services provided for special education pupils. Ongoing funding has yet to be identified. AB 102 (Committee on Budget), Chapter 29, Statutes of 2011, shifts the administrative duties of Medi-Cal specialty mental health managed care, the Early Periodic Screening Diagnosis and Treatment Program (EPSDT), and other functions related to federal Medicaid requirements from DMH to DHCS, effective July 1, 2012.