BILL ANALYSIS                                                                                                                                                                                                    Ó




                   Senate Appropriations Committee Fiscal Summary
                           Senator Christine Kehoe, Chair

                                          AB 1297 (Chesbro)
          
          Hearing Date: 8/25/2011         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                        potentially 
          significant                                  Federal*

          Start-up administrative       $0        $150      $100 
          General/**
          expenditures                                           Federal

          *Increased federal financial participation
          **50 percent General Fund, 50 percent federal funds
          _________________________________________________________________
          ____

          STAFF COMMENTS:  SUSPENSE FILE. AS PROPOSED TO BE AMENDED.
          
          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 
          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 








          AB 1297 (Chesbro)
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          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. DHCS would need increased 
          resources to claim additional FFP of approximately $100,000 
          annually, as well as one-time costs of $25,000 in FY 2011-2012 
          and $50,000 in FY 2012-2013 in order to update related 
          regulations. Costs would be shared 50 percent General Fund and 
          50 percent federal funds.

          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 
          funds with no General Fund component. The SPA would be 
          retroactive to January 1, 2009, but it is unclear when federal 








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          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.

          AS PROPOSED TO BE AMENDED. The author's proposed amendments 
          would delay implementation until July 1, 2012.

          AS PROPOSED TO BE AMENDED. The committee's proposed amendments 
          would clarify that any county claiming reimbursement up to the 
          federal UPL could use only local funds, and not state funds, to 
          pay the non-federal share of the CPE. 

          These two amendments would remove General Fund cost pressures 
          associated with accessing additional federal funding. DHCS 
          administrative costs would remain, but would not commence until 
          FY 2012-2013.