BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  SB 695
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          SENATE THIRD READING
          SB 695 (Hancock)
          As Amended September 2, 2011
          Majority vote

           SENATE VOTE  :40-0  
           
           HEALTH              19-0        APPROPRIATIONS      17-0        
           
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          |Ayes:|Monning, Logue, Ammiano,  |Ayes:|Fuentes, Harkey,          |
          |     |Atkins, Bonilla, Eng,     |     |Blumenfield, Bradford,    |
          |     |Garrick, Gordon, Hayashi, |     |Charles Calderon, Campos, |
          |     |Roger Hernández,          |     |Davis, Donnelly, Gatto,   |
          |     |Bonnie Lowenthal,         |     |Hall, Hill, Lara,         |
          |     |Mansoor, Mitchell,        |     |Mitchell, Nielsen, Norby, |
          |     |Nestande, Pan,            |     |Solorio, Wagner           |
          |     |V. Manuel Pérez, Silva,   |     |                          |
          |     |Smyth, Williams           |     |                          |
          |     |                          |     |                          |
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           SUMMARY  :  Authorizes, until January 1, 2014, Medi-Cal benefits 
          to be provided to a Medi-Cal eligible individual awaiting 
          adjudication in a county juvenile detention facility if the 
          county agrees to pay the state's share of Medi-Cal expenditures 
          and administrative costs.  Specifically,  this bill  : 

          1)Provides that benefits shall be provided until the date of 
            adjudication and requires benefits to be suspended if the 
            individual is placed in an institution.

          2)Limits eligibility to an individual who is receiving Medi-Cal 
            benefits at the time of admission or is subsequently 
            determined to be eligible.

          3)Specifies that this bill shall not be construed to require a 
            county to pay for Medi-Cal benefits that the state is 
            obligated to provide under administrative action or final 
            court order.

          4)Conditions implementation on receipt of written confirmation 
            from the federal Centers for Medicare and Medicaid Services 
            that federal financial participation (FFP) is available and 
            the execution of a declaration by the director of the 








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            Department of Health Care Services (DHCS) that implementation 
            will not jeopardize the state's ability to receive FFP 
            including any increase in the federal assistance percentage 
            available as specified.

          5)Authorizes DHCS to recoup any amounts resulting from a 
            disallowance as a result of a federal audit, including any 
            interest.

          6)Authorizes the Director of DHCS to cease operation if a 
            determination is made that the declaration specified in 5) 
            above is no longer accurate, authorizes implementation by 
            all-county-letter or similar instructions and requires notice 
            to the Joint Legislative Budget Committee, the Department of 
            Finance and posted on the DHCS Web site.

          7)Authorizes initial implementation by all-county letter and 
            sunsets on January 1, 2014.

           FISCAL EFFECT  :  According to the Assembly Appropriations 
          Committee:
           
           1)Annual increased Medi-Cal costs, likely in the millions of 
            dollars (50% federal/50% local) to the extent counties opt 
            into the funding mechanism established by this bill and 
            provide Medi-Cal health services to youth awaiting 
            adjudication.  

          2)Unknown one-time administrative workload to DHCS to seek 
            federal approval, not likely to exceed $100,000.  Although 
            this bill requires counties to pay the state share of cost for 
            state administrative workload, it unclear whether the initial 
            workload necessary to receive federal approval will be 
            reimbursed by counties. 

          3)Unknown ongoing costs (50% federal/50% local) to DHCS to 
            administer the funding mechanism established by this bill, and 
            to county welfare departments to verify the Medi-Cal 
            eligibility status of youth awaiting adjudication and process 
            new applications.   This bill requires counties to pay the 
            state share of cost for administrative workload.  Actual costs 
            would depend on how many counties opt in to the program and 
            how many youth are found Medi-Cal eligible.

           COMMENTS  :  This bill, according to the sponsor, Alameda County, 








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          is intended to take advantage of federal authority to use 
          Medicaid funds to reduce the costs of health and mental health 
          services that the county is already incurring for the first 30 
          days of a youth's stay in juvenile hall.  According to the 
          sponsor, the average length of stay is 24 days.  Medi-Cal 
          regulations make individuals who are inmates of public 
          institutions ineligible for Medi-Cal.  However, a 2004 letter to 
          State Medicaid Directors from the federal Centers for Medicare 
          and Medicaid Services encourages states to "suspend" and not 
          "terminate" benefits while a person is in a public institution 
          or Institute for Mental Disease, noting the payment exclusion 
          (known as the "inmate exception") under Medicaid does not affect 
          the eligibility of an individual for the Medicaid Program.  This 
          policy was codified with regard to juveniles in SB 1147 
          (Calderon and Yee), Chapter 546, Statutes of 2008.  DHCS 
          indicated that the necessary protocols to implement a suspension 
          of benefits were issued in March 2010.

          Federal regulations also appear to allow states to claim FFP for 
          all Medicaid services provided to a person in a public 
          institution for a temporary period pending other arrangements as 
          an exception to unavailability of FFP for services provided to 
          inmates.  This bill is based on information from Pennsylvania 
          and New Mexico, two states that have taken advantage of this 
          opportunity.  

          SB 1091 (Hancock) of 2010 was substantially similar to this bill 
          and was vetoed.  The veto message cited inconsistency with 
          federal law and potentially significant state costs.  This bill, 
          as drafted, appears to be consistent with federal law and does 
          not appear to expose the state to significant costs.   

           Analysis Prepared by  :    Marjorie Swartz / HEALTH / (916) 
          319-2097


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