BILL ANALYSIS �
SENATE COMMITTEE ON HEALTH
Senator Ed Hernandez, O.D., Chair
BILL NO: AB 1054
AUTHOR: Chesbro
AMENDED: April 11, 2013
HEARING DATE: June 5, 2013
CONSULTANT: Robinson-Taylor
SUBJECT : Mental health: skilled nursing facility: reimbursement
rate.
SUMMARY : Revises the reimbursement rate by counties to
institutions for mental disease (IMDs) licensed as skilled
nursing facilities (SNFs) by providing for a 3.5 percent annual
increase rather than a 4.7 percent annual increase, effective
July 1, 2014.
Existing law:
1.Defines, in federal law, an IMD as a hospital, nursing
facility, or other institution of more than 16 beds that is
primarily engaged in providing diagnosis, treatment, or care
of persons with mental diseases, including medical attention,
nursing care, and related services.
2.Establishes the federal IMD exclusion, which prohibits federal
financial participation (FFP) through Medicaid (Medi-Cal in
California) for individuals in an IMD between the ages of 22
and 65. These individuals may still be eligible for
state-only Medi-Cal.
3.Requires the Department of Health Care Services (DHCS) to
contract with SNFs that have been designated as IMDs to
provide services to residents.
4.Requires ancillary outpatient services, defined as physician
services, prescription drugs, laboratory, X-ray, dental,
vision, and psychiatric and psychological services, to be
covered regardless of the availability of FFP for any eligible
patient between the ages of 22 and 65 in an IMD.
5.Imposes a rate freeze on the following long term care
facilities: SNFs; intermediate care facilities; rural
swing-bed facilities; subacute and pediatric subacute care
units that are distinct parts of general acute care hospitals;
and, adult day health centers.
Continued---
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6.Requires IMDs licensed as SNFs (SNF IMDs) to be reimbursed for
services at the rate established by DHCS. Mandates, effective
July 1, 2008, an annual 4.7 percent increase in the
reimbursement rate for SNF IMDs.
7.Imposes a two-year rate freeze for SNF IMDs from July 1, 2010
to June 30, 2012.
This bill:
1.Requires DHCS, effective July 1, 2014, to increase the
reimbursement rate by counties to SNF IMDs by 3.5 percent
annually.
2.Declares that it is the intent of the Legislature that the
annual rate increases be utilized by SNF IMDs to meet direct
service costs and, to the extent possible, improve the quality
of care rendered to residents in the facilities.
FISCAL EFFECT : According to the Assembly Appropriations
Committee analysis, this bill will result in negligible costs,
if any, to DHCS.
PRIOR VOTES :
Assembly Health: 18- 0
Assembly Appropriations:17- 0
Assembly Floor: 75- 0
COMMENTS :
1.Author's statement. This bill requires counties to annually
provide SNF IMDs with rate increases of 3.5 percent, instead
of 4.7 percent required under current law, beginning in fiscal
year 2014-15. The 4.7 percent mandatory annual SNF IMD rate
increase in current law represents a substantial cost to
counties, irrespective of available resources, and represents
the only part of the community mental health system that is
statutorily guaranteed a significant increase each year.
According to the author, these substantial costs divert public
mental health funds away from other less restrictive
community-based outpatient services the counties deliver. The
author maintains that the reduction to the annual SNF IMD rate
increase in this bill will provide needed fiscal relief to
counties, while ensuring predictable reimbursement to SNF IMDs
at levels that are comparable to the state's Medi-Cal rates
for other SNFs.
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2.IMDs. An IMD is a type of inpatient facility that provides
care and supervision to individuals who need continuous
nursing care. Title 42, Code of Federal Regulations, Section
435.1009(b)(2), defines an IMD as "a hospital, nursing
facility, or other institution of more than 16 beds that is
primarily engaged in providing diagnosis, treatment, or care
of persons with mental diseases, including medical attention,
nursing care, and related services. Whether an institution is
an IMD is determined by its overall character and whether the
facility is established and maintained primarily for the care
and treatment of individuals with mental diseases, regardless
of whether or not it is licensed as such." IMDs in California
generally include facilities in the following licensing
categories, if the facility has more than 16 beds: acute
psychiatric hospitals, psychiatric health facilities, SNFs
with a certified special treatment program (STP) for the
mentally disordered, or mental health rehabilitation centers.
There may be exceptions for individual facilities. For
example, a large SNF with a small STP unit (less than 50
percent of total SNF beds) is not considered an IMD.
According to DPH, which licenses SNFs, there are 18 SNF IMDs
statewide that would be affected by this bill. These
facilities range in size from 43-220 beds. The average length
of stay is 12-15 months with more than 70 percent of patients
staying longer than 60 days.
3.IMD Medicaid Exclusion. In the mid-1960's, when federal
Medicaid was enacted, local psychiatric hospitals housed large
numbers of persons with severe mental illness at the
(non-federal) public's expense. At the time, Congress made
clear that the new Medicaid dollars were not to supplant this
public effort that was already going on with resources from
state and local governments. Medicaid matching payments were
prohibited for IMDs with a population between the ages of 22
and 64. This exclusion, in addition to the 1991 Realignment
which transferred state responsibility for IMDs to counties,
has resulted in counties being required to pay 100 percent of
the cost of IMD services. IMDs for persons under age 22 or
over age 64 are permitted, at state option, to draw federal
Medicaid matching funds. This leaves inpatient care for the
majority of adults with severe mental illness as the sole
category that Medicaid will not reimburse except under
circumstances.
4.IMD Rate History. California changed its nursing home
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Medicaid reimbursement methodology following passage of AB
1629 (Frommer), Chapter 875, Statutes of 2004, the Medi-Cal
Long Term Care Reimbursement Act of 2004. The impetus behind
AB 1629 was a desire by multi-stakeholder groups, and the
State, to address a confluence of issues and factors
challenging the viability of the SNF industry. AB 1629,
imposes a quality assurance fee (QAF) on SNFs for the purpose
of drawing down additional federal funds to provide a Medi-Cal
rate increase to SNFs. In addition, AB 1629 contained a $107
million General Fund appropriation to fund an increase in the
2004-05 SNF Medi-Cal reimbursement rates. Since AB 1629 would
have had a significant fiscal impact on county mental health
department reimbursement to SNF IMDs, AB 360 (Frommer),
Chapter 508, Statutes of 2005, was enacted the following year
to exempt SNF IMDs certified by the former Department of
Mental Health from AB 1629. AB 360, instead, required that
rates for SNF IMDs be the same as Medi-Cal rates in effect on
July 1, 2004, and prescribed the following rate increase
schedule for SNF IMDs:
� Effective July 1, 2005 through June 30, 2008, an
increase of 6.5 percent annually.
� Effective July 1, 2008, an increase of 4.7 percent
annually.
Due to the state budget crisis, the State Budget Act of 2009
(AB X4 5 (Evans), Chapter 5, Statutes of 2009-10, Fourth
Extraordinary Session), froze nursing home rates for many
licensed facilities, including SNFs and intermediate care
facilities, at 2008-09 levels, but the rate freeze did not
include SNF IMDs, since their costs are borne entirely by
counties, leaving counties at continued obligation to pay the
mandated annual 4.7 percent rate increase. In 2010, AB 2645
(Chesbro), Chapter 554, Statutes of 2010, froze SNF IMD rates
for two fiscal years from July 1, 2010, to June 30, 2012.
Effective July 1, 2012, counties began once again providing
these facilities with the 4.7 percent annual increase. This
bill reduces the mandated rate increase from 4.7 percent to
3.5 percent for SNF IMDs.
1.Prior legislation.
a. AB 97 (Committee on Budget), Chapter 3, Statutes of
2011, reduced Medi-Cal payments for health care
providers, including SNFs, by 10 percent.
b. AB X1 19 (Blumenfield) Chapter 4, Statutes of
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2011-12, provided a maximum Medi-Cal rate increase of 2.4
percent in the 2012-13 rate year.
c. AB 2645 (Chesbro), Chapter 554, Statutes of 2010,
imposes a two-year rate freeze for SNF IMDs from July 1,
2010, to June 30, 2012.
d. SB 853 (Arambula) Chapter 717, Statutes of 2010,
which established a SNF Quality and Accountability
Supplemental Payment System, intended to improve the
quality and accountability of care rendered to residents,
and to penalize facilities that do not meet measurable
standards.
e. ABX4 5 (Evans), Chapter 5, Statutes of 2009, freezes
the reimbursement rate paid to SNFs, as well as other
long-term care facilities.
f. AB 360 (Frommer) Chapter 508, Statutes of 2005,
exempts SNF IMDs from the requirement to pay a QAF and
prescribes a rate-increase schedule for these facilities.
g. AB 1629 (Frommer), Chapter 875, Statutes of 2004,
imposes a QAF on SNFs and provides that the funds
assessed be made available to draw down a federal match
in Medi-Cal and support facility quality improvement
efforts in SNFs.
2.Support. The California Mental Health Directors Association
(CMHDA), the sponsors of this legislation, write in support
that this reduction to the annual SNF IMD rate increase will
provide needed fiscal relief to counties, while ensuring
predictable reimbursement to SNF IMDs at a level that are
comparable to the state's Medi-Cal rates for other SNFs.
According to CMHDA, the 4.7 percent rate increase in the
current fiscal year is costing Los Angeles County $2.6
million, $651,000 in Riverside County, $627,000 in San
Francisco County, $450,000 in San Mateo County, and over
$396,000 in Orange County. The California State Association
of Counties (CSAC) writes in support that counties recognize
the important role that SNF IMDs play in the mental health
system and want to ensure continued access to IMD services and
treatment. Both CMHDA and CSAC state that the current
automatic annual rate increase is forcing difficult fiscal
decisions at the local level, including forcing counties to
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divert funding from less restrictive community-based
outpatient services.
SUPPORT AND OPPOSITION :
Support: California Mental Health Directors Association
(sponsor)
California Association of Health Facilities
California Council of Community Mental Health Agencies
California State Association of Counties
Los Angeles County Board of Supervisors
Orange County Board of Supervisors
Rural County Representatives of California
San Francisco Department of Public Health
Oppose: None received.
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