BILL ANALYSIS �
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THIRD READING
Bill No: AB 1054
Author: Chesbro (D)
Amended: 4/11/13 in Assembly
Vote: 21
SENATE HEALTH COMMITTEE : 9-0, 6/5/13
AYES: Hernandez, Anderson, Beall, De Le�n, DeSaulnier, Monning,
Nielsen, Pavley, Wolk
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 75-0, 5/9/13 (Consent) - See last page for vote
SUBJECT : Mental health: skilled nursing facility:
reimbursement rate
SOURCE : California Mental Health Directors Association
DIGEST : This bill revises the reimbursement rate by counties
to institutions for mental disease (IMDs) licensed as skilled
nursing facilities (SNFs) by providing for a 3.5% annual
increase rather than a 4.7% annual increase, effective July 1,
2014.
ANALYSIS :
Existing law:
1. Defines, in federal law, an IMD as a hospital, nursing
facility, or other institution of more than 16 beds that is
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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.
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% 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% 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.
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Background
IMDs . An IMD is a type of inpatient facility that provides care
and supervision to individuals who need continuous nursing care.
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.
According to the Department of Public Health, which licenses
SNFs, there are 18 SNF IMDs statewide that will 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% of
patients staying longer than 60 days.
IMD Medicaid Exclusion . According to the National Alliance on
Mental Illness (NAMI), in the mid-1960, 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% of the cost of IMD services. IMDs
for persons under age 22 or over age 64 are permitted, at state
option, to draw down 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, which according to NAMI,
narrowly limit choice, and likely compromise quality.
IMD Rate History . California changed its nursing home Medicaid
reimbursement methodology following passage of AB 1629 (Frommer,
Chapter 875, Statutes of 2004) the Medi-Cal Long Term Care
Reimbursement Act of 2004. 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 will have had a significant
fiscal impact on county mental health department reimbursement
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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% annually.
Effective July 1, 2008, an increase of 4.7% annually.
Due to the state budget crisis, the State Budget Act of 2009 (AB
5X4, 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% 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% annual
increase. This bill reduces the mandated rate increase from
4.7% to 3.5% for SNF IMDs.
Prior Legislation
AB 97 (Assembly Budget Committee, Chapter 3, Statutes of 2011)
reduced Medi-Cal payments for health care providers, including
SNFs, by 10%.
AB 19X1 (Blumenfield, Chapter 4, Statutes of 2011-12 First
Extraordinary Session) provided a maximum Medi-Cal rate increase
of 2.4% in the 2012-13 rate year.
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.
SB 853 (Arambula, Chapter 717, Statutes of 2010) which
established a SNF Quality and Accountability Supplemental
Payment System, intended to improve the quality and
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accountability of care rendered to residents, and to penalize
facilities that do not meet measurable standards.
AB 5X4 (Evans, Chapter 5, Statutes of 2009 Forth Extraordinary
Session) freezes the reimbursement rate paid to SNFs, as well as
other long-term care facilities.
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.
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.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Assembly Appropriations Committee analysis,
this bill will result in negligible costs, if any, to DHCS.
SUPPORT : (Verified 6/24/13)
California Mental Health Directors Association (source)
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
ARGUMENTS IN SUPPORT : 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.
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
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state's Medi-Cal rates for other SNFs. According to CMHDA, the
4.7% 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 divert funding from less restrictive community-based
outpatient services.
ASSEMBLY FLOOR : 75-0, 5/9/13
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom,
Blumenfield, Bocanegra, Bonilla, Bonta, Bradford, Brown,
Buchanan, Ian Calderon, Campos, Chau, Ch�vez, Chesbro, Conway,
Cooley, Dahle, Daly, Dickinson, Eggman, Fong, Fox, Frazier,
Beth Gaines, Garcia, Gatto, Gomez, Gordon, Gorell, Gray,
Grove, Hagman, Hall, Harkey, Roger Hern�ndez, Jones,
Jones-Sawyer, Levine, Linder, Lowenthal, Maienschein, Mansoor,
Medina, Melendez, Mitchell, Morrell, Mullin, Muratsuchi,
Nazarian, Nestande, Olsen, Pan, Patterson, Perea, V. Manuel
P�rez, Quirk, Quirk-Silva, Rendon, Salas, Skinner, Stone,
Ting, Torres, Wagner, Weber, Wieckowski, Wilk, Williams,
Yamada, John A. P�rez
NO VOTE RECORDED: Donnelly, Holden, Logue, Waldron, Vacancy
JL:d 6/25/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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