BILL ANALYSIS                                                                                                                                                                                                    Ó




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                               CONFERENCE REPORT NO. 1


          Bill No:  ABX2 1
          Author:   Assemblymember Thurmond (D), Senator Beall (D),  
                    Assemblymember Bonta (D), Assemblymember Maienschein  
                    (R), and Senator Cannella (R), et al.
          Proposed: 2/22/16  
          Vote:     27  

          CONFERENCE COMMITTEE:  10-0, 2/22/16
          AYES:  Senator Hernandez, Senator Anderson, Senator Leno,  
            Senator Mitchell, Senator Nielsen, Assemblymember Bonta,  
            Assemblymember Bonilla, Assemblymember Gallagher,  
            Assemblymember Patterson, Assemblymember Santiago 

           SUBJECT:   Developmental services:  Medi-Cal:  funding


          SOURCE:    Author


          DIGEST:          This bill implements targeted rate increases for the  
          community-based developmental services system, and forgives  
          retroactive recoupment of Medi-Cal payment reductions and rate  
          freezes, pursuant to AB 97 (Committee on Budget, Chapter 3,  
          Statutes of 2011), for distinct part nursing facilities.
          Conference Committee Amendments delete the prior version of the  
          bill and insert the current language.


          ANALYSIS:   


          Existing law:  

          1)Establishes the Department of Developmental Services (DDS),  
            which oversees the provision of services and supports to over  








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            290,000 persons with developmental disabilities and their  
            families, pursuant to the provisions of the Lanterman  
            Developmental Disabilities Services Act, also known as the  
            Lanterman Act, (Division 4.5 of the California Welfare and  
            Institutions Code). The Lanterman Act establishes an  
            entitlement to services and supports for Californians with  
            developmental disabilities. 

          2)Establishes the state's Medi-Cal program provides health care  
            coverage for low income children, their families, and certain  
            disabled residents of the state. Over the last several years,  
            there have been a variety of attempts by the state to reduce  
            payment rates to Medi-Cal providers, in an effort to reduce  
            state spending on the program. As part of the 2011-12 Budget,  
            AB 97 (Committee on Budget, Chapter 3, Statutes of 2011)  
            implemented rate reductions and rate freezes for certain  
            Medi-Cal providers, including distinct part nursing  
            facilities.
          
          This bill:

          1)Makes the following changes, effective July 1, 2016, except as  
            otherwise noted below, to the community-based developmental  
            services system:

              a)    Requires DDS to submit a rate study to the Legislature  
                by March 1, 2019, addressing the sustainability, quality,  
                and transparency of community-based services for  
                individuals with developmental disabilities.

              b)    Requires an entity to obtain an independent review of  
                its financial statements relating to payments made by  
                regional centers if it receives payments more than or  
                equal to $500,000 but less than $2 million. Current law  
                requires an independent review if the entity receives  
                payments more than or equal to $250,000 but less than  
                $500,000. This bill also requires an entity to obtain an  
                independent audit if it receives payments that are equal  
                to or more than $2 million and allows these entities to  
                apply for a two-year exemption from the audit requirement.

              c)    Provides for a 7.5% rate increase for salary and/or  








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                benefit increases for regional center staff. The funds  
                used to provide this rate increase cannot be used for  
                unfunded retirement liabilities or executive staff. The  
                amount of funding for this purpose is capped at $29.7  
                million General Fund and total fund estimate is $43.6  
                million.

              d)    Provides for a 2.5% rate increase for administrative  
                costs for regional centers and clients' rights advocates  
                contracts. The amount of funding for this purpose is  
                capped at $1.4 million General Fund and total fund  
                estimate is $2 million. 

              e)    Requires regional centers to maintain documentation on  
                how this funding was allocated and requires regional  
                centers to report specified information to DDS by March  
                10, 2017 and October 1, 2017, regarding the allocation of  
                this funding. Any regional center that fails to report  
                this information shall forfeit these rate increases.

              f)    Requires DDS to describe the implementation of these  
                rate increases in its 2017-18 May Revision.

              g)    Provides a 7.5% rate increase for the purpose of  
                enhancing wages and benefits for staff who spend a minimum  
                of 75% of their time providing direct services to  
                consumers. The actual percentage rate increase shall be  
                determined based on a random sample of service providers  
                in each service category eligible for the rate. DDS shall  
                use this information to determine a rate increase, to be  
                the same for eligible providers in each service category,  
                which shall be based on the proportion of the rate that is  
                for direct services in each category. The amount of  
                funding for this purpose is capped at $169.5 million  
                General Fund and total fund estimate is $294.8 million.

              h)    Provides a 2.5% rate increase for administrative  
                expenses for service providers. The amount of funding for  
                this purpose is capped at $9.9 million General Fund and  
                total fund estimate is $17.3 million. 

              i)    Provides that these rate increases do not apply to  








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                services for which rates are determined by other entities,  
                such as the Department of Health Care Services or the  
                Department of Social Services, or that are usual and  
                customary.

              j)    Requires DDS to conduct a survey of all providers on  
                how these rate increases were used by providers. This  
                survey shall include, but not be limited to, the number of  
                employees and their salary, wage, and benefit costs;  
                percentage of time each employee spends providing direct  
                services; administrative expenses; and additional  
                information determined by the department.

              aa)         Requires DDS to describe the implementation of  
                these rate increases in its 2017-18 May Revision.

              bb)         Provides a 5% rate increase for supportive and  
                independent living services. The cost for this rate  
                increase is $34.3 million ($18 million General Fund) in  
                2016-17.

              cc)         Provides for a 5% rate increase for in and  
                out-of-home respite services. The cost for this rate  
                increase is $16.4 million ($10 million General Fund) in  
                2016-17.

              dd)         Implements a 5% rate increase for Intermediate  
                Care Facilities for the Developmentally Disabled  
                (ICF-DDs). This rate increase is achieved by eliminating  
                the AB 97 (Committee on Budget, Chapter 3, Statutes of  
                2011), Medi-Cal payment reductions and then increasing the  
                rates to these providers by 3.7%. This rate increase is  
                effective August 1, 2016, as the rate year for this  
                provider type is August to July. The cost for this rate  
                increase is $24 million ($12 million General Fund) in  
                2016-17. This bill does not appropriate this funding.

              ee)         Provides a 5% rate increase for transportation  
                services. The cost of this rate increase is $13.9 million  
                ($9 million General Fund) in 2016-17.

              ff)         Provides an 11.1% rate increase (from $30.82 to  








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                $34.24) for the supported employment program at DDS. The  
                cost of this rate increase is $10.9 million ($8.5 million  
                General Fund) in 2016-17. This increase will restore rates  
                to the level in-effect in 2006.

              gg)         Establishes a program to increase paid  
                internship opportunities for individuals with  
                developmental disabilities and to provide additional  
                payments to supported employment services providers for  
                initial placements, placements lasting a continuous six  
                months, and placements lasting 12 consecutive months.  
                Placements for this program must be into competitive,  
                integrated work environments. Regional centers will report  
                information to DDS regarding the outcomes of this program.  
                DDS will include this information in its May Revision  
                fiscal estimate. The cost of this program is $20 million  
                General Fund in 2016-17.

              hh)         Provides for pay differentials supporting  
                bilingual service coordinators at regional centers when  
                fluency in the second language helps to address the  
                language needs of the regional center's catchment area,  
                for a cost of $1 million General Fund. This bill also  
                provides for implementation of recommendations and plans  
                to help reduce disparities in the purchase-of-service  
                expenditures and to encourage the development and  
                expansion of culturally and linguistically appropriate  
                services. Activities funding may include, but are not  
                limited to, paying differentials supporting direct care  
                bilingual staff of community-based service providers,  
                parent education programs, cultural competency training,  
                and outreach, for a cost of $10 million General Fund.

          2)Appropriates $287 million General Fund to the DDS effective  
            July 1, 2016, for the purposes specified above. This bill does  
            not include an appropriation to the Department of Health Care  
            Services for the rate increase for ICF-DDs.

          3)Prohibits the Department of Health Care Services from  
            implementing or retroactively recouping the rate reductions  
            and rate freezes for skilled nursing facilities that are  
            distinct parts of general acute care hospitals, referred to as  








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            distinct part nursing facilities, pursuant to AB 97 for dates  
            of service on or after June 1, 2011, and on or before  
            September 30, 2013. The cost for this is $122.9 million  
            General Fund in 2016-17. This bill does not appropriate this  
            funding.

          FISCAL EFFECT:   Appropriation:    Yes         Fiscal  
          Com.:YesLocal:   No


          SUPPORT:   (Verified2/26/16)


          Association of Regional Center Agencies
          Barton Health
          Barton Memorial Hospital
          Bear Valley Community Healthcare District
          California Association of Health Facilities Developmental  
          Services Conference
          California Disability Services Association 
          California Disability-Senior Community Action Network
          California Hospital Association 
          California Person Centered Advocacy Partnership
          California Respite Association
          California State Council on Developmental Disabilities
          California Supported Living Network
          Cal-TASH
          Catalina Island Medical Center
          Central Valley Regional Center Inc.
          Coalinga Regional Medical Center
          Colusa Regional Medical Center 
          Community Regional Medical Center
          Developmental Services Network
          Disability Rights California
          Easter Seals Disability Services
          Eastern Los Angeles Regional Center
          Eastern Plumas Health Care
          Educate.Advocate.
          Family Resource Centers Network of California
          George L. Mee Memorial Hospital
          IDA California
          Jewish Home of San Francisco








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          Kaweah Delta Health Care District
          Kern Valley Healthcare District
          Lanterman Coalition
          Mayers Memorial Hospital District 
          Modoc Medical Center
          Motion Picture & Television Fund
          Mountains Community Hospital
          Orchard Hospital
          Palomar Health
          People First of California
          Regional Center of the East Bay
          ResCoalition
          San Andreas Regional Center
          Seneca Healthcare District
          Service Employees International Union
          Sharp HealthCare
          SoCal Association of People Supporting Employment First
          Sonora Regional Medical Center
          Strategies to Empower People
          Tahoe Forest Hospital District
          The Alliance
          The Arc California
          United Cerebral Palsy California Collaboration


          OPPOSITION:   (Verified2/24/16)


          None received



          Prepared by:  Michelle Baass / P.H. & D.S. / 
          2/26/16 14:03:18


                                   ****  END  ****


          










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