BILL ANALYSIS Ó SENATE COMMITTEE ON BUDGET AND FISCAL REVIEW Senator Mark Leno, Chair 2015 - 2016 Regular Bill No: AB 119 Hearing Date: June 15, 2015 ----------------------------------------------------------------- |Author: |Committee on Budget | |----------+------------------------------------------------------| |Version: |January 9, 2015 Introduced | ----------------------------------------------------------------- ---------------------------------------------------------------- |Urgency: |No |Fiscal: |No | ---------------------------------------------------------------- ----------------------------------------------------------------- |Consultant|Michelle Baass | |: | | ----------------------------------------------------------------- Subject: Budget Act of 2015. Summary: Budget Act of 2015: Nursing home quality assurance fee and rate adjustments Background: AB 1629 (Frommer), Chapter 875, Statutes of 2004, enacted the Medi-Cal Long-Term Care Reimbursement Act of 2004, which establishes a reimbursement system that bases Medi-Cal reimbursements to skilled nursing facilities (SNFs) on the actual cost of care. Prior to AB 1629, SNFs were paid a flat rate per Medi-Cal resident. This flat rate system provided no incentive for quality care and reimbursed SNFs for less than it cost to care for their residents. AB 1629 also allows the state to leverage new federal Medicaid dollars by imposing a quality assurance fee (QAF) on SNFs. This new federal funding is used to increase nursing-home reimbursement rates. (Federal Medicaid law allows states to impose such fees on certain health-care service providers and in turn repay the providers through increased reimbursements.) Because the costs of Medicaid reimbursements to health care providers are split between states and the federal government, this arrangement provides a method by which states can leverage additional federal funds for the support of their Medicaid programs and offset state costs. In 2015-16, it is projected that the SNF QAF will offset over $500 million in General Fund expenditures. AB 119 (Committee on Budget) Page 2 of ? AB 1629 contained a sunset date of July 1, 2008 and has been extended five times. SB 853 (Committee on Budget and Fiscal Review), Chapter 717, Statutes of 2010, established the Quality and Accountability Supplemental Payment (QASP) program. Under the QASP program, SNFs that meet minimum staffing standards can earn incentive payouts from a pool of supplemental funds. The payouts are awarded based on SNFs' performance on certain quality measures (including clinical indicators), as well as SNFs' improvement on these measures relative to the previous year. Under SB 853, a portion of each year's weighted average rate increase was to be set aside to fund the QASP payment pool. The set-aside amount was $43 million in 2013-14, and $90 million in the 2014-15 rate year. In 2013-14, about 477 out of 1,000 SNFs earned the QASP payouts. Proposed Law: This bill contains necessary statutory changes to implement the Budget Act of 2015 for the Department of Health Care Services (DHCS). Specifically, this bill: 1.Extends the sunset date for the skilled nursing facility rate-setting methodology established under AB 1629 (Frommer), Chapter 875, Statutes of 2004, as well as the Quality Assurance Fee (QAF) and Quality/Accountability Supplemental Payment (QASP) programs, from July 31, 2015, to July 31, 2020. 2.Specifies that beginning in 2015-16, the annual increase in the weighted average Medi-Cal reimbursement rate for skilled nursing facilities would be 3.62 percent. (The rate increase for 2013-14 and 2014-15 was three percent.) 3.Sets Quality Accountability Supplemental Payment Program (QASP) payments at the same level as existed for 2014-15 (approximately $90 million per year). 4.Extends the DHCS Administrative Procedure Act (APA) exemption through July 31, 2020, and the California Department of Public Health (CDPH) Public Contract Code exemption through December 31, 2020. 5.Beginning with the 2015-16 fiscal year, incorporates direct AB 119 (Committee on Budget) Page 3 of ? care staff retention as a performance measure for QASP to be developed in consultation with representatives from the long-term care industry, organized labor, and consumers. 6.Requires DHCS, in coordination with the Department of Public Health, to report to the Assembly and Senate budget subcommittees by May 1, 2016 regarding the quality and accountability payments including its assessment of if these payments are adequate to incentivize quality and are adequate to sustain the program. Fiscal Effect: The QAF is estimated to generate $539.7 million in fee revenue from August 1, 2015 through July 31, 2016 (accrual). This fee revenue offsets General Fund expenditures used to reimburse skilled nursing facilities in Medi-Cal. -- END --