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
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          |Author:   |Committee on Budget                                   |
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          |Version:  |January 9, 2015    Introduced                         |
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          |Urgency:  |No                     |Fiscal:    |No               |
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          |Consultant|Michelle Baass                                        |
          |:         |                                                      |
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                            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.








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          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  








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            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.
          

          
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