BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON APPROPRIATIONS
                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          AB 741 (Williams) - Mental health:  community care facilities
          
           ----------------------------------------------------------------- 
          |                                                                 |
          |                                                                 |
          |                                                                 |
           ----------------------------------------------------------------- 
          |--------------------------------+--------------------------------|
          |                                |                                |
          |Version: June 16, 2016          |Policy Vote: HUMAN S. 4 - 0,    |
          |                                |          HEALTH 8 - 0          |
          |                                |                                |
          |--------------------------------+--------------------------------|
          |                                |                                |
          |Urgency: No                     |Mandate: Yes                    |
          |                                |                                |
          |--------------------------------+--------------------------------|
          |                                |                                |
          |Hearing Date: August 1, 2016    |Consultant: Brendan McCarthy    |
          |                                |                                |
           ----------------------------------------------------------------- 

          This bill meets the criteria for referral to the Suspense File.

          Bill  
          Summary:  AB 741 would allow a short-term residential treatment  
          center to be operated as a children's crisis residential center,  
          with specified regulatory requirements.


          Fiscal  
          Impact:  
           One-time costs of about $550,000 for the development of  
            regulations by the Department of Social Services (General  
            Fund). The bill requires the Department to adopt regulations  
            to specify the requirements for operating a short-term  
            residential treatment center as a children's crisis  
            residential center. 

           Unknown information technology costs, likely in the low  
            hundreds of thousands, for the Department of Social Services  
            to modify its internal systems for licensing and regulating  
            children's crisis residential treatment centers (General  
            Fund).








          AB 741 (Williams)                                      Page 1 of  
          ?
          
          
           Ongoing costs of about $125,000 per year for the Department of  
            Social Services to license and regulate children's crisis  
            residential center (General Fund). Although the Department  
            does collect licensing fees from regulated entities, those  
            fees are not set at a level that is sufficient to fund the  
            Department's licensing and enforcement program.

           No significant administrative costs are anticipated by the  
            Department of Health Care Services. The bill requires the  
            Department to establish Medi-Cal rates to pay for the costs of  
            providing children's crisis residential services. However, the  
            Department indicates that the Medi-Cal State Plan already  
            includes children's crisis residential services and includes a  
            methodology to pay for those services. The Department  
            indicates that the reimbursement rate will be the same as that  
            provided for adult crisis residential services.

           Unknown increase in Medi-Cal costs due to increased  
            utilization of children's crisis residential services (General  
            Fund, local funds, and federal funds). The intention of the  
            bill is to provide services to children in children's crisis  
            residential centers, rather than in psychiatric hospitals or  
            general acute care hospitals. In those cases, there would  
            likely be cost savings to Medi-Cal, since the reimbursement  
            rates for crisis residential services will be lower than  
            inpatient hospital rates. However, there is a consensus that  
            there is a significant shortage in available psychiatric beds  
            for children in the state. There is likely to be a significant  
            unmet need for psychiatric inpatient services. Therefore, some  
            of the utilization of children's crisis residential care will  
            be in addition to those services currently being provided in  
            hospitals, rather than a substitution for services already  
            being provided. The size of this impact is unknown.


          Background:  Under current law (AB 403, Stone, Statutes of 2015), the state  
          is implementing what is referred to as the continuum of care  
          reform effort. The purpose of this effort is to reform the  
          system for providing residential services to foster youth,  
          particularly those with mental health issues. Under the reform,  
          the state is phasing out group homes for foster youth, and  
          replacing them with short-term residential treatment facilities.  
          While mental health services are intended to be part of the  
          services offered by short-term residential treatment facilities,  








          AB 741 (Williams)                                      Page 2 of  
          ?
          
          
          those facilities are not intended to be used as an alternative  
          to inpatient psychiatric care (as are adult crisis residential  
          centers).


          Proposed Law:  
            AB 741 would allow a short-term residential treatment center  
          to be operated as a children's crisis residential center, with  
          specified regulatory requirements.
          Specific provisions of the bill would:
           Define "children's crisis residential center" as a short-term  
            residential treatment facility operated specifically to divert  
            children experiencing a mental health crisis from psychiatric  
            hospitalization;
           Require the Department of Social Services to establish  
            regulations for short-term residential treatment centers that  
            are operated as children's crisis residential centers;
           Specify requirements for children's crisis residential centers  
            - such as the maximum duration of stay, requirements for  
            therapeutic services, operating hours, and other requirements;
           Require the Department of Health Care Services, in  
            consultation with specified stakeholders, to establish  
            Medi-Cal rates that are sufficient to reimburse for the costs  
            of providing children's crisis residential services;
           Require reimbursements paid to children's crisis residential  
            centers for board and care to be equivalent to those paid for  
            short-term residential treatment services;
           Specify the criteria for a children's crisis residential  
            center to admit residents.


          Related  
          Legislation:  
           AB 403 (Stone, Statutes of 2015) codified the continuum of  
            care reform efforts, including establishing short-term  
            residential treatment centers as a replacement for group  
            homes.
           AB 1997 (Stone, 2016) is a technical cleanup measure to AB  
            403. That bill will be heard in this committee.


          Staff  
          Comments:  Under current law, Medi-Cal specialty mental health  
          services and the operation of the foster care system have been  








          AB 741 (Williams)                                      Page 3 of  
          ?
          
          
          realigned to the counties. Counties fund these programs with  
          realignment funds and federal funds. However, pursuant to  
          Government Code Section 30026.5, legislation enacted after  
          September 30, 2012, that has an overall effect of increasing the  
          costs already borne by a local agency for programs or levels of  
          service under the 2011 Realignment shall apply to local agencies  
          only to the extent that the state provides annual funding for  
          the cost increase. Local agencies are not be obligated to  
          provide programs or levels of service required by legislation  
          above the level for which funding has been provided. To the  
          extent that counties experience increased costs under the bill  
          (for example, due to greater provision of crisis residential  
          services for children who are not currently receiving  
          residential services), counties could seek additional funding  
          from the state to offset those increased costs. 

          The 2016-17 Budget Act includes $30 million (General Fund and  
          Mental Health Services Act Fund) for grants to develop capacity  
          for children's mental health services. The implementing law does  
          not specifically authorize those funds to be used to support new  
          children's crisis residential centers. However, the use of that  
          funding to support the development of children's crisis  
          residential centers does appear to conform to the intent of the  
          budget action.

          The only costs that may be incurred by a local agency relate to  
          crimes and infractions. Under the California Constitution, such  
          costs are not reimbursable by the state.




                                      -- END --