BILL ANALYSIS                                                                                                                                                                                                    



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

          AB 847 (Mullin) - Mental health:  community-based services
          
           ----------------------------------------------------------------- 
          |                                                                 |
          |                                                                 |
          |                                                                 |
           ----------------------------------------------------------------- 
          |--------------------------------+--------------------------------|
          |                                |                                |
          |Version: February 22, 2016      |Policy Vote: HEALTH 9-0         |
          |                                |                                |
          |--------------------------------+--------------------------------|
          |                                |                                |
          |Urgency: Yes                    |Mandate: No                     |
          |                                |                                |
          |--------------------------------+--------------------------------|
          |                                |                                |
          |Hearing Date: March 7, 2016     |Consultant: Brendan McCarthy    |
          |                                |                                |
           ----------------------------------------------------------------- 
          
          This bill meets the criteria for referral to the Suspense File.


          Bill  
          Summary:  AB 847 would require the Department of Health Care  
          Services to develop a proposal for a specific federal  
          demonstration program that provides enhanced federal funding for  
          mental health services provided to Medi-Cal beneficiaries. The  
          bill would appropriate $1 million from the Mental Health  
          Services Fund to pay for a portion of the costs to develop the  
          proposal.


          Fiscal  
          Impact:  
           One-time costs of $1.9 million for the Department of Health  
            Care Services to develop a proposal (federal funds and Mental  
            Health Services Fund). The Department indicates that the total  
            cost to prepare the proposal is $1.9 million. The Department  
            has received a $900,000 planning grant from the federal  
            government. The $1 million appropriation in the bill will  
            allow the Department to complete the administrative work  
            needed to prepare proposal for participation in the  
            demonstration program.







          AB 847 (Mullin)                                        Page 1 of  
          ?
          
          


          Background:  Under federal law, the United States Health and Human Services  
          Agency is authorized to implement a demonstration program in  
          eight states, for two years, to provide enhanced federal  
          financial participation for mental health services provided by  
          certified community behavioral health clinics to Medicaid  
          beneficiaries. Federal law authorizes states to apply for an  
          initial planning grant to pay for the costs to develop a  
          proposal to participate in the demonstration program. The state  
          applied for such a planning grant and received an award of  
          $900,000 in late 2015. However, the Department indicates that  
          the costs to develop a competitive proposal for participation in  
          the demonstration program will be about $1.9 million. Because  
          the Department did not receive sufficient federal funding to  
          develop a proposal, it has not undertaken any of the  
          administrative activities that would be necessary to develop a  
          proposal - such as identifying participating counties, request  
          client information from clinics that are likely to participate,  
          establish payment rates, etc.
          The Mental Health Services Act (Proposition 63 of 2004) imposes  
          an additional 1% personal income tax on incomes over $1 million.  
          Most of the funding from the Mental Health Services Act is  
          transferred to counties to provide support for mental health  
          services. The Mental Health Services Act limits state  
          administrative spending to 5% of revenues.




          Proposed Law:  
            AB 847 would require the Department of Health Care Services to  
          develop a proposal for a specific federal demonstration program  
          that provides enhanced federal funding for mental health  
          services provided to Medi-Cal beneficiaries. The bill would  
          appropriate $1 million from the Mental Health Services Fund to  
          pay for a portion of the costs to develop the proposal.
          The bill includes a legislative finding that the expenditure of  
          funds from the Mental Health Services Fund for the purpose of  
          implementing the bill is consistent with the intent of the  
          Mental Health Services Act.


          The bill contains an urgency clause.








          AB 847 (Mullin)                                        Page 2 of  
          ?
          
          




          Related  
          Legislation:  AB 861 (Maienschein) would have required the  
          Department of Health Care Services to apply for participation in  
          the federal demonstration program addressed by this bill, if the  
          Department had received a planning grant from the federal  
          government. That bill was vetoed by Governor Brown.


          Staff  
          Comments:  By appropriating $1 million from the Mental Health  
          Services Fund for the purposes of the bill, the bill will reduce  
          the funding available under the administrative cap for other  
          state spending priorities that are authorized under the Mental  
          Health Services Act.
          State proposals to participate in the demonstration program are  
          due in October 2016. Because the Department has not taken any  
          action to develop a proposal since the fall of 2015, it is not  
          clear whether the Department will be able to develop a  
          competitive proposal in the remaining time available. The bill  
          requires the Department to develop a proposal for participation  
          in the demonstration project; the bill does not require the  
          Department to submit an application - this is intended to  
          provide flexibility to the Department if it cannot develop an  
          application that it feels would be workable for the state and  
          counties.


          If the state applies to participate in the demonstration program  
          and is selected for inclusion, enhanced federal financial  
          participation will be available to support mental health and  
          substance abuse disorder services for Medi-Cal beneficiaries.  
          Under the program, federal financial participation for those  
          services would increase from 50% to 65% for the two-year  
          duration of the demonstration program. Because mental health  
          benefits for Medi-Cal beneficiaries with severe mental illness  
          are paid for with non-state funds (generally county realignment  
          funds, county Mental Health Services Act funds, and federal  
          funds), additional federal funding will flow to the counties,  
          rather than the state.









          AB 847 (Mullin)                                        Page 3 of  
          ?
          
          

          




                                      -- END --