BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 1018


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          Date of Hearing:  April 29, 2015


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                                 Jimmy Gomez, Chair


          AB  
          1018 (Cooper) - As Amended April 13, 2015


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          Urgency:  No  State Mandated Local Program:  NoReimbursable:  No


          SUMMARY:


          This bill modifies provisions related to funding for Medi-Cal  
          Early and Periodic Screening, Diagnosis, and Treatment (EPSDT)  
          services to allow schools to provide, and be reimbursed for,  
          services directly.  Specifically, this bill:  








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          1)Requires the California Department of Health Care Services  
            (DHCS) to allow county mental health plans (MHPs) to contract  
            with local education agencies (LEAs) to provide services for  
            Medi-Cal eligible pupils under EPSDT.

          2)Requires DHCS, in counties where the local education agency  
            (LEA) does not have a contract with the county MHP, to allow  
            the MHP to obtain federal funds on behalf of nonpublic  
            agencies that contract with LEAs to provide those services, as  
            specified.  

          3)States that unless otherwise precluded by federal law, LEAs  
            and nonpublic agencies shall be reimbursed for specified EPSDT  
            services.

          4)Specifies LEAs provide matching funds for the services.



          5)Defines services that a county MHP may contract for, or for  
            which a nonpublic agency may receive federal financial  
            participation.

          6)Requires DHCS to examine methodologies for increasing LEA  
            participation in the Medi-Cal program so that schools can meet  
            the educationally related health care needs of their pupils,  
            which includes simplifying the claiming processes for Medi-Cal  
            billing.

          7)Requires DHCS to seek necessary federal approvals.

          FISCAL EFFECT:
          
          1)One-time administrative costs to DHCS (GF/federal), likely in  
            the hundreds of thousands of dollars, to renegotiate a federal  
            waiver or develop a state plan amendment, issue guidance to  
            clarify responsibility for provision of services, make any  
            necessary adjustments to contracts with county MHPs, examine  








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            methodologies to simplify billing, and set up a separate  
            billing and claiming structure for LEAs directly providing  
            EPSDT services.   

          2)Significant ongoing additional administrative costs to DHCS to  
            oversee and certify LEAs and other providers as direct  
            providers of EPSDT services (GF/federal).  DHCS is the single  
            state agency responsible for certifying all federally  
            reimbursed Medi-Cal expenditures. Ongoing costs would depend  
            on how many LEAs and other providers chose to provide EPSDT  
            services directly.  

          3)If direct billing by LEAs for EPSDT services becomes  
            widespread, and assuming EPSDT services are paid for with  
            Proposition 98 dollars, it could result in significant  
            increased fiscal pressure on Proposition 98, proportionate to  
            the dollar amount of services billed.  The state already  
            provides funding directly to counties to provide EPSDT  
            services to eligible children.  If EPSDT services were  
            provided directly through schools without county MHP contracts  
            and Proposition 98 funds were used instead, the state would  
            be, in a sense, paying twice for those services. Since a  
            redirection of Prop 98 funds for EPSDT would leave less  
            funding available for other services, the bill would result in  
            cost pressure to Proposition 98. 

          COMMENTS:
          
          1)Purpose.  According to the author, there is currently no state  
            policy or direction on how an LEA can seek direct access to  
            EPSDT mental health funding.  Instead, each LEA or Special  
            Education Local Plan Area (SELPA) must negotiate separately  
            with each county MHP in order to be able to provide and be  
            reimbursed for EPSDT mental health services for eligible  
            students.  Each MHP determines locally whether they want the  
            LEA or SELPA to provide these services.  The author contends  
            that in 2011, the state shifted 100% of the service  
            responsibility for the mental health special education needs  
            of children, but left responsibility for EPSDT services with  








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            counties, and did not provide schools access to EPSDT funding.  
             

          2)Federal IDEA requirements on schools. The federal Individuals  
            with Disabilities Education Act (IDEA) entitles all children  
            with disabilities to a free, appropriate public education that  
            prepares them to live and work in the community, including  
            mental health treatment services necessary to benefit from  
            their education.  Pursuant to IDEA, LEAs define the services  
            students with disabilities need in order to benefit from their  
            education through an individualized education program (IEP).   
            An IEP can include mental health services.   
           
           3)County Mental Health and EPSDT.  The 2011 realignment left  
            counties fully responsible for providing and funding specialty  
            mental health services for Medi-Cal eligible individuals.  
            Through contracts with the state DHCS, and pursuant to a  
            specialty mental health waiver with the federal government,  
            county MHPs are responsible for funding and providing EPSDT  
            mental health services to Medi-Cal eligible children who meet  
            clinical criteria. EPSDT is a broad set of services available  
            to Medi-Cal eligible children, but the mental health portion  
            of EPSDT is a smaller set of services which include group  
            therapy, family therapy, case management, crisis counseling,  
            medication, and other medically necessary services for  
            children with serious mental illness.   

            County MHPs fulfill EPSDT obligations through direct service  
            provision and contracts.  Many county MHPs contract with LEAs  
            or Special Education Local Plan Area (SELPAs) to provide  
            certain services. County MHPs pay 100% of the costs of  
            services and submit reimbursement claims to the federal  
            government, through DHCS, to claim federal financial  
            participation (FFP). By claiming FFP, counties can be  
            reimbursed for about 50% of their costs.  Counties fund their  
            portion of the cost of these services through a combination of  
            2011 realignment funding, 1991 realignment funding, and  
            Proposition 63 funds.  
           








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           4)Recent Shifts of Responsibility. The roles and  
            responsibilities of county mental health departments and LEAs  
            to provide mental health services to students have changed  
            over the years.   Prior to 1984, school districts were  
            responsible for providing all special education services to  
            children. In 1984, the Legislature enacted AB 3632, which  
            transferred responsibility for providing mental health  
            services to special education pupils from school districts to  
            county mental health departments. The intent was to build on  
            counties' existing expertise, and provide collaboration  
            between schools and public mental health.  AB 3632 services  
            were deemed a state-reimbursable mandate.  

            In 2010, during the state's recent fiscal crisis, state  
            funding for AB 3632 was vetoed and the mandate was suspended.  
            AB 114 (Budget Committee), Chapter 43, Statutes of 2011,  
            repealed provisions of AB 3632, and realigned responsibility  
            for mental health services back to school districts.  The  
            federal IDEA now serves as the statutory framework for the  
            provision of required services. The California Department of  
            Education (CDE) provides guidance to LEAs on numerous aspects  
            of this transition, including options LEAs have for claiming  
            federal matching funds for qualifying services provided to  
            Medi-Cal eligible children.  

            The issue here appears to be when there is overlap between  
            IDEA and EPSDT, that is, when students are Medi-Cal eligible,  
            eligible for specialty mental health services through a county  
            mental health plan, and, in absence of Medi-Cal eligibility,  
            would be provided services pursuant to IDEA by the school.  In  
            most counties, there appear to be successful partnerships to  
            provide needed services to these children, which often involve  
            school-based delivery of care. 

          5)LEA Billing Option Program. There is already an established  
            mechanism through which LEAs can be reimbursed for providing  
            certain Medi-Cal services on a fee-for-service basis to  
            Medi-Cal eligible children.  Through the LEA Billing Option  
            Program, LEAs pay for the services with local funds, then file  








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            claims for federal reimbursement. LEAs are generally  
            reimbursed 50 cents for every dollar spent, minus funds  
            withheld for DHCS administrative costs.  Thus, the program is  
            fully funded with a combination of local and federal funds;  
            there is no GF cost.

            LEAs are only able to submit claims for services allowable  
            under the federally approved State Plan for the LEA Medi-Cal  
            Billing Option Program.  There is some crossover with the list  
            of services provided through EPSDT.  EPSDT services that are  
            also reimbursable through this program include psychology and  
            counseling, case management, mental health assessments,  
            nursing services, and other health services.
              
          6)Opposition.  The California Council of Community Mental Health  
            Agencies states in opposition that this bill would require the  
            state to seek federal approval to expand the scope of the  
            school Medi-Cal billing option for LEAs to provide all  
            services covered by the EPSDT county mental health program.   
            According to the opposition, this is the wrong approach to  
            this issue, as it ignores the need for a partnership between  
            counties and schools.  Moreover, it is not likely to be  
            successful in getting federal approval as it is inconsistent  
            with the managed care approach of the Medi-Cal county mental  
            health system.  The opposition states that a better approach  
            is to ensure that counties fulfill their responsibilities to  
            provide services to Medi-Cal enrolled students under the EPSDT  
            program and partner with schools to identify and serve all  
            youth who may need such services.

          7)Related Legislation.

             a)   AB 1025 (Thurmond), pending in Assembly Education,  
               requires CDE to establish a three-year pilot program to  
               encourage inclusive practices that integrate mental health,  
               special education, and school climate interventions  
               following a multitiered framework.  

             b)   AB 1133 (Achadjian), pending in Assembly Health,  makes  








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               technical changes to existing law regarding grants to LEAs  
               to pay the state share of costs of providing school-based  
               early mental health intervention and prevention services to  
               eligible students.  

        8)Prior Legislation.  

             a)   AB 114 (Committee on Budget), Chapter 43, Statutes of  
               2011, a companion measure to the 2011-12 Budget bill,  
               relieved county mental health departments of the  
               responsibility to provide mental health services to  
               students with disabilities (AB 3632 program) and  
               transferred that responsibility to school districts.

             b)   AB 2212 (Gray) of 2014 was substantially similar to this  
               bill and was held on the Suspense File of this committee.

          9)Staff Comments.  Through 2011 realignment, the state has  
            completed the realignment of EPSDT services for Medi-Cal  
            eligible children to counties, providing them both the  
            responsibility and funding for these services.  In many parts  
            of the state, LEAs have entered contracts or MOUs to ensure  
            appropriate services are provided to students who need them.   
            It appears this bill intends to allow LEAs who are not able to  
            secure contracts from MHPs to provide EPSDT services to bypass  
            county MHPs, who are statutorily responsible for providing and  
            funding such services.  This raises the following issues: 
           
              a)   Paying twice? The state is already providing funding  
               directly to counties to provide EPSDT services.  If the  
               state were to allow LEAs to use Proposition 98 funding to  
               directly draw down federal reimbursement to provide EPSDT  
               services at the discretion of the LEA and outside of the  
               county MHP structure, the state may be double-paying for  
               those services. In effect, there would be an increase in  
               Proposition 98 funding of EPSDT services without a decrease  
               in county funding for such services.  The net effect would  
               be to reduce the funding available for other non-EPSDT  
               Proposition 98 activities, increasing cost pressure on  








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               Proposition 98. 

             b)   Definition of the Problem and Solution? Overall, from a  
               state fiscal perspective, it makes sense to maximize  
               federal reimbursement for EPSDT services provided to  
               students with serious mental illness.  If schools are  
               directly providing or contracting for such services because  
               of the federal IDEA mandate, and are not under contract  
               with a county MHP, Proposition 98/GF is paying 100% of the  
               costs of those services, which seems suboptimal.  However,  
               it should be noted that (1) not all mental health services  
               provided by schools in order to meet IDEA requirements  
               would be federally reimbursable, either because they are  
               provided to children who are not Medi-Cal eligible or  
               because the services are not covered EPSDT benefits, and  
               (2) there are significant bureaucratic strings attached to  
               claiming FFP, including administrative and audit  
               requirements. According to the existing law structure, in  
               an ideal scenario that is to the mutual benefit of the  
               child requiring services, the school, and the state General  
               Fund, anything that is an EPSDT service provided to a  
               Medi-Cal eligible student should be provided through the  
               coordinated structure of the county MHP and in a manner  
               that works well for the student.  Often, this will be  
               school-based delivery of care. If there are local  
               conditions where county MHPs are not making appropriate  
               arrangements for children to get the care they are entitled  
               to, a better approach may be to provide oversight of those  
               county MHPs, or create a formal mechanism by which schools  
               can raise and resolve issues relating to the adequacy of  
               care, with state mediation and intervention if necessary.   
               If, on the other hand, the problem in question is that the  
               schools simply prefer to be the providers of these  
               services, but the county MHPs find that a different  
               mechanism of delivering the care is preferable, that seems  
               more an issue of local coordination. For better or worse,  
               the state has put those choices into the hands of counties  
               through realignment.  Finally, because of the dual mandate  
               and the overlap in eligibility for mental health services  








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               through IDEA and EPSDT, it may be worth considering  
               clarifying the responsibility of schools versus county MHPs  
               to provide services for students entitled to those services  
               through both IDEA and EPSDT, including who is the primary  
               payer and who is the secondary payer, either through  
               statute or through DHCS technical assistance or guidance.    
                
          


          Analysis Prepared by:Lisa Murawski / APPR. / (916)  
          319-2081