BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session AB 1261 (Burke) - Community-based adult services: adult day health care centers ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: February 27, 2015 |Policy Vote: HEALTH 9 - 0 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: No | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: July 6, 2015 |Consultant: Brendan McCarthy | | | | ----------------------------------------------------------------- This bill meets the criteria for referral to the Suspense File. Bill Summary: AB 1261 would require Community-Based Adult Services to be provided as a Medi-Cal benefit. Fiscal Impact: Ongoing costs of about $330 million per year to continue to provide Community-Based Adult Services in the counties in which this program is currently operating (General Fund and federal funds). Community-Based Adult Services is an optional benefit that states are not required to offer under federal law. In the absence of this bill, the state could elect to discontinue the program after at the conclusion of the state's next Section 1115 waiver in 2020 (or sooner by an amendment to that waiver). Unknown costs (or potentially cost savings) if the bill results in Medi-Cal managed care plans providing Community-Based Adult Services in counties where services are AB 1261 (Burke) Page 1 of ? currently unavailable (General Fund and federal funds). Prior to March 2012, Community-Based Adult Services were limited by the availability of providers. At that time, 26 counties had an Adult Day Health Center provider (the predecessor to Community-Based Adult Services). The remaining 32 counties are generally rural counties with small populations. Given the low population densities of those counties, it is not clear whether the operation of an Adult Day Health Center could be financially viable or whether there would be significant demand for those services, given long travel times to and from such a center. To the extent that managed care plans do provide Community-Based Adult Services in those areas where it is not currently available, reduced reliance on institutional care could reduce overall costs. No additional costs are anticipated from the requirement that Medi-Cal managed care plans pay providers at rates that are not less than Medi-Cal fee-for service rates. Medi-Cal managed care plans currently pay providers at or above the fee-for-service rate for Community-Based Adult Services and the Department of Health Care Services indicates that this will continue to be the case. Potential cost savings due to reduced institutionalization and improved clinical outcomes for participating Medi-Cal beneficiaries (General Fund and federal funds). The intent of offering Community-Based Adult Services is to allow Medi-Cal beneficiaries who are at risk of being institutionalized (for example, placement in a skilled nursing facility) due to physical illness and cognitive impairment to remain in the community. To the extent that Community-Based Adult Services actually keeps a Medi-Cal beneficiary out of institutional care, this benefit will almost certainly reduce state spending. Whether or not the overall program reduces state spending will depend, in part, on whether the benefit is provided to beneficiaries who are likely to be institutionalized and the clinical success of the benefit in preventing institutionalization. Unknown costs to the Department of Public Health for licensing of additional Adult Day Health Centers (Licensing and Certification Fund). To the extent that new Adult Day Health Centers open to provide Community-Based Adult Services, those facilities would be licensed by the Department. All licensing AB 1261 (Burke) Page 2 of ? and enforcement costs would be reimbursed by fees. Ongoing costs of about $3.3 million per year to certify that Community-Based Adult Services providers are meeting Medi-Cal program criteria and requirements by the Department of Aging (General Fund and federal funds). Under an interagency agreement with the Department of Health Care Service, the Department of Aging is responsible for certifying that providers meet all the applicable Medi-Cal program requirements. Background: The Medi-Cal program is a health care program for low-income individuals and families who meet defined eligibility requirements. Medi-Cal coordinates and directs the delivery of health care services to approximately 12 million qualified individuals, including low-income families, seniors and persons with disabilities, children in families with low-incomes or in foster care, pregnant women, low-income people with specific diseases, and, as of January 1, 2014, due to the Affordable Care Act, childless adults up to 138 percent of the federal poverty level. With the exception of certain populations (for example, individuals eligible for limited scope Medi-Cal benefits or individuals dually eligible for Medi-Cal and Medicare in most counties), managed care is the primary system for providing Medi-Cal benefits. The Department estimates that in 2014-15, 7.5 million Medi-Cal beneficiaries (73 percent of total enrollment) will receive care through the managed care system. Prior to March 2011, the state offered Adult Day Health Center services as an optional Medi-Cal benefit. Adult Day Health Center services included medical care, nursing care, meals, social and therapeutic activities, transportation, and other services designed to avoid institutionalization by medically frail individuals. In March 2011, the state eliminated Adult Day Health Center services as a Medi-Cal benefit as part of the Budget Act. The state was subsequently sued by Adult Day Health Center participants. Under a settlement agreement, the state created Community-Based Adult Services as a successor benefit, with somewhat tighter eligibility criteria. The settlement agreement was binding on the state until August 2014. AB 1261 (Burke) Page 3 of ? The Department of Health Care Services has added Community-Based Adult Services as an optional benefit under the state's Bridge-to-Reform waiver, which is valid until October 2015. The Department anticipates that the Bridge-to-Reform waiver will be extended to October 2020 and that Community-Based Adult Services will continue be included as an optional benefit. Proposed Law: AB 1261 would require Community-Based Adult Services to be provided as a Medi-Cal benefit. Specific provisions of the bill would: Make Community-Based Adult Services a Medi-Cal benefit and require it to be covered by Medi-Cal managed care plan contracts; Require the program standards and eligibility criteria to be equal to the Special Terms and Conditions (the agreement between the state and the federal government) that are in effect on the enactment date of this bill; Specify the eligibility criteria for participation by Medi-Cal beneficiaries; Require providers to be licensed by the Department of Public Health and meet all applicable Medi-Cal standards; Require Community-Based Adult Services to be offered as a managed care benefit and as a fee-for-service benefit for Medi-Cal enrollees not in managed care; Require Medi-Cal managed care plans to pay Community-Based Adult Services providers at rates that are not less than Medi-Cal fee-for-service rates; Require implementation of the bill only if federal financial participation is available. Related Legislation: AB 1552 (Lowenthal, 2014) was substantially similar to this bill. That bill was vetoed by Governor Brown. AB 518 (Yamada, 2013) would have established Community-Based Adult Services as a Medi-Cal benefit and require new Community-Based Adult Services to be non-profit entities. That bill was heard in the Senate Health Committee but no vote was taken. AB 96 (Committee on Budget, 2013) would have created a different successor program to the terminated Adult Day Health Center Medi-Cal benefit. That bill was vetoed by AB 1261 (Burke) Page 4 of ? Governor Brown. AB 97 (Committee on Budget, Statutes of 2013) eliminated Adult Day Health Center services as a Medi-Cal benefit. Staff Comments: The state is no longer obligated under a court settlement to provide Community-Based Adult Services. The Department of Health Care Services has received permission from the federal government to continue to offer Community-Based Adult Services at least until October 2015 and is requesting permission to continue through the next Section 1115 waiver period (2015-2020). However, the Department is under no legal obligation to do so. By putting Community-Based Adult Services in statute as a Medi-Cal benefit, this bill would compel the Department to continue to provide that benefit (subject to federal approval). -- END --