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
          
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          |Version: February 27, 2015      |Policy Vote: HEALTH 9 - 0       |
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          |Urgency: No                     |Mandate: No                     |
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          |Hearing Date: July 6, 2015      |Consultant: Brendan McCarthy    |
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          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  







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            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  








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            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. 









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          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  








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              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).


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