BILL ANALYSIS Ó AB 1655 Page 1 Date of Hearing: April 6, 2016 ASSEMBLY COMMITTEE ON APPROPRIATIONS Lorena Gonzalez, Chair AB 1655 (Dodd) - As Introduced January 13, 2016 ----------------------------------------------------------------- |Policy |Health |Vote:|18 - 0 | |Committee: | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: YesReimbursable: No SUMMARY: This bill increases the personal needs allowance (PNA) amount from $35 to $80 per month for Medi-Cal-eligible individuals who live in a medical institution or nursing facility, or receive services from a Program of All-Inclusive Care for the Elderly (PACE) organization. AB 1655 Page 2 It also requires the Department of Health Care Services (DHCS) to annually increase the PNA based on the percentage increase in the California Consumer Price Index (CPI). FISCAL EFFECT: 1)Assuming all eligible beneficiaries make use of the higher PNA, costs to Medi-Cal would be $23.6 million ($11.8 million General Fund based on 50% matching ratio). Since increasing the PNA reduces the contribution certain individuals pay for their own institutional care, costs to Medi-Cal will increase commensurate with the increase in the PNA. The cost to Medi-Cal is $45/month per person to whom the bill applies -those residing in an institution or receiving PACE services. Medi-Cal pays for an estimated 530,000 months of institutional care and PACE annually on behalf of Medi-Cal eligible "Share of Cost" beneficiaries to which this bill would apply. 2)The California CPI adjustment will also increase costs, assuming positive CPI growth. For example, a hypothetical CPI of 2.5% would increase costs by around $600,000 for the first year of adjustment, and costs would grow on a similar basis in each future year. 3)This bill is tagged as a reimbursable mandate, but is not expected to result in mandate claims due to the reimbursement structure for Medi-Cal administration. Eligibility for Medi-Cal is administered by counties, and administrative costs are reimbursed through contract with the state. This change will require minor adjustments in county policies and practices. The total cost pressure associated with this small change is unknown but likely minor. Minor information AB 1655 Page 3 technology automation changes may be required as well. COMMENTS: 1)Purpose. This bill updates the PNA to better reflect the costs of personal items like clothing, hair and body products, and outside activities for individuals residing in nursing facilities. 2)Share of Cost Medi-Cal and the PNA. Through the Medically Needy/Share of Cost program, individuals whose income is otherwise too high to qualify for Medi-Cal can become eligible. Under this program, Medi-Cal will pay for services in a particular month if a beneficiary incurs high health care costs and pays a significant amount out of pocket first (called their "share of cost"). Once a beneficiary incurs their share of cost for a month, they are "certified," which means Medi-Cal will cover eligible medical expenses in that month. Although share-of-cost certification is a determined month-by-month, given the high cost of long-term care, individuals receiving such care generally meet their share of cost and become certified. For someone receiving care in a facility or through a PACE program, the beneficiary share of cost is calculated as the AB 1655 Page 4 following: ------------------------------------------------------------ | | | | | | | |= |Countable |minus|"Maintenance income | | | |income | |needs level" (the lowest | |Share | |(income, minus | |income levels that | |of cost | |specified | |reasonably permit | | | |deductions) | |medically needy persons | | | | | |to meet their basic | | | | | |needs for food, | | | | | |clothing, and shelter.) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ------------------------------------------------------------ The maintenance income needs level includes a variety of allowances, including a PNA of $35 that was established in 1985. Increasing the PNA to $80 would increase this maintenance needs income level by $45 and reduce an individual's share of cost by the same amount. The state's costs would then increase, because the state pays whatever costs remain after a beneficiary's share of cost has been met. The General Fund pays half of the increased cost and federal funds pay the other half, based on the state's 50% Medi-Cal matching rate for this population. 3)DHCS can increase PNA. Current law authorizes DHCS, by regulation, to annually increase the PNA amount as AB 1655 Page 5 necessitated by increasing costs of personal and incidental needs. However, DHCS has never increased the PNA and it remains at $35. In order to ensure the amount is adjusted to reflect the cost of living, this bill requires DHCS to increase the amount annually by the California CPI. 4)Related Legislation. a) AB 1235 (Gipson) of 2015 established a home upkeep allowance and transitional personal needs fund for certain Medi-Cal eligible long-term care facility residents. AB 1235 was held in the Senate Appropriations Committee. b) AB 1319 (Dababneh) of 2015 would have increased the personal and incidental needs deduction for Medi-Cal beneficiaries residing in a licensed community care facility from $20 to $50. AB 1319 was held in the Senate Appropriations Committee. c) AB 789 (Campbell) of 1999, which was vetoed, increased the PNA to $40. Analysis Prepared by:Lisa Murawski / APPR. / (916) 319-2081 AB 1655 Page 6