BILL ANALYSIS                                                                                                                                                                                                    Ó



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          Date of Hearing:  April 6, 2016


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                               Lorena Gonzalez, Chair


          AB  
          1655 (Dodd) - As Introduced January 13, 2016


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          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.  










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          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  








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            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  








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            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  








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            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


















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