BILL ANALYSIS                                                                                                                                                                                                    Ó



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          Date of Hearing:  April 27, 2016


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                               Lorena Gonzalez, Chair


          AB  
          2079 (Calderon) - As Amended April 18, 2016


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          Urgency:  No  State Mandated Local Program:  YesReimbursable:   
          No


          SUMMARY:


          This bill increases the minimum staffing standards in skilled  
          nursing facilities (SNFs) from 3.2 hours to 4.1 hours.   
          Specifically, this bill:


          1)Beginning July 1, 2017, mandates minimum staff-to-patient  
            ratios for certified nursing assistants (CNAs).








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          2)Beginning January 1, 2018, increases the current minimum ratio  
            of 3.2 nursing hours per patient day to 4.1 direct care hours  
            per patient day, which include separate, specific minimum  
            ratios for licensed nurses and CNAs as part of the overall  
            ratio. The specific ratios for licensed nurses and CNAs would  
            be minimums of 1.3 hours and 2.8 hours per patient day,  
            respectively.   


          3)Retains the current 3.2 hour per patient day requirement for  
            any skilled nursing facility that is a distinct part of a  
            facility licensed as a general acute care hospital.


          4)Expands the definition of direct caregiver services to clarify  
            the activities that qualify as direct caregiver hours.


          5)Modifies facility posting requirements regarding staffing and  
            resident census.


          6)Requires the California Department of Public Health (CDPH) to  
            adopt regulations consistent with the specified minimum  
            levels.


          7)Adds, beginning in the 2017-18 fiscal year, compliance with  
            the direct care service hour requirements for SNFs as a  
            performance measure in a supplemental payment program.  


          FISCAL EFFECT:


          1)Under current law, Medi-Cal payment rates to skilled nursing  
            facilities are calculated using a facility-specific cost-based  








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            system. This rate development process requires the Department  
            of Health Care Services (DHCS) to increase the rates to  
            skilled nursing facilities to offset the projected cost of  
            complying with new state or federal mandates.  Based on this  
            requirement, and using their facility-specific model, the  
            California Association of Health Facilities (CAHF) projects  
            annual Medi-Cal costs for increased reimbursement to SNFs, of  
            $106 million in 2017, $391 million in 2018, and increasing  
            annually until 2022 and thereafter when costs are projected at  
            $462 million annually (50% GF/ 50% federal). 



            2017 costs are relatively lower because of a July 1, 2017,  
            implementation date for CNA shift ratios, while the bill's  
            other mandates are fully implemented January 1, 2018.   Costs  
            in 2022 also reflect full implementation of an increased  
            minimum wage to $15 pursuant to SB 3 (Leno, De León, and  
            Leyva), Chapter 4, Statutes of 2016.  This estimate assumes  
            the minimum wage increases are implemented as scheduled  
            without a "pause" for budget or economic reasons.  Each extra  
            dollar of minimum wage appears to translate to approximately  
            $18 million in increased Medi-Cal costs (GF/federal), so for  
            any year in which the wage increase was delayed, Medi-Cal  
            reimbursement would be lower commensurate with the delay.       






          2)Unknown potential GF costs to the Department of State  
            Hospitals (DSH) for additional staff. DSH operates three  
            skilled nursing units as part of the state hospital system.  
            Because state hospitals are licensed as psychiatric hospitals,  
            the skilled nursing facilities operated by DSH are not  
            eligible for the exemption granted in the bill for skilled  
            nursing facilities that are a distinct part of a general acute  
            care hospital. The cost for DSH to comply with the mandated  








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            direct care hours in the bill is unknown, in part because the  
            nature of the patient population in the state hospital system  
            generally requires more staffing than is typical in a normal  
            skilled nursing facility.  In addition, DSH uses psychiatric  
            technicians instead of CNAs so the applicability of the ratios  
            specific to CNAs are unclear.



          3)One-time costs in the range of $100,000 to adopt regulations  
            and modify internal tracking systems by CDPH (Licensing and  
            Certification Fund).



          4)Minor additional ongoing enforcement costs to CDPH (Licensing  
            and Certification Fund).  The department already licenses  
            SNFs, including compliance with existing nursing hours  
            requirements, and the increased workload is not expected to be  
            significant.



          COMMENTS:


          1)Purpose. According to the author, the current minimum of 3.2  
            hours per patient per day staffing requirements for SNFs does  
            not meet the direct care needs of nursing home residents.   
            This chronic understaffing of CNAs in SNFs creates unsafe  
            living conditions for the residents and stressful workplace  
            conditions for staff.


          2)Background. SNFs care for individuals who are elderly,  
            recovering from illness or injury, or have special needs such  
            as developmental or mental disabilities. They can be  
            freestanding or operated a part of a hospital (often called  
            distinct-part SNFs).  This bill applies to freestanding SNFs  








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            and excludes distinct-part SNFs from its requirements for  
            higher staffing levels. Medi-Cal pays for about two thirds of  
            all patient days in SNFs, making Medi-Cal reimbursement policy  
            critical to the financial viability of most SNFs.


          3)SNF Reimbursement. The current Medi-Cal rate methodology is  
            facility-specific and cost-based.  It is a complicated  
            methodology which reimburses facilities based on various cost  
            categories, up to certain caps, and subject to peer grouping  
            provisions. Since a SNF level of care is labor-intensive,  
            labor makes up the largest cost category. Current law also  
            ensures facilities are reimbursed for any additional costs of  
            federal or state mandates, such as the increase in direct care  
            nursing hours proposed by this bill.  For example, the  
            recently passed minimum wage increase will be factored into  
            reimbursement.  Prior to the availability of cost reports that  
            reflect the increased costs experienced by the facility as a  
            result of a mandate, facilities receive an "add-on" that is  
            reflective of 100% of the projected costs of the mandate.


          4)Minimum staffing requirements. Currently facilities are  
            required to staff throughout the day in order to achieve  
            minimum standards, but are also required to employ and  
            schedule additional staff based on patient care needs.  The  
            current minimum of 3.2 nursing hours per patient day does not  
            mean that each patient receives 3.2 hours of care each day,  
            but is instead the total number of nursing hours performed by  
            direct caregivers, divided by the average patient census. The  
            current average staffing level across facilities is equivalent  
            to 3.7 nursing hours per day, higher than the 3.2 minimum,  
            though this varies according to facility.  This bill requires  
            both minimum staff-to-patient ratios for each shift as well as  
            a minimum level of direct care service hours per patient day.   



            A noteworthy difference between the current minimum and this  








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            proposal is the separate minimums that are embedded inside the  
            4.1 direct care service hour requirement.   The current  
            minimum is for a combined total of 3.2 hours, while this bill  
            specifies two separate ratios within the single 4.1 hour  
            requirement (1.3 hours for licensed nurses and 2.8 hours for  
            CNAs).  Under this bill, for example, hours of care provided  
            an RN, even though they are more highly trained, cannot  
            substitute for hours provided by a CNA.  The CNA hours  
            requirement is expected to result in a substantial increase in  
            demand for CNAs.  CAHF has provided an estimate indicating  
            this would increase the CNA workforce in SNFs by over 10,000,  
            a 30% increase over current levels.  


          5)Support. SEIU California, sponsor of this measure, states that  
            providing person-centered care in SNFs requires time and  
            sufficient staff.  The California Labor Federation, Congress  
            of California Seniors, and California Long-Term Care Ombudsman  
            Association also support this bill.


          6)Opposition.  The California Association of Health Facilities  
            (CAHF) writes in opposition that this measure would create  
            artificial staffing patterns that do not necessarily lead to  
            higher quality patient care, that it would be expensive to  
            implement, and that would be a huge challenge for SNFs to find  
            the necessary staff to comply with the staffing mandates of  
            this bill. Leading Age California and the Association of  
            California Healthcare Districts are also opposed.


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














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