BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 2821


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          Date of Hearing:  May 11, 2016


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                               Lorena Gonzalez, Chair


          AB  
          2821 (Chiu) - As Amended April 26, 2016


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          |Policy       |Housing and Community          |Vote:|6 - 1        |
          |Committee:   |Development                    |     |             |
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          |             |Health                         |     |14 - 2       |
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          Urgency:  No  State Mandated Local Program:  NoReimbursable:  No


          SUMMARY:


          This bill requires the Department of Housing and Community  
          Development (HCD), in coordination with the Department of Health  
          Care Services (DHCS), to establish the Medi-Cal Housing Program  
          (MCHP).  Specifically, this bill:  


          1)Requires HCD, in coordination with DHCS, on or before January  
            1, 2018, and every year thereafter, subject to an  
            appropriation by the Legislature, to award grants to eligible  







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            counties and regions to house homeless Medi-Cal beneficiaries.  


          2)Defines eligible counties and regions as those participating  
            in specified Medi-Cal programs targeting persons who are high  
            utilizers of health care, and requires eligible counties and  
            regions to meet other criteria including community  
            partnerships, availability of funds for the provision of care  
            management and other supportive services, and participation in  
            data reporting and evaluation.

          3)Requires a county or region to use grants awards for the  
            following purposes, as specified: interim housing, long-term  
            rental assistance for periods up to five years, and up to 5%  
            of the total grant for county administrative costs. 

          4)Specifies the MCHP is subject to an initial appropriation by  
            the Legislature, and that after the initial appropriation, the  
            funding of grants under the MCHP is subject to annual  
            appropriations by the Legislature based on decreased costs of  
            care, as reported by participating counties, due to moving  
            eligible participants into supportive housing.

          5)Requires HCD to use no more than 5% of the funds appropriated  
            for the MCHP for purposes of administering the program.

          FISCAL EFFECT:


          1)This bill does not make an appropriation, but codifying the  
            program results in cost pressure to fund the program.  A group  
            of Assemblymembers, which includes the author, has proposed a  
            $1.3 billion package of proposals for affordable housing,  
            including $60 million to fund the MCHP.   


          2)Assuming a one-time $60 million GF appropriation for the grant  
            program, $500,000 to HCD to develop the grant program  
            criteria, and $335,000 ongoing for the life of the program,  
            based on an assumption of a one-time $60 million GF allocated  







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            to the program.   


          3)Costs to DHCS to consult on program design are expected to be  
            absorbable within existing resources. To the extent it is  
            helpful to the program design to have more involvement from  
            DHCS staff in the program design, some of the one-time program  
            development costs could be shifted to DHCS (GF).  


          4)There is fairly convincing data that demonstrates that housing  
            indigent and homeless individuals who are high utilizers of  
            health care significantly reduces health care costs. A number  
            of pilot projects have been conducted that demonstrate a clear  
            return on investment in a fairly short period of time.  To the  
            extent housing grants through this program reduce health care  
            costs of individuals enrolled in Medi-Cal, there could be  
            significant savings to the Medi-Cal fee-for-service program  
            and a reduction in cost growth in Medi-Cal managed care. 


            This bill suggests any savings generated should be reinvested  
            in the program, by stating further funding is subject to  
            annual appropriations by the Legislature based on decreased  
            costs of care as described in #4, above.  This creates ongoing  
            cost pressure to maintain funding.  However, if additional  
            funding is provided based on estimated savings from housing  
            interventions funded by the original appropriation, these  
            additional grants should not result in additional costs beyond  
            the original appropriation. 


          COMMENTS:


          1)Purpose. This bill, supported by housing advocates, attempts  
            to coordinate delivery of services between the health and  
            housing systems to further the goal of eliminating  
            homelessness. 








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          2)Housing and Health Care. It is difficult to be healthy without  
            a home. Homelessness often precludes good nutrition, good  
            personal hygiene, and basic first aid, adding to the complex  
            health needs of homeless people.  Additionally, conditions  
            which require regular, uninterrupted treatment, such as  
            tuberculosis and HIV/AIDS, are extremely difficult to treat or  
            control among those without adequate housing.  Diseases that  
            are common among the homeless population include heart  
            disease, cancer, liver disease, kidney disease, skin  
            infections, HIV/AIDS, pneumonia, and tuberculosis.  Barriers  
            to health care include lack of knowledge about where to get  
            treated, lack of access to transportation, and lack of  
            identification, psychological barriers, and cost. As a result,  
            many homeless people utilize hospital emergency departments  
            (EDs) as their primary source of health care. Some homeless  
            people have high health care needs that are met in high-acuity  
            settings, including hospital EDs, inpatient psychiatric  
            facilities, and skilled nursing facilities, as well as state  
            and local correctional health facilities if individuals become  
            incarcerated.   


          3)Medi-Cal 1115 Waiver and Whole Person Care pilot.  A new  
            "Medi-Cal 2020" waiver approved last year by the federal  
            government builds upon the state's prior work and includes  
            several new, ambitious initiatives to improve health care  
            delivery. Whole Person Care pilots are a key opportunity  
            included in the waiver.  Under this pilot, counties will  
            coordinate physical health, behavioral health, and social  
            services in a patient-centered manner with the goal of  
            improving the health and well-being of beneficiaries.  The  
            pilots will enable counties and their partners to target high  
            users of services, share data between systems, coordinate care  
            in real time, and evaluate progress.  The waiver originally  
            proposed allowing the state to leverage federal funding for  
            housing, based on the demonstrated fiscal benefit to the  
            federal government for reduced Medi-Cal spending, but the  
            federal government declined to allow federal matching funds  
            for this purpose. 







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          4)Cost-Effectiveness.   Supporters of this bill have provided  
            numerous studies documenting that housing individuals with  
            high health care needs can be cost-effective and potentially  
            demonstrate a positive return on investment. Results of some  
            pilots are striking. For example, an analysis of costs and  
            outcomes one year prior as compared to one year after a  
            housing intervention, among 163 of the most costly homeless  
            hospital patients in Los Angeles County, found a 72% decline  
            in average total health care costs from $58,962 to $16,474  
            among the participants who moved into supportive housing.    
            Another study in Washington State found a group of individuals  
            that was given supportive housing had 74% fewer hospital  
            admissions than a comparison group.


          5)Staff Comments. This bill appears to target high-cost Medi-Cal  
            beneficiaries who are participating in either the Health Homes  
            or Whole Person Care pilot projects, two Medi-Cal projects  
            that target high utilizers of care in order to coordinate and  
            improve services.  However, the provisions describing the  
            criteria for eligible individuals do not reference the  
            programs. Limiting eligibility to participants in the programs  
            would ensure the individuals targeted for housing are the ones  
            with high health care needs.  


            Eligibility for grant funding is granted based on a county  
            meeting certain criteria. As the appropriation and size of the  
            program is unknown, granting eligibility may be premature.   
            Granting eligibility suggests an entitlement. The author may  
            wish to consider amending this bill to clarify that  
            eligibility is subject to the availability of funding and/or  
            allow for some prioritization or competitive criteria in the  
            case the funding is inadequate to allow meaningful awards that  
            are sufficient to serve to all counties and all individuals  
            deemed eligible by the bill as currently drafted.  









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            Somewhat related to the comment above, staff notes in addition  
            to Medi-Cal savings, there are benefits to local government  
            from housing the homeless, including potential savings in the  
            criminal justice, mental health and substance use, and public  
            hospital systems.  If the state provides grants to assist with  
            housing on the assumption it can be done on a cost-neutral or  
            cost-effective basis based on savings to Medi-Cal, there  
            should be an assurance that counties are prioritizing housing  
            for individuals with high health care needs for which the  
            state would otherwise pay.  Otherwise, and perhaps even still,  
            it is worth considering whether counties should share in the  
            cost of this housing program. It also may make sense to  
            differentiate the program design for counties with public  
            hospitals versus without, because the public hospital counties  
            pay the nonfederal share of inpatient costs, and thus these  
            counties would experience the majority of health care cost  
            savings.  In addition, many homeless individuals are childless  
            adults, for whom the federal government shoulders over 90% of  
            the cost burden. Health care cost savings among this  
            population will benefit the federal government.  The author  
            may wish to consider ways to ensure fiscal benefits flow back  
            to the state, if the state is the only entity investing money  
            in housing.  


            Finally, staff notes reinvesting any cost savings back into  
            sustaining the program has merit, but would require some  
            fairly sophisticated modeling work to do well.  Identifying  
            the effect of providing housing will be difficult,  
            particularly since participation in the Health Homes or Whole  
            Person Care pilots may be a confounding factor.  If careful  
            evaluation is desired, a solid experimental design will need  
            to be built in from the beginning, and that does not appear to  
            be envisioned here.  A less scientific approach still has  
            merit and would be simpler, but would not yield robust data as  
            a basis for future decision-making.   


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







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