BILL ANALYSIS Ó AB 2821 Page 1 Date of Hearing: May 11, 2016 ASSEMBLY COMMITTEE ON APPROPRIATIONS Lorena Gonzalez, Chair AB 2821 (Chiu) - As Amended April 26, 2016 ----------------------------------------------------------------- |Policy |Housing and Community |Vote:|6 - 1 | |Committee: |Development | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | |Health | |14 - 2 | | | | | | | | | | | ----------------------------------------------------------------- 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 AB 2821 Page 2 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 AB 2821 Page 3 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. AB 2821 Page 4 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. AB 2821 Page 5 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. AB 2821 Page 6 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 AB 2821 Page 7