BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON APPROPRIATIONS
                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          AB 2821 (Chiu) - Medi-Cal Housing Program
          
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          |Version: June 16, 2016          |Policy Vote: HEALTH 9 - 0, T. & |
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          |Urgency: No                     |Mandate: No                     |
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          |Hearing Date: August 1, 2016    |Consultant: Brendan McCarthy    |
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          This bill meets the criteria for referral to the Suspense File.

          Bill  
          Summary:  AB 2821 would require the Department of Housing and  
          Community Development to establish a program to fund competitive  
          grants to pay for rental assistance for homeless Medi-Cal  
          beneficiaries.


          Fiscal  
          Impact:  
           Unknown annual costs to provide grants to support rental  
            assistance for homeless Medi-Cal beneficiaries (General Fund).  
            The bill does not appropriate any funding for the program nor  
            does it specify a projected level of funding for future years.  
            Staff notes that the author and other members of the Assembly  
            had proposed to include $60 million in the current year budget  
            to fund this bill (as part of a larger program for affordable  
            housing). That funding was not included in the enacted Budget  
            Act.

           One-time costs of about $500,000 to develop program  
            requirements, consult with stakeholders, and adopt program  







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            guidelines by the Department of Housing and Community  
            Development (General Fund). The bill would require the  
            Department to develop the program immediately, whereas  
            actually funding grants under the program would be subject to  
            an appropriation by the Legislature. Therefore, the Department  
            would incur the upfront administrative costs, regardless of  
            whether the Legislature appropriated money in future years for  
            the program.

           Ongoing costs of about $300,000 per year to administer the  
            grant program by the Department of Housing and Community  
            Development (General Fund). Based on the initial proposal for  
            $60 million in initial funding, the Department anticipated  
            needing about $300,000 per year to administer the grant  
            program. 

           Ongoing costs, likely in the low hundreds of thousands per  
            year, to contract with an independent evaluator to analyze  
            program data, including health care spending data for program  
            participants (General Fund). The bill requires the Department  
            of Housing and Community Development to contract for an  
            independent evaluation. The bill does not place an end date on  
            the evaluation of the program, therefore staff assumes that  
            program evaluation will be an ongoing cost.

           Ongoing costs, likely in the low hundreds of thousands, for  
            the Department of Health Care Services to coordinate with the  
            Department of Community Development and to collect and report  
            on Medi-Cal expenditures for participating Medi-Cal  
            beneficiaries (General Fund and federal funds). The bill  
            requires the independent evaluator to determine changes in  
            health care costs for participating Medi-Cal beneficiaries.  
            The Department of Health Care Services will likely incur staff  
            costs to compile both fee-for-service and managed care  
            expenditure data.

           Unknown, but significant future public savings are likely due  
            to reduced health care costs for participating individuals, to  
            the extent the program is funded (General Fund, local funds,  
            federal funds). There are numerous published studies that have  
            shown significant reductions in public spending when homeless  
            individuals who are high-utilizers of public services are  
            provided housing as well as physical and mental health  
            services. Those studies have shown a strong cost-benefit ratio  








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            to "housing first" pilot projects. To the extent that this  
            program is funded and funding is targeted towards  
            high-utilizers of health care services, the program is likely  
            to generate future cost savings in avoided health care costs  
            (as well as potential savings due to decreased costs in the  
            criminal justice system). Cost savings could accrue to the  
            state due to reductions in hospitalizations at private  
            hospitals, to local governments due to reductions in  
            hospitalizations at public hospitals or psychiatric hospitals,  
            and to the federal government which provides matching funds  
            for Medi-Cal services. Because of the complexity of financing  
            for Medi-Cal services, cost savings to the state may or not  
            fully offset state expenditures.


          Background:  Under state and federal law, the Department of Health Care  
          Services operates the Medi-Cal program, which provides health  
          care coverage to low income individuals, families, and children.  
          Medi-Cal provides coverage to childless adults and parents with  
          household incomes up to 138% of the federal poverty level and to  
          children with household incomes up to 266% of the federal  
          poverty level. The federal government provides matching funds  
          that vary from 50% to 90% of expenditures depending on the  
          category of beneficiary.
          Federal law generally prohibits federal Medicaid matching funds  
          from being used directly to support housing of Medicaid  
          beneficiaries. However, there are two federally authorized  
          Medi-Cal programs that do allow federal funds to be used for  
          services associated with housing. The Whole Person Care Pilots  
          (a program included in the new Section 1115 "Medi-Cal 2020"  
          waiver) authorizes federal matching funds for a variety of  
          social services and supports for high-utilizers of Medi-Cal  
          health care services. Funding for the Whole Person Care Pilots  
          will come from additional federal funds ($300 million per year  
          for five years) and intergovernmental transfers from  
          participating counties. Also, the state has authorized  
          participation in the federal "Health Homes" program, which  
          provides enhanced federal matching funds (90%) for two years to  
          provide additional services and supports to individuals with  
          high-health care costs and/or mental illness.












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          Proposed Law:  
            AB 2821 would require the Department of Housing and Community  
          Development to establish a program to fund competitive grants to  
          pay for rental assistance for homeless Medi-Cal beneficiaries.
          Specific provisions of the bill would:
           Require the Department of Housing and Community Development,  
            in coordination with the Department of Health Care Services,  
            to establish the Medi-Cal Housing Program by July 1, 2017;
           Require the Department of Housing and Community Development to  
            establish draft guidelines to fund competitive grants to pay  
            for rental assistance for Medi-Cal beneficiaries;
           Specify certain criteria that must be included in the grant  
            guidelines;
           Require the Department of Housing and Community Development,  
            on or after December 31, 2017, subject to appropriation of  
            funds by the Legislature, to award competitive grants to  
            participants in the Whole Person Care Pilots or Medi-Cal  
            managed care plans administering the Health Home Program;
           Require the Department of Housing and Community Development to  
            collect data from participants and the Department of Health  
            Care Services;
           Require the Department of Housing and Community Development to  
            contract with an independent evaluator to determine the  
            changes in health care costs for Medi-Cal beneficiaries who  
            are provided services under the Program;
           Specify the eligibility requirements for grant applicants -  
            including a requirement that the applicant be either the lead  
            agency for a Whole Person Care pilot or is located in a county  
            where a Health Home Program is operating, that the applicant  
            has identified sources of funding for certain housing-related  
            services and that the applicant agrees to contribute funding  
            for rental assistance, and other requirements;
           Require the Department of Housing and Community Development  
            and the Department of Health Care Services to coordinate to  
            collect Medi-Cal data on health care costs for participating  
            beneficiaries;
           Specify the eligible uses of grant funds;
           Specify the eligibility criteria for individuals receiving  
            assistance funded through the program - primarily that  
            participants be Medi-Cal eligible and be homeless;
           Make the program subject to annual appropriation by the  
            Legislature;
           Limit administrative costs to 5% of program funding;
           Specify that the bill shall only be implemented after all  








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            necessary federal approvals have been received and only to the  
            extent that the bill's implementation does not jeopardize  
            federal funding.


          Related  
          Legislation:  AB 1618 (Committee on Budget, Statutes of 2016)  
          establishes a program for the Department of Housing and  
          Community Development to distribute $2 billion in funding for  
          permanent supportive housing for individuals eligible for  
          services under the Mental Health Services Act (Proposition 63).  
          Funding for this program will come from a securitization of  
          future Mental Health Services Act tax revenues. 


          Staff  
          Comments:  The author of this bill and several other members of  
          the Assembly proposed to include $1.3 billion for affordable  
          housing (including $60 million to fund AB 2821) in the 2016-17  
          Budget Act. In addition, there was a separate proposal to  
          provide $400 million for affordable housing the Budget Act.  
          Neither of those proposals were included in the enacted Budget  
          Act.
          The bill requires the Department of Housing and Community  
          Development to develop the grant program required in the bill  
          before any funding is appropriated by the Legislature. The  
          Department would incur substantial administrative costs before  
          knowing whether future funding would be available. 




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