BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session AB 2821 (Chiu) - Medi-Cal Housing Program ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: June 16, 2016 |Policy Vote: HEALTH 9 - 0, T. & | | | H. 10 - 1 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: No | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: August 1, 2016 |Consultant: Brendan McCarthy | | | | ----------------------------------------------------------------- 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 AB 2821 (Chiu) Page 1 of ? 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 AB 2821 (Chiu) Page 2 of ? 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. AB 2821 (Chiu) Page 3 of ? 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 AB 2821 (Chiu) Page 4 of ? 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. -- END --