California Legislature—2015–16 Second Extraordinary Session

Senate Bill No. 1

Introduced by Senator Beall

(Principal coauthors: Senators Monning and Pavley)

July 2, 2015

An act to amend Sections 4648.4, 4681.6, 4688.21, 4689.8, 4691.9, and 4860, and to add Sections 4681.2, 4690.7, 4795, and 4796 to, the Welfare and Institutions Code, relating to developmental services.

LEGISLATIVE COUNSEL’S DIGEST

SB 1, as introduced, Beall. Developmental services: funding.

(1) The Lanterman Developmental Disabilities Services Act requires the State Department of Developmental Services to contract with regional centers to provide services and supports to individuals with developmental disabilities. Under existing law, the regional centers purchase needed services for individuals with developmental disabilities through approved service providers or arrange for those services through other publicly funded agencies. The annual budget appropriates funds to the department to fund regional center operations.

This bill would require the department, subject to an appropriation by the Legislature for these purposes, to increase the funding paid to a regional center for the regional center’s operating budget by 10%, and to increase funding to enable the regional center and the regional center’s purchase-of-service vendors to fund certain costs related to minimum wage requirements. The bill would also require the department to develop a 10-year financial sustainability plan to ensure that the state’s community-based developmental services system effectively serves all individuals with developmental disabilities.

(2) Existing law establishes specified rates to be paid to certain service providers and the rates to be paid for certain developmental services. Existing law requires that rates to be paid to other developmental service providers either be set by the department or negotiated between the regional center and the service provider.

This bill would increase the rates established by existing law by 10%, as specified, and would require a 10% increase to the rates set by the department and the rates negotiated between regional centers and service providers, as specified.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 4648.4 of the Welfare and Institutions
Code is amended to read:

4648.4.  

begin delete (a) end delete begin delete   end delete Notwithstanding any other begin delete provision of law or
regulation, end delete begin insert law, end insert commencing July 1, 2006, rates for services listed
in paragraphs (1), (2), with the exception of travel reimbursement,
(3) to (8), inclusive, (10), and (11) of subdivision (b), shall be
increased by 3 percent, subject to funds specifically appropriated
for this increase in the Budget Act of 2006. The increase shall be
applied as a percentage, and the percentage shall be the same for
all providers. Any subsequent change shall be governed by
subdivision (b).

(b) Notwithstanding any other begin delete provision of law or regulation, end delete
begin insert law, end insert except for subdivision (a), no regional center may pay any
provider of the following services or supports a rate that is greater
than the rate that is in effect on or after June 30, 2008, unless the
increase is required by a contract between the regional center and
the vendor that is in effect on June 30, 2008, or the regional center
demonstrates that the approval is necessary to protect the
consumer’s health or safety and the department has granted prior
written authorization:

(1) Supported living services.

(2) Transportation, including travel reimbursement.

(3) Socialization training programs.

(4) Behavior intervention training.

(5) Community integration training programs.

(6) Community activities support services.

(7) Mobile day programs.

(8) Creative art programs.

(9) Supplemental day services program supports.

(10) Adaptive skills trainers.

(11) Independent living specialists.

begin insert

(c) Notwithstanding subdivisions (a) and (b), and subject to an
appropriation of funds by the Legislature for these purposes, a
regional center shall increase rates for services listed in
paragraphs (1), (2), with the exception of travel reimbursement,
and (3) to (11), inclusive, of subdivision (b), where the rates are
determined through a negotiation between the regional center and
the provider, by 10 percent above the levels that otherwise would
have been in effect on the effective date of the act that added this
subdivision, unless the rate for a service was increased pursuant
to another provision of the act that added this subdivision.

end insert

SEC. 2.  

Section 4681.2 is added to the Welfare and Institutions
Code, to read:

4681.2.  

Notwithstanding any other law, and subject to an
appropriation of funds by the Legislature for these purposes, the
department shall increase the rates set for community care facilities
serving persons with developmental disabilities by 10 percent
above the levels that otherwise would have been in effect on the
effective date of the act that added this section.

SEC. 3.  

Section 4681.6 of the Welfare and Institutions Code
is amended to read:

4681.6.  

(a) Notwithstanding any other begin delete law or regulation, end delete begin insert law, end insert
commencing July 1, 2008:

(1) A regional center shall not pay an existing residential service
provider, for services where rates are determined through a
negotiation between the regional center and the provider, a rate
higher than the rate in effect on June 30, 2008, unless the increase
is required by a contract between the regional center and the vendor
that is in effect on June 30, 2008, or the regional center
demonstrates that the approval is necessary to protect the
consumer’s health or safety and the department has granted prior
written authorization.

(2) A regional center shall not negotiate a rate with a new
residential service provider, for services where rates are determined
through a negotiation between the regional center and the provider,
that is higher than the regional center’s median rate for the same
service code and unit of service, or the statewide median rate for
the same service code and unit of service, whichever is lower. The
unit of service designation shall conform with an existing regional
center designation or, if none exists, a designation used to calculate
the statewide median rate for the same service. The regional center
shall annually certify to the department its median rate for each
negotiated rate service code, by designated unit of service. This
certification shall be subject to verification through the
department’s biennial fiscal audit of the regional center.

(b) Notwithstanding subdivision (a), commencing July 1, 2014,
regional centers may negotiate a rate adjustment with residential
service providers regarding rates that are otherwise restricted
pursuant to subdivision (a), if the adjustment is necessary in order
to pay employees no less than the minimum wage as established
by Section 1182.12 of the Labor Code, as amended by Chapter
351 of the Statutes of 2013, and only for the purpose of adjusting
payroll costs associated with the minimum wage increase. The
rate adjustment shall be specific to the unit of service designation
that is affected by the increased minimum wage, shall be specific
to payroll costs associated with any increase necessary to adjust
employee pay only to the extent necessary to bring pay into
compliance with the increased state minimum wage, and shall not
be used as a general wage enhancement for employees paid above
the minimum wage. Regional centers shall maintain documentation
on the process to determine, and the rationale for granting, any
rate adjustment associated with the minimum wage increase.

(c) Notwithstanding subdivision (a), commencing July 1, 2015,
regional centers may negotiate a rate adjustment with residential
service providers regarding rates that are otherwise restricted
pursuant to subdivision (a), if the adjustment is necessary to
implement Article 1.5 (commencing with Section 245) of Chapter
1 of Part 1 of Division 2 of the Labor Code, as added by Chapter
317 of the Statutes of 2014. The rate adjustment may be applied
only if a minimum of 24 hours or three days of paid sick leave per
year was not a benefit provided to employees as of June 30, 2015,
and shall be specific to payroll costs associated with any increase
necessary to compensate an employee up to a maximum of 24
hours or three days of paid sick leave in each year of employment.

begin insert

(d) Notwithstanding subdivision (a), and subject to an
appropriation of funds by the Legislature for these purposes,
regional centers shall increase the rates paid to residential service
providers, for services where rates are determined through a
negotiation between the regional center and the provider, by 10
percent above the levels that otherwise would have been in effect
on the effective date of the act that added this subdivision.

end insert begin delete

(d)

end delete

begin insert (e) end insert  For purposes of this section, “residential service provider”
includes Adult Residential Facilities for Persons with Special
Health Care Needs, as described in Section 4684.50.

begin delete

(e)

end delete

begin insert (f) end insert  This section shall not apply to those services for which rates
are determined by the State Department of Health Care Services,
or the State Department of Developmental Services, or are usual
and customary.

SEC. 4.  

Section 4688.21 of the Welfare and Institutions Code
is amended to read:

4688.21.  

(a) The Legislature places a high priority on
opportunities for adults with developmental disabilities to choose
and customize day services to meet their individualized needs;
have opportunities to further the development or maintenance of
employment and volunteer activities; direct their services; pursue
postsecondary education; and increase their ability to lead
integrated and inclusive lives. To further these goals, a consumer
may choose a tailored day service or vouchered community-based
training service, in lieu of any other regional center vendored day
program, look-alike day program, supported employment program,
or work activity program.

(b) (1) A tailored day service shall do both of the following:

(A) Include an individualized service design, as determined
through the individual program plan (IPP) and approved by the
regional center, that maximizes the consumer’s individualized
choices and needs. This service design may include, but may not
be limited to, the following:

(i) Fewer days or hours than in the program’s approved day
program, look-alike day program, supported employment program,
or work activity program design.

(ii) Flexibility in the duration and intensity of services to meet
the consumer’s individualized needs.

(B) Encourage opportunities to further the development or
maintenance of employment, volunteer activities, or pursuit of
postsecondary education; maximize consumer direction of the
service; and increase the consumer’s ability to lead an integrated
and inclusive life.

(2) The type and amount of tailored day service shall be
determined through the IPP process, pursuant to Section 4646.
The IPP shall contain, but not be limited to, the following:

(A) A detailed description of the consumer’s individualized
choices and needs and how these choices and needs will be met.

(B) The type and amount of services and staffing needed to
meet the consumer’s individualized choices and needs, and unique
health and safety and other needs.

(3) The staffing requirements set forth in Section 55756 of Title
17 of the California Code of Regulations and subdivision (r) of
Section 4851 of this code shall not apply to a tailored day service.

(4) For currently vendored programs wishing to offer a tailored
day service option, the regional center shall vendor a tailored day
service option upon negotiating a rate and maximum units of
service design that includes, but is not limited to, the following:

(A) A daily or hourly rate and maximum units of service design
that does not exceed the equivalent cost of four days per week of
the vendor’s current rate, if the vendor has a daily day program
rate.

(B) A rate and maximum units of service design that does not
exceed the equivalent cost of four-fifths of the hours of the vendor’s
current rate, if the vendor has an hourly rate.

(5) The regional center shall ensure that the vendor is capable
of complying with, and will comply with, the consumer’s IPP,
individual choice, and health and safety needs.

(6) For new programs wishing to offer a tailored day service
option, the regional center shall vendor a tailored day service option
upon negotiating a rate and maximum units of service design. The
rate paid to the new vendor shall not exceed four-fifths of the
temporary payment rate or the median rate, whichever is applicable.

begin insert

(7) Notwithstanding any other law, and subject to an
appropriation of funds by the Legislature for these purposes, the
rates paid to tailored day service providers shall be increased by
10 percent above the levels that otherwise would have been in
effect on the effective date of the act that added this paragraph.

end insert begin delete

(7)

end delete

begin insert ( end insert begin insert 8) end insert  Effective July 1, 2011, and prior to the time of development,
review, or modification of a consumer’s IPP, regional centers shall
provide information about tailored day service to eligible adult
consumers. A consumer may request information about tailored
day services from the regional center at any time and may request
an IPP meeting to secure those services.

(c) (1) A vouchered community-based training service is
defined as a consumer-directed service that assists the consumer
in the development of skills required for community integrated
employment or participation in volunteer activities, or both, and
the assistance necessary for the consumer to secure employment
or volunteer positions or pursue secondary education.

(2) Implementation of vouchered community-based training
service is contingent upon the approval of the federal Centers for
Medicare and Medicaid Services.

(3) Vouchered community-based training service shall be
provided in natural environments in the community, separate from
the consumer’s residence.

(4) A consumer, parent, or conservator vendored as a vouchered
community-based training service shall utilize the services of a
financial management services (FMS) entity. The regional center
shall provide information about available financial management
services and shall assist the consumer in selecting a FMS vendor
to act as coemployer.

(5) A parent or conservator shall not be the direct support worker
employed by the vouchered community-based training service
vendor.

(6) If the direct support worker is required to transport the
consumer, the vouchered community-based training service vendor
shall verify that the direct support worker can transport the
consumer safely and has a valid California driver’s license and
proof of insurance.

(7)  begin insert (A) end insert begin insert   end insert The rate for vouchered community-based training
service shall not exceed thirteen dollars and forty-seven cents
($13.47) per hour. The rate includes employer-related taxes and
all transportation needed to implement the service, except as
described in paragraph (8). The rate does not include the cost of
the FMS.

begin insert

(B) Notwithstanding subparagraph (A), and subject to an
appropriation of funds by the Legislature for these purposes, the
rate described in subparagraph (A) shall be fourteen dollars and
eighty-two cents ($14.82) per hour.

end insert

(8) A consumer vendored as a vouchered community-based
training service shall also be eligible for a regional center-funded
bus pass, if appropriate and needed.

(9) Vouchered community-based training service shall be limited
to a maximum of 150 hours per quarter. The services to be provided
and the service hours shall be documented in the consumer’s IPP.

(10) A direct support worker of vouchered community-based
training service shall be an adult who possesses the skill, training,
and experience necessary to provide services in accordance with
the IPP.

(11) Effective July 1, 2011, and prior to the time of development,
review, or modification of a consumer’s IPP, regional centers shall
provide information about vouchered community-based training
service to eligible adult consumers. A consumer may request
information about vouchered community-based training service
from the regional center at any time and may request an IPP
meeting to secure those services.

(12) The type and amount of vouchered community-based
training service shall be determined through the IPP process
pursuant to Section 4646. The IPP shall contain, but not be limited
to, the following:

(A) A detailed description of the consumer’s individualized
choices and needs and how these choices and needs will be met.

(B) The type and amount of services and staffing needed to
meet the consumer’s individualized choices and unique health and
safety and other needs.

(d) The department may adopt emergency regulations for
tailored day service or vouchered community-based training
service. The adoption, amendment, repeal, or readoption of a
regulation authorized by this subdivision is deemed to be necessary
for the immediate preservation of the public peace, health and
safety, or general welfare, for purposes of Sections 11346.1 and
11349.6 of the Government Code, and the department is hereby
exempted from the requirement that it describe specific facts
showing the need for immediate action. A certificate of compliance
for these implementing regulations shall be filed within 24 months
following the adoption of the first emergency regulations filed
pursuant to this subdivision.

SEC. 5.  

Section 4689.8 of the Welfare and Institutions Code
is amended to read:

4689.8.  

begin insert (a) end insert begin insert   end insert Notwithstanding any other begin delete provision of law or
regulation, end delete begin insert law, end insert commencing July 1, 2008:

begin delete

(a) No

end delete

begin insert (1) end insert begin insert   end insert begin insert A end insert regional center begin delete may end delete begin insert shall not end insert pay an existing supported
living service provider, for services where rates are determined
through a negotiation between the regional center and the provider,
a rate higher than the rate in effect on June 30, 2008, unless the
increase is required by a contract between the regional center and
the vendor that is in effect on June 30, 2008, or the regional center
demonstrates that the approval is necessary to protect the
consumer’s health or safety and the department has granted prior
written authorization.

begin delete

(b) No

end delete

begin insert (2) end insert begin insert   end insert begin insert A end insert regional center begin delete may end delete begin insert shall not end insert negotiate a rate with a new
supported living service provider, for services where rates are
determined through a negotiation between the regional center and
the provider, that is higher than the regional center’s median rate
for the same service code and unit of service, or the statewide
median rate for the same service code and unit of service,
whichever is lower. The unit of service designation shall conform
with an existing regional center designation or, if none exists, a
designation used to calculate the statewide median rate for the
same service. The regional center shall annually certify to the State
Department of Developmental Services its median rate for each
negotiated rate service code, by designated unit of service. This
certification shall be subject to verification through the
department’s biennial fiscal audit of the regional center.

begin insert

(b) Notwithstanding subdivision (a), and subject to an
appropriation of funds by the Legislature for these purposes,
regional centers shall increase the rates paid to supported living
service providers, for services where rates are determined through
a negotiation between the regional center and the provider, by 10
percent above the levels that otherwise would have been in effect
on the effective date of the act that added this subdivision.

end insert

SEC. 6.  

Section 4690.7 is added to the Welfare and Institutions
Code, to read:

4690.7.  

(a) Notwithstanding any other law, and subject to an
appropriation of funds by the Legislature for these purposes, the
department shall increase the rates set for nonresidential service
providers by 10 percent above the levels that otherwise would have
been in effect on the effective date of the act that added this section.

SEC. 7.  

Section 4691.9 of the Welfare and Institutions Code
is amended to read:

4691.9.  

(a) Notwithstanding any other begin delete law or regulation, end delete begin insert law, end insert
commencing July 1, 2008:

(1) A regional center shall not pay an existing service provider,
for services where rates are determined through a negotiation
between the regional center and the provider, a rate higher than
the rate in effect on June 30, 2008, unless the increase is required
by a contract between the regional center and the vendor that is in
effect on June 30, 2008, or the regional center demonstrates that
the approval is necessary to protect the consumer’s health or safety
and the department has granted prior written authorization.

(2) A regional center shall not negotiate a rate with a new service
provider, for services where rates are determined through a
negotiation between the regional center and the provider, that is
higher than the regional center’s median rate for the same service
code and unit of service, or the statewide median rate for the same
service code and unit of service, whichever is lower. The unit of
service designation shall conform with an existing regional center
designation or, if none exists, a designation used to calculate the
statewide median rate for the same service. The regional center
shall annually certify to the State Department of Developmental
Services its median rate for each negotiated rate service code, by
designated unit of service. This certification shall be subject to
verification through the department’s biennial fiscal audit of the
regional center.

(b) Notwithstanding subdivision (a), commencing July 1, 2014,
regional centers may negotiate a rate adjustment with providers
regarding rates if the adjustment is necessary in order to pay
employees no less than the minimum wage as established by
Section 1182.12 of the Labor Code, as amended by Chapter 351
of the Statutes of 2013, and only for the purpose of adjusting
payroll costs associated with the minimum wage increase. The
rate adjustment shall be specific to the unit of service designation
that is affected by the increased minimum wage, shall be specific
to payroll costs associated with any increase necessary to adjust
employee pay only to the extent necessary to bring pay into
compliance with the increased state minimum wage, and shall not
be used as a general wage enhancement for employees paid above
the increased minimum wage. Regional centers shall maintain
documentation on the process to determine, and the rationale for
granting, any rate adjustment associated with the minimum wage
increase.

(c) Notwithstanding any other law or regulation, commencing
January 1, 2015, rates for personal assistance and supported living
services in effect on December 31, 2014, shall be increased by
5.82 percent, subject to funds specifically appropriated for this
increase for costs due to changes in federal regulations
implementing the federal Fair Labor Standards Act of 1938 (29
U.S.C. Sec. 201 et seq.). The increase shall be applied as a
percentage, and the percentage shall be the same for all applicable
providers. As used in this subdivision, both of the following
definitions shall apply:

(1) “Personal assistance” is limited only to those services
provided by vendors classified by the regional center as personal
assistance providers, pursuant to the miscellaneous services
provisions contained in Title 17 of the California Code of
Regulations.

(2) “Supported living services” are limited only to those services
defined as supported living services in Title 17 of the California
Code of Regulations.

(d) Notwithstanding subdivision (a), commencing July 1, 2015,
regional centers may negotiate a rate adjustment with existing
service providers for services for which rates are determined
through negotiation between the regional center and the provider,
if the adjustment is necessary to implement Article 1.5
(commencing with Section 245) of Chapter 1 of Part 1 of Division
2 of the Labor Code, as added by Chapter 317 of the Statutes of
2014. The rate adjustment may be applied only if a minimum of
24 hours or three days of paid sick leave per year was not a benefit
provided to employees as of June 30, 2015, and shall be specific
to payroll costs associated with any increase necessary to
compensate an employee up to a maximum of 24 hours or three
days of paid sick leave in each year of employment.

begin insert

(e) Notwithstanding subdivision (a), and subject to an
appropriation of funds by the Legislature for these purposes,
regional centers shall increase the rates paid to service providers,
for services where rates are determined through a negotiation
between the regional center and the provider, by 10 percent above
the levels that otherwise would have been in effect on the effective
date of the act that added this subdivision.

end insert begin delete

(e)

end delete

begin insert (f) end insert  This section shall not apply to those services for which rates
are determined by the State Department of Health Care Services,
or the State Department of Developmental Services, or are usual
and customary.

SEC. 8.  

Section 4795 is added to the Welfare and Institutions
Code, to read:

4795.  

(a) The department shall, subject to an appropriation of
funds by the Legislature for these purposes, increase the funding
provided to a regional center for the regional center’s operating
budget by 10 percent above the levels that otherwise would have
been in effect on the effective date of the act that added this section.

(b) The department shall, subject to an appropriation of funds
by the Legislature for these purposes, increase the funding provided
to a regional center to enable the regional center and regional
center’s purchase-of-service vendors to fund all of the following
costs associated with minimum wage requirements:

(1) The costs necessary to comply with a statewide minimum
wage requirement.

(2) The costs necessary to comply with minimum wage
requirements enacted by local governments that exceed the
statewide minimum wage.

(3) The costs necessary to increase compensation for exempt,
salaried employees to comply with wage orders issued by the
Industrial Welfare Commission or any other state regulatory
agency.

(4) Any other wage adjustments that vendors are required to
make in response to minimum wage increases mandated by state
or federal statutes, regulations, or other authorities.

SEC. 9.  

Section 4796 is added to the Welfare and Institutions
Code, to read:

4796.  

The department shall develop a 10-year financial
sustainability plan to ensure that the state’s community-based
developmental services system effectively serves all individuals
with developmental disabilities.

SEC. 10.  

Section 4860 of the Welfare and Institutions Code is
amended to read:

4860.  

(a) (1)  begin insert (A) end insert begin insert   end insert The hourly rate for supported employment
services provided to consumers receiving individualized services
shall be thirty dollars and eighty-two cents ($30.82).

begin insert

(B) Notwithstanding subparagraph (A), and subject to an
appropriation of funds by the Legislature for these purposes, the
rate described in subparagraph (A) shall be thirty-three dollars
and ninety cents ($33.90).

end insert

(2) Job coach hours spent in travel to consumer worksites may
be reimbursable for individualized services only when the job
coach travels from the vendor’s headquarters to the consumer’s
worksite or from one consumer’s worksite to another, and only
when the travel is one way.

(b)  begin insert (1) end insert begin insert   end insert The hourly rate for group services shall be thirty dollars
and eighty-two cents ($30.82), regardless of the number of
consumers served in the group. Consumers in a group shall be
scheduled to start and end work at the same time, unless an
exception that takes into consideration the consumer’s compensated
work schedule is approved in advance by the regional center. The
department, in consultation with stakeholders, shall adopt
regulations to define the appropriate grounds for granting these
exceptions. When the number of consumers in a supported
employment placement group drops to fewer than the minimum
required in subdivision (r) of Section 4851, the regional center
may terminate funding for the group services in that group, unless,
within 90 days, the program provider adds one or more regional
centers, or Department of Rehabilitation-funded supported
employment consumers to the group.

begin insert

(2) Notwithstanding paragraph (1), and subject to an
appropriation of funds by the Legislature for these purposes, the
rate described in paragraph (1) shall be thirty-three dollars and
ninety cents ($33.90).

end insert

(c) Job coaching hours for group services shall be allocated on
a prorated basis between a regional center and the Department of
Rehabilitation when regional center and Department of
Rehabilitation consumers are served in the same group.

(d) When Section 4855 applies, fees shall be authorized for the
following:

(1)  begin insert (A) end insert begin insert   end insert A three-hundred-sixty-dollar ($360) fee shall be paid
to the program provider upon intake of a consumer into a supported
employment program. No fee shall be paid if that consumer
completed a supported employment intake process with that same
supported employment program within the previous 12 months.

begin insert

(B) Notwithstanding subparagraph (A), and subject to an
appropriation of funds by the Legislature for these purposes, the
fee described in subparagraph (A) shall be
three-hundred-ninety-six-dollars ($396).

end insert

(2)  begin insert (A) end insert begin insert   end insert A seven-hundred-twenty-dollar ($720) fee shall be paid
upon placement of a consumer in an integrated job, except that no
fee shall be paid if that consumer is placed with another consumer
or consumers assigned to the same job coach during the same hours
of employment.

begin insert

(B) Notwithstanding subparagraph (A), and subject to an
appropriation of funds by the Legislature for these purposes, the
fee described in subparagraph (A) shall be
seven-hundred-ninety-two-dollars ($792).

end insert

(3)  begin insert (A) end insert begin insert   end insert A seven-hundred-twenty-dollar ($720) fee shall be paid
after a 90-day retention of a consumer in a job, except that no fee
shall be paid if that consumer has been placed with another
consumer or consumers, assigned to the same job coach during
the same hours of employment.

begin insert

(B) Notwithstanding subparagraph (A), and subject to an
appropriation of funds by the Legislature for these purposes, the
fee described in subparagraph (A) shall be
seven-hundred-ninety-two-dollars ($792).

end insert

(e) Notwithstanding paragraph (4) of subdivision (a) of Section
4648, the regional center shall pay the supported employment
program rates established by this section.

SEC. 11.  

The Legislature declares that the changes made by
this act are not intended to result in the substantial impairment of
any contract. To the extent any contract would be substantially
impaired as a result of the application of any change made by this
act, it is the intent of the Legislature that the change apply only to
contracts renewed or entered into on or after the effective date of
this act.