California Legislature—2015–16 Second Extraordinary Session

Senate Bill No. 4

Introduced by Senators Nielsen and Stone

(Coauthors: Senators Anderson, Bates, Berryhill, Fuller, Gaines, Huff, Moorlach, Morrell, Nguyen, Runner, and Vidak)

(Coauthors: Assembly Members Maienschein, Mayes, and Steinorth)

July 16, 2015

An act to amend Sections 4681.6, 4689.8, 4691.9, and 4860, and to add Sections 4681.2, 4690.7, 4793, 4794, and 14105.194 to, the Welfare and Institutions Code, relating to human services financing, and making an appropriation therefor.

LEGISLATIVE COUNSEL’S DIGEST

SB 4, as introduced, Nielsen. Developmental services: Medi-Cal: rate increases.

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. 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. Existing law prohibits certain provider rate increases, but authorizes increases to those rates as necessary to adjust employee wages to meet the state minimum wage law and to provide paid sick leave.

Existing law establishes the Medi-Cal program, administered by the State Department of Health Care Services, under which basic health care services are provided to qualified low-income persons. The Medi-Cal program is, in part, governed and funded by federal Medicaid Program provisions. Existing law requires, except as otherwise provided, Medi-Cal provider payments to be reduced, as specified.

This bill would, to the extent that General Fund revenues for the 2014-15 fiscal year exceed the revenues estimated for that fiscal year in the Budget Act of 2015 and that General Fund revenues for the 2015-16 fiscal year are expected to exceed the revenues estimated for that fiscal year in the Budget Act of 2015, appropriate certain sums to the State Department of Developmental Services to increase rates for certain developmental service providers and to increase regional center operating budgets, and appropriate certain sums to the State Department of Health Care Services for the purpose of increasing Medi-Cal provider rates for providers whose rates were reduced. The bill would require the Director of Finance to determine the percentage increases to be provided to developmental service providers, regional center operating budgets, and Medi-Cal providers based on the amount by which General Fund revenues exceed, or are expected to exceed, the revenues budgeted for the 2014-15 and 2015-16 fiscal years. The bill would make the rate increases, if any, retroactive to July 1, 2015.

Vote: ²⁄₃. Appropriation: yes. Fiscal committee: yes. State-mandated local program: no.

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

SECTION 1.  

(a) The Legislature finds and declares that the
Budget Act of 2015 did not prioritize community services for
Californians with intellectual or developmental disabilities or better
access to care for Medi-Cal recipients.

(b) Therefore, it is the intent of the Legislature that unanticipated
General Fund revenues received by the state be used to increase
funding for community services provided to individuals with
intellectual or developmental disabilities and to increase
reimbursement rates for Medi-Cal providers.

SEC. 2.  

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

4681.2.  

Notwithstanding any other law, the department shall
increase the rates set for community care facilities serving persons
with developmental disabilities to implement the rate increase or
increases, if any, required by Section 4793.

SEC. 3.  

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

4681.6.  

(a) Notwithstanding any other law or regulation,
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), 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, to implement the rate increase
or increases, if any, required by Section 4793.

end insert begin delete

(d)

end delete

begin insert ( end insert 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 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 end delete law or
regulation, 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), 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, to implement the rate increase
or increases, if any, required by Section 4793.

end insert

SEC. 5.  

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

4690.7.  

Notwithstanding any other law, the department shall
increase the rates set for nonresidential service providers to
implement the rate increase or increases, if any, required by Section
4793.

SEC. 6.  

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

4691.9.  

(a) Notwithstanding any other law or regulation,
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), 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, to implement the rate increase, if any,
required by Section 4793.

end insert begin delete

(e)

end delete

begin insert (f end insert begin insert ) 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. 7.  

Section 4793 is added to the Welfare and Institutions
Code, immediately following Section 4792, to read:

4793.  

(a) (1) On or before January 10, 2016, the Director of
Finance shall calculate the sum of the amount by which General
Fund revenues for the 2014-15 fiscal year exceed the revenue
estimated for that fiscal year calculated at the time of the Budget
Act of 2015 and the amount by which General Fund revenues for
the 2015-16 fiscal year are expected to exceed the revenue
estimated for that fiscal year in the Budget Act of 2015.

(2) (A) If the amount calculated pursuant to paragraph (1), after
subtracting the amounts required to satisfy the obligations arising
from Sections 8 and 20 of Article XVI of the California
Constitution, is less than or equal to the amount necessary to
provide a 10 percent rate increase to the developmental services
providers identified in subparagraph (B), the entire amount is
appropriated to the State Department of Developmental Services
for the purpose of providing rate increases to service providers
and increasing regional center operating budgets, the amount of
which shall be calculated pursuant to subparagraph (B).

(B) The Director of Finance shall, in consultation with the State
Department of Developmental Services, calculate the percentage
rate increase to be provided to community care facilities serving
persons with developmental disabilities, residential service
providers, supported living service providers, nonresidential service
providers, other service providers, and supported employment
services providers, and the increase to regional center operating
budgets. In calculating the percentage increase, the director shall
ensure that the total cost of the rate increases for all service
providers and the increase in regional center operating budgets
equals the amount calculated pursuant to paragraph (1) and that
the percentage increase for each provider type and regional center
operating budget is the same.

(3) (A) If the amount calculated pursuant to paragraph (1), after
subtracting the amounts required to satisfy the obligations arising
from Sections 8 and 20 of Article XVI of the California
Constitution, is more than the amount necessary to provide a 10
percent rate increase to the developmental services providers
identified in subparagraph (B) of paragraph (2), then the amount
necessary to provide a 10 percent rate increase to the developmental
services providers identified in subparagraph (B) of paragraph (2)
is appropriated to the State Department of Developmental Services
for the purpose of providing rate increases to service providers
and increasing regional center operating budgets, the amount of
which shall be calculated pursuant to subparagraph (B), and the
remainder of the amount, up to the amount necessary to restore
the rates paid to affected Medi-Cal providers to the levels in effect
prior to the reductions imposed by Sections 14105.07, 14105.191,
14105.192, and 14105.93, is appropriated to the State Department
of Health Care Services for the purpose of increasing Medi-Cal
provider rates, the amount of which shall be calculated pursuant
to subparagraph (C).

(B) The Director of Finance shall, in consultation with the State
Department of Developmental Services, calculate the percentage
rate increase to be provided to community care facilities serving
persons with developmental disabilities, residential service
providers, supported living service providers, nonresidential service
providers, other service providers, and supported employment
service providers, and the increase to regional center operating
budgets. In calculating the percentage increase, the director shall
ensure that the total cost of the rate increases for all service
providers and the increase in regional center operating budgets is
no greater than the amount necessary to provide a 10 percent rate
increase to the developmental services providers identified in
subparagraph (B) of paragraph (2) and that the percentage increase
for each provider type and regional center operating budget is the
same.

(C) The Director of Finance shall, in consultation with the State
Department of Health Care Services, calculate the percentage rate
increase to be provided to Medi-Cal providers for whom rates were
reduced pursuant to Section 14105.07, 14105.191, 14105.192, or
14105.93. In calculating the percentage rate increase, the director
shall ensure that the total cost of the rate increase for all providers
equals the amount calculated pursuant to paragraph (1) minus the
amount necessary to provide a 10 percent rate increase to the
developmental services providers identified in subparagraph (B)
of paragraph (2), but no more than the amount necessary to restore
the rates paid to affected Medi-Cal providers to the levels in effect
prior to the reductions imposed by Sections 14105.07, 14105.191,
14105.192, and 14105.93, and that the percentage increase is
equitable among eligible Medi-Cal providers and managed care
health plans that contract with the State Department of Health Care
Services pursuant to Chapter 7 (commencing with Section 14000)
or Chapter 8 (commencing with Section 14200) of Part 3 of
Division 9.

(b) (1) On or before May 14, 2016, the Director of Finance
shall recalculate the sum of the amount by which General Fund
revenues for the 2014-15 fiscal year exceed the revenue estimated
for that fiscal year calculated at the time of the Budget Act of 2015
and the amount by which General Fund revenues for the 2015-16
fiscal year are expected to exceed the revenue estimated for that
fiscal year in the Budget Act of 2015.

(2) If the amount calculated pursuant to paragraph (1), after
subtracting the amounts required to satisfy the obligations arising
from Sections 8 and 20 of Article XVI of the California
Constitution, is greater than the amount calculated pursuant to
paragraph (1) of subdivision (a), but is less than or equal to the
amount necessary to provide a 10 percent rate increase to the
developmental services providers identified in subparagraph (B)
of paragraph (2) of subdivision (a), the entire amount, less the
amount appropriated pursuant to subparagraph (A) of paragraph
(2) of subdivision (a), is appropriated to the State Department of
Developmental Services for the purpose of providing rate increases
to service providers and increasing regional center operating
budgets, the amount of which shall be calculated pursuant to
subparagraph (B) of paragraph (2) of subdivision (a), except that
the total cost of the rate increases for all service providers and the
increase in regional center operating budgets shall equal the amount
calculated pursuant to this paragraph.

(3) If the amount calculated pursuant to paragraph (1), after
subtracting the amounts required to satisfy the obligations arising
from Sections 8 and 20 of Article XVI of the California
Constitution, is greater than the amount calculated pursuant to
paragraph (1) of subdivision (a), and is more than the amount
necessary to provide a 10 percent rate increase to the developmental
services providers identified in subparagraph (B) of paragraph (2)
of subdivision (a), then the amount necessary to provide a 10
percent rate increase to the developmental services providers
identified in subparagraph (B) of paragraph (2) of subdivision (a),
less any amount appropriated pursuant to subparagraph (A) of
paragraph (2) of subdivision (a) or subparagraph (A) of paragraph
(3) of subdivision (a), is appropriated to the State Department of
Developmental Services for the purpose of providing rate increases
to service providers and increasing regional center operating
budgets, the amount of which shall be calculated pursuant to
subparagraph (B) of paragraph (3) of subdivision (a), except that
the total cost of the rate increases for all service providers and the
increase in regional center operating budgets shall equal the amount
appropriated to the State Department of Developmental Services
pursuant to this paragraph. The remainder of the amount, up to the
amount necessary to restore the rates paid to affected Medi-Cal
providers to the levels in effect prior to the reductions imposed by
Sections 14105.07, 14105.191, 14105.192, and 14105.93, less any
amount appropriated pursuant to subparagraph (A) of paragraph
(3) of subdivision (a), is appropriated to the State Department of
Health Care Services for the purpose of increasing Medi-Cal
provider rates for providers for whom rates were reduced pursuant
to Sections 14105.07, 14105.191, 14105.192, and 14105.93, the
amount of which shall be calculated pursuant to subparagraph (C)
of paragraph (3) of subdivision (a), except that the total cost of the
rate increase for all providers shall equal the amount appropriated
to the State Department of Health Care Services pursuant to this
paragraph.

(c) The rate increases calculated and provided pursuant to this
section, if any, shall be retroactive to July 1, 2015.

SEC. 8.  

Section 4794 is added to the Welfare and Institutions
Code, immediately following Section 4793, to read:

4794.  

Notwithstanding any other law, the department shall
increase funding provided to a regional center for the regional
center’s operating budget to implement the rate increase or
increases, if any, required by Section 4793.

SEC. 9.  

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

4860.  

(a) (1)  begin delete The end delete begin insert Except as provided in subdivision (f), the end insert
hourly rate for supported employment services provided to
consumers receiving individualized services shall be thirty dollars
and eighty-two cents ($30.82).

(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 delete The end delete begin insert Except as provided in subdivision (f), the end insert 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.

(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) 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.

(2) 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.

(3) 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.

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

begin insert

(f) The department shall increase the hourly rates established
pursuant to subdivisions (a) and (b) to implement the rate increase
or increases, if any, required by Section 4793.

end insert

SEC. 10.  

Section 14105.194 is added to the Welfare and
Institutions Code, to read:

14105.194.  

(a) Notwithstanding Sections 14105.07, 14105.191,
14105.192, and 14105.193, payments to providers and managed
care health plans that contract with the department pursuant to this
chapter or Chapter 8 (commencing with Section 14200) shall be
increased pursuant to the operation of Section 4793.

(b) The director shall implement this section to the maximum
extent permitted by federal law and for the maximum time period
for which the director obtains federal approval for federal financial
participation for the increases provided for in Section 4793 and
this section.

(c) The director shall promptly seek all necessary federal
approvals to implement 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 date this act
becomes effective.