BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session SB 779 (Hall) - Skilled nursing facilities: certified nurse assistant staffing ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: May 4, 2015 |Policy Vote: HEALTH 7 - 2 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: Yes | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: May 18, 2015 |Consultant: Brendan McCarthy | | | | ----------------------------------------------------------------- This bill meets the criteria for referral to the Suspense File. Bill Summary: SB 779 would increase the minimum number of required direct care hours per patient in skilled nursing facilities from 3.2 hours to 4.1 hours. The bill would require the Department of Public Health to develop staff to patient ratios that convert the direct care hours requirement into staffing ratios. Fiscal Impact: Annual costs of $110 million per year to $250 million per year for additional Medi-Cal payments to skilled nursing facilities (General Fund and federal funds). Under current law, the Department of Health Care Services pays skilled nursing facilities that care for Medi-Cal beneficiaries on a cost-based system. Under current law, the Department is required to increase reimbursement rates to skilled nursing facilities to offset any additional costs mandated by the state or federal government. Currently, the average nursing hours is about 3.7 per patient day. It is not clear whether current law will require the Department to offset the SB 779 (Hall) Page 1 of ? increased cost to go from 3.7 to 4.1 hours, or whether the Department will be required to pay for the costs to go from the currently required 3.2 hours to 4.1 hours. The lower cost estimate above assumes that the Department will increase payments to a skilled nursing facility based on the cost to increase staffing levels from current practice to the newly mandated hours requirement. The higher cost estimate assumes that the Department increases payments to facilities to pay the full costs of increasing staffing levels from the currently mandated level to the level mandated in this bill. Unknown costs to the Department of State Hospitals for additional staff (General Fund). The Department of State Hospitals operates three skilled nursing units as part of the state hospital system. Because state hospitals are licensed as psychiatric hospitals, the skilled nursing facilities operated by the Department of State Hospitals are not eligible for the exemption granted in the bill for skilled nursing facilities that are a distinct part of a general acute care hospital. The cost for the Department to comply with the mandated direct care hours in the bill is unknown, in part because the nature of the patient population in the state hospital system generally requires more staffing than is typical in a normal skilled nursing facility. One-time costs, less than $150,000 to adopt regulations and modify internal tracking systems by the Department of Public Health (Licensing and Certification Fund). Minor additional ongoing enforcement costs to the Department of Public Health (Licensing and Certification Fund). Because the Department already licenses skilled nursing facilities, including compliance with existing nursing hours requirements, there is no anticipated additional cost to enforce the requirements of this bill as part of the ongoing licensing program. Background: Under current law, skilled nursing facilities are licensed and regulated by the Department of Public Health. Current law and regulation requires skilled nursing facilities to provide 3.2 hours of nursing care per patient per day. Under current law, skilled nursing facilities that provide services to Medi-Cal patients are paid on a cost-based system. SB 779 (Hall) Page 2 of ? Under that system, a skilled nursing facility receives payments are based on the facility's actual costs, with certain caps, based on similar facilities. For example, a skilled nursing facility's Medi-Cal payments reflect the actual labor costs of the facility, capped at the 95th percentile of labor costs for similar facilities. Under current law (set to sunset in July 2015), the Department of Health Care Services is required to pay skilled nursing facilities for the projected cost to comply with new state or federal mandates, on top of the calculated payment rates. The cost based reimbursement system was adopted at the same time the state imposed a quality assurance fee on skilled nursing facilities, in order to use fee revenues to draw down additional federal funding to pay for skilled nursing facility services (and generate General Fund savings of about $500 million per year). (A similar system exists for private hospitals.) In addition, current law authorizes a Quality and Accountability Supplemental Payment System, which provides additional payments to skilled nursing facilities based on performance measures. Since the shift in payments to a cost-based system and the creation of the incentive payment system, average nursing hours have increased from the mandated 3.2 hours per patient to an estimated statewide average of about 3.7 hours per patient, in part because the current financing system rewards skilled nursing facilities for investing in additional staff to improve patient care. Proposed Law: SB 779 would increase the minimum number of required direct care hours per patient in skilled nursing facilities from 3.2 hours to 4.1 hours. Specific provisions of the bill would: Revise the term "nursing care" which can include care provided by nurses or unlicensed staff to "direct care hours"; Increase the minimum number of direct care hours in skilled nursing facilities from 3.2 to 4.1 per patient per day; Exempt skilled nursing facilities that are a distinct part of a general acute care hospital from the increased staffing requirement; Require the Department of Public Health to develop staff to patient ratios that convert the direct care hours requirement into specified staffing ratios. (The specified staffing ratios SB 779 (Hall) Page 3 of ? in the bill do not appear to increase the overall staffing requirements for skilled nursing facilities, beyond what the bill already requires to increase direct care hours.); Require skilled nursing facilities to post information about direct care hours being provided by the facility; Require skilled nursing facilities to make information available to the public, upon request, regarding staffing levels; Specifically apply the new direct care hours requirement to skilled nursing facilities providing service under the Medi-Cal program; Add compliance with direct care service hours to the quality performance measures used by the Department of Health Care Services to determine additional payments. Staff Comments: Current law which governs the rate setting for skilled nursing facilities and implements the skilled nursing facility quality assurance fee sunsets on July 31, 2015. The Governor's budget proposal includes trailer bill language to extend the quality assurance fee and the rate setting methodology until 2020. The proposed trailer bill language would extend the current requirement to pay skilled nursing facilities for the costs to comply with new state or federal mandates. The only costs that may be incurred by a local agency relate to crimes and infractions. Under the California Constitution, such costs are not reimbursable by the state. -- END --