BILL ANALYSIS
AB 754
Page 1
Date of Hearing: April 21, 2009
ASSEMBLY COMMITTEE ON HEALTH
Dave Jones, Chair
AB 754 (Chesbro) - As Amended: April 14, 2009
SUBJECT : Medi-Cal mental health managed care contracts.
SUMMARY : Clarifies the obligations and timeframes for the
Department of Mental Health (DMH) and the Department of Health
Care Services (DHCS) to promptly reimburse county mental health
plans for their Medi-Cal claims. Specifically, this bill :
1)Revises the existing requirement for county mental health
plans (MHPs) to bear the full cost of providing medically
necessary mental health services to exclude services provided
under the Early Periodic Screening Diagnosis and Treatment
(EPSDT) program.
2)Requires changes and amendments to contracts between DMH and
MHPs for the provision of specialty mental health care to
Medi-Cal beneficiaries to be agreed upon by all parties.
3)Allows MHPs to reopen their contracts with DMH if changes to
state or federal law affect MHP costs.
4)Requires DMH to apply the federally established timeframes
that it follows for the collection of overpayments from MHPs
to the reimbursement of MHPs for underpayments of state
General Funds (GF) or Federal Financial Participation (FFP)
funds.
5)Requires DMH and DHCS to submit claims for FFP to the federal
government throughout the fiscal year, and to pay MHP claims
within 30 days after the state receives FFP.
6)Directs DMH to allocate and distribute the full amount of
contracted state GF matching funds at the beginning of the
fiscal year.
7)Requires DMH to distribute the state funds for the EPSDT
program to MHPs each fiscal year once the state budget is
adopted, according to a specified formula.
8)Requires Medi-Cal state GF matching dollars to be distributed
to counties each fiscal year within 30 days after the state
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budget is adopted, as specified.
9)Revises the existing requirement for DMH to consult annually
with a statewide organization representing counties regarding
the method of allocating state GF matching funds to counties,
pursuant to 8) above, to specify that the consultation occur
by June 1 of the prior fiscal year.
10)Includes MHP participation in existing legislative intent
that DMH and DHCS consult and collaborate closely with regard
to the administration, delivery, and provision of EPSDT
specialty mental health services.
EXISTING LAW :
1)Establishes DMH, which directs and coordinates statewide
efforts for the treatment of mental disabilities.
2)Establishes the Medi-Cal program, administered by DHCS, which
provides health benefits to low-income children, their
parents, or caretaker relatives, pregnant women, elderly,
blind or disabled persons, and other individuals who meet
specified eligibility criteria.
3)Establishes, under federal law, the EPSDT program to provide
physical and mental health services to Medicaid beneficiaries
under the age of 21.
4)Requires DMH to recover overpayments of FFP from MHPs within
the timeframes required by federal law and to recover
overpayments of GF moneys utilizing the recoupment methods and
timeframes specified in the State Administrative Manuel.
5)States legislative intent that DMH and the DHCS consult and
collaborate closely regarding administrative functions related
to the delivery and provision of EPSDT specialty mental health
services provided under the Medi-Cal specialty mental health
services waiver.
FISCAL EFFECT : This bill has not yet been analyzed by a fiscal
committee.
COMMENTS :
1)PURPOSE OF THIS BILL . The sponsor of this bill, the
California Mental Health Directors Association (CMHDA), states
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that this bill is needed to ensure counties receive timely
reimbursement from the state for their Medi-Cal mental health
claims. CMHDA notes that, over the last year, there have been
significant disruptions in the reimbursement of county mental
health Medi-Cal claims due to problems in communication,
accounting, and claims processing. CMHDA contends these
disruptions have led to increased federal scrutiny, multi-year
county payment deficiencies, and, to date, approximately half
a billion dollars in delayed reimbursement to counties for
services provided to Medi-Cal beneficiaries. As a result,
counties are not paid in a timely manner and needed care goes
unreimbursed, leaving counties at financial risk. CMHDA
asserts that county MHPs often find themselves in the position
of borrowing from the county GF, or other lenders, and
incurring associated interest costs which are not eligible for
state or federal reimbursement. Therefore, CMHDA maintains
that this bill is needed to formalize the process and
timeframes for federal reimbursement of county Medi-Cal mental
health claims and clarify the contractual obligations of both
the state and counties in order to achieve efficient
administration of specialty mental health services under
Medi-Cal.
2)MEDI-CAL MENTAL HEALTH REIMBURSEMENT . Specialty mental health
services are "carved out" in the Medi-Cal program and provided
by county MHPs. County MHPs also serve Medi-Cal eligible
children under the EPSDT program. As the agency charged with
administering Medi-Cal, DHCS has an interagency agreement with
DMH to administer specialty mental health services and each
MHP has a contract with DMH through which they are reimbursed
for specialty mental health and EPSDT services. In
California, the state contributes 50% and the federal
government contributes 50% toward the cost of the Medi-Cal
program. County MHPs are reimbursed a percentage of their
actual expenditures, and this reimbursement is referred to as
the FFP. Currently, county MHPs are reimbursed an interim
amount throughout the fiscal year and, at the end of each
fiscal year, county MHPs and DMH reconcile the interim amounts
to actual expenditures and DMH audits the cost reports to
determine the county MHPs final Medi-Cal entitlement.
3)DMH CLAIMS PAYMENT SYSTEM . A final report on DMH's overall
claims payment system was issued by the Department of Finance
in December 2007. Among other things, the report found that
the system is fragmented, decentralized, and ineffective; the
county MHPs are not being paid timely because of problems with
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DMH's claims reimbursement system; DMH's claims reimbursement
system, including the information system, is outdated,
unreliable, and at risk of failure; and, DMH is at continued
risk of overbilling the federal government because of
insufficient corrective measures to address previous billing
errors and additional actions must be taken to ensure that
claims involving FFP are accurate. According to briefing
documents from DMH, the current computer system that
adjudicates county Medi-Cal mental health claims and claims
from direct service providers processes approximately 1.5
million claims per month. DMH estimates that the annual
amount of approved claim reimbursements totals $1 billion.
The current mainframe adjudication system was built in the
early 1980s. DMH indicates that a new claims system that will
be fully compliant with the federal Health Insurance
Portability and Accountability Act will be in place in July
2009, beginning with a new accounting system for payments.
DMH expects counties to begin using the system by October
2009. DMH indicates that, under the new system, claims are
expected to be paid in 30 days, adjustments will be automated,
and the data will be standardized for reporting purposes. The
entire system, including the new claims processing system,
will be fully functional by February 2010, at which time the
outdated system that is currently in use will be completely
phased out.
4)SUPPORT . The California State Association of Counties (CSAC)
writes in support that this bill attempts to remedy the
ongoing problem of late state reimbursements for critical
mental health care, which leaves counties on the financial
hook for providing such services. CSAC believes this bill
will strengthen the partnership between state and local
government, and increase the efficiency and timeliness of
Medi-Cal payments to MHPs who are responsible for delivering
mental health services to half a million Californians with a
serious mental illness or serious emotional disturbance. The
Regional Council of Rural Counties has identified prompt
payment of Medi-Cal mental health claims as a priority and
this bill will establish policies that will expedite
processing of the enormous backlog of unpaid FFP claims at the
state level.
5)SUPPORT IF AMENDED . The California Alliance of Child and
Family Services (CACFS) supports this bill if it is amended to
remove the provision that excludes EPSDT from the existing
requirement for counties to bear the financial risk for the
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cost of providing Medi-Cal mental health services. CACFS
states that this provision should be removed to prevent
unintended consequences for certain providers of EPSDT
services and notes that, with this change, it believes that
the timeframes and procedures specified in this bill will make
substantive improvements and efficiencies in ensuring claims
are paid in a more effective manner.
6)RELATED LEGISLATION . SB 152 (Cox), pending in the Senate,
requires the State Controller to reimburse cities and counties
for certain mental health services within 90 days after DMH
receives a claim for reimbursement and provides that interest
shall be paid from the DMH budget if the claim is not paid on
time.
7)PRIOR LEGISLATION .
a) AB 1780 (Galgiani), Chapter 320, Statutes of 2008,
codifies an administrative structure for the review,
oversight, appeals processes, reimbursement, and claiming
procedures of the EPSDT program.
b) SB 1349 (Cox) of 2008, which was substantially similar
to SB 152, would have required mental health services
claims submitted by counties to be reimbursed within 90
days after DMH receives the claim and interest to accrue
starting on the 91st day of an unpaid claim. SB 1349 was
held in the Assembly Appropriations Committee.
8)AUTHOR'S AMENDMENT . The author intends to offer an amendment
in committee to delete the provision that excludes ESPDT
services from the current requirement for county MHPs to bear
the full cost of providing specialty mental health services.
REGISTERED SUPPORT / OPPOSITION :
Support
California Mental Health Directors Association (sponsor)
Butte County Behavioral Health Department
California State Association of Counties
Glenn County Board of Supervisors
Humboldt County Board of Supervisors
Orange County Board of Supervisors
Regional Council of Rural Counties
Riverside County Department of Mental Health
San Bernardino County Board of Supervisors
Santa Barbara County Board of Supervisors
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Opposition
None on file.
Analysis Prepared by : Cassie Rafanan / HEALTH / (916)
319-2097