BILL ANALYSIS
AB 754
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Date of Hearing: May 13, 2009
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
AB 754 (Chesbro) - As Amended: April 23, 2009
Policy Committee: Health Vote:19-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill addresses statutory timeframes for the Department of
Mental Health (DMH) and the Department of Health Care Services
(DHCS) to reimburse county mental health plans (MHPs) for
Medi-Cal claims. Specifically, this bill:
1)Requires DMH to distribute 75% of the GF portion of Early and
Periodic Screening, Diagnosis and Treatment (EPSDT) claims to
MHPs following the enactment of the state budget.
2)Requires DMH to allocate the full amount of state GF matching
funds for Medi-Cal managed care at the start of the fiscal
year.
3)Requires DMH to apply the federal timeframe for collection of
overpayments to counties' reimbursement for underpayment of
state GF or federal financial participation (FFP).
4)Requires DMH and DHCS to submit claims for FFP throughout the
fiscal year and to pay county MHP claims within 30 days after
receiving FFP.
5)Makes several other changes to reimbursement processes and
timing to address delays in payment by DMH to counties under
current law
FISCAL EFFECT
1)A major shift in the timing of allocations for significant
portions of GF mental health funding. For example, annual
EPSDT expenditures in 2009-10 will be $1.1 billion, of which
$510 million is GF. A 75% advancement of the GF portion of
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EPSDT funds results in an earlier release of $381 million GF.
In addition, this bill appears to expedite Medi-Cal managed
care funds, which would be advanced to counties within 30 days
of budget enactment. These funds account for $452 million
($226 million GF) in 2009-10.
2)Although the advancement of GF required by this bill will
address significant funding issues for county mental health
programs, this shift may also exacerbate GF cash flow and
reduce GF interest on cash reserves. According to the
Legislative Analyst's Office, due to the deterioration of the
state's economic and revenue situation, short-term borrowing
requirements may exceed $20 billion in the next few months.
Due to the state's low credit rating, California may be unable
to access this magnitude of needed short-term funding. This
bill significantly reduces GF cash reserves and funding
available in the Pooled Money Investment Account (PMIA).
3)Approximately $6.2 billion (33% GF) is available for
expenditure for in-patient and outpatient mental health
programs statewide in 2008-09. This bill has several fiscal
effects, addressing specific portions of these funds, to
improve cash flow to county mental health programs. According
to recent federal and state audits there are over-arching
deficiencies in state DMH reimbursement and accounting
processes, including weak governance, defective systems, and
inefficient manual systems requiring county MH claims to
languish for weeks and months due to arcane processes. This
bill reduces dysfunctional state reimbursement to local mental
health programs.
COMMENTS
Rationale . This bill is sponsored by the California Mental
Health Directors Association (CMHDA) to increase the efficiency
and timeliness of Medi-Cal payments to county Mental Health
Plans by clarifying payment timeframes and responsibilities.
Over the last several years, there have been significant
disruptions in the reimbursement of county mental health
Medi-Cal services due to problems in communication, accounting,
and claims processing. These disruptions have led to increased
federal and state scrutiny, multi-year county payment
deficiencies, and approximately $500 million in delayed
reimbursement to counties for services provided to Medi-Cal
beneficiaries. Counties have not been paid in a timely manner,
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creating significant pressure on local programs, leaving
counties with major financial risk, and creating barriers to
care for patients with mental health service needs.
Analysis Prepared by : Mary Ader / APPR. / (916) 319-2081