BILL ANALYSIS
AB 754
Page 1
ASSEMBLY THIRD READING
AB 754 (Chesbro)
As Amended June 2, 2009
Majority vote
HEALTH 19-0 APPROPRIATIONS
12-0
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|Ayes:|Jones, Fletcher, Adams, |Ayes:|De Leon, Ammiano, Charles |
| |Ammiano, | |Calderon, Davis, Fuentes, |
| |Block, Carter, Conway, De | |Hall, John A. Perez, Price, |
| |La Torre, | |Skinner, Solorio, |
| |De Leon, Emmerson, Gaines, | |Torlakson, Krekorian |
| |Hall, Hayashi, Hernandez, | | |
| |Bonnie Lowenthal, Nava, V. | | |
| |Manuel Perez, Salas, | | |
| |Audra Strickland | | |
| | | | |
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SUMMARY : Clarifies the obligations and timeframes for the
Department of Mental Health (DMH) and the Department of Health
Care Services (DHCS) to reimburse county mental health plans for
their Medi-Cal claims. Specifically, this bill :
1)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.
2)Allows MHPs to reopen their contracts with DMH if changes to
state or federal law affect MHP costs.
3)Requires DMH and DHCS to submit claims for federal financial
participation (FFP) funds to the federal government throughout
the fiscal year, and to pay MHP claims directly to the MHP
after the state receives FFP.
4)Clarifies that DMH is required to allocate and distribute the
full amount of contracted state General Fund (GF) matching
funds at the beginning of the contract period to the MHP.
5)Revises the existing requirement for DMH to consult annually
with a statewide organization representing counties regarding
the existing method of allocating state GF matching funds to
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counties to specify that the consultation occur by June 1 of
the prior fiscal year.
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 comprehensive health benefits to low-income children,
their parents or caretaker relatives, pregnant women, elderly,
blind or disabled persons, nursing home residents, and
refugees who meet specified eligibility criteria.
3)Establishes, under federal law, the Early Periodic Screening
Diagnosis Treatment (EPSDT) program to provide physical and
mental health services to Medicaid (Medi-Cal in California)
beneficiaries under the age of 21.
4)States legislative intent that DMH and 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 : According to the Assembly Appropriations
Committee, unknown impacts as the result of clarifying changes
to contracting processes between county mental health agencies
and the DMH. Unknown potential savings to DHCS to the extent
administrative costs are reduced pursuant to streamlining
provisions of this bill.
COMMENTS : The sponsor of this bill, the California Mental
Health Directors Association (CMHDA), states 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
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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.
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.
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 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
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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.
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, which
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.
Analysis Prepared by : Cassie Rafanan / HEALTH / (916)
319-2097
FN: 0001378