BILL ANALYSIS
SENATE HEALTH
COMMITTEE ANALYSIS
Senator Elaine K. Alquist, Chair
BILL NO: AB 754
A
AUTHOR: Chesbro
B
AMENDED: June 2, 2009
HEARING DATE: July 15, 2009
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CONSULTANT:
5
Tadeo/
4
SUBJECT
Medi-Cal: mental health plans
SUMMARY
Revises and clarifies the obligations and timeframes for
the Department of Mental Health and the Department of
Health Care Services to reimburse county mental health
plans for Medi-Cal specialty mental health services.
CHANGES TO EXISTING LAW
Existing federal law:
Establishes the Medicaid program to provide comprehensive
health benefits to low-income persons.
Establishes the Early Periodic Screening Diagnosis
Treatment (EPSDT) program, to provide physical and mental
health services to Medicaid beneficiaries under the age of
21. EPSDT is an entitlement program which states must
administer as a condition of receiving federal Medicaid
funds.
Existing state law:
Establishes the Department of Mental Health (DMH), which
directs and coordinates statewide efforts for the treatment
of mental illness.
Continued---
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Establishes the Medi-Cal program, administered by the
Department of Health Care Services (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.
Provides for DMH to implement managed mental health care
for Medi-Cal beneficiaries through fee-for-service or
capitated rate contracts with county mental health plans
(MHPs), as well as other entities. Counties have the right
of first refusal for these contracts.
Requires state agencies to pay properly submitted,
undisputed invoices within 45 days of receipt, or
automatically calculate and pay appropriate late payment
penalties, as specified. This does not apply to claims for
reimbursement for health care services provided under the
Medi-Cal program, unless the Medi-Cal health care services
provider is a small business or nonprofit organization.
This bill:
Requires changes and amendments to contracts between DMH
and county mental health plans (MHPs) for the provision of
specialty mental health care to Medi-Cal beneficiaries to
be agreed upon by all parties.
Allows MHPs to reopen their contracts with DMH if changes
to state or federal law affect MHP costs.
Requires DMH and DHCS to submit claims for federal
financial participation funds to the federal government
throughout the fiscal year, as the claims are received from
MHPs and to pay MHP claims directly to the MHP after the
federal payments have been received by the state.
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.
Revises the existing requirement for DMH to consult
annually with a statewide organization representing
counties regarding the existing method of allocating state
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GF matching funds to counties to specify that the
consultation occur by June 1 of the prior fiscal year.
FISCAL IMPACT
According to the Assembly Appropriations Committee analysis
of AB 754, unknown impacts as a 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.
BACKGROUND AND DISCUSSION
The author states that over the last year there have been
significant disruptions in the reimbursement of MHPs for
Medi-Cal specialty mental health services due to problems
in communication, accounting, and claims processing on the
part of DMH and DHCS. These disruptions have led to
increased federal scrutiny, multi-year county payment
deficiencies and approximately half a billion dollars in
unreimbursed care provided to Medi-Cal beneficiaries with
severe mental illness. The author also states that
counties currently pay for the full cost of Medi-Cal
specialty mental health services while awaiting
reimbursement from the state and federal government. This
timeframe can vary from four to six months to two years;
counties often find themselves in the position of borrowing
funds to meet the up front costs and then incur associated
interest costs that are not eligible for state or federal
reimbursement. The author further states that, given the
current budget crisis, providing care without reimbursement
has become increasingly untenable for counties. The author
contends that AB 754 would increase the administrative
efficiency in the delivery of Medi-Cal specialty mental
health services by enabling federal funds for the program
to flow more efficiently to counties.
Mental health services in Medi-Cal
Generally, Medi-Cal is responsible for providing both
physical and mental health care services to beneficiaries.
Medi-Cal services are provided by a combination of
fee-for-service providers and Medi-Cal managed care plans.
Specialty mental health services, defined in regulation,
include medically necessary inpatient and outpatient
services delivered by a mental health professional to
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patients who meet certain diagnostic and impairment
criteria. These services have been "carved out" of the
Medi-Cal program, meaning they are not administered by
DHCS, but are the responsibility of DMH and county mental
health programs. These services are provided by counties
through contracts with DMH, using a managed care model of
service delivery. Each county mental health department is
responsible for providing specialty mental health services
to Medi-Cal recipients in its county, and may provide those
services itself, or through contracted providers.
Since this carve-out was implemented, the services provided
by the county plans have been further expanded to include
services provided under the Medicaid Early and Periodic
Screening, Diagnosis, and Treatment (EPSDT) program. The
program covers screening, diagnosis, and treatment
services, and any service that falls under the federal
definition of "medical necessity," including mental health
services, even if the service is not covered by a state's
Medicaid program, for Medicaid recipients up to the age of
21.
Office of State Audits and Evaluations (OSAE) report
In 2007, the Office of State Audits and Evaluations (OSAE)
within the Department of Finance released a report on the
fiscal processes DMH uses in the payment of local
assistance claims. The report confirmed that MHPs are not
paid in a timely manner. One of the most far-reaching and
mission critical weaknesses cited in the report was the
fragmented, decentralized, and ineffective program
governance between DMH and DHCS. Another was the continued
use of defective and outdated information systems. County
mental health plans are not being paid in a timely manner
because of problems with DMH's claims reimbursement system,
which is outdated, unreliable, and at risk of failure. A
limited sample of claims processing times revealed that the
average processing time was 96 days for claims involving
state funds and 109 days for those involving federal funds.
OSAE also identified other problems, which include the
continued risk of over billing of the federal government by
DMH because of insufficient corrective measures to address
previous billing errors.
DMH has acknowledged that there are problems with its
reimbursement system and has been working with DHCS on
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solutions, but progress has been slow. In response to
OSAE's findings, DMH reports that, it has developed and
implemented a corrective action plan in collaboration with
DHCS, MHPs, and the federal Centers for Medicare and
Medicaid Services to identify solutions to improve the
claims processing system. With regard to the EPSDT
estimating methodology, DMH reports that it has instituted
changes to improve its projections of the program's cost
and has established a Medi-Cal Claims Customer Service
Office to provide counties direct access to staff who can
deliver up-to-date claim payment information, assist
counties with their claim submissions, and answer any other
Medi-Cal-related questions.
DMH billing systems
According to briefing documents from DMH, the current
computer system that adjudicates behavioral health Medi-Cal
claims from counties, and direct providers, processes
approximately 1.5 million claims monthly. Annual approved
claim reimbursement is approximately $1 billion. The
current mainframe adjudication system was built in the
early 1980's. A new claims system, which will be fully
compliant with the Health Insurance Portability and
Accountability Act, will begin to be utilized in July,
2009, starting with a new accounting system for payments.
Counties will begin using the system by October, 2009.
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 a new
claims processing system will be in place by February,
2010, at which time the current system will be completely
retired.
Related bills
SB 152 (Cox) would require 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. This bill
is currently located in the Assembly Health Committee.
Prior legislation
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.
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SB 1349 (Cox, 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. This bill was held in the
Assembly Appropriations Committee.
SB 604 (Cox, 2007) would have required the Controller to
pay interest after 90 days, charged at the Pooled Money
Investment Account rate, on local government claims for
costs incurred for services to state prisons or prisoners.
This bill was held in the Assembly Appropriations
Committee.
AB 308 (Galgiani, 2007) would have required the DMH to
prepare regulations to assure prompt payment to counties
for provision of services under the EPSDT. This bill was
held in the Senate Health Committee.
Arguments in support
Proponents state that AB 754 would attempt 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. Proponents argue that AB
754 would 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 contends that AB 754 would
establish policies that will expedite processing of the
enormous backlog of unpaid federal financial participation
claims at the state level.
Arguments in opposition
DMH states that under current law and practice, it has the
flexibility to advance counties as much as 95 percent
up-front moneys from the General Fund (GF) in order to
address any claims discrepancies without the necessity of
beginning a cost recovery process, and is only required to
make these GF payments incrementally over a full 12 months.
DMH argues that AB 754 would undo that flexibility by
threatening GF cash flow. DMH further argues that AB 754
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also transfers payment authority from DMH to DHCS and that
any such reorganization would further strain GF resources.
DMH contends that AB 754 would put GF cash flow directly at
risk.
PRIOR ACTIONS
Assembly Floor: 77-0
Assembly Appropriations:16-0
Assembly Human Services: 7-0
Assembly Health: 8-0
POSITIONS
Support: California Mental Health Directors Association
(sponsor)
Butte County Behavioral Health Department
California Association of Counties
California State Association of Counties
County of San Diego
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
Sacramento County Board of Supervisors
San Bernardino County Board of Supervisors
Santa Barbara County Board of Supervisors
Oppose: Department of Mental Health
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