BILL ANALYSIS
AB 1593
Page 1
Date of Hearing: March 23, 2010
ASSEMBLY COMMITTEE ON HEALTH
William W. Monning, Chair
AB 1593 (Yamada) - As Introduced: January 4, 2010
SUBJECT : Adult day health care centers.
SUMMARY : Creates an exemption to the existing Medi-Cal
certification moratorium which will allow the opening of two
new, publicly financed Adult Day Health Centers (ADHCs).
Exempts from the current moratorium a state-owned and operated
property, for which planning began before 2002. Construction is
funded by state bonds and federal grants to serve California
veterans.
EXISTING LAW :
1)Establishes the California ADHC Act which requires licensure
and regulation of ADHCs with administrative responsibility
shared between the State Department of Public Health (DPH),
the California Department of Aging (CDA), and the Department
of Health Care Services (DHCS) pursuant to an interagency
agreement.
2)Requires ADHCs to be licensed by DPH as health care facilities
and permits certification for Medi-Cal payments by CDA.
3)Establishes DHCS as the principal agency to oversee Medi-Cal
policy, rates, audits, investigations, eligibility, and
utilization.
4)Authorizes DPH to implement one year moratoriums on
certification and enrollment in the Medi-Cal Program of new
adult day health care centers on a statewide or regional basis
with certain statutory exceptions. These exceptions include:
a) Applicants for Programs of All-Inclusive Care for the
Elderly;
b) Applicants for organizations currently designated as
federally qualified health centers;
c) Applicants centrally located in counties with no other
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certified ADHCs;
d) Applicants serving discharged nursing home patients in
San Francisco;
e) Applicants requesting expansion or relocation within a
county with a specified ratio of persons over the age of 65
receiving Medi-Cal; and,
f) Applicants currently licensed and located in a county
whose population exceeds 9,000,000 serving a specified
population from a regional center.
FISCAL EFFECT : This bill has not yet been analyzed by a fiscal
committee.
COMMENTS :
1)PURPOSE OF THIS BILL . This bill, according to the sponsor,
the California Association for Adult Day Services (CAADS),
creates an exemption to the ADHC moratorium on Medi-Cal
certification to permit two ADHCs operated by the California
Department of Veterans Affairs (CDVA) to become eligible for
Medi-Cal reimbursement. CDVA is constructing two large
veteran's campuses, one in Ventura County and another in
Lancaster, which will include multi-level housing and medical
services intended to incorporate ADHC within their planned
care continuum. The availability of ADHC, notes the sponsor,
is a key component of these publicly funded operations, and
the Medi-Cal moratorium has had the unintended effect of
preventing ADHC services within the new facilities. The
sponsor adds that the purpose of the bill is to reduce the
cost to the General Fund of operating these two programs by
allowing the qualifying services to be matched with federal
funds in the Medi-Cal Program. Until January 1, 2011, the
federal match is 62% federal funds and 38% General Funds due
to a temporary increase enacted by the American Recovery and
Reinvestment Act (ARRA). At the expiration of ARRA, the match
will return to the usual match of 50%.
2)BACKGROUND . ADHC is an organized day program of therapeutic,
social, and health activities and services provided to elderly
persons with functional impairments, either physical or
mental, at risk of institutional placement. The sponsor notes
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that ADHCs employ a multidisciplinary team approach providing
multiple services under one roof. These services include
skilled nursing care, physical therapy, social services,
meals, speech therapy, and socialization in order to reduce
the risk factors which could lead to placement into more
expensive care settings. California offers ADHC as an
optional Medi-Cal benefit to reduce utilization of nursing
homes, emergency rooms, and hospitals. According to CAADS
roughly 37,000 Medi-Cal beneficiaries are now served by 321
ADHCs in this state.
3)ADHC MORATORIUM . The 2004-05 Health Budget Trailer Bill, SB
1103 (Committee on Budget and Fiscal Review), Chapter 228,
Statutes of 2004, authorizes DHCS to impose a twelve-month
moratorium on the certification of new ADHCs after August
2004. DHCS has interpreted this authority to be renewable
annually at the discretion of the Director. This authority
has been exercised every year and has been extended through
fiscal year 2010-11. The Health Budget Trailer Bill of 2005
(AB 131 (Committee on Budget), Chapter 80, Statutes of 2005)
added additional exceptions.
ADHCs were initially required to be nonprofit, charitable
facilities until 1994 when legislation (SB 1492 (Mello),
Chapter 1121, Statutes of 1994) authorized for-profit
companies to develop ADHCs. Since 1994 the number of centers
has grown from 90 to approximately 322 stand alone operations
and an estimated 37,000 monthly users.
According to DHCS the moratorium was implemented to capture the
enrollment of ADHCs at that time and to limit any increases in
licensed capacity until ADHC reform was accomplished. The
moratorium was established to be moderate in nature, and allow
for increases in capacity, change of ownership and relocation.
It has exceptions for new ADHCs in unserved areas and for
increases in underserved areas. It was in response to the
very rapid growth in ADHCs. For example the growth rate
jumped from 7% in 1997-98 to 25% in 1998-99 and continued in
the double digits until the moratorium.
According this bill's sponsor, CAADS, ADHCs removed their
opposition to the moratorium pending implementation of program
reforms because of reduced state staff resources available to
provide training and support for new providers.
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4)VENTURA AND LANCASTER FACILITIES . In 2002, according to the
CDVA Web site, planning for three large veteran's facilities,
one in Ventura County, one in Lancaster, and one in West Los
Angeles, was initiated following passage of the Veterans Home
Bond Act of 2000 (AB 2559 (Wesson), Chapter 216, Statutes of
2002). The construction of the three facilities are financed
with federal veteran's home grants and state bond funding
totaling $229 million, of which 60% is from federal sources.
All three sites are intended to provide multilevel housing and
medical services for eligible veterans. The two sites nearest
completion, Ventura and Lancaster, incorporate ADHC services
as well as assisted living and nursing care units within their
continuum of care design. CAADS indicates that both projects
had sought approval for up to 100 licensed ADHC slots, but
anticipate only 20 enrollees at each facility for the first
few years of operation. Absent this legislation, residents of
the two facilities will, according to the sponsor, be placed
in the campus Medi-Cal nursing home with higher state costs
and less personal independence for the beneficiary.
5)REIMBURSEMENT RATE REFORMS . In December 2003, the federal
Centers for Medicare and Medicaid Services (CMS) notified
California to shift ADHC from an optional Medi-Cal benefit to
either a home and community based waiver program or apply for
a State Plan Amendment (SPA) with specified changes to the
program. SB 1755(Chesbro), Chapter 691, Statutes of 2006,
enacted these reforms including modifications to the
reimbursement rate methodology. The expected implementation
date for the new rate methodology is August 1, 2011.
6)COST CONTAINMENT MEASURES .
a) Rate freeze new medical necessity and eligibility
criteria . The 2009-10 Health Budget Trailer Bill, (AB 5 X4
(Evans), Chapter 5, Statutes of 2009-10 Fourth
Extraordinary Session) enacted a rate freeze for 2009-10
and every year thereafter at the 2008-09 levels. The
budget reductions also included new limits on the criteria
for eligibility, effective, March 1, 2010. It is estimated
that the new criteria could reduce the number of eligible
persons by 2-%. An order granting an injunction of these
reductions was granted by the federal court on February 24,
2010.
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b) Treatment Authorization Requests . Services must be
approved by a DHCS field office and reapproved every six
months through a Treatment Authorization Request (TAR). On
site TAR reviews was scheduled to be implemented in
November 2009 and result in savings beginning December 2009
by reducing eligibility by 20%. This has been delayed and
will be revised in May 2010.
7)ELIMINATION OF ADHC SERVICES. The Governor is proposing to
completely eliminate ADHC as a covered Medi-Cal benefit,
effective June 1, 2010.
8)SUPPORT . The California Alliance for Retired Americans writes
that this bill will improve the care of veteran's living on
campus by authorizing this limited Medi-Cal exemption.
Without access to these ADHCs, veterans living on the Ventura
and Lancaster campuses will be forced into more costly campus
nursing homes. This relocation would waste state funds by not
utilizing lower cost ADHC services and would pointlessly
diminish the quality of the veteran's lives.
9)PREVIOUS AND RELATED LEGISLATION .
a) AB 2073 (Lowenthal) of 2010 revises the Medi-Cal
eligibility criteria in the adult day health care (ADHC)
program. This bill is set for hearing on March 23, 2010 in
the Assembly Health Committee
b) AB 369 (Yamada) of 2009 would have created an exemption
to the existing Medi-Cal certification moratorium to allow
the opening of two new, publicly financed ADHCs. AB 396
was vetoed by the Governor. The veto message is as follows:
This measure is premature and would add new General
Fund costs to the Medi-Cal program when significant
reductions are currently being implemented.
Furthermore, the new facilities are still under
construction and not scheduled to provide services
until at least July 2011.
I encourage the author to examine ways to provide
these services in the most cost-effective manner and
propose them through the annual budget process.
c) AB 827 (Hancock) of 2008 would have exempted from the
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moratorium ADHCs seeking a change of ownership, relocation,
or increase in capacity under specified conditions. AB 827
was held in the Assembly Appropriations Committee.
d) SB 1103 (Committee on Budget and Fiscal Review), Chapter
228, Statutes of 2004, gives authority to DHCS to impose a
moratorium on the certification of new ADHC providers
effective in August of 2004.
e) SB 428 (Perata) of 2003, would have put in place a
pre-licensure review process, implemented a one year
moratorium, and imposed new licensing fees to fund the
additional DPH workload. SB 428 was vetoed by the Governor.
The veto message is as follows:
This measure would significantly amend Adult Day
Health Care (ADHC) statutes to impose a one-year
moratorium on future applications for licensure as
an ADHC provider, to create a preapplication
process, and to revise fees to finance the
preapplication process.
While I commend the author and sponsor for coming
forward with this proposal to rein in future ADHC
costs, SB 428 represents significant workload
increases for the Department of Health Services and
the Department of Aging, without which the
preapplication process cannot be implemented.
Further, due to timing of the proposed fee increases
after the implementation work has been performed,
both DHS and Aging would have to use General Fund
money initially to finance needed additional staff.
Additionally, the proposed one-year moratorium will
not result in Medi-Cal program savings until future
years because the bill would require processing of
the applications currently pending.
Given our current fiscal situation, I cannot support
this measure's increased workload on State agencies.
REGISTERED SUPPORT / OPPOSITION :
Support
California Association of Adult Day Services (sponsor)
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Aging Services of California
California Association of County Veterans Service Officers
National Association of Social Workers, California Chapter
Opposition
None on file.
Analysis Prepared by : Marjorie Swartz / HEALTH / (916)
319-2097