BILL ANALYSIS
SENATE HEALTH
COMMITTEE ANALYSIS
Senator Elaine K. Alquist, Chair
BILL NO: AB 1593
A
AUTHOR: Yamada
B
AMENDED: May 28, 2010
HEARING DATE: June 16, 2010
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REFERRAL: Veterans Affairs
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CONSULTANT:
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Bain
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SUBJECT
Adult day health care centers
SUMMARY
Exempts two veterans' facilities (the William J. "Pete"
Knight Veterans Home of California, Lancaster and the
Veterans Home of California, Ventura) from the moratorium
on the certification and enrollment of new Adult Day Health
Care (ADHC) centers into Medi-Cal, contingent upon an
appropriation of funds in the annual Budget Act.
CHANGES TO EXISTING LAW
Existing law:
Existing law establishes ADHC services as a Medi-Cal
benefit for Medi-Cal beneficiaries who generally meet
certain criteria, including being 18 years of age or older,
having a request for ADHC services from a health care
provider, having one or more chronic or postacute medical,
cognitive, or mental health conditions, and having
functional impairments in two or more activities of daily
living, instrumental activities of daily living, or one or
more of each, and requires assistance or supervision in
Continued---
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performing these activities.
Existing law authorizes DHCS to implement a one-year
moratorium on the certification and enrollment into the
Medi-Cal program of new ADHC centers on a statewide basis
or within a geographic area, subject to certain
limitations. Existing law permits the director of DHCS to
extend this moratorium, if necessary, to coincide with the
implementation date of the ADHC centers waiver.
Existing law exempts certain applicants from this
moratorium.
This bill:
This bill exempts from the ADHC moratorium, the William J.
"Pete" Knight Veterans Home of California, Lancaster and
the Veterans Home of California, Ventura. This bill is to
be implemented to the extent that funds for its purposes
are appropriated in the annual Budget Act.
FISCAL IMPACT
According to the Assembly Appropriations Committee:
1)According to published analysis by the Department of
Finance (DOF), annual increased Medi-Cal costs of $50,000
(50 percent General Fund (GF) would result from this
bill. The DOF estimate appears to underestimate the
number of potential Medi-Cal eligible individuals who may
enroll in ADHC pursuant to this bill and appears to
underestimate annual per capita costs. Actual costs in
the range of $450,000 (50 percent GF) may result to
provide ADHC services to 40 Medi-Cal eligible individuals
eventually enrolled in the two veterans homes addressed
in this bill. Annual costs per ADHC participant are
$11,000.
2)This bill contains language to make it contingent on the
annual Budget Act.
BACKGROUND AND DISCUSSION
According to the author, two veterans' facilities in the
cities of Ventura and Lancaster, run by the California
Department of Veterans Affairs (CDVA) will open ADHCs in
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2011 at each campus. A veteran visits an ADHC to receive
assistance with his or her basic daily health needs during
the day and returns to his or her home after receiving
medical and health care. These services allow participants
to live independent lives and receive the day care they
need. Each veteran's facility intends to incorporate an
ADHC into other long-term care services they will provide
to veterans living on campus and in the surrounding area.
However, a 2004 moratorium prevents these ADHCs from
receiving Medi-Cal certification, which will force the CDVA
to pay for ADHC services from its operating budget (a GF
allocation) instead of billing Medi-Cal and drawing down
federal matching funds. Without an exemption, the state
will lose federal funding and pay more for ADHC services.
The author argues this bill, by exempting these ADHCs from
the moratorium on ADHC Medi-Cal certification, will allow
the CDVA to draw down federal matching funds and save GF
dollars for other state programs.
Background on ADHC
ADHC is an organized day program of therapeutic, social and
health activities and services provided to elderly persons
or other persons with physical or mental impairments for
the purpose of restoring or maintaining optimal capacity
for self-care. Under federal law, ADHC services are an
"optional benefit" for states to provide. The Adult Day
Health Medi-Cal Law establishes adult day health care
services as a Medi-Cal benefit for Medi-Cal beneficiaries
who meet certain criteria. There are over 300 ADHC centers
that are Medi-Cal providers throughout California.
Expenditures in 2009-10 for ADHC services were $424 million
($212 million GF). The average number of monthly users of
ADHC services in 2009-10 was 36,671.
ADHC moratorium
Since 2004, current law has authorized DHCS to implement a
one-year moratorium on the certification and enrollment
into the Medi-Cal program of new ADHC centers on a
statewide basis, or within a geographic area, with
specified exemptions from the moratorium. DHCS' May 2009
Medi-Cal Estimate indicates the moratorium has been
extended through the 2009-10 fiscal year. Existing law
exempts certain applicants from this moratorium, including
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the following:
Programs of All-Inclusive Care for the Elderly (PACE);
Federally qualified health centers;
Federally qualified rural health clinics;
An applicant with the physical location of the ADHC
center in an unserved area (defined as a county having no
licensed and certified ADHC centers within its geographic
boundary); and,
An applicant for certification as an ADHC that meets
specified criteria, such as being located in particular
counties (San Francisco, Napa and Los Angeles are three
such counties).
Background on veterans homes
The overall mission of California veterans homes (VH) is to
"provide the state's aged or disabled veterans with
rehabilitative, residential, and medical care and services
in a home-like environment." In order to be eligible for
admission to a VH, an applicant must be age 62 or older (or
younger if disabled), a resident of California, and have
served honorably in the military. CDVA currently operates
VHs with campuses in Yountville, Barstow, and Chula Vista,
and is constructing three new VHs in Ventura, Lancaster,
and West Los Angeles. The two sites nearing completion
(Ventura and Lancaster) will incorporate ADHC services, as
well as assisted living (known as residential care
facilities for the elderly) within their continuum of care
design. Those residents who need skilled nursing care,
will be transferred to the main campus in West Los Angeles
or one of the other three homes in the system that offer
skilled nursing facility level-of-care.
Arguments in support
This bill is sponsored by the California Association for
Adult Day Services (CAADS) to create an exemption to the
current ADHC moratorium on Medi-Cal certification to permit
two ADHCs operated by the CDVA to become eligible for
Medi-Cal reimbursement. CAADS argues the inability to
certify the CDVA ADHCs is an unintended consequence of the
ADHC moratorium. The California Chapter of the National
Association of Social Workers writes the ADHC moratorium
will force CDVA to pay for ADHC services out of its
operating budget, which is a GF allocation. If the ADHC
were able to receive Medi-Cal certification, federal
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matching funds could be used to fund the ADHCs, which would
offset state costs.
Arguments in opposition
The Department of Finance (DOF) writes in opposition that
this bill is similar to AB 369 of 2009 (Yamada), which was
vetoed by the Governor. DOF states the concerns in the
Governor's veto message were timing (the facilities were
not operational), competing demands for available General
Fund, and process (the budget process is a more appropriate
venue for this proposal to be considered rather than
legislation). DOF states these concerns remain, and states
this bill would expand ADHC, which is contrary to the
Governor's budget proposal to eliminate ADHC as an optional
Medi-Cal benefit in 2010-11.
ADHC budget
The 2009-10 Budget Act, through the health budget trailer
bill (ABX4 5 (Evans), Chapter 5, Statutes of 2009), made
several changes to ADHC to achieve budget savings
including: a) a three-day per week cap on services (a court
injunction has prevented this change); b) standards on
medical necessity (a court injunction has prevented this
change); c) on-site treatment authorization requests; and,
d) a freeze on provider rates as of August 2009 (ADHCs were
exempted from the 5 percent payment reduction effective for
dates of service on or after March 9, 2009, as a result of
a court injunction).
The Governor's January 2010-11 budget proposed, effective
June 1, 2010, to no longer cover ADHC services as a
Medi-Cal benefit, for an estimated savings of $351 million
($175 million GF). The Governor's May 2010-11 budget
revision continued to propose to eliminate ADHC services,
but with a later effective date (October 1, 2010) than the
January budget, for a savings of $268 million ($134 million
GF). The elimination of ADHC has been rejected by the
budget committees of both houses of the Legislature.
Previous legislation
SB 1103 (Committee on Budget and Fiscal Review), Chapter
228, Statutes of 2004, authorized DHCS to impose a
moratorium on the certification and enrollment into
Medi-Cal of new ADHC providers.
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AB 131, Chapter 80, Statutes of 2005 and AB 1807, Chapter
74, Statutes of 2006, which were both health budget trailer
bills, modified the required exemptions from the ADHC
moratorium.
AB 827 (Hancock) of 2008 would, as of August 2010, repeal
DHCS' authority to impose an ADHC moratorium. AB 827 was
held on the Assembly Appropriations Committee suspense
file.
AB 369 (Yamada) of 2009 was similar to this bill in that it
exempted two veterans facilities (one in Ventura and one in
Lancaster) from the moratorium prohibiting the enrollment
of adult day health care centers into the Medi-Cal program,
except AB 1593 is contingent upon an appropriation in the
budget act. AB 369 was vetoed by the Governor, who argued
the measure was premature, would add new General Fund costs
to the Medi-Cal program, and the new facilities are still
under construction and not scheduled to provide services
until at least July 2011. The Governor encouraged the
author to examine ways to provide these services in the
most cost-effective manner and propose them through the
annual budget process.
SB 1755 (Chesbro), Chapter 691, Statutes of 2006, made
numerous changes to the ADHC program, including narrowing
the eligibility and medical necessity criteria, requiring
DHCS to perform field audits, and establishing a
reimbursement methodology and a reimbursement limit for
ADHC services on a prospective cost basis for services
provided to each participant, pursuant to his or her
individual plan of care.
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COMMENTS
1. Cost or savings to General Fund? Whether this bill
results in costs or savings to the state GF depends upon
the assumption of whether ADHC services will be offered in
these two new facilities, and whether and what level of
state GF is used to pay for these services. If the CDVA
offers ADHC services in these two new facilities, and pays
for the costs of these services using 100 percent GF,
allowing DVA to bill Medi-Cal for these services would save
the state money. If the state decided not to spend GF in
the DVA budget, or to not provide ADHC services using GF at
these facilities, this bill would result in a state cost
because GF spending would be required as the state match to
draw down federal Medicaid funds.
PRIOR ACTIONS
Assembly Floor: 75-0
Assembly Appropriations:17-0
Assembly Health: 18-0
POSITIONS
Support: California Association for Adult Day Services
(sponsor)
Aging Services of California
California Association of County Veterans Service
Officers
National Association of Social Workers -
California Chapter
Oppose: Department of Finance
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