BILL ANALYSIS
AB 2645
Page 1
Date of Hearing: April 20, 2010
ASSEMBLY COMMITTEE ON HEALTH
William W. Monning, Chair
AB 2645 (Chesbro) - As Introduced: February 19, 2010
SUBJECT : Mental health: skilled nursing facilities:
reimbursement rate.
SUMMARY : Expands current law which imposes a reimbursement rate
freeze on specified skilled nursing facilities (SNFs) to include
institutions for mental disease (IMDs) licensed as SNFs.
EXISTING FEDERAL LAW :
1)Defines an IMD as a hospital, nursing facility, or other
institution of 17 or more beds that is primarily engaged in
providing diagnosis, treatment, or care of persons with mental
diseases, including medical attention, nursing care, and
related services.
2)Specifies that whether an institution is an IMD is determined
by its overall character as that of a facility established and
maintained primarily for the care and treatment of individuals
with mental diseases, regardless of whether or not it is
licensed as such.
3)Establishes the IMD exclusion, which prohibits federal
financial participation (FFP) through Medicaid (Medi-Cal in
California) for individuals in an IMD between the ages of 22
and 65. These individuals may still be eligible for
state-only Medi-Cal.
EXISTING STATE LAW :
1)Requires the Department of Health Care Services (DHCS) to
contract with SNFs that have been designated by the Department
of Mental Health (DMH) as IMDs to provide services to
residents.
2)Establishes the Bronzan-McCorquodale Act, also known as
"Realignment," which shifted responsibility for the provision
of mental health services from the state to counties.
Provides funding for local programs with revenues from
increased vehicle licensing fees and sales taxes.
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3)Requires ancillary outpatient services, defined as physician
services, prescription drugs, laboratory, X-ray, dental,
vision, and psychiatrist and psychologist services, to be
covered regardless of the availability of FFP for any eligible
patient between the ages of 22 and 65 in an IMD.
4)Imposes a rate freeze on the following long term care
facilities: SNFs, intermediate care facilities, rural
swing-bed facilities, subacute and pediatric subacute care
units that are distinct parts of general acute care hospitals,
and adult day health centers.
5)Requires IMDs licensed as SNFs to be reimbursed for services
at the rate established by DHCS. Mandates, effective July 1,
2008, an annual 4.7% increase in the reimbursement rate for
IMDs.
FISCAL EFFECT : This bill has not yet been analyzed by a fiscal
committee.
COMMENTS :
1)PURPOSE OF THIS BILL . The sponsor of this bill, the
California Mental Health Directors Association (CMHDA), notes
that federal law statutorily prohibits federal Medicaid funds
from being used for the treatment of individuals who are in
facilities that are licensed as IMDs. Due to this federal
"IMD exclusion" and California's existing Realignment policies
that make counties responsible for the provision of mental
health services, California counties must pay for 100% of the
cost of services for patients in IMDs. Current state law
requires counties to indefinitely pay DHCS-licensed SNF IMDs a
4.7% increase to their annual rates. CMHDA maintains that
this rate increase is unsustainable for counties given that
every dollar spent by counties on the escalating costs of SNF
IMD care, the most restrictive level of care available in the
community, is one less dollar available to counties for other
community-based services. While the State Budget Act of 2009
(AB 5 x4 (Evans)), Chapter 5, Statutes of 2009-10, Fourth
Extraordinary Session) froze nursing home rates for many
licensed facilities at 2008-09 levels, the rate freeze
excluded SNF IMDs. CMHDA argues that, without the change in
law proposed by this bill, counties must use significantly
reduced funding streams to pay for IMD-level care. This bill
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will enable counties that are currently facing serious
economic difficulties to allocate the dollars they save from
the rate freeze toward other community-based programs and
services.
2)IMDs . IMDs are a type of SNF with 17 or more beds that
provide 24-hour nursing care and supervision to mentally ill
persons in need of continuous psychiatric and nursing care.
Federal law excludes these facilities from eligibility for
federal Medicaid funds when serving Medicaid clients. This
federal IMD exclusion applies only to adult Medicaid
beneficiaries between the ages of 21 and 65. Any one of the
following criteria defines an IMD: the facility is licensed as
a psychiatric facility; the facility is accredited as a
psychiatric facility; the facility is under the jurisdiction
of DMH; the facility specializes in providing
psychiatric-psychological care and treatment; or, more than
50% of all the patients-residents in the facility require care
because of mental illness. In California, IMDs include
facilities in the following licensing categories, if the
facility has 17 beds or more: acute psychiatric hospitals,
psychiatric health facilities, SNFs with a certified special
treatment program (STP), and mental health rehabilitation
centers. There may be exceptions for individual facilities.
For example, a large SNF with a small STP unit (less than 50%
of total SNF beds) is not considered an IMD. According to the
Department of Public Health, which licenses SNFs, there are 15
SNF IMDs statewide that would be affected by the rate freeze
proposed in this bill. These facilities range in size from
43-220 beds. The average length of stay is 12-15 months with
more than 70% of patients staying longer than 60 days.
3)BACKGROUND ON IMD RATES . According to information from DMH,
AB 1629 (Frommer), Chapter 875, Statutes of 2004, creates a
new system that allows California to receive more federal
Medicaid dollars by imposing a quality assurance fee (QAF) on
SNFs. AB 1629 put into effect a Medi-Cal rate increase in
fiscal year 2004-2005 that county mental health departments
would have been required to pay Medi-Cal freestanding nursing
facilities, including IMDs. Since residents under age 65
residing in IMDs are not eligible for federal Medicaid funding
like residents in other SNFs, the new rate increases for these
individuals would have been the sole responsibility of county
mental health departments.
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Since AB 1629 would have had a significant fiscal impact on
county mental health departments, AB 360 (Frommer), Chapter
508, Statutes of 2005, was enacted to mitigate the unintended
consequences resulting from AB 1629. AB 360 mandates that
rates for IMDs be the same as Medi-Cal rates in effect on July
1, 2004, and prescribed the following rate increase schedule
for IMDs: effective July 1, 2005, through June 30, 2008, an
annual increase of 6.5% annually, and effective July 1, 2008,
an increase of 4.7% annually. This bill freezes the rate for
services in IMDs at the same rate as was in effect on July 1,
2009.
4)PRIOR LEGISLATION AND BUDGET ACTION .
a) AB 5 X4 freezes the reimbursement rate paid to SNFs, as
well as other long-term care facilities.
b) AB 360 exempts SNFs that provide pediatric subacute
services and IMDs from a requirement to pay a QAF and
prescribes a rate-increase schedule for these facilities.
c) AB 1629 imposes a QAF on SNFs and provides that the
funds assessed be made available to draw down a federal
match in the Medi-Cal Program, or to provide additional
reimbursement to, and support facility quality improvement
efforts in SNFs.
5)SUPPORT . Supporters, representing consumer advocates and
counties, state that this bill will bring conformity to
nursing home rates that were frozen in the Budget Act of 2009
by setting the reimbursement rate for services in IMDs at the
same rate as was in effect on July 1, 2009. Disability Rights
California writes in support that this bill makes good fiscal
sense in that it keeps rates consistent for better financial
planning in this difficult economic time yet maintains
services for people needing to reside in an IMD. The
California State Association of Counties and the Regional
Council of Rural Counties note in support that, during
difficult fiscal times for counties, this bill will remove the
mandatory 4.7% cost of living increase that is enjoyed by
IMDS, and not any other part of the public mental health
system.
6)OPPOSE UNLESS AMENDED . The California Association of Health
Facilities (CAHF), representing IMD providers in the state,
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opposes this bill unless it is amended to impose a one year
rate freeze for IMDs, effective July 1, 2010, through June 30,
2011. CAHF argues that, while it recognizes the economic
realities that counties face during these fiscal times,
freezing IMD rates permanently does not make sense given the
increasing costs of providing services. CAHF contends that a
one year rate freeze seems to be reasonable in light of
current budgetary issues. Lastly, CAHF asserts that there
needs to be some basis to adjust IMD rates on a go forward
basis and adds that since IMDs are licensed skilled nursing
facilities and have similar operating costs, it makes sense to
tie rate increases to the actual cost increases for SNFs.
7)POLICY QUESTION . Would the goal of this bill be more
appropriately achieved through the budget process?
REGISTERED SUPPORT / OPPOSITION :
Support
California Mental Health Directors Association (sponsor)
California State Association of Counties
Disability Rights California
Humboldt County Department of Health and Human Services
Regional Council of Rural Counties
San Bernardino County Board of Supervisors
Oppose unless amended
California Association of Health Facilities
Opposition
None on file.
Analysis Prepared by : Cassie Rafanan / HEALTH / (916)
319-2097