BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
117 (Corbett)
Hearing Date: 5/28/2009 Amended: 3/9/2009
Consultant: Katie Johnson Policy Vote: Health 10-1
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BILL SUMMARY: SB 117 would extend the deadline by which the
Department of Health Care Services (DHCS) is required to
establish a new Medi-Cal rate reimbursement methodology for
adult day health care (ADHC) services from August 1, 2010, to
August 1, 2013, and would make conforming statutory changes.
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Fiscal Impact (in thousands)
Major Provisions 2009-10 2010-11 2011-12 Fund
DHCS staffing costs $0 $144 - $393 $287 - $785General
for development of $144 - $393 $287 -
$785 Federal
methodology
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STAFF COMMENTS: SUSPENSE FILE.
Existing law, enacted by the passage of SB 1755 (Chesbro),
Chapter 691, Statutes of 2006, requires the DHCS to establish a
new cost-based Medi-Cal reimbursement methodology for ADHC
services, in consultation with stakeholders, by August 1, 2010.
Existing law also sets forth specific timeframes and deadlines
for the DHCS to develop, implement, and promulgate regulations
for SB 1755. The DHCS has not met several of the statutory
deadlines and is unlikely to meet the August 1, 2010, completion
date.
Currently, ADHC centers are reimbursed for services by Medi-Cal
at a flat rate of $68.57 per participant per day. ADHC centers
do not bill services individually. Instead, they bill services
in a bundled package that includes core, specialty, and
transportation services. These costs are shared equally between
state and federal funds.
This bill would extend each of the deadlines set forth by SB
1755 by three years. For example, this bill would require DHCS
to develop the rate methodology and a reimbursement limit by
August 1, 2013, instead of by the current August 1, 2010.
The DHCS expects to realize tens of millions of dollars in
savings upon the implementation of SB 1755 through the
restructuring of the rate methodology and the unbundling of the
current reimbursement rate. This bill would delay those savings
by up to three years and, as such, the DHCS would find it
necessary to sustain current levels of budgetary funding for up
to an additional three years at an unknown cost of tens of
millions of dollars. In the November FY 2009-2010 Medi-Cal
budget estimate, the administration predicted savings of
approximately $34 million due to ADHC reforms. It is unknown if
this number will be revised in the May 2009-2010 estimate. Staff
notes that
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SB 117 (Corbett)
new information and analysis indicate that these savings have
not yet been taken into account in future budget estimates and
that they would be unlikely to materialize if this project is
not completed.
In February of 2009, President Obama signed the American
Reinvestment and Recovery Act (ARRA) into law. As a result, the
Federal Medical Assistance Percentage (FMAP) increased from 50
percent to 61.59 percent. Thus, retroactively from October 1,
2008 through December 31, 2010, the federal government would pay
for approximately 62 percent (FFP) and the state general fund
(GF) would pay for 38 percent of benefit-related Medi-Cal
expenditures. This would apply to ADHC service costs and thus
temporarily ease the burden of some of the delayed savings.
In order to continue to develop the rate methodology, conduct
the cost audits, and complete other tasks mandated by SB 1755,
commencing January 1, 2011, the DHCS would likely need to extend
up to 20 limited-term existing auditor positions, at about
$70,000 each annually, and 2 manager positions, at about $85,000
each annually, for up to the August 1, 2013 deadline at an
annual cost of $1,570,000 ($785,000 GF / $785,000 FF). If
workload were to diminish as the department moves closer to full
implementation, it is possible that only one third of the
auditors and 1 manager would be needed to continue the SB 1755
implementation at an estimated cost of $575,000 annually
($287,000 GF, $287,000 FF).