BILL ANALYSIS
SB 117
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Date of Hearing: August 19, 2009
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
SB 117 (Corbett) - As Amended: June 1, 2009
Policy Committee: HealthVote:15-4
Aging & LTC 5-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill extends deadlines established by SB 1755 (Chesbro),
Chapter 648, Statutes of 2006 for the California Department of
Health Care Services (DHCS) to establish a new rate methodology
for Adult Day Health Care Centers (ADHC). Specifically, this
bill:
1)Requires DHCS, in conjunction with stakeholders, to establish
an "unbundled rate" to conform to federal funding requirements
and laws by August 1, 2011. The term unbundled rates refers to
billing for "core" services allowable under federal law and
separately billable services such as transportation, physical
and occupational therapy, and mental health services. Under
current law ADHCs are reimbursed in an all-inclusive flat fee
manner.
2)Extends several other related deadlines for rate methodology
interim benchmarks including peer groupings, reimbursement
limits, separately billable services, and rate comparisons.
FISCAL EFFECT
1)$2 million (50% GF/50% federal) in 2010-11 to extend 24
currently funded limited-term auditing positions to complete
the workload of establishing the analytical framework,
collecting data, and finalizing rates and methodologies per
the requirements of this bill.
2)If California does not unbundle ADHC rates per the
requirements of this bill and explicit federal direction the
state risks losing more than $150 million in federal Medicaid
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funding that is matched with state GF to provide ADHC services
to 36,000 recipients statewide.
3)Annual savings in the range of $35 million GF once the new
rate methodology is adopted. The new rate structure will
reduce the rates paid for ADHC services. According to earlier
estimates associated with the initial enactment of SB 1755,
the savings of the new rate approach is expected to approach
20% of total cost.
COMMENTS
1)Purpose . This bill is sponsored by the California Association
for Adult Day Health Services (CAADS) to extend timelines
initially established by SB 1755 that have passed or will not
be met in early 2010. According to the author and sponsor the
work has been more complex and cumbersome than expected. The
progress on baseline issues such as cost reporting inputs is
behind schedule. This bill is a specific and significant step
in addressing the continued concerns of the federal government
about ADHC reimbursement. Failure to comply with the
establishment of a new rate methodology may put all federal
funding in this program at risk. The author and sponsors
highlight the importance of ADHC in the current budget
environment in which many programs serving the elderly and
disabled have been reduced or eliminated.
2)Background . ADHC are licensed community-based day care
programs providing a variety of health, therapeutic, and
social services to elderly and disabled adults at risk of
being placed in a nursing home. The California Department of
Public Health licenses ADHC and the California Department of
Aging administers the program and certifies programs for
Medi-Cal reimbursement. There are over 300 ADHC centers
statewide. Approximately 36,000 clients are served statewide
and each ADHC site serves from 25 to 275 individuals.
3)Reimbursement . Medi-Cal currently reimburses ADHCs at a
bundled rate, a single rate which is paid per recipient each
per day with a minimum four-hour stay required. This rate
includes payment for all required ADHC services and is set at
90 % of the state's reimbursement rate for Nursing
Facility-Level A as a result of legal settlement a decade ago.
The recently enacted 2009-10 ADHC budget was reduced by $28
million (GF) associated with reforms to ADHC administration
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and funding, including limiting services to no more than three
days per week for a period of time, freezing program rates,
establishing a definition of medical acuity, performing
on-site treatment authorization requests, and establishing a
stakeholder group to assist with implementation.
4)Federal Scrutiny of ADHC . The federal government, which pays
for half of ADHC services, has expressed ongoing concern about
how ADHC is structured and administered in California. The
concerns address whether the program meets federal and state
laws and regulations with regard to Medi-Cal reimbursement.
For example, the federal government notified California in
2003 of the need to include ADHC either in a State Plan
Amendment (SPA) to California's Medicaid Plan or to have the
program approved under a waiver of federal funding rules to
continue receipt of federal funding. SB 1755, signed several
years later, enacted substantial reforms, but key outcomes
have not yet been met. This bill addresses a series of those
outcomes.
Communication from the federal government in July of 2009
indicates substantial compliance issues remain with respect to
ADHC and state and federal law. For example, the federal
government notified California that ADHC receive payment for
services that are not eligible for Medi-Cal reimbursement,
ADHC are not eligible providers under the approved State Plan,
and the bundled rate methodology is inconsistent with the
federal Social Security act governing reimbursement. This bill
eliminates the bundled rate methodology and increases
compliance with federal requirements.
Analysis Prepared by : Mary Ader / APPR. / (916) 319-2081