BILL ANALYSIS
SB 152
Page 1
Date of Hearing: June 30, 2009
ASSEMBLY COMMITTEE ON HEALTH
Dave Jones, Chair
SB 152 (Cox) - As Amended: April 14, 2009
SENATE VOTE : 34-0
SUBJECT : Medi-Cal funding: mental health services.
SUMMARY : Directs, beginning on March 1, 2010, the Department
of Mental Health (DMH) to send a reimbursement claim to the
State Controller (Controller) within 90 days after receipt of
mental health services claims submitted by counties and requires
interest to accrue starting on the 91st day of an unpaid claim.
Specifically, this bill :
1)Requires DMH to send a reimbursement claim to the Controller
within 90 days after receipt of fee-for-service (FFS) claims
for reimbursement that any county contractor or subcontractor
submits for mental health services.
2)Exempts from the 90-day timeframe in 1) above claims that are
involved in DMH's dispute resolution process or that have been
returned to the submitting entity for additional information
or necessary changes.
3)Requires, beginning on the 91st day of an unpaid claim,
interest to accrue at the daily Pooled Money Investment
Account (PMIA) rate and to be paid equally from the budgets of
DMH, the Department of Health Care Services (DHCS), and the
Health and Human Services Agency.
4)Requires DMH, if sufficient funds are not available, to
request the Department of Finance (DOF) to include any amounts
necessary to satisfy the claim in a request for a deficiency
appropriation.
5)Prohibits interest charges from accruing against DMH's budget
when funding to DMH is insufficient to pay the claim.
EXISTING LAW :
1)Establishes the Medi-Cal program, administered by DHCS, to
provide comprehensive health benefits to low-income children,
SB 152
Page 2
their parents or caretaker relatives, pregnant women, elderly,
blind or disabled persons, nursing home residents, and
refugees who meet specified eligibility criteria.
2)Establishes DMH, which directs and coordinates statewide
efforts for the treatment of mental disabilities.
3)Provides for DMH to implement specialty mental health care for
Medi-Cal beneficiaries through FFS or capitated rate contracts
with county mental health plans (MHPs) and other entities.
4)Excludes Medi-Cal claims for health care services
reimbursement, unless the Medi-Cal provider is a small
business or nonprofit entity, from the California Prompt
Payment Act requiring state agencies to pay properly
submitted, undisputed invoices within 45 days of receipt, or
automatically calculate and pay the appropriate late payment
penalties as specified.
FISCAL EFFECT : According to the Senate Appropriations
Committee, the fiscal impact of interest payments on unpaid
claims is unknown, depending on the number and extent of future
late reimbursements, if any.
COMMENTS :
1)PURPOSE OF THIS BILL . The sponsor of this bill, the Regional
Council of Rural Counties (RCRC), states that it has become
commonplace for county Medi-Cal mental health claims to be
held at DMH for 90 days or longer. RCRC notes that a large
number of claims have been held for more than a year. RCRC
maintains that California's small and rural counties lack the
fiscal capacity to sustain millions of dollars in overdue
Medi-Cal claims and, as a result, are forced to borrow
internally and externally to pay for staff and services.
According to RCRC, while DMH has begun to revamp their current
financial management practices and systems to address these
delays, ongoing problems with staffing, processes, and
computer reliability continue to emerge. The author states
that this bill is intended to ensure expedient payment of
county Medi-Cal mental health claims by requiring the state to
pay accrued interest on claims that are paid 91 days or more
after DMH has received them.
2)MEDI-CAL MENTAL HEALTH SERVICES . Mental health services are
SB 152
Page 3
delivered in the Medi-Cal program through a system distinct
from other Medi-Cal services. Medi-Cal beneficiaries who meet
certain medical necessity, diagnostic, and impairment criteria
obtain specialty mental health care through
county-administered MHPs, which provide the services directly
or through contract providers. These services include
treatment by mental health professionals, residential
treatment, rehabilitative services, targeted case management,
and medication management. Specialty mental health services
are carved out of the Medi-Cal program, meaning they are not
under the purview of DHCS, but are the responsibility of DMH
and county mental health departments. General mental health
care needs for Medi-Cal beneficiaries remain the
responsibility of DHCS either through their physical health
managed care plans or the FFS Medi-Cal system.
3)DMH CLAIMS PAYMENT SYSTEM . A final report on DMH's overall
claims payment system was issued by the Department of Finance
(DOF) in December 2007. Among other things, the report found
that the system is fragmented, decentralized, and ineffective;
the county MHPs are not being paid timely because of problems
with DMH's claims reimbursement system; DMH's claims
reimbursement system, including the information system, is
outdated, unreliable, and at risk of failure; and, DMH is at
continued risk of overbilling the federal government because
of insufficient corrective measures to address previous
billing errors and additional actions must be taken to ensure
that claims involving FFP are accurate.
According to briefing documents from DMH, the current computer
system that adjudicates county Medi-Cal mental health claims
and claims from direct service providers processes
approximately 1.5 million claims per month. DMH estimates
that the annual amount of approved claim reimbursements totals
$1 billion. The current mainframe adjudication system was
built in the early 1980s. DMH indicates that a new claims
system that will be fully compliant with the federal Health
Insurance Portability and Accountability Act will be in place
in July 2009, beginning with a new payments accounting system.
DMH expects counties to begin using the system by October
2009. DMH indicates that, under the new system, claims are
expected to be paid in 30 days, adjustments will be automated,
and the data will be standardized for reporting purposes. The
entire system, including the new claims processing system,
will be fully functional by February 2010, at which time the
SB 152
Page 4
outdated system that is currently in use will be completely
eliminated.
4)POOLED MONEY INVESTMENT ACCOUNT . As of March 1, 2010, this
bill would establish a 90-day repayment requirement and apply
interest at the daily PMIA rate for payments that exceed 90
days. Through the PMIA, the State Treasurer invests
taxpayers' money to manage the state's cash flow and
strengthen the financial security of local governmental
entities. The primary investment objectives governing the
PMIA are safety, liquidity, and yield. The PMIA provides
loans to bond-funded infrastructure projects and to the state
General Fund (GF) to help meet cash flow needs. The PMIA has
three primary sources of funds: the GF; special funds held by
state agencies; and, moneys deposited by cities, counties, and
other local entities into the Local Agency Investment Fund
(LAIF). Funds in the LAIF cannot be used by the state for any
purpose, including infrastructure and general fund loans.
5)SUPPORT . Supporters, including the California State
Association of Counties, California Mental Health Directors
Association, and the California Alliance of Child and Family
Services, state that the lack of timely reimbursement to
counties for mandated mental health services threatens the
ability of counties to continue to provide mental health
programs and services. They maintain that small and rural
counties are hit particularly hard by delays in reimbursement
payments because they do not have the cash flow to sustain
millions of dollars in overdue Medi-Cal claims and, as a
result, county mental health departments are forced to borrow
funds to pay for staff and services. Additionally, they note
that counties must absorb the interest paid on these loans,
which results in reductions to services for indigent
populations. Supporters acknowledge that although DMH has
initiated efforts to reform its financial management practices
and systems to address these issues, this bill is needed to
give the state and DMH a meaningful incentive to expedite
these improvements.
6)OPPOSITION . Both DMH and DHCS object to this bill because
they contend it is unnecessary. They agree that counties must
receive Medi-Cal reimbursement in a timely manner but this
bill does nothing to address the factors that contribute to
delayed reimbursement. DHCS states that this bill may require
the state to redirect GF money from other valuable state
SB 152
Page 5
programs in order to pay interest on claims after the 91st
day. DMH points out that it and DHCS have taken significant
systematic steps to create a faster claim process.
Furthermore, DMH reports that this issue is being handled
administratively and it is confident that the new electronic
claims processing system will streamline claims processing and
increase accuracy and timeliness by processing claims in
approximately 30 days.
7)RELATED LEGISLATION . AB 754 (Chesbro), pending in the Senate
Health Committee, clarifies the obligations and timeframes for
DMH and DHCS to promptly reimburse county mental health plans
for their Medi-Cal claims.
8)PRIOR LEGISLATION .
a) AB 1780 (Galgiani), Chapter 320, Statutes of 2008,
codifies an administrative structure for the review,
oversight, appeals processes, reimbursement, and claiming
procedures of the Early and Periodic Screening, Diagnosis,
and Treatment Program, a federally mandated program to
provide physical and mental health services to federal
Medicaid beneficiaries under the age of 21.
b) SB 1349 (Cox) of 2008, which was substantially similar
to SB 152, would have required the Controller to reimburse
cities and counties for certain mental health services
within 90 days after DMH receives a claim for reimbursement
and required interest to accrue starting on the 91st day of
an unpaid claim. SB 1349 was held on the Assembly
Appropriations Committee suspense file.
c) SB 604 (Cox) of 2007 would have required the Controller
to pay interest after 90 days, charged at the PMIA rate, on
local government claims for costs incurred for services to
state prisons or prisoners. SB 604 was held on the
Assembly Appropriations Committee suspense file.
9)POLICY QUESTIONS . Is requiring DMH, DHCS, and the Health and
Human Services Agency to equally pay accrued interest on late
payments an appropriate use of scarce GF resources that could
otherwise be directed toward mental health programs? Is
imposing an interest penalty the best approach to improving
the overall reimbursement system?
SB 152
Page 6
REGISTERED SUPPORT / OPPOSITION :
Support
Regional Council of Rural Counties (sponsor)
Alameda County Board of Supervisors
California Alliance of Child and Family Services
California Communities United Institute
California Mental Health Directors Association
California State Association of Counties
Colusa County Board of Supervisors
Del Norte County Board of Supervisors
Glenn County Board of Supervisors
Inyo County Board of Supervisors
Los Angeles County Board of Supervisors
Madera County Board of Supervisors
Sacramento County Board of Supervisors
San Bernardino County Board of Supervisors
Santa Barbara County Board of Supervisors
Santa Clara County Board of Supervisors
Sierra County Board of Supervisors
Tehama County Board of Supervisors
Urban Counties Caucus
Opposition
Department of Health Care Services
Department of Mental Health
Analysis Prepared by : Cassie Rafanan / HEALTH / (916)
319-2097