BILL ANALYSIS �
SENATE COMMITTEE ON HEALTH
Senator Ed Hernandez, O.D., Chair
BILL NO: AB 2608
AUTHOR: Bonilla
AMENDED: May 25, 2012
HEARING DATE: June 20, 2012
CONSULTANT: Bain
SUBJECT : Medi-Cal: local educational agency billing option.
SUMMARY : Makes permanent and expands provisions relating to
program improvement activities in the Medi-Cal Local Billing
Option (LBO) program, through which Local Educational Agencies
(LEA) can draw down federal funding for health care services
provided to Medi-Cal-eligible students. Requires money collected
for administrative activities for program improvement activities
be proportionately reduced from federal Medicaid payments to all
participating LEAs so that no one LEA loses a disproportionate
share of its Medicaid payments.
Requires DHCS to amend the Medicaid state plan and regulatory
requirements pertaining to the provision of medical
transportation services by LEAs so that they are no more
restrictive than federal requirements.
Existing law:
1.Establishes the Medi-Cal program, administered by the
Department of Health Care Services (DHCS), under which
qualified low-income persons receive health care benefits.
2.Requires specified services provided by a LEA are covered
Medi-Cal benefits, to the extent federal financial
participation is available, are subject to utilization
controls and standards adopted by DHCS, and are consistent
with Medi-Cal requirements for physician prescription, order,
and supervision.
3.Requires DHCS to make various LEA program improvement
activities, including:
a. Amending the Medicaid state plan with respect to the LBO
for services by LEAs to ensure that schools are reimbursed
for all eligible services that they provide that are not
precluded by federal requirements;
b. Eliminating and modifying state plan and regulatory
requirements that exceed federal requirements when they are
unnecessary;
Continued---
AB 2608 | Page 2
c. Consulting regularly with the Department of Education
(DOE); representatives of urban, rural, large and small
school districts; county offices of education, the local
education consortium; and LEAs in order to assist DHCS in
formulating the Medicaid state plan amendments; and
d. Filing an annual report with the Legislature.
4.Requires LEA program improvement-related activities to be
funded and staffed by proportionately reducing federal
Medicaid payments allocable to LEAs. Prohibits the annual
amount funded for program improvement activities from
exceeding $1.5 million dollars. Requires funding received
under this provision to derive only from federal Medicaid
funds that exceed the baseline amount of LEA Medicaid billing
option revenues for the 2000-01 fiscal year (FY).
5.Requires, as part of the LEA program improvement activities,
DHCS to file an annual report with the Legislature regarding
LEA that includes a state-by-state comparison of school-based
Medicaid total and per child eligible claims and federal
revenues; a summary of DHCS activities, a listing of all
school-based services, activities, and providers approved for
reimbursement by the federal government in other state plans
that are not approved in California; any barriers to LEA
reimbursement that are not imposed by federal requirements;
and a description of the actions that have been and will be
taken to eliminate them.
6.Authorizes DHCS to enter into a sole source contract to comply
with these program improvement requirements.
7.Sunsets the LEA program improvement activity-related
provisions January 1, 2013.
This bill:
1.Makes the LEA program improvement provisions permanent by
eliminating the January 1, 2013, sunset date.
2.Eliminates a requirement that LEAs receive a baseline Medicaid
funding amount (the amount LEAs received in the 2000-01 fiscal
year) before federal Medicaid moneys can fund administrative
activities related to program improvements.
3.Requires money collected for administrative activities for
program improvements be proportionately reduced from Medicaid
payments to all participating LEAs so that no one LEA loses a
disproportionate share of its federal Medicaid payments.
AB 2608 | Page
3
4.Requires DHCS to amend the Medicaid state plan and regulatory
requirements pertaining to the provision of medical
transportation services by LEAs so that they are no more
restrictive than federal requirements to allow LEAs to seek
reimbursement for school transportation services that are not
precluded by federal requirements.
5.Requires, as part of an existing report to the Legislature,
DHCS to include an accounting of funds collected from federal
Medicaid payments allocable to LEAs. Requires the report to
detail amounts withheld from federal Medicaid payments to each
participating LEA for the year.
6.Requires DHCS to collaborate with DOE to help ensure LEA
compliance with state and federal Medicaid requirements and to
help improve LEA participation in the Medi-Cal billing option
for LEAs.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1.One-time minor, absorbable costs to DHCS to modify regulations
to be no more restrictive than federal requirements. Ongoing
costs for additional reporting and collaboration with DOE
should also be minor and absorbable.
2.New federal funding for schools, potentially in millions of
dollars according to the Los Angeles Unified School District
(LAUSD), to the extent schools may be able to submit
additional transportation services for federal reimbursement.
PRIOR VOTES :
Assembly Health: 18- 0
Assembly Appropriations:17- 0
Assembly Floor: 74- 0
COMMENTS :
1.Author's statement. AB 2608 would enable school districts to
draw down more federal funds for transportation services for
students with disabilities by expanding the Medi-Cal LBO
program for LEAs. The LBO program allows school districts to
claim federal reimbursement for health services for Medi-Cal
eligible children. Although California has the largest number
AB 2608 | Page 4
of eligible children in the nation, the amount of federal
dollars claimed is well below other states. In an effort to
address this problem, SB 231 (Ortiz), Chapter 655, Statutes of
2001, was enacted to increase the amount of Medicaid
reimbursement received by California school districts through
the LBO program. That legislation, however, is set to expire
on January 1, 2013. AB 2608 eliminates the sunset clause and
makes necessary changes to the LBO program to allow LEAs to
obtain additional federal funds for health care services.
Current state regulations are more restrictive than the
federal rules. This bill expands the LBO program by aligning
state and federal regulations for transportation
reimbursement. Expanding the LBO program will generate
millions of dollars statewide for necessary school
transportation for students with disabilities. For example,
LAUSD currently spends $77 million on transportation for
13,000 students with disabilities. However, under the current
state rules, LAUSD is only able to receive $2 million in
federal reimbursement. Given the state's fiscal challenges,
and the uncertainty surrounding home-to-school transportation
funding, this bill is necessary in order to maximize the
amount of federal reimbursement school districts can receive.
Additionally, this bill provides more transparency and
accountability in the work performed by DHCS. DHCS is able to
withhold certain amounts from the federal reimbursement
dollars that go to schools in order to offset the costs to
DHCS for administering the LBO program. Properly accounting
for these withhold amounts ensures that schools are receiving
the federal money they are due.
2.LEA. The LEA Medi-Cal LBO Program was established in 1993 to
provide federal financial participation (FFP) through Medicaid
reimbursement to LEAs (school districts, county offices of
education, community colleges, and university campuses) for
health-related services provided by qualified medical
practitioners to students who are enrolled in Medi-Cal. DHCS
indicates school-based health services reimbursed by the LEA
Program are primarily provided to students with disabilities
receiving special education services through an Individualized
Education Plan or Individualized Family Service Plan.
LEAs pay for health-related services and are reimbursed for 50
percent of their costs through Medicaid FFP. LEA services are
delivered either through the LEAs (which employ practitioners
who provide the services on site) or through local contracted
practitioners. LEAs must annually certify that the public
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funds expended for LEA services provided are eligible for FFP.
Subject to specified conditions, LEA covered services can
include the following:
� Health and mental health evaluations and health and
mental health education;
� Medical transportation;
� Nursing services;
� Occupational therapy;
� Physical therapy;
� Physician services;
� Mental health and counseling services;
� School health aide services;
� Speech pathology services;
� Audiology services; and
� Targeted case management services for children with an
individualized education plan or an individualized family
service plan.
In 2009-10, there were 391,919 LEA claims, total federal
Medicaid reimbursement was $220 million and average
reimbursement per claim was $122. Medi-Cal reimbursement in
the LEA Program has increased by 84 percent, growing from
$59.6 million in FY 2000-01 to $109.9 million in FY 2008-09.
1.Funding for LBO administrative costs in LEA. Funding for DHCS
administrative activities and contractor costs are currently
governed by both law and practice through the DHCS Provider
Participation Agreement. Administrative funding is as follows:
a. DHCS administrative and processing services costs
related to the management of the LEA Medi-Cal LBO, not to
exceed one percent of the amount payable to the LEA
submitting the claim. This fee is in the Provider
Participation Agreement and is not codified.
b. DHCS audit administration and associated audit resources
costs to ensure fiscal accountability of LEA Medi-Cal LBO
and to comply with the Medicaid State Plan, not to exceed
one percent of the amount payable to the LEA submitting the
claim. The total amount collected from this fee is capped
at $650,000 through the 2010-11 Budget Act.
c. DHCS costs required to fund and support the program
improvement activities in existing law using a contractor,
not to exceed a program wide amount of $1.5 million
annually. Current law specifies this fee is collected on
amounts in excess of a 2000-01 baseline amount ($60 million
in practice) received by LEAs. This fee is capped in
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statute at $1.5 million and is collected through a 2.5
percent fee against individual LEA paid claim amounts.
2.DHCS proposed budget trailer bill language and AB 2608. DHCS
proposed budget trailer bill language (TBL) on the LEA LBO,
which has three main components: (a) it deletes the January 1,
2013, sunset date on the program improvement provisions; (b)
it eliminates the requirement that a baseline LBO funding
amount must be met prior to funding LBO contractor costs for
program improvements; and (c) it removes the maximum annual
funding amount of $1.5 million for DHCS administrative and
contractor costs. Both (a) and (b) are contained in this bill.
Instead of (c), the TBL proposes the funding be an amount
agreed upon by DHCS and an Ad Hoc LEA Workgroup Advisory
Committee. This bill does not make either of these changes.
The Budget Committees rejected the proposed TBL, so the policy
changes could be made in this bill.
This bill also contains additional provisions that the TBL does
not include. These include a specific requirement that DHCS
align state rules with federal requirements for medical
transportation reimbursement (current law already contains a
similar provision), additional DHCS reporting requirements, a
requirement that money collected for administrative activities
for program improvement activities be proportionately reduced
from federal Medicaid payments to all participating LEAs so
that no one LEA loses a disproportionate share of its Medicaid
payments, and a requirement that DHCS to collaborate with DOE
to help ensure LEA compliance with state and federal Medicaid
requirements and to help improve LEA participation in the
Medi-Cal billing option for LEAs.
3.Prior legislation. SB 870 (Ducheny), Chapter 712, Statutes of
2010, the 2010-11 Budget Bill required DHCS to withhold 1
percent of LEA reimbursements, not to exceed $650,000, for the
purpose of funding the work and related administrative costs
associated with the audit resources approved in a specified
budget change proposal to ensure fiscal accountability of the
LEA Medi-Cal LBO and to comply with the Medi-Cal State Plan.
AB 1540 (Committee on Health), Chapter 298, Statutes of 2009,
extended the LEA LBO program improvement provision sunset date
from January 1, 2010, to January 1, 2013.
AB 131 (Committee on Budget), Chapter 80, Statutes of 2005,
the 2005 health budget trailer bill, sunset the LEA program
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improvement provisions January 1, 2010.
SB 231 (Ortiz), Chapter 655, Statutes of 2001, enacted the LEA
program improvement activities requirements, required DHCS to
obtain a state plan amendment to accomplish various goals to
enhance reimbursement for Medi-Cal services provided at school
sites and student access to those services, and sunset various
provisions of that bill January 1, 2006.
SB 256 (Maddy), Chapter 654, Statutes of 1993, established the
LEA LBO program by requiring that services provided by a LEA
are a Medi-Cal-covered benefit.
4.Support. This bill is sponsored by the LAUSD to continue and
improve the LEA Medi-Cal LBO program improvement activities
set to expire in 2013. LAUSD states that almost $110 million
in federal funds going to California schools to support
essential health and mental health related services to
students are provided through the LBO, and since 2001, LAUSD
has received $120 million of federal funding through the
program. LAUSD states this bill makes a number of improvements
to the LBO to generate millions of dollars statewide for
necessary school transportation for students with disabilities
by requiring state rules and regulations that are overly
restrictive be better aligned with federal rules that allow
for reimbursement for transportation of students with
disabilities. Additionally, LAUSD states greater transparency
and accountability in the work performed by DHCS is needed, as
DHCS is able to withhold certain amounts from the federal
reimbursement dollars that go to schools in order to offset
DHCS administrative costs. LAUSD argues proper accounting for
these withhold amounts ensures that schools are receiving the
federal money they are due.
5.Policy issue. This bill requires DHCS to amend the Medicaid
state plan and regulatory requirements pertaining to the
provision of medical transportation services by LEAs so that
they are no more restrictive than federal requirements to
allow LEAs to seek reimbursement for school transportation
services that are not precluded by federal requirements.
Current law already requires DHCS to eliminate and modify
state plan and regulatory requirements that exceed federal
requirements when they are unnecessary. However, state
Medi-Cal regulations govern the scope of the medical
transportation benefit generally (not specific to LEAs) and it
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is not clear that the state can expand the scope of the
Medi-Cal medical transportation only for LEAs when LEAs are
putting up the required federal matching funds.
If Medi-Cal medical transportation services can be expanded for
LEAs for purposes of drawing down federal matching funds, the
author may wish to consider (in lieu of requiring DHCS to
adopt regulations) adding language to this bill to override
the current regulatory requirement relating to Medi-Cal
medical transportation services so as to avoid the time and
workload to modify the regulation, as DHCS indicates it
typically takes 18 to 24 months to complete regulations.
Alternatively, this bill could provide DHCS with emergency
regulation authority to make the regulatory change to the
school transportation service regulatory provisions.
SUPPORT AND OPPOSITION :
Support: Los Angeles Unified School District (sponsor)
Oppose: None received.
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