BILL ANALYSIS �
AB 1054
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Date of Hearing: April 2, 2013
ASSEMBLY COMMITTEE ON HEALTH
Richard Pan, Chair
AB 1054 (Chesbro) - As Introduced: February 22, 2013
SUBJECT : Mental health: skilled nursing facility: reimbursement
rate.
SUMMARY : Repeals current law requiring counties to provide a
4.7% annual increase to the reimbursement rates of institutions
for mental disease (IMDs) licensed as skilled nursing facilities
(SNFs) and, instead, requires the rates to be negotiated
directly between the IMD and the county in which it is located.
EXISTING LAW :
1)Defines, in federal law, 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)Establishes the federal 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.
3)Requires the Department of Health Care Services (DHCS) to
contract with SNFs that have been designated as IMDs to
provide services to residents.
4)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.
5)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.
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6)Requires IMDs licensed as SNFs (SNF IMDs) 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 SNF 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), states
that despite the complex history of rate-setting legislation
intended to improve the quality of nursing home care in
California, counties continue to be required to provide SNF
IMDs with an across-the-board 4.7% annual rate increase,
regardless of the availability of local resources and without
any requirements that providers demonstrate their costs and
the quality of care they provide patients. The author notes
that, because of the federal IMD exclusion, counties must pay
100% of the cost of services for patients in SNF IMDs and the
current 4.7% automatic rate increase is unsustainable for
counties in that it represents the only part of the public
mental health system that is guaranteed a significant increase
each year and diverts funds from other less restrictive
community-based outpatient services. CMHDA maintains that
this bill is intended to ensure that counties are authorized
to pay fair rates to SNF IMDs by eliminating the 4.7% rate
increase and enabling the county in which a SNF IMD is located
to negotiate a rate directly with the facility.
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 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
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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. There are 18 SNF
IMDs statewide that would be affected by 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)RATE HISTORY . According to background information from CMHDA,
AB 1629 (Frommer), Chapter 875, Statutes of 2004, established
a nursing home rate structure 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 2004-05 that county
mental health departments would have been required to pay
freestanding nursing facilities, including SNF IMDs. Since
patients under age 65 residing in IMDs are not eligible for
federal Medicaid funding like residents of other SNFs, the
rate increases for these individuals would have been the sole
responsibility of county mental health departments.
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 and excluded SNF IMDs from
the QAF and AB 1629 rate structure. However, it also mandated
the following rate increase schedule for these facilities:
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.
CMHDA points out that, due to the state budget crisis, 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, including SNFs and
intermediate care facilities, at 2008-09 levels, but the rate
freeze did not include SNF IMDs, since their costs are borne
entirely by counties, leaving counties at continued obligation
to pay the mandated annual 4.7% rate increase. In 2010, CMHDA
sponsored AB 2645 (Chesbro), Chapter 554, Statutes of 2010,
which froze SNF IMD rates for two fiscal years from July 1,
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2010, to June 30, 2012. Effective July 1, 2012, counties
began once again providing these facilities with the 4.7%
annual increase. This bill eliminates the mandated rate
increase and instead allows counties to negotiate rates
directly with the IMDs.
4)PRIOR LEGISLATION AND BUDGET ACTION .
a) AB 2645 imposes a two-year rate freeze for SNF IMDs from
July 1, 2010, to June 30, 2012.
b) AB 5 X4 freezes the reimbursement rate paid to SNFs, as
well as other long-term care facilities.
c) AB 360 exempts SNF IMDs from the requirement to pay a
QAF and prescribes a rate-increase schedule for these
facilities.
d) AB 1629 imposes a QAF on SNFs and provides that the
funds assessed be made available to draw down a federal
match in Medi-Cal and support facility quality improvement
efforts in SNFs.
5)SUPPORT . CMHDA states in support that authorizing a county in
which a SNF IMD is located to negotiate a rate directly with
the facility is similar to the way in which other providers
that contract with county mental health departments are
reimbursed and provides counties with the local flexibility
and control to manage county resources by negotiating rates
for services they purchase in these facilities. The
California State Association of Counties writes in support
that while counties recognize the important role that SNF IMDs
play in the mental health system and want to ensure continued
access to SNF IMD services and treatment, the current
automatic annual rate increase is forcing difficult fiscal
decisions at the local level and counties are now asking to be
allowed to negotiate fair rates with SNF IMDs in their
counties through passage of this bill.
6)OPPOSE UNLESS AMENDED . The California Association of Health
Facilities (CAHF), which represents SNF IMD providers, opposes
this bill unless it is amended to set the annual rate increase
for these facilities at 3.5%, rather than eliminate the
statutory increase entirely and replace it with a requirement
for providers to negotiate individual rates with the counties.
CAHF suggests that mandating a 3.5% increase would be a more
simplistic and predictable approach to protecting SNF IMDs
rates at levels that are consistent with operational cost
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increases necessary to comply with SNF regulatory
requirements. CAHF asserts that should such protections be
eliminated without other mitigation or relief in SNF
regulatory requirements, SNF IMDs will fail and clients will
suffer.
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
Opposition
None on file.
Analysis Prepared by : Cassie Royce / HEALTH / (916) 319-2097