BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
AB 1552 (Lowenthal) - Community-based adult services: adult day
health centers.
Amended: August 4, 2014 Policy Vote: Health 8-0
Urgency: Yes Mandate: No
Hearing Date: August 4, 2014
Consultant: Brendan McCarthy
This bill meets the criteria for referral to the Suspense File.
Bill Summary: AB 1552 would require Community-Based Adult
Services to be provided as a Medi-Cal benefit.
Fiscal Impact:
Ongoing costs of about $380 million per year to continue to
provide Community-Based Adult Services in the counties in
which this program is currently operating (General Fund and
federal funds). As noted below, the state is currently
offering Community-Based Adult Services under a court order
that is set to expire in August of 2014. Community-Based
Adult Services is an optional benefit that states are not
required to offer under federal law. In the absence of this
bill, the state could elect to discontinue the program after
August 2014 (although the state may be subject to further
legal action if it did so).
Potential cost savings due to reduced institutionalization
and improved clinical outcomes for participating Medi-Cal
beneficiaries (General Fund and federal funds). The intent
of offering Community-Based Adult Services is to allow
Medi-Cal beneficiaries who are at risk of being
institutionalized (for example, placement in a skilled
nursing facility) due to physical illness and cognitive
impairment to remain in the community. To the extent that
Community-Based Adult Services actually keeps a Medi-Cal
beneficiary out of institutional care, this benefit will
almost certainly reduce state spending. Whether or not the
overall program reduces state spending will depend, in part,
on whether the benefit is provided to beneficiaries who are
likely to be institutionalized and the clinical success of
the benefit in preventing institutionalization.
AB 1552 (Lowenthal)
Page 1
Unknown costs to expand Community-Based Adult Services
statewide (General Fund and federal funds). Prior to March
2012, Community-Based Adult Services were limited by the
availability of providers. At that time, 26 counties had an
Adult Day Health Center provider (the predecessor to
Community-Based Adult Services). Current law places a
one-year moratorium on new Community-Based Adult Services
providers, which can be extended by the Department of Health
Care Services. The bill does not extend the moratorium on
providers. If the Department relaxes the moratorium on new
providers, the Community-Based Adult Services could become
available in the 32 counties that do not currently have a
provider. However, the remaining 32 counties are generally
rural counties with small populations. Given the low
population densities of those counties, it is not clear
whether the operation of an Adult Day Health Center could be
financially viable or whether there would be significant
demand for those services, given long travel times to and
from such a center.
Unknown costs to the Department of Public Health for
licensing of additional Adult Day Health Centers (Licensing
and Certification Fund). To the extent that new Adult Day
Health Centers open to provide Community-Based Adult
Services, those facilities would be licensed by the
Department. All licensing and enforcement costs would be
reimbursed by fees.
Ongoing costs of about $3.3 million per year to certify
that Community-Based Adult Services providers are meeting
Medi-Cal program criteria and requirements by the Department
of Aging (General Fund and federal funds). Under an
interagency agreement with the Department of Health Care
Service, the Department of Aging is responsible for
certifying that providers meet all the applicable Medi-Cal
program requirements.
Background: Under state and federal law, the Department of
Health Care Services operates the Medi-Cal program, which
provides health care coverage to pregnant women, children and
their parents with low incomes, as well as blind, disabled, and
certain other populations. Pursuant to the federal Affordable
Care Act, California has opted to expand eligibility for
AB 1552 (Lowenthal)
Page 2
Medi-Cal up to 138 percent of the federal poverty level and to
include childless adults.
With the exception of certain populations (for example,
individuals eligible for limited scope Medi-Cal benefits or
individuals dually eligible for Medi-Cal and Medicare in most
counties), managed care is the primary system for providing
Medi-Cal benefits. The Department estimates that in 2014-15, 7.5
million Medi-Cal beneficiaries (73 percent of total enrollment)
will receive care through the managed care system.
Prior to March 2011, the state offered Adult Day Health Center
services as an optional Medi-Cal benefit. Adult Day Health
Center services included medical care, nursing care, meals,
social and therapeutic activities, transportation, and other
services designed to avoid institutionalization by medically
frail individuals. In March 2011, the state eliminated Adult Day
Health Center services as a Medi-Cal benefit as part of the
Budget Act. The state was subsequently sued by Adult Day Health
Center participants. Under a settlement agreement, the state
created Community-Based Adult Services as a successor benefit,
with somewhat tighter eligibility criteria. The settlement
agreement is binding on the state until August 2014. The state
also implemented a moratorium on enrolling new providers into
Medi-Cal.
The Department of Health Care Services has been in negotiations
with the federal government to continue Community-Based Adult
Services as an optional benefit under the state's
Bridge-to-Reform waiver, which is valid until October 2015. The
Department anticipates that the Bridge-to-Reform waiver will be
extended to October 2020 and that Community-Based Adult Services
will be included as an optional benefit.
Proposed Law: AB 1552 would require Community-Based Adult
Services to be provided as a Medi-Cal benefit.
Specific provisions of the bill would:
Make Community-Based Adult Services a Medi-Cal benefit and
require it to be covered by Medi-Cal managed care plan
contracts;
Require the program standards and eligibility criteria to
be equal to the Special Terms and Conditions (the agreement
between the state and the federal government) that are in
AB 1552 (Lowenthal)
Page 3
effect on the enactment date of this bill;
Specify the eligibility criteria for participation by
Medi-Cal beneficiaries;
Require providers to be licensed by the Department of
Public Health and meet all applicable Medi-Cal standards;
Require Community-Based Adult Services to be offered as a
managed care benefit and as a fee-for-service benefit for
Medi-Cal enrollees not in managed care;
Require implementation of the bill only if federal
financial participation is available.
Related Legislation:
AB 518 (Yamada, 2013) would have established
Community-Based Adult Services as a Medi-Cal benefit and
require new Community-Based Adult Services to be non-profit
entities. That bill was heard in the Senate Health Committee
but no vote was taken.
AB 96 (Committee on Budget, 2013) would have created a
different successor program to the terminated Adult Day
Health Center Medi-Cal benefit. That bill was vetoed by
Governor Brown.
AB 97 (Committee on Budget, Statutes of 2013) eliminated
Adult Day Health Center services as a Medi-Cal benefit.
Staff comments: The state is currently obligated under a court
settlement to provide Community-Based Adult Services through
August 2014. The Department of Health Care Services has
requested permission from the federal government to continue to
offer Community-Based Adult Services for at least one more year.
By putting Community-Based Adult Services in statute as a
Medi-Cal benefit, this bill would compel the Department to
continue to provide that benefit (subject to federal approval).