BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
AB 2612 (Dababneh) - Medi-Cal: substance abuse disorder
treatment.
Amended: May 23, 2014 Policy Vote: Health 6-1
Urgency: No Mandate: No
Hearing Date: August 14, 2014
Consultant: Brendan McCarthy
SUSPENSE FILE. AS AMENDED.
Bill Summary: AB 2612 would require the Department of Health
Care Services to seek a waiver of federal Medicaid law to
authorize federal matching funds for residential (drug and
alcohol) treatment lasting less than 120 days that is provided
within an institute of mental disease. The bill would require
the Department, as part of its implementation of the Health Home
Program, to seek a waiver of federal Medicaid law to authorize
federal funding for health home services provided to individuals
who are state or county inmates in their last 30 days of
custody.
Fiscal Impact (as approved on August 14, 2014):
Minor additional staff costs to include a provision
relating to services for inmates in the state's forthcoming
waiver application to implement the Health Home Program.
No significant increase in state costs is anticipated by
adding services for inmates to the Health Home Program.
Under the health home option in federal law, enhanced
federal financial participation at 90 percent is available
for the first eight quarters of program implementation -
increasing state funding that can be used for the program.
On the other hand, federal law and guidance requires health
home programs to provide more intensive services than are
typically provided by Medi-Cal. The intent of the program is
to both improve health outcomes for participants and to
reduce overall costs, by providing more intensive primary
care and support services while reducing costly
hospitalization and emergency medical services. Based on
other programs similar in nature, including the Frequent
Users of Health Services Initiative, this is a reasonable
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assumption. In addition, current law governing the Health
Home Program requires the Department to continue
implementation of the program after the initial eight
quarters only if it finds that the avoided costs are
sufficient to fully fund the ongoing costs of
implementation.
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. Generally, the federal government
provides a 50 percent federal match for state expenditures.
Pursuant to the federal Affordable Care Act, California has
opted to expand eligibility for Medi-Cal up to 138 percent of
the federal poverty level and to include childless adults. The
Affordable Care Act provides a significantly enhanced federal
match for the Medicaid expansion. Under the law, the federal
government will pay for 100 percent of the cost of the Medicaid
expansion in 2013-14 declining to a 90 percent federal match in
the 2020 federal fiscal year and thereafter.
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.
Drug Medi-Cal, which is the package of benefits related to
substance use disorders has been "carved out" of managed care
and is provided by the counties using realignment funds.
According to the 2011 realignment, counties are only responsible
for the costs to provide benefits that were authorized prior to
September 30, 2012.
Pursuant to Government Code Section 30026.5, legislation enacted
after September 30, 2012, that has an overall effect of
increasing the costs already borne by a local agency for
programs or levels of service under the 2011 Realignment shall
apply to local agencies only to the extent that the state
provides annual funding for the cost increase. Local agencies
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shall not be obligated to provide programs or levels of service
required by legislation above the level for which funding has
been provided.
Under federal law, federal financial participation is not
available for any services provided to Medicaid (Medi-Cal)
beneficiaries under age 65 in an institute of mental disease
(which by definition is an inpatient facility with more than 16
bends providing primarily psychiatric services). Under this
federal law, when Drug Medi-Cal beneficiaries receive services
within an institute of mental disease (for example, residential
substance use treatment), no federal matching funds are
available and the state or counties are responsible for all
costs. As noted above, because of the federal IMD exclusion and
its impact on the availability of providers, the federal
government has not authorized the state to include additional
residential inpatient treatment and detoxification services in
the Medi-Cal program.
Under current law (AB 361, Mitchell, Statutes of 2013)
Department of Health Care Services is authorized to establish a
program to provide specified health home services for certain
Medi-Cal enrollees, with the intent of reducing avoidable
hospitalization or use of emergency medical services.
Proposed Law: AB 2612 would require the Department of Health
Care Services to seek a waiver of federal Medicaid law to
authorize federal matching funds for residential (drug and
alcohol) treatment lasting less than 120 days that is provided
within an institute of mental disease.
The bill would require the Department, as part of its
implementation of the Health Home Program, to seek a waiver of
federal Medicaid law to authorize federal funding for health
home services (excluding health care services) provided to
individuals who are state or county inmates in their last 30
days of custody.
Related Legislation: SB 1161 (Beall) would require the
Department of Health Care Services to seek a waiver of federal
Medicaid law to authorize federal matching funds for short term
residential (drug and alcohol) treatment and short-term
inpatient medical detoxification provided within institutes of
mental disease. That bill is on the Assembly Appropriations
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Committee's Suspense File.
Staff Comments: Current federal law allows states to apply for
"waivers" of requirements of the federal Social Security Act.
This process allows states, on a case by case basis, to make
changes to their Medicaid program with the approval of the
federal Centers for Medicare and Medicaid Services. In general,
for the federal government to approve a waiver, the state must
demonstrate that total federal costs will not exceed
fee-for-service equivalent costs to the federal government over
the period of the waiver. In order for the federal government to
approve a waiver under this bill, the Department will need to
demonstrate that overall federal costs will not increase, even
though the waiver would explicitly seek to increase federal
funding for specified services. The Department would likely need
to demonstrate that additional federal funding for select
inpatient services would reduce the need for other Medi-Cal
services over the period of the waiver. It is important to note,
however, that the Department is currently developing a waiver
application to administer the Drug Medi-Cal program as an
organized delivery system (in other words, to shift Drug
Medi-Cal from a fee-for-service model to a managed care model,
separate from the overall Medi-Cal managed care program).
Author's amendments: would delete the provisions of the bill
that would require the Department of Health Care Services to
seek a waiver of federal Medicaid law to authorize federal
matching funds for residential (drug and alcohol) treatment
lasting less than 120 days that is provided within an institute
of mental disease.