BILL ANALYSIS �
SENATE COMMITTEE ON HEALTH
Senator Ed Hernandez, O.D., Chair
BILL NO: SB 1161
AUTHOR: Beall
AMENDED: April 10, 2014
HEARING DATE: April 24, 2014
CONSULTANT: Bain
SUBJECT : Drug Medi-Cal
SUMMARY : Requires the Department of Health Care Services to seek
a waiver of the federal Medicaid law prohibition against federal
matching funds being available for services provided in an
Institution for Mental Disease so as to provide short-term
residential treatment in facilities with bed capacities in
excess of 16 beds meeting specified criteria, and short-term
inpatient medical detoxification in a free-standing acute
psychiatric and chemical dependency recovery hospital.
Existing law:
1.Establishes the Medi-Cal program, administered by the
Department of Health Care Services (DHCS), under which
qualified low-income individuals receive health care services.
The Medi-Cal program is, in part, governed and funded by
federal Medicaid provisions.
2.Excludes, under federal Medicaid law, federal financial
participation (FFP) for any payments for care or services for
an individual under age 65 and who is a patient in an
institution for mental diseases (IMD). This is known as the
"IMD exclusion."
3.Defines an IMD, under federal law, as a hospital, nursing
facility, or other institution of more than 16 beds, that is
primarily engaged in providing diagnosis, treatment, or care
of persons with mental diseases, including medical attention,
nursing care, and related services.
4.Establishes specified Drug Medi-Cal (DMC) reimbursable
services for Medi-Cal beneficiaries. Requires, effective
January 1, 2014, Medi-Cal to provide coverage for additional
mental health and substance use disorder services included in
the essential health benefits (EHB) package adopted by
California (the state adopted the Kaiser Small Group Product
as the state's EHB for the individual and small group health
Continued---
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insurance market last session).
This bill:
1.Requires DHCS to seek a Section 1115 waiver of federal law to
receive FFP under DMC.
2.Requires DHCS to seek a waiver of the IMD exclusion to provide
short-term residential treatment in facilities with bed
capacities in excess of 16 beds, 30 to 90 days maximum, with
an average length of stay of 60 days, and short-term inpatient
medical detoxification in a hospital setting, including, but
not limited to, free-standing acute psychiatric and chemical
dependency recovery hospitals.
3.Implements this bill only to the extent federal approval is
obtained and to the extent that FFP is available.
4.Makes legislative findings and declarations regarding the
changes made by federal health care reform and state law
related to mental health and substance use disorder services,
the number of Californians in need of those services, the
federal IMD exclusion and state capacity for residential care
and medical detoxification. States legislative intent to
expeditiously expand statewide capacity for mental health and
substance use disorder treatment services.
FISCAL EFFECT : This bill has not been heard by a fiscal
committee.
COMMENTS :
1.Author's statement. According to the author, the state's
recently approved Medi-Cal expansion includes residential
substance use disorder treatment and medical detoxification
services. An estimated 250,000 Californians newly eligible for
Medi-Cal are in need of or are seeking substance use disorder
treatment. California's capacity for both medical
detoxification and residential treatment services is severely
limited because of an outdated federal regulation known as the
IMD exclusion. Other than 11 perinatal programs, there are no
DMC licensed residential substance use disorder facilities in
California. According to a letter from the Director of DHCS
to the Centers for Medicare and Medicaid Services (CMS), only
21 percent of California's beds are in facilities with a
capacity of 16 and under, and capacity for inpatient medical
detoxification is equally restrictive. The California Hospital
Association reports 817 chemical dependency beds available in
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their facilities. Of that amount, 511 fall under the IMD
exclusion and are ineligible for Medi-Cal reimbursement. This
bill would require DHCS to seek a waiver of the IMD exclusion
for short-term residential treatment facilities over 16 beds
and short-term inpatient medical detoxification in a hospital
setting to be eligible for Medi-Cal/Medicaid reimbursement.
2.Background on IMD Exclusion. The IMD exclusion prohibits FFP
from being available for any medical assistance under federal
Medical law for services provided to any individual who is
under age 65 who is a patient in an IMD unless the payment is
for inpatient psychiatric services for individuals under age
21. The IMD exclusion was designed to ensure that states,
rather than the federal government, continue to have principal
responsibility for funding inpatient psychiatric services.
Under this broad exclusion, no Medicaid payment can be made
for services provided either in or outside the facility for
IMD patients in this age group. The IMD exclusion is unusual
in that it is one of the very few instances in which federal
Medicaid law prohibits FFP for care provided to enrolled
beneficiaries.
3.Medicaid waivers. When DHCS wants to make significant changes
to its Medicaid program, it must amend its State Medicaid Plan
(the State's contract with the federal government), and (if
needed) receive an exemption or Medicaid waiver from portions
of federal Medicaid law. California has used Medicaid waivers
to provide additional services to specific groups of
individuals who were not eligible for FFP, to limit services
to specific geographic areas of the state, and provide medical
coverage to individuals who may not otherwise be eligible
under Medicaid rules. An example of a provision of Medicaid
law that is waived is the federal "freedom of choice"
requirements. Waiving this requirement allows California to
require Medi-Cal beneficiaries to receive benefits through
managed care plans.
The criteria used by the federal government for approval of
Medicaid waivers are generally based upon policy, rather than
solely on federal law. The most significant federal
requirement is that of cost-effectiveness or budget
neutrality. The proposed waiver changes must not cost the
federal government more than the expected Medicaid costs for
the traditional Medicaid population under the same time
period.
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a. Section 1915 waivers must not exceed fee-for-service
equivalent costs. These waivers do not need to result in
cost savings to be budget neutral during the waiver period
as long as the costs do not exceed the federal
fee-for-service equivalency.
b. Section 1115 waivers must demonstrate that actual costs
will be reduced or the rate of growth in spending will be
slower over the period of the waiver than it would be
without the waiver (this bill requires DHCS to seek a
Section 1115 waiver).
1.State DMC waiver proposal. DHCS will be requesting a waiver
from CMS to operate DMC as an organized delivery system. DHCS
states the waiver will give state and county officials more
authority to select quality providers to meet drug treatment
needs. DHCS indicates the waiver will support coordination and
integration across systems, increase monitoring of provider
delivery of services, and strengthen county oversight of
network adequacy, service access, and standardized practices
in provider selection.
DHCS indicates its proposed waiver will only be operational in
counties that elect to opt into this organized delivery system
for DMC. Counties that opt into this waiver will be required
to meet specified requirements, including implementing
selective provider contracting (selecting which providers
participate in the program), providing all DMC benefits,
monitoring providers based on performance criteria, ensuring
beneficiary access to services and an adequate provider
network, using a single-point of access for beneficiary
assessment and service referrals, and data collection and
reporting.
2.Expansion of Drug Medi-Cal benefits and the IMD Exclusion. As
part of the implementation of federal health care reform last
year, the DMC benefit was expanded to require Medi-Cal to
provide coverage for additional substance abuse disorder
services. These additional benefits included services in the
EHB adopted by the state, and an additional preventive
service. Effective January 1, 2014, eligible Medi-Cal
beneficiaries may receive these expanded substance use
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disorder services:
a. Intensive Outpatient Treatment: Currently a DMC benefit,
but limited to pregnant and postpartum women, children, and
youth under the age of 21. This service will be available
for the overall Medi-Cal population;
b. Residential Substance Use Disorder Benefit: Currently a
DMC benefit, but limited to pregnant and postpartum women.
This service will be available for the overall Medi-Cal
population;
c. Voluntary Inpatient Detoxification: This service will be
available to the general population and is not limited to
individuals with a medical condition; and,
d. Screening and Brief Intervention: This service will be
available to the Medi-Cal adult population for alcohol
misuse, and if threshold levels indicate, a brief
intervention is covered. This service would occur in
primary care settings.
In February 2014, the DHCS Director wrote to CMS regarding
California's ability to provide the Residential Substance Use
Disorder Benefit as California proposed in its SPA. DHCS
requested that CMS employ an interpretation of the IMD
exclusion that does not rely solely on the number of beds.
DHCS requested that CMS instead recognize the distinguishing
characteristics of the proposed benefit and the realities
faced in providing this service as the number of beds
(licensed capacity of 18,155 beds) available for Medi-Cal
beneficiaries would be only 10 percent of total capacity
(1,815), assuming full provider capacity.
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1.Related legislation. AB 2612 (Dababneh) would, among other
provisions, require DHCS, in completing its application for a
Section 1115 waiver, include a request for approval to create
a process by which counties may receive FFP for stays of 90
days or less in an IMD for beneficiaries with a substance use
disorder diagnosis for purposes of treating the substance use
disorder. AB 2612 is scheduled to be heard in the Assembly
Health Committee on April 29, 2014.
2.Prior legislation. AB 106 (Committee on Budget), Chapter 32,
Statutes of 2011, a budget trailer bill, transferred
California's DMC program from DADP to DHCS, effective July 1,
2012.
3.Support. The County Alcohol and Drug Program Administrators
Association of California writes in support that the major
obstacle to expanded treatment for addiction through Medicaid
is the federal IMD exclusion, and the unintended consequence
of this restriction is discrimination against people who need
help.
The California Hospital Association (CHA) writes that hospitals
play a central role in the delivery of mental health and
substance use disorder treatment. CHA states there are
approximately 6,600 inpatient psychiatric and 800 chemical
dependency beds available for the 38 million individuals
living in the state of California. Unfortunately, over 500 of
the 800 available substance use disorder beds fall under the
federal IMD exclusion. CHA supports obtaining a waiver of the
IMD exclusion for short-term inpatient medical detoxification
in free-standing acute psychiatric and chemical dependency
recovery hospitals.
The California Psychiatric Association (CPA) writes the
original purpose of the IMD exclusion was to disincentivize
states' use of institutional forms of care for mental
illness in an early era that favored and promoted
non-institutional models of care. CPA writes that some forms
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of care, such as residential drug treatment and medical
detoxification, which require residential treatment in
excess of 24 hours for patient populations between 22 and 65
years of age, are in fact the community standard of care,
medically necessary, and represent the least restrictive
option consistent with good care, and there is sufficient
justification for FFP for these services.
4.Support with request for amendments. The California Opioid
Maintenance Providers (COMP) support residential treatment and
believes that federal law should be waived to increase the
availability of this treatment modality. COMP also requests an
amendment that will clarify that any waiver not include a
provision that limits freedom of choice of providers for
narcotic treatment program services for Medi-Cal
beneficiaries. COMP states this is a fundamental component of
this program as beneficiaries or patients will experience
limited access to this treatment modality without this
protection. COMP states that Narcotic Treatment Programs and
the use of Medically Assisted Treatment has a long history of
stigma due to misunderstandings of the medical condition of
opiate addicts. Without replacement medicine, such as
methadone or other drugs, these patients fail at recovery and
often remain addicted to heroin and other opiates for years if
not their lifetime.
5.Amendments in legislative findings. Staff recommends a number
of clarifying changes to the findings and declarations in this
bill including clarifying the scope of the new Medi-Cal
benefits, deleting the findings (7) and (10) related to
medical detoxification and stating DHCS has the authority to
seek a Section 1115 waiver, and clarifying the legislative
intent language that the expanded mental health and substance
abuse disorder services applies to Medi-Cal beneficiaries, and
not simply the newly Medi-Cal eligible.
6.Policy issues:
a. DHCS waiver authority. As indicted above, DHCS is
pursuing a broader Section 1115 relating to DMC. In
discussions regarding this bill, DHCS has indicated it is
reviewing whether its language would limit its authority to
seek such a waiver. As currently drafted, the waiver
required by this bill is limited to a waiver of the IMD
exclusion.
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DHCS' current authority to seek a broader Section 1115 waiver
is an area of dispute between legislative staff and the
Administration. DHCS cites as its current law authority a
provision of existing law that requires DHCS to prepare and
submit amendments to its Medicaid state plan and apply for
any necessary waivers in order to obtain FFP to implement
DMC treatment program provisions. DHCS argues this
provision enables it to seek a broader waiver, while
legislative staff and have argued that the waiver provision
is limited to obtaining FFP, and a Section 1115 waiver can
be used to obtain FFP but that the other changes DHCS seeks
as part of the waiver (such as selective provider
contracting) are not necessary to obtain FFP.
b. Waiver limited to DMC. The IMD exclusion applies to a
hospital, nursing facility, or other institution of more
than 16 beds, that is primarily engaged in providing
diagnosis, treatment, or care of persons with mental
diseases. As drafted, the IMD exclusion waiver request
under this bill is drafted as a DMC benefit.
c. Should length of stay be specified in statute requesting
a waiver? This bill requires the IMD waiver to be for
purposes of providing short-term residential treatment in
facilities with bed capacities in excess of 16 beds, 30 to
90 days maximum, with an average length of stay of 60 days.
Placing a 30 to 90 days maximum and an average length of
stay as a requirement may limit DHCS flexibility to obtain
FFP for facilities with a different patient census.
d. Funding waiver services under this bill with state or
county matching funds? Existing law sets forth the list of
DMC reimbursable services. Under existing law, the
non-federal share for the pre-ACA DMC services are required
to be funded through a county's realignment funds, and any
other available county funds eligible under federal law for
federal Medicaid reimbursement, while the expanded services
under implementation of the ACA are funded by the state
General Fund.
The Administration, as part of its waiver proposal, has not
yet decided on financing and rates, including how to fund
the non-federal share of Medi-Cal expenditures if the IMD
exclusion is waived. This bill is not specific on which
entity provides the non-federal share. Should the state or
counties put up funds to drawn down Medicaid FFP under this
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bill?
SUPPORT AND OPPOSITION :
Support: County Alcohol and Drug Program Administrators
Association of California
California Association of Alcohol and Drug Program
Executives, Inc.
California Mental Health Directors Association
California State Association of Counties
California Hospital Association
California Opioid Maintenance Providers
California Psychiatric Association
Drug Policy Alliance
Oppose: None received
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