BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
SB 1161 (Beall) - Drug Medi-Cal.
Amended: April 29, 2014 Policy Vote: Health 7-0
Urgency: No Mandate: No
Hearing Date: May 12, 2014 Consultant: Brendan McCarthy
This bill meets the criteria for referral to the Suspense File.
Bill Summary: SB 1161 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.
Fiscal Impact:
One-time costs up to $150,000 to develop a waiver
application by the Department of Health Care Services
(General Funds and federal funds).
Unknown increased federal funding for services provided in
the Drug Medi-Cal program by local governments (federal
funds). Under current law, counties provide and pay for
residential drug treatment services for pregnant and
post-partum women. Under current federal law, federal
matching funds are not available for services provided in an
institute of mental disease (IMD) with more than 16 beds. In
effect, this "IMD exclusion" means that counties are
providing some services through Drug Medi-Cal without
receiving federal matching funds. To the extent that the
bill results in the federal government waiving the IMD
exclusion, counties would receive additional federal
funding.
Annual costs of about $50 million per year to the state
(and about $70 million in additional federal matching funds)
to provide additional services in the Drug Medi-Cal program
that were newly authorized as of January 1, 2014 (General
Fund and federal funds).
Under the terms of the state's 2011 realignment, the state
is responsible for any new services authorized in law for
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realigned programs, including Drug Medi-Cal. As part of the
state's expansion of Medi-Cal, the state expanded both the
population eligible for Medi-Cal and the benefit package
available in Medi-Cal. As of January 1, 2014, all Medi-Cal
beneficiaries are eligible for residential treatment and
inpatient detoxification services (previously those benefits
were only authorized for pregnant or post-partum women).
However, because those services cannot be provided in an IMD
under federal law and there are very few non-IMD providers
of those services, the federal government did not accept the
state plan amendment proposal to add those services to the
Medi-Cal benefit package. Thus, the state will not provide
those services any Medi-Cal beneficiaries other than the
previously eligible pregnant and post-partum population,
despite the authority in current law.
If the federal government were to waive the IMD exclusion
under this bill, it is likely that the federal government
would also allow the state to add those benefits to the
Medi-Cal benefit package. In that case, the state would be
responsible for paying for the non-federal share of the cost
to provide those benefits to Medi-Cal beneficiaries.
Increased federal funding of about $20 million per year for
benefits provided to the newly eligible Medi-Cal population
(i.e. childless adults). Over time, the state will assume a
share of this cost, rising to 10 percent of total costs by
2020.
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.
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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
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.
Proposed Law: SB 1161 would require the Department of Health
Care Services to seek a waiver of federal Medicaid law to
authorize federal matching funds for certain Drug Medi-Cal
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benefits provided within institutes of mental disease.
The bill would require the Department to seek a federal waiver
to allow federal financial participation for short term
residential treatment in facilities with more than 16 beds and
short-term inpatient medical detoxification in a hospital
setting.
The bill would only be implemented to the extent that federal
financial participation is available.
Related Legislation: SB 973 (Hernandez) would make several
changes to the statutes governing narcotic treatment programs.
That bill will be heard in this committee.
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).