BILL ANALYSIS �
SB 1161
Page 1
Date of Hearing: June 17, 2014
ASSEMBLY COMMITTEE ON HEALTH
Richard Pan, Chair
SB 1161 (Beall) - As Amended: April 29, 2014
SENATE VOTE : 32-4
SUBJECT : Drug Medi-Cal.
SUMMARY : Requires the Department of Health Care Services (DHCS)
to seek a waiver of federal Medicaid law in order to authorize
federal financial participation (FFP) for short-term residential
substance use disorder treatment in facilities with a bed
capacity in excess of 16 beds, and for short-term inpatient
medical detoxification provided in hospital settings, including
freestanding acute psychiatric and chemical dependency recovery
hospitals.
EXISTING LAW :
1) Establishes the Medi-Cal program, administered by DHCS,
under which qualified low-income individuals receive health
care services.
2) Establishes the Drug Medi-Cal (DMC) program, also
administered by DHCS, which provides medically necessary
substance use disorder treatment services to eligible
Medi-Cal beneficiaries.
3) Requires Medi-Cal, effective January 1, 2014, to provide
coverage for additional mental health and substance use
disorder services included in the essential health benefits
(EHB) package adopted by California.
4) Excludes, under federal Medicaid law, FFP for any
payments for services provided to an individual under age
65 in an institution for mental disease (IMD), which is
defined 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. This federal law is referred to as
the "IMD exclusion."
FISCAL EFFECT : According to the Senate Appropriations
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Committee, this bill would result in: 1) one-time costs up to
$150,000 (General Funds and federal funds) for DHCS to develop a
waiver application; 2) unknown increased federal funding for
services provided in the Drug Medi-Cal program by local
governments; 3) annual state costs of $50 million (and
approximately $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; and, 4) increased
federal funding to the state of about $20 million per year for
benefits provided to the newly eligible Medi-Cal population.
COMMENTS :
1) PURPOSE OF THIS BILL . According to the author, under
the state's recently approved Medi-Cal expansion, an
estimated 250,000 newly eligible Medi-Cal beneficiaries
will be in need of, or will seek substance use disorder
treatment. The author states that California's capacity
for both inpatient medical detoxification and short-term
residential substance use disorder treatment services is
severely limited because of the "IMD exclusion" which bars
federal funds from being available for substance use
disorder services provided in IMDs. The author states
that, other than 11 perinatal programs providing
residential substance use disorder services under DMC,
there are no DMC-licensed residential substance use
disorder facilities in California. The author also states
that capacity for inpatient medical detoxification is
equally restrictive with a majority of hospital-based
chemical dependency beds falling under the IMD exclusion
and ineligible for Medi-Cal reimbursement. According to
the author, this bill seeks to remove the barriers to
treatment caused by the IMD exclusion by requiring DHCS to
seek a waiver to allow short-term residential treatment
facilities with more than 16 beds and short-term inpatient
medical detoxification in a hospital setting to be eligible
for Medi-Cal reimbursement.
2)BACKGROUND .
a) IMD exclusion. Current federal Medicaid law bars FFP
for any services provided to Medicaid beneficiaries under
the age of 65 who receive care in IMDs. It should be noted
that the IMD exclusion does not apply to psychiatric
services provided in an IMD to children under the age of
21. Thus, under the broad IMD exclusion, no FFP would be
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available for short-term substance use disorder services,
or short-term inpatient medical detoxification treatment
provided to Medi-Cal beneficiaries in an IMD.
The IMD exclusion dates back to the enactment of Medicaid in
1965, and was designed to ensure that states, not the
federal government, bear the primary responsibility for
funding inpatient psychiatric services. In the mid 1980's,
in order to use Medicaid to promote small, community-based
group living arrangements as an alternative to large
institutions, the IMD exclusion was amended to narrow the
definition of an IMD to a facility with more than 16 beds.
b) Expansion of Drug Medi-Cal benefits. As a part of the
implementation of federal health care reform last year, the
Drug Medi-Cal benefit was expanded to require Medi-Cal to
provide coverage for additional substance use disorder
services. Effective January 1, 2014, residential substance
use disorder benefits are available all Medi-Cal
beneficiaries rather than being limited to pregnant and
postpartum women. Further, voluntary inpatient
detoxification benefits are available to the general
Medi-Cal population, and not limited to beneficiaries with
a medical condition.
In order to implement the expansion of DMC benefits, DHCS
must amend its State Medicaid Plan (the state's contract
with the federal government) through a State Plan Amendment
(SPA). In December 2013, DHCS submitted two SPAs to the
Centers for Medicare and Medicaid Services (CMS), SPA
13-035 regarding Alternative Benefits Plans and SPA 13-038
which is the main vehicle to allow DHCS to implement
additional substance use disorder services under the DMC
program and make medically necessary substance use disorder
services available to all Medi-Cal beneficiaries. Neither
of these SPAs would result in changes to the IMD exclusion.
However, in February 2014, the Director of DHCS wrote to
CMS regarding California's ability to provide the
residential substance use disorder benefit as proposed in
its SPA, and requested that CMS use an interpretation of
the IMD exclusion that does not rely solely on the number
of beds. DHCS requested that CMS instead allow for
flexibility to assess facilities on a case-by-case basis
rather than by number of beds alone, and recognize that
under the current interpretation of the IMD exclusion the
number of beds available for Medi-Cal beneficiaries would
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be only 10% of the state's total licensed capacity (1,815
out of 18,155 licensed beds).
c) Drug Medi-Cal waiver. Under federal law, a state which
desires to make significant changes to its Medicaid program
may request a waiver from certain federal Medicaid laws.
Waivers allow states to test new or different ways to
deliver and pay for health care services in Medicaid. This
bill would require DHCS to request a waiver under Section
1115 of the Social Security Act. Waivers under Section
1115 provide states additional flexibility to design and
improve their programs through pilot or demonstration
projects. Demonstrations under Section 1115 must be
"budget neutral" to the federal government, meaning that
federal expenditures cannot be more than federal spending
would be without the waiver. CMS has approved a Section
1115 waiver of the IMD exclusion for at least one other
state, Massachusetts. Under the Massachusetts waiver, the
state was granted authority to claim as allowable
expenditures, payments for covered services furnished to
IMD inpatients that are not otherwise eligible for FFP.
Independent of this bill, DHCS intends to submit a waiver
request to CMS to operate the DMC program as an organized
delivery system, thereby shifting DMC from a
fee-for-service model to a managed care model. According
to DHCS, the waiver will give state and county officials
more authority to select quality providers to meet drug
treatment needs, and result in a number of benefits
including improved coordination across systems, increased
provider monitoring, strengthened county oversight of
network adequacy, service access, and standardized
practices in provider selection. DHCS indicates that the
proposed waiver will only be operational in counties that
elect to opt in to an organized delivery system for DMC.
DHCS held waiver advisory group meetings in the spring of
2014, and based on feedback provided during those meetings,
is currently drafting the Special Terms and Conditions
(STC) of the waiver. Drafts of the STCs may be available
for public review during July 2014.
3)SUPPORT . Sponsor of this bill, the County Alcohol and Drug
Program Administrators Association of California (CADPAAC)
states that the number of newly-eligible Medi-Cal clients in
need of substance use disorder treatment will significantly
increase over the next five years, but the treatment capacity
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in the state falls far short of meeting this need, especially
for residential treatment facilities. CADPAAC states that the
major obstacle to expanded treatment for addiction through the
Medicaid program is the federal IMD exclusion which does not
allow drug treatment centers with more than 16 beds to bill
Medicaid for residential services provided to low-income
adults. Due to the IMD exclusion, CADPAAC states that only
10% of the available inpatient beds in California are in
facilities that meet the federal government's restrictions,
and capacity for inpatient medical detoxification is equally
limited. Further, CADPAAC asserts that an unintended
consequence of the IMD exclusion is discrimination against
people who need help, something that is not done for any other
disease. CADPAAC states that this bill will remove barriers
to substance use disorder treatment and will enable the state,
counties, and providers to work together to improve access to
medically necessary services for all Medi-Cal beneficiaries in
need of substance use disorder treatment.
The California Chapter of the American College of Emergency
Physicians (California ACEP) states that, due to the acute
shortage of inpatient psychiatric beds throughout the state,
patients with psychiatric conditions who have been stabilized
in the emergency department commonly wait upwards of two to
six days to be transferred to an inpatient hospital bed for
further treatment. California ACEP states that when those
patients have complicating illnesses, including substance use
problems, they are even more difficult to place in an
in-patient setting. California ACEP states that increasing
the availability of additional residential treatment and
short-term hospital beds for Californians with substance use
problems is an important step toward increasing access to the
broad variety of health care services patients need.
The California Hospital Association (CHA) states that hospitals
play a central role in the delivery of mental health and
substance use disorder treatment. CHA states that over 500 of
the available 800 chemical dependency beds for patients with
substance use disorder fall under the IMD exclusion, and that
it supports the requirements of this bill.
4)RELATED LEGISLATION . AB 2612 (Dababneh) requires DHCS to
request a waiver or waiver amendment to create a process by
which FFP may be claimed for stays of 120 days or less in an
IMD for beneficiaries with a substance use disorder diagnosis,
and for home health services provided to individuals who are
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eligible under the home health program and who are state or
county inmates in their last 30 days of custody. AB 2612 is
currently in the Senate Health Committee.
5) PREVIOUS LEGISLATION . SB 1 X1 (Ed Hernandez), Chapter
4, Statutes of 2013-14 First Extraordinary Session, added,
commencing January 1, 2014, mental health services and
substance use disorder services included in the essential
health benefits package, as adopted by the state, to the
schedule of Medi-Cal benefits, as specified. AB 106
(Committee on Budget), Chapter 32, Statutes of 2011, a
budget trailer bill, transfers California's DMC program
from the Department of Drug and Alcohol Programs to DHCS.
REGISTERED SUPPORT / OPPOSITION :
Support
County Alcohol and Drug Program Administrators Association of
California (sponsor)
California American College of Emergency Physicians
California Association of Alcohol and Drug Program Executives,
Inc.
California Hospital Association
California Mental Health Directors Association
California Psychiatric Association
California State Association of Counties
Center Point, Inc.
Drug Policy Alliance
Opposition
None on file.
Analysis Prepared by : Kelly Green / HEALTH / (916) 319-2097