BILL ANALYSIS �
SB 1161
Page 1
Date of Hearing: July 2, 2014
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
SB 1161 (Beall) - As Amended: April 29, 2014
Policy Committee: HealthVote:17-0
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill requires the Department of Health Care Services (DHCS)
to request a specified federal waiver, in order to receive
federal financial participation under the Drug Medi-Cal program
for short-term residential drug treatment and inpatient medical
detoxification services delivered in facilities that are
currently barred from receiving federal funding for such
services (so-called institutes for mental disease, or IMD
facilities).
FISCAL EFFECT
1)Administrative costs in the range of $200,000 (GF/federal) to
DHCS to develop a waiver proposal. DHCS is currently working
on a broader demonstration waiver related to coordinating
substance use services in Drug Medi-Cal.
2)A successful waiver proposal may increase utilization of
services by expanding supply, as discussed below, but costs
are not attributable specifically to this bill, as the
services identified in the bill are already Medi-Cal benefits
pursuant to state law.
COMMENTS
1)Purpose . 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 federal reimbursement.
SB 1161
Page 2
2)IMD Exclusion . Under federal law, federal financial
participation is not available for any services provided to
Medicaid beneficiaries under age 65 in an IMD (an inpatient
facility with more than 16 beds providing primarily
psychiatric services). Under this federal law, when Drug
Medi-Cal beneficiaries receive services within an IMD (for
example, residential substance use treatment), no federal
matching funds are available and the state or counties are
responsible for all costs. This federal policy appears to
have been instituted to prevent long-term "warehousing" of
mentally ill individuals in large institutions and to
encourage community-based treatment. However, the exclusion
poses a barrier to short-term residential and inpatient
treatment.
3)State versus County Role in Drug Medi-Cal . Drug Medi-Cal,
which covers a number of drug treatment modalities for
Medi-Cal beneficiaries, was realigned to counties in 2011 as
part of Public Safety Realignment. Counties deliver Drug
Medi-Cal services directly and through contracts with
providers, pay for the services, and submit the claims to DHCS
to claim federal reimbursement. However, the state is
required to fund the state share of the inpatient services
that are the subject of this bill, as these services were not
contemplated as part of 2011 realignment.
Proposition 30 (2012) provides protection for the realigned
revenue source and other protections for programs that were
realigned to counties. It specifies that 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 mandated by the 2011 Realignment
Legislation shall apply to local agencies only to the extent
that the State provides annual funding for the cost increase."
Since these expanded services are authorized pursuant to SB X1
1 (Hernandez), Chapter 4, Statutes of 2013, which required
Medi-Cal to cover substance use disorder services included in
the essential health benefits package adopted by the state,
counties are not obligated to provide the expanded services
unless the state pays the nonfederal share of costs of the
services.
4)Inpatient and Residential Drug Treatment Services . SB X1 1
only requires expanded substance use benefits to be provided
to the extent that federal financial participation is
SB 1161
Page 3
available and any necessary federal approvals have been
obtained. The 2014-15 May revision budget estimates
residential treatment services will cost $148 million ($49
million GF). But a plan submitted by DHCS to the federal
government to add these services has not yet been approved due
to a dearth of providers that are not IMDs. In practical
terms, this means the state does not currently provide nor pay
for these services, even though they are already authorized to
be provided pursuant to state law. A portion of the
individuals requiring these services would likely be newly
eligible pursuant to the recent ACA-related expansion of
Medi-Cal, and services for this population would therefore be
funded with 100% federal funds until 2017 (declining to 90%
federal share by 2020).
5)Drug Medi-Cal Expansion and Waiver . DHCS is currently
developing a Section 1115 demonstration waiver proposal to
provide the Drug Medi-Cal benefit in a coordinated manner,
modeled after the mental health benefit provided by county
mental health plans. Demonstration waivers allow the state to
waive certain federal rules, as long as services are provided
in an effective way without increasing costs. As part of this
effort, DHCS is already pursuing a waiver of federal IMD
exclusion rules. Since the waiver proposal is currently being
developed and modified with stakeholder input, it is unclear
whether this bill would assist or harm this effort by
potentially constraining the terms of such a waiver proposal.
Allowing federal reimbursement for services delivered in IMDs
would likely increase capacity for, and utilization of,
residential and inpatient drug treatment services. The
current lack of federal reimbursement for these services
artificially constrains the number of providers supplying
these services. Therefore, a practical impact of lifting the
IMD exclusion could be that the state actually begins paying
for these services because more providers will be
accessible-however, this could also occur under various
scenarios regardless of this bill.
6)Related Legislation . AB 2612 (Dababneh), pending in Senate
Appropriations, contains a similar provision requiring DHCS to
seek a waiver from the IMD exclusion.
Analysis Prepared by : Lisa Murawski / APPR. / (916) 319-2081
SB 1161
Page 4