BILL NUMBER: SB 117 ENROLLED
BILL TEXT
PASSED THE SENATE SEPTEMBER 10, 2009
PASSED THE ASSEMBLY SEPTEMBER 8, 2009
AMENDED IN ASSEMBLY SEPTEMBER 4, 2009
AMENDED IN ASSEMBLY AUGUST 31, 2009
AMENDED IN SENATE JUNE 1, 2009
AMENDED IN SENATE MARCH 9, 2009
INTRODUCED BY Senator Corbett
(Principal coauthor: Assembly Member Chesbro)
FEBRUARY 2, 2009
An act to amend Sections 14525.1, 14526.1, and 14571.2 of the
Welfare and Institutions Code, relating to adult day health care.
LEGISLATIVE COUNSEL'S DIGEST
SB 117, Corbett. Adult day health care services: eligibility
criteria: Medi-Cal reimbursement methodology and limit.
Existing law establishes the Medi-Cal program, administered by the
State Department of Health Care Services, under which basic health
care services are provided to qualified low-income persons.
The Adult Day Health Medi-Cal Law establishes adult day health
care services as a Medi-Cal benefit for Medi-Cal beneficiaries who
meet certain criteria, including, beneficiaries who meet the skilled
nursing facility level of care, as specified.
This bill would modify the aforementioned criteria to, instead,
provide that a beneficiary shall be eligible for adult day health
care services as a Medi-Cal benefit if he or she meets a specified
level of care.
Under existing law, participation in an adult day health care
program requires prior authorization by the department.
Existing law requires the department, effective August 1, 2010, to
establish a reimbursement methodology and a reimbursement limit for
adult day health care services on a prospective cost basis for
services that are provided to each participant, pursuant to his or
her individual plan of care, as specified. Existing law requires that
these provisions be implemented only to the extent that federal
financial participation is available.
This bill would, instead, provide that the requirement that the
department establish a reimbursement methodology and reimbursement
limit be effective August 1, 2012, and would make other conforming
changes.
This bill would also make a technical, nonsubstantive change
relating to adult day health care services.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 14525.1 of the Welfare and Institutions Code is
amended to read:
14525.1. (a) Except as provided in subdivisions (b) and (c), any
adult eligible for benefits under Chapter 7 (commencing with Section
14000) shall be eligible for adult day health care services if that
person meets all of the following criteria:
(1) The person is 18 years of age or older and has one or more
chronic or postacute medical, cognitive, or mental health conditions,
and a physician, nurse practitioner, or other health care provider
has, within his or her scope of practice, requested adult day health
care services for the person.
(2) The person has two or more functional impairments involving
ambulation, bathing, dressing, self-feeding, toileting, transferring,
medication management, and hygiene.
(3) (A) Except as provided under subparagraph (B), the person
requires substantial human assistance in performing these activities.
(B) The persons described in subdivisions (b) and (c) shall only
require assistance in performing these activities.
(4) The person requires ongoing or intermittent protective
supervision, assessment, or intervention by a skilled health or
mental health professional to improve, stabilize, maintain, or
minimize deterioration of the medical, cognitive, or mental health
condition.
(5) The person requires adult day health care services, as defined
in Section 14550, that are individualized and planned, including,
when necessary, the coordination of formal and informal services
outside of the adult day health care program to support the
individual and his or her family or caregiver in the living
arrangement of his or her choice and to avoid or delay the use of
institutional services, including, but not limited to, hospital
emergency department services, inpatient acute care hospital
services, inpatient mental health services, or placement in a nursing
facility or a nursing or intermediate care facility for the
developmentally disabled providing continuous nursing care.
(6) The person meets the level of care set forth in Section 51120
of Title 22 of the California Code of Regulations.
(b) A resident of an intermediate care facility for the
developmentally disabled-habilitative shall be eligible for adult day
health care services if that resident meets the criteria set forth
in paragraphs (1) to (5), inclusive, of subdivision (a) and has
disabilities and a level of functioning that are of such a nature
that, without supplemental intervention through adult day health
care, placement to a more costly institutional level of care would be
likely to occur.
(c) Persons having chronic mental illness or moderate to severe
Alzheimer's disease or other cognitive impairments shall be eligible
for adult day health care services if they meet the criteria
established in paragraphs (1) to (5), inclusive, of subdivision (a).
(d) This section shall only be implemented to the extent permitted
by federal law.
(e) Notwithstanding Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code, the
department may implement the provisions of this section by means of
all-county letters, provider bulletins, or similar instructions
without taking further regulatory action.
(f) Prior to implementing this section, the department shall meet
and confer with provider representatives, including, but not limited
to, adult day health care, home- and community-based services, and
nursing facilities for the purpose of presenting and discussing
information and evidence to assist the department as it determines
the methods and procedures necessary to implement this section.
(g) Upon the determination of the director that all necessary
methods and procedures described in subdivision (f) have been
ascertained and are sufficient to implement the purposes of this
section, the director shall execute and retain a declaration
indicating that this determination has been made. Subdivisions (a) to
(e), inclusive, shall be inoperative, until the date of execution of
the declaration. Upon the date of execution of such a declaration,
subdivisions (a) to (e), inclusive of this section shall become
operative and Section 14525 shall become inoperative.
SEC. 2. Section 14526.1 of the Welfare and Institutions Code is
amended to read:
14526.1. (a) Initial and subsequent treatment authorization
requests may be granted for up to six calendar months.
(b) Treatment authorization requests shall be initiated by the
adult day health care center, and shall include all of the following:
(1) The signature page of the history and physical form that shall
serve to document the request for adult day health care services. A
complete history and physical form, including a request for adult day
health care services signed by the participant's personal health
care provider, shall be maintained in the participant's health
record. This history and physical form shall be developed by the
department and published in the inpatient/outpatient provider manual.
The department shall develop this form jointly with the statewide
association representing adult day health care providers.
(2) The participant's individual plan of care, pursuant to Section
54211 of Title 22 of the California Code of Regulations.
(c) Every six months, the adult day health care center shall
initiate a request for an updated history and physical form from the
participant's personal health care provider using a standard update
form that shall be maintained in the participant's health record.
This update form shall be developed by the department for that use
and shall be published in the inpatient/outpatient provider manual.
The department shall develop this form jointly with the statewide
association representing adult day health care providers.
(d) Except for participants residing in an intermediate care
facility/developmentally disabled-habilitative, authorization or
reauthorization of an adult day health care treatment authorization
request shall be granted only if the participant meets all of the
following medical necessity criteria:
(1) The participant has one or more chronic or post acute medical,
cognitive, or mental health conditions that are identified by the
participant's personal health care provider as requiring one or more
of the following, without which the participant's condition will
likely deteriorate and require emergency department visits,
hospitalization, or other institutionalization:
(A) Monitoring.
(B) Treatment.
(C) Intervention.
(2) The participant has a condition or conditions resulting in
both of the following:
(A) Limitations in the performance of two or more activities of
daily living or instrumental activities of daily living, as those
terms are defined in Section 14522.3, or one or more from each
category.
(B) A need for assistance or supervision in performing the
activities identified in subparagraph (A) as related to the condition
or conditions specified in paragraph (1) of subdivision (d). That
assistance or supervision shall be in addition to any other nonadult
day health care support the participant is currently receiving in his
or her place of residence.
(3) The participant's network of non-adult day health care center
supports is insufficient to maintain the individual in the community,
demonstrated by at least one of the following:
(A) The participant lives alone and has no family or caregivers
available to provide sufficient and necessary care or supervision.
(B) The participant resides with one or more related or unrelated
individuals, but they are unwilling or unable to provide sufficient
and necessary care or supervision to the participant.
(C) The participant has family or caregivers available, but those
individuals require respite in order to continue providing sufficient
and necessary care or supervision to the participant.
(4) A high potential exists for the deterioration of the
participant's medical, cognitive, or mental health condition or
conditions in a manner likely to result in emergency department
visits, hospitalization, or other institutionalization if adult day
health care services are not provided.
(5) The participant's condition or conditions require adult day
health care services specified in subdivisions (a) to (d), inclusive,
of Section 14550.5, on each day of attendance, that are
individualized and designed to maintain the ability of the
participant to remain in the community and avoid emergency department
visits, hospitalizations, or other institutionalization.
(e) When determining whether a provider has demonstrated that a
participant meets the medical necessity criteria, the department may
enter an adult day health care center and review participants'
medical records and observe participants receiving care identified in
the individual plan of care in addition to reviewing the information
provided on or with the TAR.
(f) Reauthorization of an adult day health care treatment
authorization request shall be granted when the criteria specified in
subdivision (d) or (g), as appropriate, have been met and the
participant's condition would likely deteriorate if the adult day
health care services were denied.
(g) For individuals residing in an intermediate care
facility/developmentally disabled-habilitative, authorization or
reauthorization of an adult day health care treatment authorization
request shall be granted only if the resident has disabilities and a
level of functioning that are of such a nature that, without
supplemental intervention through adult day health care, placement to
a more costly institutional level of care would be likely to occur.
(h) Subdivision (e) shall become operative commencing on the first
day of the month following 30 days after the effective date of the
act adding this subdivision.
SEC. 3. Section 14571.2 of the Welfare and Institutions Code is
amended to read:
14571.2. (a) Subject to the provisions of this section, the
department shall establish, effective August 1, 2012, a reimbursement
methodology and a reimbursement limit for adult day health care
services on a prospective cost basis for services that are provided
to each participant, pursuant to his or her individual plan of care.
The prospective reimbursement methodology shall be determined by the
department after consultation with the California Association for
Adult Day Services and other interested stakeholders.
(b) The following definitions shall apply for purposes of this
section:
(1) "Daily core services" means the services described in Section
14550.5.
(2) "Separately billable services" means services designated by
the department, after consultation with the California Association
for Adult Day Services, and shall include, but not be limited to, the
following:
(A) Physical therapy services.
(B) Occupational therapy services.
(C) Speech and language pathology services.
(D) Mental health services.
(E) Registered dietician services.
(F) Transportation services.
(c) The prospective reimbursement methodology for the daily core
services provided by each adult day health care center shall be
determined by the department based on the reasonable cost of
providing all of the adult day health care services included within
the core services and adjusted to the particular rate year. Services
and costs included in the calculation of the daily core services rate
shall include, but not be limited to, all of the following:
(1) Fixed or capital-related costs representing depreciation,
leases and rentals, interest, leasehold improvements, and other
amortization.
(2) Labor costs other than those for the separately billable
services, including direct and indirect labor and contracted staff
hours required by law or regulation.
(3) All other costs exclusive of fixed or capital-related costs,
leases or rentals, interest, leasehold improvements, and other
amortization.
(4) Add-ons, adjustments, and audit adjustments determined
annually in the calculation of the core rate to allow for changes
specified in subdivision (h), until those changes are reflected in
the cost report.
(5) Cost components required to comply with licensing and
certification laws and regulations.
(d) (1) The daily reimbursement rates for the separately billable
services shall be determined based upon the reasonable cost of
providing each service, how each of the individual billable services
is defined, and which professional is providing the service, subject
to the scope of his or her license. These reimbursement rates shall
not exceed the Medi-Cal rates for the same service on file at the
time the service is rendered.
(2) In establishing the total reimbursement limit, direct patient
care labor costs may be paid at a specified discrete percentile to
ensure maintenance of quality of care.
(e) The department shall determine a reimbursement limit
applicable to each adult day health center peer group established
pursuant to subdivision (m), taking into account total overall
average costs per day of attendance for providing the entire array of
adult day health care services, including the daily core services
and the separately billable services. The department shall determine
a reimbursement limit applicable to each adult day health care center
peer group established pursuant to subdivision (m) based on cost
containment principles applied to other acute care and long-term care
providers.
(f) By July 1, 2010, the department shall develop, after
consultation with the California Association for Adult Day Services,
all of the following:
(1) An adult day health care center cost report meeting the
requirements of subdivision (j) and a list of individual components
to be included in the core rate calculation.
(2) The methodology and documentation necessary to establish the
reimbursement rate for the separately billable services.
(3) The reimbursement rates for transportation services. Payments
for transportation services shall be subject to the limit on the
daily reimbursement and shall be reimbursed whether the center
provides transportation directly, by use of contracted
transportation, or both. The department shall review methodologies
for payment for transportation services. The review of payment
methodologies shall include a survey of other states' adult day
health care transportation systems, and transportation reports or
expert consultation relevant to nonemergency medical transportation
services in the community.
(g) (1) By January 1, 2011, the department shall facilitate the
training of providers in collaboration with the California
Association for Adult Day Services. The adult day health care centers
shall be trained in the all of the following elements:
(A) The use of the modified cost report, supplemental reports, and
the accounting and reporting manual.
(B) Plan of care documentation required to support the separately
billable rate components.
(C) Medical necessity and eligibility requirements and
documentation.
(2) By January 1, 2011, the department, after consultation with
the California Association for Adult Day Services, shall establish
facility peer groupings as specified in subdivision (m).
(h) By July 1, 2011, the department, after consultation with the
California Association for Adult Day Services, shall establish a
methodology for calculation of the reimbursement limit, rates for the
daily core services, and applicable percentiles limiting specific
cost categories within the core rate.
(i) (1) By March 30, 2012, a preliminary estimate of the
reimbursement limit, the reimbursement rate for individual adult
health care services, and separately billable services shall be
established and provided to the California Association for Adult Day
Services and other interested stakeholders. The department shall
allow an appropriate stakeholder comment period following this
action.
(2) The information supplied to all interested stakeholders in
paragraph (1) shall be compared to what would have been paid under
the rate methodology in effect for the 2011-12 fiscal year.
(3) Based on the rate comparisons, a methodology to provide for a
multiyear phase in of the new prospective payment may be implemented.
(4) At the time of implementation, no adult day health care center'
s payment shall be decreased by more than 10 percent below the rate
paid in the rate year immediately preceding the first year that the
rate methodology prescribed in this section is implemented. In the
second and third rate years, no adult day health care center
reimbursement rate shall be decreased by more than 10 percent below
the adult day health care center's reimbursement rate on file at the
time of the application of the next year's reimbursement rate.
(j) (1) The department, with input from the California Association
for Adult Day Services and all interested stakeholders, shall
develop the cost reporting form and determine the costs that are to
be included and excluded from the annual cost reporting methodology.
(2) Cost reporting shall be consistent with Section 1861 of the
federal Social Security Act (42 U.S.C. Sec. 1395x) and Part 413 of
Title 42 of the Code of Federal Regulations.
(3) Cost reporting shall include itemization of the costs of all
adult day health care services such that information necessary to
determine costs associated with the core bundle of services and each
of the separately billable services can be collected.
(4) The cost report or supplemental report to the cost report, as
determined by the frequency the data will be required for calculation
of the core rate, shall collect staffing level and salary data for
all direct and indirect patient care staff, arranged through either
employment or contract.
(5) All adult day health care centers participating in the
Medi-Cal program shall maintain books and records according to
generally accepted accounting principles and the uniform accounting
systems adopted by the state, and shall submit annual cost reports
directly to the department.
(k) (1) The department may exclude any cost report or portion
thereof that it deems to be inaccurate, incomplete, or
unrepresentative, consistent with the policies established in
paragraph (2) of subdivision (j). For facilities that fail to file
cost reports with the department pursuant to this section, the
department shall reimburse those facilities at 10 percent below the
lowest reimbursement limit established in the facility's peer group
pursuant to subdivision (d).
(2) Cost report data shall be validated by using comparisons to
salary surveys and health industry administrative data maintained by
the Office of Statewide Health Planning and Development and other
state agencies. If cost report data is not statistically valid for a
given peer group, survey statistics shall be used as a proxy to
substitute for the cost report data.
(3) Cost report data for any adult day health care center that has
closed or is no longer a Medi-Cal participating facility shall be
excluded from the rate calculation.
(4) The specific process for maintaining cost data and submitting
cost reports shall be developed after consultation with the
California Association for Adult Day Services.
(l) Field audits shall be performed by the department in
accordance with all of the following laws and regulations:
(1) Section 1861 of the Social Security Act (42 U.S.C. Sec. 1395x)
and Title XVIII of the Social Security Act (42 U.S.C. Sec. 1395 et
seq.).
(2) Sections 413.9, 433.32, and 483.10 of, Part 413 of, Title 42
of the Code of Federal Regulations.
(3) Centers for Medicare and Medicaid Services Publication 15-1
(federal Department of Health and Human Services Manual).
(4) Chapter 5 (commencing with Section 54001) of Division 3 of,
and Chapter 10 (commencing with Section 78001) of Division 5 of,
Title 22 of the California Code of Regulations.
(5) Sections 14170 and 14171.
(6) Relevant portions of the California Medicaid State Plan.
(m) (1) In accordance with field audit requirements, adult day
health care centers shall be placed in a minimum of three designated
peer groupings. Each adult day health care center in each of the
designated peer groupings shall be audited on an annual basis.
(2) If for any reason a field audit was not performed, the average
audit adjustment of the peer grouping shall be applied.
(3) The peer groupings shall include, at minimum, geographic
differences and size of facility. The need for additional groupings
shall be periodically reevaluated to ensure that the peer groupings
remain relevant on a statewide basis.
(4) The department shall analyze and evaluate the data obtained
through peer grouping analysis in order to determine if additional
peer groupings or data elements are necessary for refinement of the
peer groupings.
(5) After analyzing the data pursuant to paragraph (4), the
department may increase the number of peer groupings or change the
criteria to reflect pertinent factors affecting peer grouping costs.
(n) (1) An audit adjustment or adjustments, either specific to an
adult day health care center or by peer grouping, reflecting the
difference between reported and audited costs and participant days
for field audited centers, shall be applied to all adult day health
care centers for purposes of establishing the core services
reimbursement rate and the reimbursement limit for the following rate
year. Audit adjustments shall include all of the following:
(A) The results of settled appeals. The department shall consider
only the findings of audit appeal reports that are issued more than
180 days prior to the beginning of the new rate year.
(B) In the case of peer grouping audit adjustments, audited costs
shall be modified by a factor reflecting share-of-cost overpayments
and share-of-cost underpayments.
(C) The results of federal audits, when reported to the state,
shall be applied in determining audit adjustments.
(D) (i) An adjustment or adjustments to reported costs of adult
day health care centers shall be made to reflect changes in state or
federal laws and regulations that would affect those costs, including
increases in the minimum wage or increases in minimum staffing
requirements.
(ii) The costs described in clause (i) shall be reflected as an
add-on to the new rate or rates.
(iii) To the extent not prohibited by federal law or regulations,
add-ons to the rate or rates shall continue until those costs are
included in cost reports used to set the new rate or rates.
(2) Adjusted costs shall be divided into categories and treated as
follows:
(A) Fixed or capital-related costs shall include costs that
represent depreciation, leases and rentals, interest, leasehold
improvements, and other amortization. No update shall be applied.
(B) Property taxes, where identified, shall be updated at a rate
of 2 percent annually.
(C) Labor costs, which shall be defined as a ratio of salary,
wage, and benefits costs to the total costs of each adult day health
care center, shall be updated based upon the labor study conducted by
the department and using industry-specific wage data as reported by
the adult day health care centers. The separately billable services
shall be updated by applying the median market-based rate specific to
the specialty service category.
(D) All other costs shall include all other costs less fixed or
capital-related costs, property taxes, and labor costs. This cost
category shall be updated using the California Consumer Price Index.
(3) Prior to the implementation of this methodology, the
department shall take measures to ensure appropriate training of
state audit staff.
(o) The department shall provide updates on the rate methodology
to the appropriate fiscal and policy committees of the Legislature.
The appropriation for services paid under this rate methodology shall
be included in the annual Budget Act.
(p) Adult day health care centers may appeal findings that result
in an adjustment to the rate or rates pursuant to Section 14171 and
to Article 1.5 (commencing with Section 51016) of Chapter 3 of
Division 3 of Title 22 of the California Code of Regulations.
(q) (1) Notwithstanding Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code, the
department shall implement this section by means of a provider
bulletin or similar instruction without taking regulatory action. By
August 1, 2015, the department shall adopt regulations in accordance
with the requirements of Chapter 3.5 (commencing with Section 11340)
of Part 1 of Division 3 of Title 2 of the Government Code.
(2) The department shall notify and consult with interested
stakeholders in implementing, interpreting, or making specific the
provisions described in this section.
(r) The department shall implement this section only to the extent
that federal financial participation is obtained.
(s) The department may file a state plan amendment to implement
the requirements of this section. Immediately upon filing any such
state plan amendment, the department shall provide the fiscal
committees of the Legislature with a copy of the state plan
amendment.