SACRAMENTO - The Assembly Budget Subcommittee #1 on Health and Human Services in its final hearing for this budget year, voted to reject the Governor’s proposal to reduce by $602 million funding to the counties for mental health community services and the Governor’s Medi-Cal cost containment proposals that included capping several benefits and imposing co-payments on several services. The actions by the Assembly budget subcommittee is identical (with one exception regarding the Medi-Cal cost containment) to the actions taken earlier by the Senate Budget and Fiscal Review Committee.

Both Assembly and Senate Previously Rejected Governor’s Proposals on SSI/SSP, Cash Assistance Program for Immigrants, Food Assistance Program and CalWORKS

Both the Senate and Assembly budget panels previously this week also voted to reject the Governor’s proposals to reduce SSI/SSP (Supplemental Security income/State Supplemental Payment) individual grants to the lowest level allowed by the federal government, additional grant reductions to CalWORKS, proposed elimination of the Cash Assistance Program for Immigrants (CAPI) and the California Food Assistance Program (CFAP).

As previously reported, both houses also rejected the Governor’s May 14th budget revision proposals calling for $750 million in reductions to the In-Home Supportive Services Program, and approved the closure plan of Lanterman Developmental Center (see CDCAN Report #093-2010).

No Action At This Stage of Budget Process Final

No action at this stage – or even later, especially with an enormous budget shortfall that remains largely unresolved - is absolutely final until a budget is actually passed by the Legislature and signed into law by the Governor.

The next phase of the budget process is budget conference committee, composed of 6 members – 3 members from the Assembly (2 Democrats and 1 Republican) and 3 members from the Senate (2 Democrats and 1 Republican) to review those budget issues where each house took a different action.

In most instances the budget conference committee is considered a risky phase for any budget issue going before it because it keeps a budget item open for potentially larger cuts or other major policy changes. During that phase of the budget process, especially with an enormous unresolved budget shortfall of nearly $20 billion, policymakers will be scrambling to find any money to fill that huge gap.

Senate Budget Panel Meeting Now - AB 3632 Special Education Mandate for Students with Mental Health Needs Likely on Agenda

The Senate Budget and Fiscal Review Committee convened its final hearing today at 12:28 PM.

The Senate Budget and Fiscal Review Committee will take final action on any remaining “open” issues, largely centered on K-12 education and higher education budget issues – and also report on revenues and other related issues.

At least one major health related budget item will likely be taken up dealing with the Governor’s proposal to suspend the AB 3632 mandate (requirement) for counties to provide special education mental health services for students with mental health needs. The Assembly Budget Subcommittee on Health and Human Services voted today (May 27th) to reject the Governor’s proposal.

Issue of AB 1629 Medi-Cal Quality Assurance Fee for Nursing Homes Will Go To Budget Conference Committee for Further Discussion

The Assembly Budget subcommittee partially rejected the Governor’s proposal for the reauthorization of the Medi-Cal Quality Assurance Fee for free standing nursing facilities that was originally authorized by AB 1629 in 2004. The Department of Health Care Services is seeking to renew and expand the fee to cover Multi-Level Retirement Communities and make other changes.

• The Assembly subcommittee instead voted to approve that the new elements that the Schwarzenegger Administration wanted to include in the reauthorization – including expanding the fee to include Multi-level Retirement Communities and to impose new restrictions on how funding could be used and other quality measures – be implemented during the 2010-2011 State Budget year, which ends June 30, 2011.
• The intent of the action – like the Senate action on Wednesday, is to continue discussions on the major policy changes that the Governor is proposing, as the budget process moves forward, including moving separate legislation on the issue in the regular legislative bill process for more thorough review by the legislative policy committees (such as the Assembly and Senate Health Committees).
•  The issue then – and now – has raised major concerns by many disability and some senior advocates and others who are concerned about improvements of quality of care that was supposed to be linked to increased reimbursement rates to nursing homes. Advocates for health facilities raised concerns about some of the changes being proposed.
• The quality assurance fee is a fee on specified providers – in this case free standing nursing homes – that they pay to the State that is matched by federal Medicaid funds. The State then gives a portion of that increased federal funding back to the providers including a small increase in their rates.
• The legislation in 2004 – AB 1629 made other requirements that included improvements in quality of care, that many advocates contended did not go far enough – a claim that nursing home providers disputed.
• Other providers have raised concerns and opposition to the fee because while they are required to pay the fee there is no increase in reimbursements because they largely do not serve Medi-Cal recipients.

CDCAN Summary of Some of the Actions Taken MAY 27 by Assembly Budget Subcommittee on Health and Human Services

Mental Health

Mental Health Community Services: Governor’s proposal to reduce by 60% ($602 million state general funds) funding to the counties for mental health community services.

· SENATE action as of 05/26/2010: On May 26th the Senate Budget and Fiscal Review Committee REJECTED the Governor’s proposal by vote of 10 to 0.

· ASSEMBLY action as of 05/27/2010: On May 27th the Assembly Budget Subcommittee #1 on Health and Human Services REJECTED the Governor’s proposal by vote of 5 to 0.

AB 3632 Special Education Mandate for Students with Mental Health Needs: Governor proposed suspending this mandate (requirement) and eliminates $52 million (State general funds) that would have gone to the counties for this purpose.

· SENATE action as of 05/26/2010: Senate Budget and Fiscal Review Committee will take up this issue on May 27th (Thursday).

· ASSEMBLY action as of 05/27/2010: On May 27th the Assembly Budget Subcommittee #1 on Health and Human Services REJECTED the Governor’s proposal.

Medi-Cal

Medi-Cal “Cost Containment” Measures: Governor proposed in January and provided in May details that would implement yearly caps on certain Medi-Cal benefits such as prescription out-patient drugs, durable medical equipment, various medical supplies including wound dressings, incontinence products, urinary catheters for adults not residing in a long term care facility; hearing aids; eliminate selected over the counter drugs; impose a cap of 10 office visits per year for both Med-Cal “fee for service” and managed care recipients; establish mandatory co-payments of $5 for doctor and Federally Qualified Health Centers, Rural Health Center office visits; mandatory co-payments of $5 for dental office visits; mandatory co-payments of $100 per hospital inpatient day (up to maximum of $200 per admission); mandatory co-payments of $50 for each emergency room visit; mandatory co-payments of $50 for non-emergency use of emergency room visits; mandatory co-payments of $3 per prescription for preferred drugs (generics) and $5 per prescription for non-preferred drugs (brand) at point of service; and limit enteral nutrition products to only adults who must be tube-fed (limit would not apply to adults in long term care facilities, children under age of 21 and pregnant women)

· SENATE ACTION as of 05/26/2010: On May 26th the Senate Budget and Fiscal Review Committee REJECTED the Governor’s proposal by vote of 8 to 1.

· ASSEMBLY ACTION as of 05/27/2010: On May 27th the Assembly Budget Subcommittee #1 on Health and Human Services REJECTED the Governor’s proposal.

Medi-Cal Optometry Optional Benefit Reinstatement: The Governor’s budget revision released May 14th indicated that the previously eliminated optometry Medi-Cal optional benefit for adults (eliminated as of July 1, 2009, as part of the 2009-2010 State Budget passed in February 2009) would be reinstated – at least temporarily – in order to comply with federal law which prohibits the elimination of this service if physicians could still provide the services and the State previously funded these services. The 2009-2010 State Budget included provisions that specified that the elimination of any of the 10 Medi-Cal optional benefits could be made (effective July 1, 2009) to the extent that federal law allowed it. With that provision, no change in State law is required to reinstate the optometry Medi-Cal optional benefit for adults (the eliminated 10 optional benefits applied only to adults and not to children or to persons living in long term care facilities). This reinstatement does not apply to the other 9 optional benefits that were eliminated for adults as of July 1, 2009.

· SENATE ACTION as of 05/26/2010: The Senate has not taken up this issue (technically no action is required by either house because no change in state law is required)

· ASSEMBLY ACTION as of 05/27/2010: On May 27th the Assembly Budget Subcommittee #1 on Health and Human Services APPROVED this proposal (though technically no action by either house is needed on this proposal)

Section 1115 Medicaid Waiver – Governor proposed last year and the Legislature approved as part of the 2009-2010 State Budget as revised in July 2009, authorization for the Department of Health Care Services to take steps to develop and submit to the federal government, a proposal to renew and dramatically expand the existing Section 1115 Medicaid Waiver to shift existing hundreds of thousands of Medi-Cal recipients who are people with disabilities, mental health needs, and seniors into different models of health care. [Note: “Section 1115” refers to a specific part of the federal Social Security Act that governs the Medicaid program. That section gives authority to the federal government to allow states to waive certain Medicaid rules to conduct a pilot or demonstration project]. Since the fall the Department of Health Care Services has held extensive public outreach, including formation of a stakeholder advisory committee, technical workgroups, with meetings open to the public and documents available for the public to access and review via a website dedicated to this issue on the department’s website. On May 13, 2010 the Department of Health Care Services released a draft implementation plan that called for a phase in approach, that many advocates have raised concerns about. The existing waiver is set to expire August 2010 and currently only covers financing to hospitals that provide health care services to the uninsured. The Department of Health Care Services proposed three budget related bills (referred to as “budget trailer bills” because the bills make changes or additions to state law that follow or trail the main budget bill) dealing with the phase in of the Section 1115 Medicaid Waiver: (1) development of pilot projects for children with special health care needs; (2) development of pilot projects for Dual Eligible Service Integration Projects – “dual eligibles” refers to persons who are eligible for the federal Medicare and Medicaid (called “Medi-Cal” in California) programs; and (3) development of the Coverage Expansion and Enrollment Projects. Note: for more information about this waiver, go to the CDCAN website at www.cdcan.us or to the Department of Health Care Services waiver website at http://www.dhcs.ca.gov/provgovpart/Pages/WaiverRenewal.aspx

· SENATE ACTION as of 05/26/2010: On May 26th the Senate Budget and Fiscal Review Committee REJECTED “without prejudice” by vote of 11 to 0 the Governor’s proposed three trailer bill language and referred it instead to policy committee for further review. The budget committee noted it was not rejecting the policy itself regarding the proposed waiver.

· ASSEMBLY ACTION as of 05/26/2010: Assembly Budget Subcommittee #1 on Health and Human Services REJECTED without prejudice” all proposed Section 1115 Medicaid trailer bill (which the Senate rejected today - May 26th) and would direct the Department of Health Care Services to “pursue development and establishment of the new [Section] 1115 Waiver through policy bills and through the legislative policy process”.

AB 1629 Quality Assurance Nursing Facilities Fee – Governor proposed reauthorization of the Medi-Cal Quality Assurance Fee for free standing nursing facilities that was originally authorized by AB 1629 in 2004. The Department of Health Care Services is seeking to renew and expand the fee to cover Multi-Level Retirement Communities.

· SENATE ACTION as of 05/26/2010: On May 26th the Senate Budget and Fiscal Review Committee adopted “placeholder” (draft) budget trailer bill language to continue the discussion of the issues surrounding the Quality Assurance Fee for nursing homes (and multi-level retirement communities).

· ASSEMBLY ACTION as of 05/27/2010: On May 27th the Assembly Budget Subcommittee #1 on Health and Human Services REJECTED the Governor’s proposal to extend the Quality Assurance fee beyond the 2010-2011 State budget year (that ends June 30, 2011) but (1) adopted the Governor’s proposal and elements in it including expanding the fee to cover Multi-level Retirement Communities (2) Use funds from the cap on liability insurance within the 2010-2011 State budget year for various quality of care efforts and add the state ombudsman to that effort.

· CDCAN COMMENT: The issue goes to budget conference committee for both houses to resolve because Senate and Assembly actions were different. The Senate Budget Committee action gave approval of the Governor’s proposal but included draft budget trailer bill language to continue discussions – including concerns raised by advocates on all sides of the issue – which is similar to the Assembly action.

Developmental Services

Regional Centers - Additional Reduction of $48.2 Million ($25.3 State general funds): Governor proposed in January an additional reduction to regional centers of nearly $50 million ($25 million in State general funds) with specifics on how that reduction would be achieved to be provided later. In late April the Governor proposed achieving that reduction by imposing an additional 1.25% cut to the payments to most regional center providers and to regional center operations, to go into effect July 1, 2010 through June 30, 2011. That cut would be in addition to the existing 3% reduction in payments to most regional center providers and regional center operations that was enacted February 1, 2009 through June 30, 2011. To help regional center providers impacted by this additional reduction, the Governor also proposed temporarily suspending some provider related requirements (except for licensed or certified residential providers).

· SENATE ACTION as of 05/26/2010: On May 26th, the Senate Budget and Fiscal Review Committee APPROVED the Governor’s proposal by vote of 8 to 2 with “placeholder” trailer bill language [note: placeholder language means “draft” language for a budget related bill that – in this case – makes changes to existing state laws to implement the policy change and/or reduction].

· ASSEMBLY ACTION as of 05/27/2010: On May 27th the Assembly Budget Subcommittee #1 on Health and Human Services REJECTED the Governor’s proposal.

· CDCAN COMMENT: This issue now goes to the budget conference committee to resolve because the actions of the Senate and Assembly differed. Assemblymember Chesbro (Democrat – Eureka), who previously chaired the Senate Budget and Fiscal Review Committee, said he would support the subcommittee chair’s motion but wanted to point out the consequences of taking a different action from the Senate, with the issue now going to budget conference committee. Chesbro noted he was “torn” on the issue because he didn’t favor more cuts to developmental services but was “fearful” that the issue was going to budget conference committee because “the subcommittees [in both houses] rejected large proposed cuts [in other programs]” and that the regional center – which is “relatively smaller” will now “be in play” and could result in a much larger reduction as both houses search for ways to close the enormous $20 billion deficit.

Healthy Families

Healthy Families Program Reductions: Governor proposed increasing monthly premiums paid by families (effective September 1, 2010); imposing two new co-payments effective February 2011 ($50 co-payment for emergency room use that does not result in patient being hospitalized) and $100 per day (maximum $200) for hospital in-patient days; and elimination of vision coverage for children, effective as of September 1, 2011.

· SENATE ACTION as of 05/26/2010: On May 26th the Senate Budget and Fiscal Review Committee REJECTED the Governor’s proposal by vote of 10 to 3.

· ASSEMBLY ACTION as of 05/27/2010: On May 27th the Assembly Budget Subcommittee #1 on Health and Human Services REJECTED the Governor’s proposal.