Nursing home bill delayed until 2010

The bill’s authors were deleted and replaced by Assemblymember Hector De La Torre (Democrat – South Gate, 50th Assembly District), who is also the chair of the Assembly Accountability and Administrative Review Committee and a member of the Assembly Health Committee.

Supporters of the bill say will fund the rate increase which they claim is needed to pay for significant increased costs of nursing facilities from the previous year.

Opponents of the bill dispute that and say nursing facilities should not be receiving rate increases at a time other community-based services are facing major cuts and also say that quality in nursing home has not improved over the years. Supporters say the rate increase – which they say is an adjustment to cover increased costs from the previous year – are need to maintain quality and a further erosion of services.

The rate freeze that AB 411 would partially reverse, was included in one of several budget related bills (called “trailer bills” because it follows or trails the main budget bill), ABx4 5 (“x4” stands for 4th special or extraordinary session).

Opponents of AB 411 Say Rate Increase Is Not Fair While Other Programs Are Cut – Supporters Says It’s A Rate Adjustment Funded by Increase In Medi-Cal Quality Assurance Fees That Would Be Imposed On Providers

Opponents of the bill, which includes several disability advocacy organizations including Disability Rights of California (formerly known as Protection and Advocacy, Inc or PAI), said it was wrong to increase rates for nursing facilities at a time when other community-based programs and services were hit by major spending reductions. Opponents of the bill also say that quality in the nursing facilities who receive a higher reimbursement rate has not improved.

Supporters of the bill, including the California Association of Health Facilities, dispute those charges and said that the increase in the bill is an adjustment to cover significant increases in costs to nursing facilities last year and that the 2.5% rate increase would be covered by increased funding from the Medi-Cal Quality Assurance Fee that the bill also required.

Supporters of the bill said that AB 411 expands the current Medi-Cal Quality Assurance Fee that many nursing facilities are currently required to pay by eliminating an exemption on certain facilities (continuing care retirement community and multi-level facilities) who are not required to pay the fee under existing state law. Supporters say the increased funding from the Medi-Cal Quality Assurance Fee coming from those facilities would off-set – pay for – the 2.5% increase in rates that they claim is needed to cover cost increases from the previous year.

Opponents of the bill dispute that the expansion of the Medi-Cal Quality Assurance Fee would generate enough new money to cover the rate increase. Some opponents of the bill say an increased money should have been used to consider restoring or off-setting costs in other Medi-Cal funded community-based programs, including In-Home Supportive Services or certain regional center funded community-based services.

Next Steps

The State Senate Health Committee on Tuesday approved by a vote of 6 to 2, legislation that would partially reverse the rate freeze imposed on freestanding nursing facilities originally imposed as part of the revised 2009-2010 State Budget enacted last July. The bill was referred for further action to the Senate Appropriations Committee.

AB 411 will likely be held on the Senate floor or in the Senate Appropriations Committee with no further action on the bill until next year sometime.

The Legislature is scheduled to adjourn on Friday, September 11th its 2009 regular session, with just 2 full days of floor sessions remaining to pass bills.

Any bill not acted on cannot have further action until January 2010, when the Legislature reconvenes the 2009 regular session.

The Legislature is almost certain to come back to Sacramento sometime during the fall to meet in special session on several issues, including likely another special session on the state budget. But the Legislature cannot take up action on regular session bills during a special session.

BACKGROUND OF THE ISSUES RAISED BY AB 411

AB 411 deals with issues first raised in 2004’s AB 1629, and in a budget trailer bill passed and enacted in July 2009, ABx4 5:

QUALITY ASSURANCE FEE & NEW REIMBURSMENT RATES

• AB 1629 by then Assemblymember Dario Frommer, was amended on 08/16/04 with the “Skilled Nursing Facility Quality Assurance Fee Program” and the “Medi-Cal Long Term Care Reimbursement Act”.
• AB 1629 passed the State Senate on 08/25/04 by vote of 29 to 1, after being gutted and amended on 08/16/04 (meaning previous contents of the bill were deleted and replaced by the “Quality Assurance Fee” provisions). The bill as amended then passed the Assembly (concurrence or agreement in amendments made in Senate) by vote of 79 to 1 on 08/28/04. It was signed by Governor Schwarzenegger on 09/29/04, and chaptered (filed) by the Secretary of State on that same day, Chapter 875, Statutes of 2004.
• AB 1629 in 2004, imposed a “Quality Assurance Fee” on freestanding skilled nursing facilities (with some exceptions) that would draw down additional matching federal funds in order to increase skilled nursing facility Medi-Cal reimbursement rates. Federal Medicaid law permits states to impose such fees on certain health care service providers and in turn repay those providers through increased reimbursements, and keeping some of the increased federal money for the State general fund for other purposes. A similar quality assurance fee has been implemented for the Intermediate Care Facilities for the Developmentally Disabled (ICF/DD).
• AB 1629 in 2004 also enacted the “Medi-Cal Long-Term Care Reimbursement Act”, requiring the Department of Health Care Services – which oversees California’s Medicaid program, to implement new facility-specific reimbursement rates by August 1, 2005.
• That new annual rate increase under state law then provided for a maximum annual rate increase of no more than 5% of the “weighted average Medi-Cal reimbursement rate” from the prior state budget year (meaning the rate increase could not exceed 5% of the previous year’s reimbursement).

TWO YEAR RATE FREEZE

• As part of the revised 2009-2010 State Budget (in ABx4 5) passed in late July and signed by the Governor on July 28, rates for Level B freestanding skilled nursing facilities, (excluding skilled nursing facilities that are a distinct part of a facility that is licensed as a general acute care hospital) were frozen at the level is was during the 2008-2009 State Budget year (July 1, 2008 through June 30, 2009) for two state budget years (July 1, 2009 through June 30, 2010 and July 1, 2010 through June 30, 2011) . Supporters of AB 411 say the bill isn’t a rate increase but a rate adjustment to cover significant increases in costs to nursing facilities in the previous years – including a increase in the Medi-Cal Quality Assurance Fee, included in the revised 2009-2010 State Budget, that facilities must pay.
• Those nursing facilities were covered by AB 1629 and referred sometimes as the “AB 1629 homes” and the rate freeze applied to those facilities and other long term care facilities.
• ABx4 5 also expanded the AB 1629 “Quality Assurance Fee” to include Medicare revenues in the calculation in the fee that providers would pay (the increased fees would mean an estimated $18 million to the State general fund), resulting in a higher fee – but also a higher reimbursement back from the State. Some nursing home providers who serve more persons who are covered by Medicare than Medicaid (Medi-Cal), said that this was not fair because while money from Medicare would be counted to increase the fee they paid – they would only receive a higher reimbursement based on the persons they served who were under the Medicaid (Medi-Cal) program.

AB 411 SEEKS TO REVERSE FREEZE WITH RATE ADJUSTMENT FUNDED BY EXPANDING QUALITY ASSURANCE FEE

• AB 411, as amended on September 2, 2009, would reverse the rate freeze in ABx4 5, for freestanding nursing facilities with a partial restoration. The bill would allow for an annual rate increase – which supporters of the bill say is really a rate adjustment to cover increased facility costs from the previous years - for those facilities of no more than 2.5% for the 2009-2010 and 2010-2011 State budget years. Prior to the freeze imposed in July, the annual rate increase could be no more than 5%.
• The bill would also change existing State law that exempts certain nursing facilities from the requirement to pay the Medi-Cal “Quality Assurance Fee”. Under current state law, the Medi-Cal Quality Assurance Fee is based upon the nursing facility’s entire net revenue (including revenue from Medicare) but exempts certain facilities including a skilled nursing facility that is part of a continuing care retirement community. AB 411 would eliminate the exemption for a skilled nursing facility that is part of a continuing care retirement community, which would require them to pay the “Quality Assurance Fee”.
• Supporters of the bill say removing the exemption and expanding who is subject to the Medi-Cal Quality Assurance Fee” would generate enough new funding to cover the 2.5% rate increase or adjustment. Opponents dispute that the funding will be sufficient to cover that increase in rates.
• Some opponents of the bill say that representatives of the continuing care retirement communities who would be impacted by the changed in the Medi-Cal Quality Assurance Fees, were not aware of AB 411 or its impact on them.
• The authors of AB 411 are: Assemblymembers Hector De La Torre and co-authored by Assemblymember Dave Jones (Democrat – Sacramento, 9th Assembly District), State Senators Elaine Alquist (Democrat – Santa Clara, 13th Assembly District) and Tony Strickland (Republican – Thousand Oaks, 19th State Senate District)
• Note: ABx4 5 – which was the “health” budget trailer bill that contained major cuts to Medi-Cal and other health programs, also contained the rate freeze that AB 411 seeks to partially restore. That budget trailer bill, which also contained major Medi-Cal cuts, was then in July supported by Assemblymember Hector De La Torre – the author of AB 411, and Assemblymember Dave Jones, co-author of AB 411, and Sen. Elaine Alquist, another co-author. It was opposed then by Republican Sen. Tony Strickland, who is also a co-author of AB 411.

The California Disability Community Action Network, is a non-partisan link to thousands of Californians with developmental and other disabilities, people with traumatic brain injuries, the Blind, the Deaf, their families, community organizations and providers, direct care, homecare and other workers, and other advocates to provide information on state (and eventually federal), local public policy issues.