| Recommended Legislation
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Enact legislation directing the Department of Health Services (DHS) to perform a comprehensive analysis of the access to physician services and quality of care provided to Medi-Cal beneficiaries. The DHS would recommend periodic adjustments to physician rates based upon that analysis, and the Legislature would determine whether to appropriate funding for such rate adjustments.
The DHS has not conducted annual rate reviews or made periodic adjustments to Medi-Cal rates to ensure reasonable access to health care services. Rather, adjustments have generally been adopted on an ad hoc basis. Our analysis indicates that the rates paid for services provided under the Medi-Cal Program are relatively low compared to those paid by the federal Medicare Program and other health care purchasers. There is some research evidence that higher physician fees can improve access to care and quality of care. Adoption of the rate-setting process we propose would be likely in the long term to foster reasonable access to health care for Medi-Cal beneficiaries and a better quality of care.
Please see A More Rational Approach to Setting Medi-Cal Physician Rates, February 2001.
Farra Bracht: 319-8355
Require the use of regional nursing bed clearinghouses to facilitate the transfer of Medi-Cal patients needing only nursing care from hospitals to less costly freestanding nursing facilities.
Current law requires hospitals to individually contact nursing homes during regular workdays to seek placements for Medi-Cal patients who no longer require hospital care, but who do need nursing care. If an appropriate outside placement is not located, then the patient may remain in a hospital-based nursing bed.
Use of regional clearinghouses, which would maintain a central database of available nursing beds, would simplify and expedite the placement process, reduce hospital administrative costs, and allow the department to easily verify compliance with the placement process. State savings could be up to several million dollars annually.
Please see our 1997-98 Analysis, page C-50.
Dan Carson: 319-8350
Establish fees based upon a client's or his or her family's ability to pay for services purchased by Regional Centers (which serve people with developmental disabilities). Specifically, establish a share of cost for services provided for children under 18 and require adult clients with assets to contribute to the cost of their care.
Unlike most health and social services provided by the state, eligibility to receive case management and community services from Regional Centers does not depend on a "means" test or determination of financial need based on income level or assets. Further, with a few minor exceptions, services are provided without any requirement that those benefiting from the services, and who have the ability to contribute, pay a share of cost. These costs to the state have been increasing rapidly. In order to help to control these costs, this proposal would impose fees only on those with an ability to pay.
Please see our 2002-03 Analysis, pages C-140 through C-142.
Dan Carson: 319-8350
Enact legislation to change the way allocations of realignment revenues are made to improve their administration, provide incentives for innovation and cost savings, and to create reserves to mitigate future reductions in revenues.
In 1991, the state enacted a major change in the state and local government relationship, known as realignment. Mental health, social services, and health programs were transferred from the state to county control, and counties were provided with dedicated tax revenues to pay for these and other changes. Our analysis found that realignment has been a largely successful experiment, but that some aspects could be improved. We propose statutory changes that would simplify realignment allocations, increase local flexibility in the use of the funds, provide incentives to counties to control program costs, and mitigate the need for reductions during periods of economic difficulty.
Please see Realignment Revisited: An Evaluation of the 1991 Experiment in State-County Relations, February 2001.
Michael Cohen: 319-8310, Lisa Folberg: 319-8358, and Dan Carson: 319-8350
Enact legislation to encourage HMOs to return to rural areas and to foster locally controlled health care systems in those counties where HMOs may be unwilling or unable to operate.
Chapter 208, Statutes of 2001 (AB 532, Cogdill) directed our office to examine the reasons why a number of HMOs have discontinued operations in rural areas, and further directed us to offer recommendations to address this situation. Our report, HMOs and Rural California, provided the Legislature with a number of options to restore managed care to rural California. Our analysis indicates that, HMOs are withdrawing coverage because of a combination of circumstances that makes it difficult for them to operate profitably, including shortages of health care providers, differences in rural medical practices, and the state's lack of support for managed care in rural areas. We propose specific steps to create a more attractive health care marketplace for HMOs in rural counties, and identify ways the state can help communities that may not be able to attract HMOs to develop their own health care systems that may provide some of the potential benefits of managed care.
Please see HMOs and Rural California, August 2002.
Farra Bracht: 319-8355, and Lisa Folberg: 319-8358
In the short term, enact legislation to strengthen internal and external oversight of the Cal-Vet program to ensure proper management. In the long term, amend state law to direct the orderly phase-out of issuance of new Cal-Vet home loans. Subject to voter approval, surplus Cal-Vet funds should be directed to programs that will benefit both veterans and state taxpayers.
The Cal-Vet home loan program portfolio has been declining due to federal restrictions on tax-exempt state bonds (which fund the program) and the aging of the war veteran population. Significant financial and operational problems in the past eroded the state's equity (assets less liabilities) in the Cal-Vet fund by about $200 million.
Please see Rethinking the Cal-Vet Loan Program, January 1998.
Dan Carson: 319-8350
Enact legislation requiring that any future collections of reimbursements that exceed budgeted levels be used to repay General Fund loans provided in past years.
When the veterans' homes operated by the department encounter difficulties in collecting reimbursements from Medicare, Medi-Cal, and other sources, the department has obtained loans from the General Fund to meet its cash needs. During the past three fiscal years, the department has received $22.9 million in General Fund loans for this purpose. Although the homes are supposed to repay such loans within six months, that often has not occurred. At the time this report was prepared, $12.6 million in such loans were outstanding. Absent statutory direction, the department would bear no consequences for its failure to repay its loans.
Please see our 2002-03 Analysis, pages F-117 through F-126.
Dan Carson: 319-8350
Give counties the option to provide employment services for more than two years so long as participants work at least 20 hours per week.
The CalWORKs program requires parents to participate in employment or welfare-to-work activities for a specified number of hours per week (single parents must work 32 hours and two-parent families must work a combined 35 hours). Generally, after a maximum of 24 months on aid, participants must meet their weekly participation requirement either through unsubsidized employment, community service, or a combination of the two. After the 24-month time limit, participants may meet their requirement through employment services in only limited circumstances. Given that counties are in the best position to judge what mixture of employment, education or training, or community service is most likely to result in long-term self-sufficiency for each recipient, counties should have the flexibility to determine whether working recipients should be permitted to participate in employment services for the remainder of their work requirement.
Please see our 2001-02 Analysis, page C-196.
Kasia O'Neill Murray: 319-8354
In order to better use community service as a bridge to nonsubsidized employment, allow counties to use private for-profit organizations as community service employers.
California Work Opportunity and Responsibility to Kids (CalWORKs) recipients must begin community service after two years on aid if they have not found a job. Under current law, such community service must be performed in the public and private nonprofit sectors. Excluding the for-profit private sector from participating in community service employment, however, (1) significantly reduces the number of potential employers and (2) increases the difficulty of finding high-quality work slots, particularly in jobs that might closely resemble those in the private sector.
LAO Reference
Please see CalWORKs Community Service, What Does It Mean for California? February 1999, page 18.
Kasia O'Neill Murray: 319-8354
Reform Foster Family Agency (FFA) rates to accelerate the movement of foster children toward family reunification or adoption.
Because foster children need permanent, stable families, both the state and federal governments have emphasized the importance of reducing the length of time children spend in foster care. Under current law, we conclude that (1) children remain longer in FFA placements than in Foster Family Home (FFH) placements; (2) neither child nor family background differences explain the longer FFA stay; and (3) youth in FFHs are reunified with biological families and adopted at a much higher rate than FFA youth.
To encourage the movement of foster children toward family reunification or adoption, we recommend adjusting the FFA rates over time. While the rate paid to the FFA foster family would remain the same over time, the portion of the rate paid to the FFA organization for services and administration would decrease the longer a child remained in care.
Please see Examining the Role of Foster Family Agencies in our 2002-03 Analysis, page C-219.
Mary Adèr: 319-8351
Establish a state-funded voluntary matching grant program for the Proposition 10 county commissions, which would fund (1) early childhood programs that have been shown to be cost-effective and/or (2) demonstration programs that are potentially cost-effective, based on existing research.
Proposition 10 provides county commissions with a significant increase in funding for programs related to early childhood development. The Legislature has no direct control over the expenditure of Proposition 10 funds, but does have an opportunity to influence decisions taken by the state and, more importantly, the county commissions. A variety of early childhood programs, typically small-scale demonstration programs, have been evaluated as being effective according to outcome measures such as school achievement and health status. Enacting a matching grant program would create a fiscal incentive to encourage the county commissions to use their funds productively.
Please see Proposition 10: How Does it Work? What Role Should the Legislature Play in Its Implementation? January 1999.
Mary Adèr: 319-8351