Existing law provides for the Medi-Cal program, which is administered by the State Department of Health Care Services, under which qualified low-income individuals receive health care services. The Medi-Cal program is, in part, governed and funded by federal Medicaid provisions. Qualified individuals under the Medi-Cal program include medically needy persons and medically needy family persons who meet the required eligibility criteria, including applicable income and share of cost requirements. Existing law prohibits medically needy persons or medically needy family persons from receiving health care services during any month in which their share of cost has not been met.

Existing law, for purposes of determining the share of cost for those medically needy persons or medically needy family persons, requires the department to establish income levels for maintenance need at the lowest levels that reasonably permit a medically needy individual to meet his or her basic needs for food, clothing, and shelter, and for which federal financial participation will still be provided under applicable federal law. In calculating the income of a medically needy individual who is in a medical institution or nursing facility, or a person receiving institutional or noninstitutional services from a Program of All-Inclusive Care for the Elderly organization, the required monthly maintenance amount includes, among other things, an amount providing for the personal and incidental needs in an amount not less than $35 while a patient, and authorizes the department, by regulation, to increase this amount as necessitated by increasing costs of personal incidental needs. This amount is also referred to as the personal needs allowance.

This bill would increase the personal needs allowance amount from $35 to $80 per month while a person is a patient as described above, and instead would require the department to annually increase this amount based on the percentage increase in the California Consumer Price Index. Because counties are required to make Medi-Cal eligibility determinations, and this bill would expand eligibility by increasing the personal needs allowance and would increase the responsibility of counties in determining Medi-Cal eligibility, this bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above.

SENATE COMMITTEE ON APPROPRIATIONS

Senator Ricardo Lara, Chair

2017 - 2018 Regular Session

SB 202 (Dodd) - Medi-Cal: beneficiary maintenance needs: personal needs allowance

This bill meets the criteria for referral to the Suspense File.

Bill Summary:

SB 202 would increase the personal needs allowance from $35 to $80 per month for Medi-Cal beneficiaries who live in a medical institution or nursing facility or receive services from a Program of All-Inclusive care for the Elderly organization.

Fiscal Impact:

• Ongoing costs of $21 million per year to increase the personal needs allowance to $80 for qualifying individuals, based on the current population of Medi-Cal beneficiaries with a share of cost (General Fund and federal funds). Currently, there are about 40,000 Medi-Cal beneficiaries in long-term care (or getting service from a PACE organization) who have a share of cost.
• Ongoing costs starting at $900,000 per year to index the personal needs allowance for inflation (General Fund and federal funds).
• Likely costs in the hundreds of thousands to low millions to make necessary changes to county Medi-Cal eligibility determination systems to accommodate the changes in the bill. The requirement to index the personal needs allowance to inflation may result in ongoing costs to make system changes annual to account for the annual increase (General Fund and federal funds).
• Likely one-time costs in the low hundreds of thousands to apply for federal approval for the changes in the bill (General Fund and federal funds).

Background:

Under state and federal law, the Department of Health Care Services operates the Medi-Cal program, which provides health care coverage to low income individuals, families, and children. Medi-Cal provides coverage to childless adults and parents with household incomes up to 138% of the federal poverty level and to children with household incomes up to 266% of the federal poverty level. The federal government provides matching funds that vary from 50% to 90% of expenditures depending on the category of beneficiary.

Under current law, an individual whose income exceeds the Medi-Cal eligibility threshold can become eligible for share of cost Medi-Cal by “spending-down” their income due to significant health care costs (these beneficiaries are referred to as “medically needy”). Under this program, an individual must spend down all of his or her monthly income (less certain set asides, for example a fixed amount to maintain their home for non-institutionalized patients or the personal and incidental needs allowance for individuals in long-term care facilities). Once an individual has spent down his or her income (paying directly to health care providers or long-term care facilities) the state will pay the remaining costs for care through Medi-Cal. Under current law, the personal and incidental needs allowance available to individuals in a medical institution, nursing facility, or receiving services from a Program for the All-Inclusive Care for the Elderly program is $35 per month. Current law authorizes the Department of Health Care Services to increase the personal needs allowance for inflation. Since the personal needs allowance level was set at $35 in 1985, the Department has not increased it for inflation.

Proposed Law:

SB 202 would increase the personal needs allowance from $35 to $80 per month for Medi-Cal beneficiaries who live in a medical institution or nursing facility or receive services from a Program of All-Inclusive care for the Elderly organization.

The bill would require the Department of Health Care Services to increase the personal needs allowance by inflation each year.

Related Legislation:

• AB 1655 (Dodd, 2016) was identical to this bill. That bill was held on the Assembly Appropriations Committee’s Suspense File.
• AB 763 (Burke, 2015) would have increased the amount of income that is disregarded when calculating eligibility for Medi-Cal for aged and disabled individuals. That bill was held on the Assembly Appropriations Committee’s Suspense File.
• AB 1235 (Gipson, 2015) would have required the home upkeep allowance for Medi-Cal beneficiaries in long-term care facilities to be based on the actual cost to maintain a beneficiary’s home. That bill was held on this committee’s Suspense File.
• AB 1319 (Dababneh, 2015) would have increased the personal needs allowance for Medi-Cal beneficiaries residing in a community care facility from $20 to $50. That bill was held on this committee’s Suspense File.

Staff Comments:

Under current law, eligibility determinations for the Medi-Cal program are performed by county welfare departments. Changes to the eligibility or benefits of the Medi-Cal program (such as is proposed in this bill to the Medi-Cal share of cost program) often require computer programming changes to be made to the systems used by the counties to determine eligibility and/or beneficiary share of cost. Generally, the state is responsible for reimbursing counties for their costs associated with making Medi-Cal eligibility determinations, including related IT costs.

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SENATE COMMITTEE ON HEALTH

Senator Ed Hernandez, O.D., Chair

BILL NO: SB 202

SUBJECT: Medi-Cal: beneficiary maintenance needs: personal needs allowance

SUMMARY:

Increases the personal needs allowance (PNA) amount from $35 to $80 per month for Medi-Cal-eligible individuals who live in a medical institution, nursing facility, or receive services from a Program of All-Inclusive Care for the Elderly organization. Requires the Department of Health Care Services to annually increase the PNA based on the percentage increase in the California Consumer Price Index.

Existing law:

1. Establishes the Medi-Cal program, which is administered by the Department of Health Care Services (DHCS), under which qualified low-income individuals receive health care services. Qualified individuals under the Medi-Cal program include medically needy persons and medically needy family persons who meet the required eligibility criteria, including applicable income requirements.
   
2. Requires DHCS to establish the income levels for maintenance need at the lowest levels that reasonably permit medically needy persons to meet their basic needs for food, clothing, and shelter, and for which federal financial participation (FFP) will still be provided under federal Medicaid law. (The medically needy Medi-Cal eligibility category is for individuals who fit into a federal benefit program category but whose income or resources exceed eligibility levels. Medically needy individuals become Medi-Cal eligible by having a share of cost whereby the individual “spends down” to Medi-Cal eligibility levels.)
   
3. Requires DHCS, in calculating the income of a medically needy individual who is in a medical institution or nursing facility, or a person receiving institutional or non-institutional services from a Program of All-Inclusive Care for the Elderly (PACE) organization, the required monthly maintenance amount to include, among other things, an amount providing for the personal and incidental needs in an amount not less than $35 while a patient. This amount is referred to as the PNA.
   
4. Permits DHCS to annually increase the PNA based on the percentage increase in the California Consumer Price Index (CPI).

This bill:

1. Increases the PNA from $35 to $80 per month.
   
2. Requires DHCS to annually increase the PNA based on the percentage increase in the California CPI.

FISCAL EFFECT:

This bill has not been analyzed by a fiscal committee.

COMMENTS:

1. Author’s statement. According to the author, a Medi-Cal nursing home resident receives basic room and board plus medical care from the skilled nursing home. The PNA is crucial to enhancing the quality of life of residents in nursing homes by covering the costs of haircuts, clothes, shoes, personal care items, reading materials, postage and meals outside the facility. The current PNA does not adequately fund the cost of these needs. The PNA has not been raised in over 30 years and inflation has increased nearly 128%, according to the US Department of Labor. These vulnerable adults have been forgotten by California in both good economic times as well as poor years. The time to help these needy seniors and disabled residents is now.
   
2. Medi-Cal PNA. Through the Medically Needy/Share of Cost program, individuals whose income is otherwise too high to qualify for Medi-Cal can become Medi-Cal eligible. Under this program, Medi-Cal will pay for services in a particular month if a beneficiary incurs high health care costs and pays a significant amount out-of-pocket first (called their "share of cost"), similar to a deductible in insurance. Individuals in this circumstance are described as “spending down” to Medi-Cal eligibility. After a person has met their share of cost, Medi-Cal coverage begins. The program functions as a last resort for those whose incomes are modest and are surpassed by their significant medical expenses. For someone receiving care in a facility or through a PACE program, the beneficiary share of cost is calculated by determining the beneficiary’s countable income (minus deductions) and subtracting the PNA. For example, a single individual in a skilled nursing facility with an income of $1,000 per month would be allowed to retain $35 per month for personal needs. The remainder ($965) of the countable income goes toward his or her share of cost each month. Medi-Cal pays the remainder of the expenses for the month up to the Medi-Cal reimbursement rate that is negotiated with the facility. Existing law precludes the facility from "balance billing" or charging the individual or family for any more than the share of cost.
   
   The federal law minimum monthly PNA is $30 for an institutionalized individual, and $60 for an institutionalized couple. California’s PNA of $35 was last increased in 1985. Current law authorizes DHCS, by regulation, to annually increase the PNA amount as necessitated by increasing costs of personal and incidental needs. However, DHCS has never increased the

PNA and it remains at $35.

1. Prior legislation. AB 1655 (Dodd of 2016) was identical to this bill. That measure was held on the Assembly Appropriations Committee suspense file.

AB 763 (Burke of 2015) would have increased the amount of income that is disregarded in calculating eligibility for purposes of the Medi-Cal aged and disabled (A&D) program. This effectively increases the upper limit of financial eligibility to 138% of the federal poverty level (FPL). AB 763 was held on the Assembly Appropriations Committee suspense file.

AB 1235 (Gipson of 2015) would have required the home upkeep allowance for eligible Medi-Cal beneficiaries in long-term care (LTC) facilities to be based on the actual minimum cost of maintaining the resident’s home. AB 1235 would have allowed a LTC facility resident who does not have a home to establish a transitional personal needs fund of up to $7,500, to be set aside from the income that otherwise would be applied toward the resident’s Medi-Cal share of cost for residing in the LTC facility. AB 1235 was held in the Senate Appropriations Committee.

AB 1319 (Dababneh of 2015) would have increased the personal and incidental needs deduction for Medi-Cal beneficiaries residing in a licensed community care facility from $20 to $50. AB 1319 was held in the Senate Appropriations Committee suspense file.

AB 789 (Campbell of 1999) would have increased the PNA to not less than $40 per month. AB 789 was vetoed by Governor Davis. In his veto message, Governor Davis stated that, while well intentioned, this bill would result in estimated new annual General Fund costs in excess of $2 million that was not included in the 1999-2000 budget, and that any increase in the personal and incidental needs allowance should be considered as part of the annual budget deliberations.

1. Support. This bill is supported by senior and groups advocating on behalf of low-income consumers, who argue the PNA has not been increased since 1984, and that residents of long-term care facilities cannot afford to pay for reasonable personal items such as hearing aid batteries, over-the-counter medications, clothing, shoes, or an outing with a loved one outside the facility on the existing $35 a month amount. Supporters argue increasing the PNA to reflect the current cost-of-living will help restore dignity and personal agency to the state’s most vulnerable individuals living in these facilities.

SUPPORT AND OPPOSITION:

Support: California Senior Legislature (sponsor)

American Federation of State, County and Municipal Employees, AFL-CIO

Big Bear Lake AARP Chapter 2598

California Advocates for Nursing Home Reform

California Long-Term Care Ombudsman Association

California PACE Association

County of Santa Cruz Senior Commission

Consumer Federation of California

Disability Rights California

Easterseals Bay area

Justice In Aging

Leading Age California

Morongo Basin Regional Council on Aging

Mountain Communities Senior Citizens Center

The National Consumer Voice for Quality Long Term Care

Service Center for Independent Life

State Long Term Care Ombudsman

Oppose: None received

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