A service of the California Health Care Foundation

Adult Day Centers Still Struggling

It has been a tough couple of years for Moli Steinert, executive director of Stepping Stone, a collection of four facilities in San Francisco that tends to some of the most frail and elderly people in the city. Many of her clients are monolingual Chinese speakers or living in poverty. It’s a high-need population with low funding.

Stepping Stone survived the elimination of the state’s Adult Day Health Care program as a Medi-Cal benefit. When a lawsuit challenging the state’s elimination of ADHC was settled, Stepping Stone weathered the transition to the Community Based Adult Services program, which raised eligibility requirements and lowered the number of people covered. Those many months of limbo and uncertainty exhausted Stepping Stone’s cash reserves, Steinert said.

But the final straw, Steinert said, was the 2011 Medi-Cal provider rate cut, which lopped another 10% off reimbursement for treating her mostly low-income, Medi-Cal clientele.

“We could not live with the rate cut. We just couldn’t do it,” she said.

Steinert said her facilities are like a lot of other CBAS centers across the state, living on the edge of the financial precipice. After trimming staff, overhead and administrative costs as low as they could go, the 10% rate cut forced Steinert to announce that Stepping Stone’s four centers would close July 1.

A reprieve came from an unlikely source. The Department of Health Care Services, with a nudge from Sen. Mark Leno (D-San Francisco), determined that nine adult day centers in San Francisco — including Stepping Stone — would be exempt from the 10% cut because the financial hardship threatened to undermine access to care, something the state is trying hard to avoid.

The arithmetic used by DHCS to reverse the reduction may give hope to other CBAS centers that might be in similar trouble.

Another financial saga unfolded in the southern half of the state. In Orange County, CalOptima, the second-largest health insurer in the county announced it would offset the cost of the 10% rate reduction for CBAS providers in Orange County.

Both financial rescues underscore the precarious nature of being a CBAS provider these days, said Lydia Missaelides, executive director of the California Association of Adult Day Services.

“It gives me hope the state and plans are beginning to realize the need for CBAS centers to be open and servicing this patient population,” Missaelides said, “and that they have started to see the hardship that the 10% rate cuts have had.”

CBAS Center Closures

At the start of 2011 there were roughly 295 CBAS centers in California, Missaelides said. In three years, 51 of them have closed.

“I think we’ll see more closures this year if things don’t change,” she said.

One way things could change is passage of AB 1805, by Assembly member Nancy Skinner (D-Berkeley), which would reverse the 10% Medi-Cal rate cut for all providers in the state.

Missaelides said CBAS centers would benefit most from passage of the bill.

“Unlike most of the other providers, CBAS centers by design are almost exclusively relying on Medi-Cal beneficiaries,” so a Medi-Cal reimbursement rate cut can’t be absorbed by raising rates for other services, she said.

The other difference between CBAS and other providers is that most providers did not immediately incur the rate cut, since it was held up in court for two years. But the CBAS system was not part of any lawsuit over provider rates, so they’ve been feeling the pinch of the 10% reduction for almost three years.

In a way, CBAS centers might be a canary in the proverbial coal mine, with other providers starting to be hit with the rate reduction that CBAS centers have encountered for years.

The result for many of the centers, Missaelides said, is a gradual erosion of all cash reserves, despite the many budgetary measures and personnel reductions centers have taken.

“For any other provider out there who’s serving public good by providing to the low-income, Medi-Cal population, this is definitely going to have a similar impact,” Missaelides said.

Hope Kindled by SF Reversal

The rate reversal for the San Francisco CBAS centers has given other centers hope — not just because the state rescinded the reduction, but because of the way it went about it.

The measuring stick for capacity has traditionally been licensing capacity at adult day centers. But CBAS advocates long have argued that just because the fire department estimates a building’s capacity for clients, that doesn’t mean the facility can actually handle that many people. With the equipment-intensive care at CBAS centers, Missaelides said, the actual patient capacity is much lower.

When DHCS evaluated the San Francisco centers, it investigated that claim, and found an 11% difference between licensing capacity and functional capacity, according to Mari Cantwell, chief deputy director of DHCS.

“Depending on the frailty of beneficiaries, their actual capacity could be lower,” Cantwell said.

Using the lower actual capacity number means a facility is less likely to be able to accommodate more clients and the level of cash flow can’t be increased by adding new people. Using the actual capacity as a yardstick is seen by some as the state acknowledging that some fiscal crises cannot be solved by increasing facility enrollment.

The San Francisco exemptions raises the possibility of similar findings at other CBAS centers, but Cantwell said, for the moment, she doesn’t know of similar cases elsewhere in the state.

“We have not had other counties [in a similar situation] that would prompt this kind of review,” she said. “We would likely need to evaluate it, if that arose in other counties. This was a specific case. But right now, I have not been contacted by any centers. At this point, I’m not aware of other CBAS centers in the same situation.”

The San Francisco situation came to a head after Leno brought the details of the potential access problem to DHCS officials.

Steinert said she hopes this same yardstick can be applied to other centers, as well.

“We thought maybe we’ve carved out a new definition of functional capacity,” Steinert said. “The functional capacity definition really changes the analysis. It gives other centers hope that they may be able to follow the same path, they could argue access based on functional capacity rather than license capacity. Perhaps there’s some precedence here.”

Categories: Insight

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