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Costs in New Adult Day Program Almost Same as Old One

After more than a year of battling over eliminating and then restructuring adult day health care coverage for Medi-Cal beneficiaries, California’s budget for delivering that care is similar to what it was before all the haggling started.

The Community-Based Adult Services program, which grew out of a lawsuit challenging the state’s proposal and replaces the ADHC program, will provide services to 80% of previous ADHC beneficiaries and is funded at a similar level to the original program.

“The original budget for ADHC was $170 million, and the current CBAS budget is $155 million,” said Lydia Missaelides, executive director of the California Association of Adult Day Services. “That means you’re looking at roughly the same cost to provide the same services to 80% of the beneficiaries.”

Of course, that doesn’t count the expense of legal battles, or the daunting number of man hours spent designing and implementing a new system, not to mention the constant arguing and debating over more than a year, she said. Missaelides sighed at the idea of it.

“I guess I just don’t understand,” she said, “why we had to go through all of this.” 

The ADHC-to-CBAS metamorphosis — which began in budget proposals more than a year ago — sparked legislation, multiple hearings at the Capitol and a lengthy lawsuit.

“We are in the process of implementing a legal settlement of substantial scope, and we are starting an entirely new program — two very costly activities,” said Norman Williams, deputy director of public affairs at the Department of Health Care Services. “Because of this, in subsequent years we expect additional savings to be realized.”

The state’s costs related to the lawsuit and settlement are separate from CBAS expenditures.

Process Slowing Down

DHCS recently announced it would phase in its new adult day health program, rather than implement it all at once on July 1. The shift involves several complicated steps: determining eligibility for 40,000 frail and elderly patients across the state, moving 80% of them to managed care plans and converting existing centers to not-for-profit status. The state recently adjusted its timetable and built in a three-month cushion to ease the transition.

State officials said 31 of the 253 adult day health care centers in California will make the switch in July, while the bulk of the centers now are eyeing an Oct. 1 deadline.

The extra time was necessary, health officials said, to work out a number of crucial details. For instance, the state requires any for-profit adult day health care center to switch to not-for-profit status to qualify as a Community-Based Adult Services center. But about a month from the July 1 deadline, the state has not yet issued guidelines for that requirement.

Rates still need to be worked out for health plans; there are questions about what will happen if the for-profits can’t make the switch; there are concerns about a number of patient eligibility denials, and those appeals will be heard starting next week. The Adult Day Health Care Association recently announced that it will file an appeal to try to reverse the state’s 10% provider rate cut. Meanwhile, two more ADHC centers recently closed.

The good news for adult day health care beneficiaries is that state officials agreed to spend more on the new program. In the May budget revision, the CBAS budget was raised to $156 million for the next year.

Missaelides said state officials clearly have been listening to stakeholders’ concerns these days, as evidenced by the decision to delay implementation for most of the centers, with the new phase-in approach.

The relative handful of CBAS centers that will lead the way with a July 1 implementation date were selected because they are all County Organized Health Systems, according to Jane Ogle, deputy director of the Department of Health Care Services.

“We picked the COHS counties first because the beneficiaries are already members of the plan and don’t have to make a plan selection,” Ogle said. “This eliminates one step in the process.”

In the rest of the counties, a big step in the process will be enrollment into Medi-Cal managed care plans. Medi-Cal is California’s Medicaid program.

“In those counties where beneficiaries have to make a choice,” Ogle said, “we will wait until October, to give them plenty of time to make that selection.”

Two Kinds of Appeals

The timetable change also gives beneficiaries time to appeal eligibility denials, which they can do starting May 30. At least 500 of those denials were for people who were deemed eligible for CBAS, were sent letters of eligibility by the state and but then were denied access, according to Disability Rights California.

At one point last month, DRC filed a contempt of court motion against the state, in part for that reason.

State health officials, the lawsuit said, “are denying CBAS to class members who have been determined to be eligible at a face-to-face assessment, by invalidating such findings through unauthorized and inappropriate administrative reviews. There is simply no basis in the agreement for a process by which a finding of eligibility may be overturned on an administrative review.”

The patient advocacy group has since withdrawn its contempt motion, after other issues were resolved, but it remains concerned about those denials.

The state has been sued on another front, as well. The Adult Day Health Care Association recently announced it would file an appeal to challenge a 10% reduction in the provider reimbursement rate.

Berdj Karapetian, executive director of the ADHCA, said if the courts allow the state to recoup 10% of provider rates, it could be a final straw for some centers.

“We are convinced that if the recoupment is to occur,” Karapetian said, “it will force many CBAS providers to close their doors. And that will further diminish the number of providers.”

According to Missaelides, 34 centers have shut down or announced plans to close over the past year, including two new closures in the past month — one in Orange County and one in Los Angeles County.

Rates, Not-For-Profit Status Still Unclear

Health plans participating in the CBAS program also need to know their payment rate, which insurers hope will be set before July 1, according to Abbie Totten, director of state programs at the California Association of Health Plans.

“The rates are still in negotiation between [federal and state officials at] CMS and DHCS,” Totten said.

Another concern revolves around the state’s not-for-profit requirement for new CBAS centers. That could be difficult for providers, Karapetian said, in part because some centers take care of more than CBAS patients. Switching patients to managed care, cutting provider rates and changing the centers’ business model all threaten to swamp adult day health centers, he said.  

“I am dismayed that DHCS can behave this way and no one is holding them to task,” Karapetian said. “If it’s so difficult to publish guidelines to become nonprofits, is it really that necessary?”

State officials have said that not-for-profit status is more appropriate for adult day health centers, and that they were first established with that status. That’s not enough reason for Karapetian.

“I’m frustrated,” Karapetian said. “We are running into unnecessary obstacles. If it were saving the taxpayers money, great, I’d be all for it. But it’s not.”

The savings will come over time, state health officials have said, once managed care has been established.

Missaelides, for one, is grateful for the full funding and the state responsiveness to the requests to slow the process a bit.

“I think the department has been listening. And I think [the phase-in] is definitely a rational decision,” Missaelides said. As with many things, she said, success of the program lies in the details.

“It will always boil down to implementation,” she said. “There’s still a lot of work ahead.”

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