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⭒ New Developments

Governor Signs Law Extending AB 1629 Reimbursement System for Skilled Nursing Facilities

On June 29, 2020, Governor Newsom signed into law AB 81, a budget bill that extends the Medi-Cal reimbursement system for freestanding skilled nursing facilities through the end of 2022. Known as “AB 1629” for the 2004 legislation that created it, the failed payment system has been a magnet for unscrupulous operators who have profited at residents’ and Medi-Cal’s expense.

The extension does not contain any of the reforms CANHR recommended, however, it is a somewhat reduced windfall for nursing home chains than they and the Newsom Administration had sought. The amended law provides aggregate rate increases of 3.62 percent through the end of calendar year 2020, 3.5 percent in calendar year 2021 and 2.4 percent in calendar year 2022.

Additionally, skilled nursing facilities will receive increased Medi-Cal payments for any new federal or state mandates plus, under separate authority, a 10 percent rate increase retroactive to March 1, 2020 that will continue until the end of the emergency period.

Collectively, these provisions will increase Medi-Cal payments to skilled nursing facility operators in California by more than $500 million through 2022. These generous increases are on top of multiple multi-billion dollar bailouts the federal government is providing to the nursing home industry.

In addition to increasing payments to nursing home operators, the extension made other changes to the payment system. Some of interest include:

• Beginning in 2021, requiring the Department of Healthcare Services (DHCS) to assess monthly penalties up to $50,000 when SNFs are found to be out of compliance with minimum staffing requirements, minimum wage laws or wage pass-through requirements.

• Increasing penalties, imposed by the Department of Public Health, on facilities for failing to meet the nursing hours or direct care service hours per patient per day statutory requirements.

• Requiring DHCS to audit facility costs and revenues that are associated with the COVID-19 Public Health Emergency to determine whether a facility has adequately used increased Medi-Cal payments associated with the emergency only for allowable costs.

• Requiring a facility that received increased Medi-Cal payments associated with COVID-19 to provide any information requested by DHCS on emergency-related costs and revenues at the time and in the manner specified by DHCS; and requiring DHCS to recoup any amounts of increased Medi-Cal payments that were not used to support the delivery of patient care.

• Requiring DHCS to convene a stakeholder process by September 1, 2021 to develop a successor supplemental payment or similar quality-based payment methodology to replace the existing program, to begin in 2023.

A more complete summary of the changes to the payment system can be found here.

The extension took effect immediately when signed on June 29, 2020.