SECTIONS 14570-14577 - California Statutes

WELFARE AND INSTITUTIONS CODE

SECTION 14570-14577

14570. (a) The department shall adopt all necessary rules and
regulations providing for quality of care and payment for services
rendered under this chapter pursuant to Chapter 7 (commencing with
Section 14000). All regulations heretofore adopted by the department
pursuant to this chapter, and that are in effect immediately
preceding the operative date of the amendment of this section enacted
by the Legislature during the 1977-78 Regular Session, shall remain
in effect and shall be fully enforceable unless and until readopted,
amended, or repealed by the director.
(b) The director shall establish a distinct organizational entity
within the department that shall have primary responsibility for the
Adult Day Health Care Medi-Cal program. This entity shall coordinate
and direct all departmental activities required by this chapter.

14571. The department, in consultation with the California
Association for Adult Day Services, shall develop a rate methodology.
The methodology shall take into consideration all allowable costs
associated with providing adult day health care services. Once a
methodology has been approved by the department, it shall be the
basis of future annual rate reviews.
Payment shall be for services provided in accordance with an
approved individual plan of care. Billing shall be submitted directly
to the department. Additionally, the department shall establish a
separately billable and reasonable rate of reimbursement for the
initial assessment that takes into account the intensity of services
and the skill level of the health professionals required to conduct
the mandated three-day assessment of new participant needs and living
environment. Subsequent assessments, as needed or required, shall be
billed at a lesser amount. The department shall establish
utilization controls for assessment days to ensure the appropriate
use of assessment and reassessment activity.
Nothing in this section shall preclude the department from
entering into specific prospective budgeting and reimbursement
agreements with providers.

14571.1. The Legislature finds and declares all of the following:
(a) Adult day health care is a necessary component in achieving an
integrated home- and community-based long-term care system
consistent with the principles of the decision of the United States
Supreme Court in Olmstead v. L.C. by Zimring (1999) 527 U.S. 581.
(b) The federal Centers for Medicare and Medicaid Services has
directed the State of California to segregate certain skilled
services from the all-inclusive per diem rate currently in use for
adult day health care centers and to bill for those services using
separate billing codes and reimbursement rates.
(c) The reimbursement methodology for adult day health care
services that is established by the department should provide for
fair and equitable reimbursement to adult day health care centers for
services that are provided to each participant.

14571.2. (a) Subject to the provisions of this section, the
department shall establish, effective August 1, 2012, a reimbursement
methodology and a reimbursement limit for adult day health care
services on a prospective cost basis for services that are provided
to each participant, pursuant to his or her individual plan of care.
The prospective reimbursement methodology shall be determined by the
department after consultation with the California Association for
Adult Day Services and other interested stakeholders.
(b) The following definitions shall apply for purposes of this
section:
(1) "Daily core services" means the services described in Section
14550.5.
(2) "Separately billable services" means services designated by
the department, after consultation with the California Association
for Adult Day Services, and shall include, but not be limited to, the
following:
(A) Physical therapy services.
(B) Occupational therapy services.
(C) Speech and language pathology services.
(D) Mental health services.
(E) Registered dietician services.
(F) Transportation services.
(c) The prospective reimbursement methodology for the daily core
services provided by each adult day health care center shall be
determined by the department based on the reasonable cost of
providing all of the adult day health care services included within
the core services and adjusted to the particular rate year. Services
and costs included in the calculation of the daily core services rate
shall include, but not be limited to, all of the following:
(1) Fixed or capital-related costs representing depreciation,
leases and rentals, interest, leasehold improvements, and other
amortization.
(2) Labor costs other than those for the separately billable
services, including direct and indirect labor and contracted staff
hours required by law or regulation.
(3) All other costs exclusive of fixed or capital-related costs,
leases or rentals, interest, leasehold improvements, and other
amortization.
(4) Add-ons, adjustments, and audit adjustments determined
annually in the calculation of the core rate to allow for changes
specified in subdivision (h), until those changes are reflected in
the cost report.
(5) Cost components required to comply with licensing and
certification laws and regulations.
(d) (1) The daily reimbursement rates for the separately billable
services shall be determined based upon the reasonable cost of
providing each service, how each of the individual billable services
is defined, and which professional is providing the service, subject
to the scope of his or her license. These reimbursement rates shall
not exceed the Medi-Cal rates for the same service on file at the
time the service is rendered.
(2) In establishing the total reimbursement limit, direct patient
care labor costs may be paid at a specified discrete percentile to
ensure maintenance of quality of care.
(e) The department shall determine a reimbursement limit
applicable to each adult day health center peer group established
pursuant to subdivision (m), taking into account total overall
average costs per day of attendance for providing the entire array of
adult day health care services, including the daily core services
and the separately billable services. The department shall determine
a reimbursement limit applicable to each adult day health care center
peer group established pursuant to subdivision (m) based on cost
containment principles applied to other acute care and long-term care
providers.
(f) By July 1, 2010, the department shall develop, after
consultation with the California Association for Adult Day Services,
all of the following:
(1) An adult day health care center cost report meeting the
requirements of subdivision (j) and a list of individual components
to be included in the core rate calculation.
(2) The methodology and documentation necessary to establish the
reimbursement rate for the separately billable services.
(3) The reimbursement rates for transportation services. Payments
for transportation services shall be subject to the limit on the
daily reimbursement and shall be reimbursed whether the center
provides transportation directly, by use of contracted
transportation, or both. The department shall review methodologies
for payment for transportation services. The review of payment
methodologies shall include a survey of other states' adult day
health care transportation systems, and transportation reports or
expert consultation relevant to nonemergency medical transportation
services in the community.
(g) (1) By January 1, 2011, the department shall facilitate the
training of providers in collaboration with the California
Association for Adult Day Services. The adult day health care centers
shall be trained in the all of the following elements:
(A) The use of the modified cost report, supplemental reports, and
the accounting and reporting manual.
(B) Plan of care documentation required to support the separately
billable rate components.
(C) Medical necessity and eligibility requirements and
documentation.
(2) By January 1, 2011, the department, after consultation with
the California Association for Adult Day Services, shall establish
facility peer groupings as specified in subdivision (m).
(h) By July 1, 2011, the department, after consultation with the
California Association for Adult Day Services, shall establish a
methodology for calculation of the reimbursement limit, rates for the
daily core services, and applicable percentiles limiting specific
cost categories within the core rate.
(i) (1) By March 30, 2012, a preliminary estimate of the
reimbursement limit, the reimbursement rate for individual adult
health care services, and separately billable services shall be
established and provided to the California Association for Adult Day
Services and other interested stakeholders. The department shall
allow an appropriate stakeholder comment period following this
action.
(2) The information supplied to all interested stakeholders in
paragraph (1) shall be compared to what would have been paid under
the rate methodology in effect for the 2011-12 fiscal year.
(3) Based on the rate comparisons, a methodology to provide for a
multiyear phase in of the new prospective payment may be implemented.
(4) At the time of implementation, no adult day health care center'
s payment shall be decreased by more than 10 percent below the rate
paid in the rate year immediately preceding the first year that the
rate methodology prescribed in this section is implemented. In the
second and third rate years, no adult day health care center
reimbursement rate shall be decreased by more than 10 percent below
the adult day health care center's reimbursement rate on file at the
time of the application of the next year's reimbursement rate.
(j) (1) The department, with input from the California Association
for Adult Day Services and all interested stakeholders, shall
develop the cost reporting form and determine the costs that are to
be included and excluded from the annual cost reporting methodology.
(2) Cost reporting shall be consistent with Section 1861 of the
federal Social Security Act (42 U.S.C. Sec. 1395x) and Part 413 of
Title 42 of the Code of Federal Regulations.
(3) Cost reporting shall include itemization of the costs of all
adult day health care services such that information necessary to
determine costs associated with the core bundle of services and each
of the separately billable services can be collected.
(4) The cost report or supplemental report to the cost report, as
determined by the frequency the data will be required for calculation
of the core rate, shall collect staffing level and salary data for
all direct and indirect patient care staff, arranged through either
employment or contract.
(5) All adult day health care centers participating in the
Medi-Cal program shall maintain books and records according to
generally accepted accounting principles and the uniform accounting
systems adopted by the state, and shall submit annual cost reports
directly to the department.
(k) (1) The department may exclude any cost report or portion
thereof that it deems to be inaccurate, incomplete, or
unrepresentative, consistent with the policies established in
paragraph (2) of subdivision (j). For facilities that fail to file
cost reports with the department pursuant to this section, the
department shall reimburse those facilities at 10 percent below the
lowest reimbursement limit established in the facility's peer group
pursuant to subdivision (d).
(2) Cost report data shall be validated by using comparisons to
salary surveys and health industry administrative data maintained by
the Office of Statewide Health Planning and Development and other
state agencies. If cost report data is not statistically valid for a
given peer group, survey statistics shall be used as a proxy to
substitute for the cost report data.
(3) Cost report data for any adult day health care center that has
closed or is no longer a Medi-Cal participating facility shall be
excluded from the rate calculation.
(4) The specific process for maintaining cost data and submitting
cost reports shall be developed after consultation with the
California Association for Adult Day Services.
(l) Field audits shall be performed by the department in
accordance with all of the following laws and regulations:
(1) Section 1861 of the Social Security Act (42 U.S.C. Sec. 1395x)
and Title XVIII of the Social Security Act (42 U.S.C. Sec. 1395 et
seq.).
(2) Sections 413.9, 433.32, and 483.10 of, Part 413 of, Title 42
of the Code of Federal Regulations.
(3) Centers for Medicare and Medicaid Services Publication 15-1
(federal Department of Health and Human Services Manual).
(4) Chapter 5 (commencing with Section 54001) of Division 3 of,
and Chapter 10 (commencing with Section 78001) of Division 5 of,
Title 22 of the California Code of Regulations.
(5) Sections 14170 and 14171.
(6) Relevant portions of the California Medicaid State Plan.
(m) (1) In accordance with field audit requirements, adult day
health care centers shall be placed in a minimum of three designated
peer groupings. Each adult day health care center in each of the
designated peer groupings shall be audited on an annual basis.
(2) If for any reason a field audit was not performed, the average
audit adjustment of the peer grouping shall be applied.
(3) The peer groupings shall include, at minimum, geographic
differences and size of facility. The need for additional groupings
shall be periodically reevaluated to ensure that the peer groupings
remain relevant on a statewide basis.
(4) The department shall analyze and evaluate the data obtained
through peer grouping analysis in order to determine if additional
peer groupings or data elements are necessary for refinement of the
peer groupings.
(5) After analyzing the data pursuant to paragraph (4), the
department may increase the number of peer groupings or change the
criteria to reflect pertinent factors affecting peer grouping costs.
(n) (1) An audit adjustment or adjustments, either specific to an
adult day health care center or by peer grouping, reflecting the
difference between reported and audited costs and participant days
for field audited centers, shall be applied to all adult day health
care centers for purposes of establishing the core services
reimbursement rate and the reimbursement limit for the following rate
year. Audit adjustments shall include all of the following:
(A) The results of settled appeals. The department shall consider
only the findings of audit appeal reports that are issued more than
180 days prior to the beginning of the new rate year.
(B) In the case of peer grouping audit adjustments, audited costs
shall be modified by a factor reflecting share-of-cost overpayments
and share-of-cost underpayments.
(C) The results of federal audits, when reported to the state,
shall be applied in determining audit adjustments.
(D) (i) An adjustment or adjustments to reported costs of adult
day health care centers shall be made to reflect changes in state or
federal laws and regulations that would affect those costs, including
increases in the minimum wage or increases in minimum staffing
requirements.
(ii) The costs described in clause (i) shall be reflected as an
add-on to the new rate or rates.
(iii) To the extent not prohibited by federal law or regulations,
add-ons to the rate or rates shall continue until those costs are
included in cost reports used to set the new rate or rates.
(2) Adjusted costs shall be divided into categories and treated as
follows:
(A) Fixed or capital-related costs shall include costs that
represent depreciation, leases and rentals, interest, leasehold
improvements, and other amortization. No update shall be applied.
(B) Property taxes, where identified, shall be updated at a rate
of 2 percent annually.
(C) Labor costs, which shall be defined as a ratio of salary,
wage, and benefits costs to the total costs of each adult day health
care center, shall be updated based upon the labor study conducted by
the department and using industry-specific wage data as reported by
the adult day health care centers. The separately billable services
shall be updated by applying the median market-based rate specific to
the specialty service category.
(D) All other costs shall include all other costs less fixed or
capital-related costs, property taxes, and labor costs. This cost
category shall be updated using the California Consumer Price Index.
(3) Prior to the implementation of this methodology, the
department shall take measures to ensure appropriate training of
state audit staff.
(o) The department shall provide updates on the rate methodology
to the appropriate fiscal and policy committees of the Legislature.
The appropriation for services paid under this rate methodology shall
be included in the annual Budget Act.
(p) Adult day health care centers may appeal findings that result
in an adjustment to the rate or rates pursuant to Section 14171 and
to Article 1.5 (commencing with Section 51016) of Chapter 3 of
Division 3 of Title 22 of the California Code of Regulations.
(q) (1) Notwithstanding Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code, the
department shall implement this section by means of a provider
bulletin or similar instruction without taking regulatory action. By
August 1, 2015, the department shall adopt regulations in accordance
with the requirements of Chapter 3.5 (commencing with Section 11340)
of Part 1 of Division 3 of Title 2 of the Government Code.
(2) The department shall notify and consult with interested
stakeholders in implementing, interpreting, or making specific the
provisions described in this section.
(r) The department shall implement this section only to the extent
that federal financial participation is obtained.
(s) The department may file a state plan amendment to implement
the requirements of this section. Immediately upon filing any such
state plan amendment, the department shall provide the fiscal
committees of the Legislature with a copy of the state plan
amendment.

14571.5. Federally qualified health centers shall be reimbursed on
a prospective payment system rate basis pursuant to Section 14132.100
for the provision of adult day health care services.

14572. (a) No Medi-Cal reimbursement shall be made for a service
rendered by an adult day health care provider that does not have a
license as an adult day health care center or that does not have
currently effective Medi-Cal certification pursuant to this chapter.
(b) Notwithstanding subdivision (a), Medi-Cal certification shall
be granted as of the date of licensure with respect to, and
reimbursement shall be made for, a service rendered on or after that
date if the provider meets all of the following requirements:
(1) Is exempt from the moratorium imposed on the certification and
enrollment of new adult day health care centers pursuant to
paragraph (5) of subdivision (b) of Section 14043.46.
(2) Meets all certification requirements for adult day health care
centers, and is enrolled as a Medi-Cal provider.
(3) Provides services in compliance with the requirements of this
chapter as of the date the center began providing services to
beneficiaries.

14573. (a) Initial Medi-Cal certification for adult day health care
providers shall expire 12 months from the date of issuance. The
director shall specify any date he or she determines is reasonably
necessary because of the record of the applicant and to carry out the
purposes of this chapter, but not more than 24 months from the date
of issuance, when renewal of the certification shall expire. The
certification may be extended for periods of not more than 60 days if
the department determines it to be necessary.
(b) Before certification renewal the provider shall submit with
the application for renewal a report according to department
specifications that includes an analysis of income and expenditures,
continued demonstrated community need, services, participant
statistics and outcome, and adherence to policies and procedures.
(c) Prior to approving renewal of Medi-Cal certification, the
California Department of Aging shall conduct a financial review and
onsite medical and management reviews. The reviews shall be conducted
by a team of persons with appropriate technical skills. The
management review shall be performed by the entity responsible for
directing and coordinating the program, as specified in the
interagency agreement entered into pursuant to Section 1572 of the
Health and Safety Code.
(d) Where the director determines that the public interests would
be served thereby, a public hearing may be held on any renewal
application subject to this section. The findings of the departmental
program and licensing reviews and the provider's annual evaluation
report shall be presented at the hearing.

14574. (a) The director shall terminate the Medi-Cal certification
of any adult day health care provider at any time if he or she finds
the provider is not in compliance with standards prescribed by this
chapter or Chapter 7 (commencing with Section 14000) or regulations
adopted pursuant to these chapters. The director shall give
reasonable notice of his or her intention to terminate the
certification to the provider and participants in the center. The
notice shall state the effective date of, and the reason for, the
termination.
(b) The denial, suspension, or termination of certification shall
be considered grounds for denial, suspension, or revocation of the
license.
(c) The California Department of Aging and the department shall
coordinate proceedings to deny an application for certification, to
terminate or suspend certification, or to revoke or suspend licensure
to the extent appropriate to ensure consistency and uniformity.
(d) The provider shall have the right to appeal the department's
decision made pursuant to Section 14123.
(e) This section is not applicable to denials of initial
certification made pursuant to a moratorium imposed in accordance
with Section 14043.46 of the Welfare and Institutions Code.

14574.1. (a) Every adult day health care center shall be
periodically inspected and evaluated for quality of care by a
representative or representatives designated by the director, unless
otherwise specified in the interagency agreement entered into
pursuant to Section 1572 of the Health and Safety Code. Inspections
shall be conducted prior to the expiration of certification, but at
least every two years, and as often as necessary to ensure the
quality of care being provided. As resources permit, an inspection
may be conducted prior to, as well as within, the first 90 days of
operation.
(b) If, as a result of the inspection, the department or the
California Department of Aging, as specified in the interagency
agreement, determines that the adult day health care center has
serious deficiencies that pose a risk to the health and safety of the
participants, the department or the California Department of Aging,
as specified in the interagency agreement, may immediately take any
of the following actions, including, but not limited to:
(1) Require a plan of correction, including as requested, a
program plan pursuant to Section 14552.2.
(2) Limit participant enrollment.
(3) Prohibit new participant enrollment.
(c) The provider shall have the right to dispute an action taken
under paragraphs (2) and (3) of subdivision (b). The department or
the California Department of Aging, as specified in the interagency
agreement, shall accept, consider, and resolve disputes filed
pursuant to this subdivision in a timely manner. The dispute
resolution process shall be determined by the California Department
of Aging in consultation with the department.
(d) The director shall ensure that public records accurately
reflect the current status of any potential actions including the
resolution of disputes.

14575. Each adult day health care provider shall maintain a uniform
accounting and reporting system as developed by the department, in
consultation with the provider. The department shall implement a
uniform cost accounting system and train providers in this system by
July 1, 1987. The California Department of Aging, in coordination
with the department may approve an alternative cost accounting system
where the provider demonstrates the ability to report comparable and
reliable data. The provider shall submit annual cost reports to the
department, unless otherwise specified in an interagency agreement
entered into pursuant to Section 1572 of the Health and Safety Code,
no later than five months after the close of the licensee's fiscal
year. The report shall be submitted in the format prescribed by the
state. Each facility shall maintain, for a period of four years
following the submission of annual cost reports, financial and
statistical records of the period covered by the cost reports which
are accurate and in sufficient detail to substantiate the cost data
reported. These records shall be made available to state or federal
representatives upon request. The department, unless otherwise
specified in an interagency agreement entered into pursuant to
Section 1572 of the Health and Safety Code, may request a financial
review performed by an independent certified public accountant as
part of the provider's annual cost report. All certified financial
statements shall be filed with the department within a period no
later than three months after the department's request. The
department, unless otherwise specified in an interagency agreement
entered into pursuant to Section 1572 of the Health and Safety Code,
may require a limited or complete certified public accountant audit
when the monitoring activities carried out pursuant to Section 14573
reveal significant financial management deficiencies.

14576. Each adult day health care provider shall furnish to the
department, unless otherwise specified by the interagency agreement
entered into pursuant to Section 1572 of the Health and Safety Code,
all additional information and reports that the department may find
necessary in performing its functions under this chapter. The
information and reports shall include, but not be limited to, any
statistical information regarding utilization of services, individual
treatment plans and individual service reports, costs of health
care, and administration the department may require.

14577. All subcontracts for services reimbursable under this
chapter shall be entered into pursuant to regulations of the
department. All subcontracts shall be in writing, and a copy shall be
transmitted to the department for approval prior to taking effect.
Each subcontract submitted to the department for approval shall
contain the amount of compensation or other consideration which the
subcontractor will receive under the terms of the subcontract with
the adult day health care provider. However, this section shall not
apply to employment contracts of salaried employees of an adult day
health care licensee.
All subcontracts to provide health care benefits, including
emergency services, shall include a specification that services will
be provided to participants to meet the needs of the participants
based upon the plans of care. All subcontracts to provide any of the
basic services specified in Section 14550 through subcontractors,
shall meet all of the qualifications required by, or pursuant to,
this chapter as appropriate for the services which the subcontractors
are required to perform.
Each subcontract shall require that the subcontractor make all of
its books and records pertaining to the goods or services furnished
under the terms of the subcontract available for inspection,
examination, or copying by the department during normal working hours
at the subcontractor's principal place of business, or at such other
place in the state as the department shall designate. Subcontracts
between an adult day health care provider and a subcontractor shall
be public records and shall be kept on file and be available at the
center. The names of the officers and stockholders of the
subcontractor shall also be kept on file and be available as public
records at the center.