The Crucial Role of Counties in the Health of Californians: An Overview July 2004 The Crucial Role of Counties in the Health of Californians: An Overview Prepared for CALIFORNIA HEALTHCARE FOUNDATION by Deborah Reidy Kelch, M.P.P.A. July 2004 Acknowledgments The author wishes to thank the many individuals who participated in providing background and information for this report. Participating organizations include representatives from the County Health Executives Association of California, the County Mental Health Directors, the County Alcohol and Drug Program Administrators Association of California, the Health Officers Association of California, the California Association of Public Hospitals, and the County Supervisors Association of California. In addition, staff at the state Department of Health Services, Department of Mental Health, Department of Alcohol and Drug Programs, and the Managed Risk Medical Insurance Board participated in interviews, responded to requests for information and, in some cases, provided feedback on portions of the report. Several legislative budget staff and staff at the Legislative Analyst’s Office responded to questions at a particularly busy time of year. Special thanks to Lee Kemper, executive director of the County Medical Services Program, and Judith Reigle, executive director of the County Health Executives Association of California, for the significant time they spent reviewing and providing background for the report. About the Author Deborah Reidy Kelch is an independent consultant, health policy researcher, and president of Kelch Associates. Since 1995, Kelch Associates has provided consulting services to nonprofit organizations, including policy research, grant writing, organizational development, meeting facilitation, and strategic planning. About the Foundation The California HealthCare Foundation, based in Oakland, is an independent philanthropy committed to improving California’s healthcare delivery and financing systems. Formed in 1996, our goal is to ensure that all Californians have access to affordable, quality healthcare. This report was produced under the direction of CHCF’s Public Financing and Policy Program, which works to create solutions to problems in publicly funded health care and safety net programs. For more information about CHCF, visit us online at www.chcf.org. ISBN 1-932064-68-0 ©2004 California HealthCare Foundation Contents 4 I. Introduction 6 II. The Programs and Systems Indigent Health Care Public Health Mental Health Substance Abuse Treatment 23 III. Issues for Consideration Threats and Challenges Key Policy Questions 28 V. Methodology and Sources 29 VI. Appendices Appendix A: County General Purpose Revenues Appendix B: Proposition 99 Appendix C: Program Overviews I. Introduction County services are often C ALIFORNIA’ S 58 COUNTIES ARE CRUCIAL providers of major health services, including health care for referred to as a “safety net” the uninsured, public health services, mental health, and for people whose financial, substance abuse treatment services. In addition to state and social, physical, mental, or federal funds available to support these programs, many counties allocate money from their general funds to help geographic conditions limit meet local health care needs. their access to mainstream Given the diversity of California’s counties in size, demographics, medical care, however, income, and culture, tremendous diversity also exists in how the counties organize, fund, and administer these health these systems not only serve programs. In addition, these services are generally treated as the needs of low-income separate systems for budgeting, policy, and administrative populations, but also provide purposes at the state level. However, history has demonstrated that policy and fiscal choices in one program area can have the basic framework to profound unintended or unappreciated consequences for protect the health of the service delivery in other systems. In addition, the specific service needs of clients often overlap the categories of services broader community. and programs developed over decades. These county services are often referred to as a “safety net” for people whose financial, social, physical, mental, or geographic conditions limit or challenge their access to mainstream medical care and related supportive services. In this context, counties are viewed as the providers of last resort. However, these systems do not serve only the needs of low-income and vulnerable populations but also provide the basic framework to protect the health, safety, and well-being of the broader community. Public health services, in particular, and the public health infrastructure at the county level, have a specific and unique focus on population health: the health of the broad community. The successes and failures of these systems can have a dramatic effect on access, affordability, and availability of services for everyone. For example, having high numbers of people without health insurance or access to health care can overload hospital emergency rooms, raise public and private provider debt, and increase the costs of health care for everyone. Ultimately, the unreimbursed costs of caring for uninsured people threaten the financial viability of important public services such as emer- gency and trauma care. Untreated mental illness or substance abuse results in a higher use of medical care services, generates 4 | CALIFORNIA HEALTHCARE FOUNDATION public health and safety challenges, and leads to increased legal and correctional system costs. Despite their importance, their interrelationship, and the impact these services and programs have on the overall health and well-being of all Californians, policymakers seldom consider the programs or their funding as pieces of a whole. The state’s unprecedented fiscal crisis and the dramatic impact it is having, and will continue to have, on county finances and programs provide an important context for this overview of existing programs and services. As policymakers consider potential changes to county funding and program responsibilities, this paper highlights and clarifies for their consideration how counties are involved in health service delivery. The current circumstan- ces make it all the more critical for policymakers to consider the interrelationships of these programs, their funding streams, and the implications of alternative policy options. This report offers an overview of the range of health services that have over time become the responsibility of California counties, either by statute, by practice, or by default. This paper outlines some of the basic requirements imposed on counties in the areas of health services for the uninsured, public health, mental health, and substance abuse treatment; the funding streams for these services and programs; and the basic structure of how counties provide the services. In addition, the report highlights the issues facing policymakers at the state and local levels that will affect the future of county health programs and services. The Crucial Role of Counties in the Health of Californians: An Overview | 5 II. The Programs and Systems No two counties organize T HIS SECTION FOCUSES ON THE PROGRAM responsibilities of counties, the funding sources counties and administer this complex receive and use for the programs, and how counties generally array of health programs meet their responsibilities in four program areas: health, public exactly the same way. health, mental health, and substance abuse treatment services. Counties currently administer local health and mental health programs relying on a historical and deeply complicated patchwork of funding streams. State and federal requirements are constantly shifting in response to political, scientific, and economic changes. State law imposes on the counties broad and often vague mandates, which are subject to interpretation and vulnerable to the changing fiscal environments at all levels of government. The programs are administered by multiple federal, state, and county agencies. At the county level, tremendous variation exists in program design, administration, and funding. Even though the programs are separate at the state level, some counties combine programs: mental health and health, substance abuse and health, medical and mental health care. No two counties organize and administer this complex array of health programs exactly the same way. Indigent Health Care In California, counties are responsible for health care for low- income uninsured residents who have no other sources of care, mostly “medically indigent adults,” ages 21 to 64, without children. This county obligation is outlined in Section 17000 of the California Welfare and Institutions Code, which states: “Every county… shall relieve and support all incompetent, poor, indigent persons and those incapacitated by age, disease, or accident, lawfully resident therein, when such persons are not supported by their relatives or friends, by their own means or by state hospitals or other state or private institutions.” California Welfare and Institutions Code, Section 17000 6 | CALIFORNIA HEALTHCARE FOUNDATION This simple language forms the basis for county organize, or pay for indigent medical care services General Relief income support programs and directly using a variety of service delivery strategies. the indigent medical and mental health care Large counties have historically been referred to programs operated by California counties. as Medically Indigent Services Program (MISP) Subsequent code sections confirm the “duty of counties. Thirty-four smaller counties voluntarily the counties to provide health care.” State law participate in the centrally administered County and legal precedents have established that the Medical Services Program (CMSP), a medical Section 17000 obligation includes, but is not coverage program similar (but not identical) to necessarily limited to, responsibility for providing Medi-Cal, California’s Medicaid program. health care for uninsured low-income adults, Large counties have broad discretion to set and often referred to as medically indigent adults. determine eligibility, services provided, payment Between 1971 and 1982, California operated a methods, and providers in the program. Some state-funded Medi-Cal program for medically limit their programs to medically indigent adults indigent adults but eventually returned the who are legal county residents, and others also program and a portion of the funding to the provide services for undocumented children or counties. Generally, the courts have found that adults. Many large counties have also developed counties need to have a standard for the services delivery systems to enhance access to health they provide under Section 17000, but neither services for both indigent and non-indigent law nor legal precedent specifically outlines how patients by operating public hospitals and counties must meet this obligation. Counties outpatient clinics. have significant discretion in the level and method of health care they provide. Counties do not report the scope of services, eligibility criteria, or methods of provider As a result, tremendous variation exists in reimbursements for their indigent care programs. counties’ programs and in their spending for One variable that affects the scope of county health care for uninsured people. Some counties programs is the service delivery model in each define the Section 17000 obligation narrowly and county. The Insure the Uninsured Project (ITUP), focus exclusively on serving legal residents who a California-based project of the Center for meet the narrow definition of medically indigent Governmental Studies, focuses on increasing adults, and other counties assume a broad health coverage for California’s uninsured and responsibility for health care for all uninsured conducts ongoing analysis and research of people, including undocumented children and programs serving the uninsured including county adults. This flexibility allows counties to be health systems. responsive to local needs, priorities, and political preferences. However, the diversity of county ITUP has identified three main county service program designs and methods makes comparison delivery models: of the county programs difficult. The general ■ Provider counties. These counties own and strategies counties use to fulfill their safety net operate county inpatient hospitals, and, in obligations are discussed below. most cases, publicly owned clinics, that serve the uninsured, as well as individuals with other County Medical Care Programs public or private health coverage. for the Uninsured When it comes to medical care services for the ■ Currently, 15 counties operate 22 county- uninsured, counties are generally split into two owned hospitals, and four counties contract categories. The 24 largest counties provide, with local University of California hospital The Crucial Role of Counties in the Health of Californians: An Overview | 7 medical centers to serve as public hospitals. CMSP provides medical care services to medically Provider counties typically have extensive indigent adults ages 18 to 64 who are not eligible outpatient clinics, including hospital-based for Medi-Cal and who are U.S. citizens or legal outpatient clinics and, in some cases, free- residents. Emergency services are provided when standing clinics. Over time, many counties immigration status is not known. CMSP is have closed or leased their county hospitals. organized as a traditional fee-for-service program The number of county-operated hospitals has similar to Medi-Cal but with fewer benefits. decreased from 50 counties with 66 facilitates County welfare departments determine eligibility. in 1964. In addition, some counties operating Most individuals on CMSP are on the program public hospitals have recently instituted new for only three to seven months; the average rules and co-payments for indigent care monthly enrollment is about 40,000. because of county budget constraints. Funding for Indigent Care ■ Payer counties. Payer counties purchase indigent care services through contracts with The primary funding sources for indigent health one or more private hospitals for inpatient care are health and welfare realignment program services and through community clinics or funds — dedicated sales tax and motor vehicle private physicians for outpatient services. license fees — (see p. 17 sidebar on realignment for more details) and county general funds (see ■ Hybrid counties. Hybrid counties do not Appendix A: County General Purpose Revenues). have public hospitals; they contract with In addition, counties that operate public hospitals private hospitals for inpatient care but also receive Disproportionate Share Hospital funds, operate some publicly owned outpatient which are Medi-Cal funds provided to public clinics, which may be the primary providers and private hospitals serving high numbers of of services to indigent people. Some hybrid Medi-Cal patients. In many counties, realignment counties also have contracts with nonprofit funds allocated to both health and mental health community clinics or private physicians. programs have been transferred to pay for the rising costs of social services programs, especially County Medical Services Program foster care and In-Home Supportive Services Smaller counties participate in the County (IHSS). Caseload growth in child welfare/foster Medical Services Program (CMSP). The CMSP care and IHSS has also limited the realignment was established in January 1983, when California funds that are available for growth in both health law transferred responsibility for providing health and mental health programs. services to indigent adults from the state to the Large counties and two small rural counties also counties. This law recognized that many smaller, receive a relatively small allocation of Proposition rural counties were not in a position to operate 99 tobacco tax revenue for indigent care (see the program and allowed counties with 300,000 Appendix B: Proposition 99). The large county or fewer inhabitants to contract back with the program is called the California Healthcare for state Department of Health Services (DHS) for Indigents Program (CHIP), and the smaller the program. Thirty-four counties currently county program is the Rural Health Services participate in CMSP. (RHS) program. Proposition 99 funds have been The program was administered by DHS until dramatically and steadily declining, dropping by 1995, when the program was transferred to the 85 percent since the program began. Funding for independent CMSP Governing Board, composed indigent care has declined from $343 million in of representatives of participating counties. The 1989–90 to just over $27 million in 2003–04. 8 | CALIFORNIA HEALTHCARE FOUNDATION Counties receive funding based on a formula In addition, ITUP found the following: and, in return, agree to submit data about their ■ Funding for the uninsured varies substantially indigent care programs and to provide follow-up between regions and counties. treatment identified as necessary through a Child Health and Disability Prevention Program ■ Counties with public hospitals generally had screening. Partly as a result of the decline in the most funding and provided the most Proposition 99 revenue for indigent care, counties care to the uninsured, followed by CMSP- report that an increasing share of realignment participating counties. health funds and county general fund revenue ■ Counties with hybrid systems and payer has been allocated to indigent health care. counties had the least funding and provided Data about funding and expenditures for county the least care per uninsured person. indigent care programs are limited. Data available Funding for CMSP. The CMSP is currently through the Medically Indigent Care Reporting funded with realignment funds, county contract- System (MICRS) are based on information that ual contributions (county general fund revenue), Proposition 99-funded counties report to DHS and third-party reimbursements and recoveries. and are typically several years old. Because In 2002, the CMSP program served about programmatic arrangements vary substantially 115,000 people at a cost of $222 million. When between counties, comparing the MICRS data CMSP was transferred to the control of the across counties can be problematic and, at times, CMSP Governing Board, state law required an controversial. annual general fund contribution of $20 million. Although some revenue sources for indigent care, The state has suspended its contribution to such as Proposition 99, have declined, county CMSP for the past five years, and the Governing expenditures for indigent health care, as reported Board has relied on CMSP reserves. As a result through MICRS, have grown. In 2001–02, with of the dwindling reserves, over the past two years, 23 of the 25 counties participating in MICRS CMSP has undertaken provider payment, bene- reporting, counties reported expenditures of fit, and eligibility reductions and is in the process $1.5 billion total funds to serve about 1.4 million of implementing administrative restructuring to indigent patients. In 1997–98, 27 counties report- reduce program costs. ed total expenditures of $1.3 billion for 1.3 million patients. Counties report that indigent care costs County Initiatives to Cover the Uninsured represent an increasing share of health realign- In recent years, several primarily urban counties ment funds and county general funds. with local public health plans for Medi-Cal and ITUP reviewed MICRS data in conjunction the Healthy Families Program have developed with its assessment of county programs, funding, county-specific programs to extend health insur- and spending for the uninsured. Although ance coverage to the uninsured. Eight counties ITUP found significant data inconsistencies in have implemented programs to cover uninsured the information that counties report to DHS, children not eligible for other programs because the project was able to draw some general of income or legal status. Many more counties conclusions. ITUP found that the average are in the planning stages for similar programs. funding that counties receive per uninsured To finance the programs, counties have used person is dramatically less than the costs of different funding strategies combining multiple coverage in either private commercial health sources such as county general fund revenue, plans or health plans participating in Medi-Cal. tobacco settlement funds, program reserves from The Crucial Role of Counties in the Health of Californians: An Overview | 9 Local Initiative plans, Proposition 10 Children eligibility for all but those aged, blind, and and Families funds, and foundation grants. disabled recipients of Supplemental Security Income/State Supplemental Payment (SSI/SSP) The County Children’s Health Initiative Program funds, who are automatically enrolled by the (C-CHIP) is a state program that will provide Social Security Administration. In addition, low-cost health coverage to uninsured children counties oversee the enrollment and recertification through age 19. The program will allow counties process. Until recently, eligibility was determined and other entities to use local funds as a match primarily through face-to-face encounters with to draw down unused federal State Children’s county welfare eligibility workers. In 1998, Health Insurance Program (SCHIP) funds. coinciding with the implementation of the SCHIP is a federal program to cover uninsured Healthy Families Program, which is California’s children that reimburses states 66 percent of implementation of SCHIP, the state developed program costs. SCHIP was implemented in a joint mail-in application for Medi-Cal and California as the Healthy Families Program Healthy Families, and the state is in the process through the Managed Risk Medical Insurance of implementing an Internet-based enrollment Board (MRMIB). In C-CHIP, counties will use application, known as Health-e-App. (Visit the federal funds to provide health insurance to www.healtheapp.org for more information about additional children using their locally sponsored Health-e-App.) health plans. C-CHIP will provide benefits simi- lar to Healthy Families but will serve children People on Medi-Cal might have very different between 250 percent and 300 percent of the experiences with the program depending on the Federal Poverty Level. California has submitted county in which they live. This is partly because a state plan amendment for federal approval to of wide variation in the number and type of implement the program. Four pilot counties have participating Medi-Cal providers available in implemented C-CHIP and are waiting federal different counties and regions in the state. For approval, and another four counties are in the example, fewer Medi-Cal providers are typically planning stages. available in rural communities. Experiences also vary because counties have different models of Other Health Care Programs and care delivery. the Counties Medi-Cal service delivery comes through two Medi-Cal. California’s Medicaid program — primary methods: fee-for-service and managed Medi-Cal — provides health care coverage for care. In the fee-for-service program, health care 6.5 million low-income Californians who lack professionals and facilities meet state licensing health insurance and meet state or federal and certification requirements, provide services program requirements. Medi-Cal is funded by to beneficiaries, bill the state for the services, and state and federal funds and is, for the most part, are paid at rates set by the state. a state-administered program. The state generally licenses and certifies the providers, sets benefits, In June 2003, of the 6.5 million Californians on eligibility, and payment levels. Separate delivery Medi-Cal, 2.4 million beneficiaries in 25 counties systems exist for mental health and drug were in managed care. Managed Medi-Cal has treatment under Medi-Cal as discussed later three main models: in this section. ■ Two-Plan Model. The Two-Plan Model serves County social services agencies (welfare depart- the greatest number of people and offers ments) are charged with determining Medi-Cal beneficiaries a choice of two managed care 10 | CALIFORNIA HEALTHCARE FOUNDATION plans. Generally, one plan is a public plan of Healthy Families expenditures, as compared (Local Initiative), and the other is an HMO with 50 percent of Medi-Cal expenditures. (commercial plan). Children, pregnant Services are delivered through managed care women, and non-disabled parents must be plans under contract with MRMIB, and enrolled in managed care and can choose one enrollees share the costs through monthly of the two plans offered in their county. Other premiums and co-payments for most services. Medi-Cal beneficiaries — primarily aged, As of December 2003, nearly 700,000 children blind, and disabled people — may voluntarily were enrolled in Healthy Families. enroll. The health plans contract with public Healthy Families includes Medi-Cal Local and private providers. There are 12 Two-Plan Initiative plans as available health plan choices Model counties serving 2.4 million enrollees, for enrolled children. County welfare depart- or 26 percent of all Medi-Cal beneficiaries. ments may identify children eligible for Healthy ■ County Organized Health System (COHS). Families as part of their responsibilities in Under the COHS model, enrollment in a Medi-Cal eligibility and enrollment processing. county-run plan is mandatory and automatic Counties also have a direct role in providing for the county’s entire Medi-Cal population services to Healthy Families subscribers. Seriously (except long-term care residents). COHS emotionally disturbed children in Healthy counties are paid a fixed monthly fee per Families are referred to county mental health person regardless of the services provided plans that can bill for the federal matching funds (capitation payment). Five COHSs provide for supplemental services. Counties also provide services in eight counties. About 9 percent of California Children’s Services benefits to both Medi-Cal beneficiaries statewide are enrolled Medi-Cal and Healthy Families-enrolled children in a COHS. Federal law limits COHS enroll- (specialty medical services for children with ment to 10 percent of statewide Medi-Cal specific physical limitations or chronic illnesses beneficiaries; additional COHS plans would or diseases). (See p. 15 for more information require specific federal approval. about California Children’s Services.) ■ Geographic Managed Care (GMC). Under GMC, currently operating in Sacramento and Public Health San Diego counties, the state contracts with a Public health services are distinct from the other number of private health plans and pays the health services examined in this paper because plans a fixed monthly fee per enrolled person, the focus is not exclusively on the provision of referred to as a capitation payment. Just as in services to individuals but on population-based Two-Plan Model counties, children, pregnant strategies to protect the overall health of the women, and non-disabled parents must enroll community. Public health includes the general in one of the plans. About 6 percent of Medi- responsibility to protect and improve the health Cal beneficiaries are enrolled in GMC plans. of the community through preventive medicine, Healthy Families Program (HFP). Healthy health education, control of communicable Families is administered by the MRMIB and diseases, application of sanitation standards, and provides health coverage for uninsured children monitoring of environmental hazards — often not eligible for Medi-Cal up to 250 percent of referred to as core public health functions. the Federal Poverty Level. Healthy Families is The statutory obligations of California counties California’s program to implement the federal with regard to public health are not always clear SCHIP. The federal government pays 66 percent The Crucial Role of Counties in the Health of Californians: An Overview | 11 in law and regulation. California counties are Emergency Medical Services Authority monthly, required by law to “preserve and protect” the quarterly, or annually. public health and to provide public health County public health programs vary substantially services, including public health nursing, in administrative structure, scope, funding levels, communicable disease control activities, and staffing, and specific services and programs environmental health programs. Public health offered. However, no statewide resource regularly nursing services and communicable disease profiles county public health programs or control activities are county-mandated functions funding. In 2001, DHS worked with the Health monitored by DHS. Local health departments Officers Association of California to survey also have primary responsibility to respond counties about their public health programs. during local emergencies such as floods and The survey has significant data limitations other natural disasters, disease outbreaks, or because only 34 counties responded and because bioterrorism attacks. Environmental health counties interpreted and responded to the programs are mandated to local governments, survey questions differently. Still, the survey generally supported by fees, and receive oversight is illustrative and found that nearly 90 percent from various state agencies in areas such as solid of public health expenditures were within five waste, small public water systems, underground public health categories (see Figure 1). storage tanks, and hazardous materials. For public health purposes, California has 61 local Figure 1. Public Health Spending, by Category health jurisdictions (sometimes referred to as Other LHJs): the 58 counties and the cities of Berkeley, (12%) Communicable Long Beach, and Pasadena. All local jurisdictions Disease Administrative Control are required by law to have a physician health (8%) (35%) officer in charge of public health. Larger counties may also have a health administrator to manage Maternal and Child Health and oversee public health and other related health (13%) care programs. Eleven small counties participate Children‘s in the Local Public Health Services Program, Medical Services Environmental (15%) Health which provides state-employed environmental (17%) specialists and public health nurses who work in and for those counties. Local public health departments also administer Public health officers have broad and far-reaching an array of state and federal public health authority and responsibility under the law. For categorical programs, that is, programs for example, public health officers have the authority specific populations or limited program purposes. to order testing of individuals and communities, Categorical programs are generally funded by to quarantine individuals or groups, or to close separate federal or state allocations or grants and beaches, restaurants, or other facilities for public have specific program requirements or guidelines safety reasons. Public health officers receive reports associated with the funding. from health providers and laboratories regarding the incidence of more than 80 statutorily Communicable Disease Control Activities reportable diseases. County health departments California law defines communicable disease must submit regular public health and program control activities as communicable disease reports to state agencies such as DHS and the prevention, epidemiologic services, public 12 | CALIFORNIA HEALTHCARE FOUNDATION health laboratory identification, surveillance, Local health jurisdictions receive funding from immunizations, follow-up care for sexually the Office of AIDS in three program areas: transmitted diseases (STDs), and tuberculosis ■ Prevention. Local health jurisdictions receive control and support services. Public health most of the Office of AIDS funds for officers must accept and evaluate mandated prevention, which includes HIV counseling reports from health providers on more than and testing, mobile outreach vans in some 80 statutorily reportable diseases. Implicit in counties, targeted prevention for high-risk the reporting requirements is the role of public groups, and various special projects (needle- health officers in tracking illnesses, injuries, exchange projects, for example). and deaths to identify trends and spot potential epidemics or other public safety concerns. ■ Surveillance. Counties also receive funds Counties also administer categorical public under the Surveillance Grant Program to health programs focused on infectious and develop and implement active AIDS case communicable disease control, such as TB surveillance programs, including local control, monitoring and treatment of STDs, planning related to AIDS reporting and and related activities. coordination with local providers in AIDS reporting and tracking. Immunizations and treatment for tuberculosis and STDs are often conducted at county public ■ Care and treatment. Counties receive an allo- health clinics or community site locations. In cation of federal Ryan White Comprehensive many counties, these clinics have very limited AIDS Resources Emergency (CARE) Act funds hours at each site, such as once-a-month immu- for primary medical care and support services nization clinics. Counties with public hospitals for HIV-infected people. Counties conduct or primary care clinics may combine public enrollment for the AIDS Drug Assistance health nursing services such as immunizations Program, which provides drugs to those who and communicable disease follow-up treatment would otherwise not be able to afford them, with their primary care service delivery system. and counties receive a small state grant to defray their administrative costs. Other state HIV/AIDS. One of the specific areas in which and federal programs allocated directly to counties receive categorical public health funding counties include funding for early intervention is HIV/AIDS. As is the case with other reportable programs and affordable housing for people diseases, county health officers have statutory infected with HIV. responsibilities related to reporting and tracking of HIV infection. In addition, local health Funding for HIV/AIDS programs comes from jurisdictions receive state and federal program the state general fund and federal funds, including funding for HIV/AIDS prevention, care and funding from the federal Centers for Disease treatment, and surveillance. State and federal Control (CDC) and the Ryan White CARE Act. funds are administered and allocated by formula Bioterrorism. According to state law, as part of to local health jurisdictions through the DHS communicable disease control activities, the local Office of AIDS. Local health agencies often health department also has the lead role in the subcontract with local providers and community- early detection and identification of a bioterrorist based agencies for specific programs and services. event. In the event of a confirmed bioterrorist DHS also directly contracts with or awards event or other large biologic disaster, the local grants to local community agencies other than health department will be responsible for initia- the county. ting expanded surveillance. Beginning in 2002, The Crucial Role of Counties in the Health of Californians: An Overview | 13 California received new federal funding for public receives federal MCAH funds and reallocates health emergency preparedness and bioterrorism. most of the funds to counties. All counties and The federal funds are not available to counties for the three city public health departments partici- general public health priorities but are subject to pate in the MCAH program. Participating cities specific federal priorities and restrictions. Counties and counties must have a local MCAH director, enter into detailed contracts with the state either public health physicians or nurses. To surrounding the expenditure of the federal funds. receive MCAH funds, local programs are required to conduct a community needs assessment and To administer and allocate the new funding, submit a program plan to the DHS every five the legislature passed a new allocation formula years. All counties must operate a toll-free and expanded the statutorily authorized uses of telephone number for access to care and services. public health funding. Although the legislation did not create new mandates on counties, by MCAH activities include: assessment of health expanding the potential uses of public health status indicators for maternal and child health funding, it did create a potential future pressure populations, community health education for funding should the federal funds be reduced programs, and outreach with a special emphasis or eliminated. on people eligible for Medi-Cal. Specific MCAH categorical programs include: Public Health Nursing and Categorical ■ Adolescent Family Life Program (AFLP) Public Health Programs (includes Adolescent Sibling Pregnancy Local public health departments administer an Prevention program). Public and private array of public health nursing and categorical contracting agencies conduct outreach to programs that are funded by federal or state enroll eligible teens, up to the age of 18 for allocations or grants, including the Maternal, females and age 20 for males, for case manage- Child, and Adolescent Health (MCAH) program. ment services. About 17,000 teens are served Not all programs are available in all counties, and statewide each year. The Adolescent Family the level and type of staffing and funding varies Life Program (AFLP) also works to develop significantly across counties. Although all counties community awareness of the problem of are required to have public health nursing adolescent pregnancy and improve services programs, some counties have relatively small for teen parents. programs that concentrate on communicable disease follow-up and immunizations, and other ■ Black Infant Health (BIH) program. counties have extensive programs that include Identifies at-risk pregnant and parenting community health education, home visiting African-American women and helps them programs, and organized outreach to pregnant use appropriate health care and other family women and children. support services. Seventeen local health jurisdictions where 94 percent of black infant Maternal, Child, and Adolescent Health births and deaths occur participate in the Program. DHS funds local health departments program. through the Maternal and Child Health Branch to carry out the core public health functions of ■ Comprehensive Perinatal Services Program assessment, policy development, and assurance to (CPSP). Medi-Cal-eligible women receive a improve the health of their MCAH populations. comprehensive prenatal risk assessment and MCAH is a federal program (Title V) with services, including comprehensive prenatal specific federal requirements, and California care, health education, nutrition services, and 14 | CALIFORNIA HEALTHCARE FOUNDATION psychological support for up to 80 days and Los Angeles. California residents under 21 postpartum. More than 1,300 Medi-Cal with covered medical conditions are eligible if providers statewide are approved for CPSP. their family income is less than $40,000 or if the County health departments help local family incurs high medical care costs related to providers meet CPSP certification require- the CCS condition. The program is funded with ments and offer technical assistance. Most state general fund, county, and federal funds, counties also have a similar role in certifying along with some fees paid by parents. and assisting providers and offering technical assistance for the California Children’s Services Funding for Public Health program and the Child Health and Disability Funding for public health comes primarily from Prevention (CHDP) program. realignment and county general funds. In addi- ■ Fetal and Infant Mortality Review (FIMR) tion, counties receive an allocation by formula program. Case-review teams in 21 counties from a relatively small general fund account review selected fetal and infant deaths to (known as the public health subvention), of identify the factors contributing to the deaths $1 million statewide. The funding level in the and any system problems that require change. subvention has generally remained constant, except for a one-time additional augmentation ■ Perinatal Outreach and Education (POE) of $5 million in 2001–02. Other funds for core program. Local health departments and public health programs come from several narrow community agencies conduct outreach to categorical public health programs, such as women of childbearing age, assess smoking Tuberculosis Control. Environmental health status and exposure to secondhand smoke, programs are generally supported by fees. and develop an individualized plan to prevent smoking and exposure to tobacco smoke Categorical public health programs have separate during pregnancy and the postpartum period. categorical funding streams, including Maternal, The program supports public health nursing Child, and Adolescent Health. Funding for case management, tobacco and drug cessation MCAH comes from multiple sources, including services, including relapse prevention, and the federal Title V MCAH block grant, Medicaid child care and transportation to support the federal financial participation, the state general above activities. fund, and other grant funds, which may be obtained by the MCAH programs. California Children’s Services Program Since 2002, California has also received federal and the Counties. funds for bioterrorism and emergency prepared- California Children’s Services (CCS) is a state- ness activities that can be considered core public wide program that treats children with certain health functions. The federal funds are subject injuries, physical limitations, and chronic health to specific federal priorities and restrictions, and conditions or diseases. CCS authorizes and pays counties have entered into detailed contracts for specific medical services and equipment with the state surrounding the expenditure of provided by CCS-approved specialists for children the federal funds. In 2004, county public health with specific conditions. DHS oversees the CCS departments received about 70 percent of program. Larger counties operate their own California’s federal bioterrorism allotment, or CCS programs, and smaller counties share the about $38 million. Los Angeles County receives operation of their programs with state CCS a direct allocation of federal bioterrorism funds. regional offices in Sacramento, San Francisco, The Crucial Role of Counties in the Health of Californians: An Overview | 15 In many counties, as stated above, realignment First, in 1991, the enactment of realignment funds allocated to both health and mental health transferred financial and programmatic responsi- programs, including public health, have been bility for mental health services to the counties. transferred by counties to pay for the rising costs Realignment provided counties with dedicated of social services programs, especially foster care revenues to pay for these changes. Second, and IHSS. Caseload growth in child welfare/foster between 1995 and 1997, California secured and care and IHSS has also limited realignment funds implemented a federal Medicaid waiver to available for both health and mental health consolidate inpatient and outpatient Medi-Cal programs. In addition, as Proposition 99 revenues mental health services into one program at the have decreased, a greater share of health realign- county level. The mental health managed care ment funds and county general fund revenue has program consolidated the two existing Medi-Cal gone to indigent care. Counties report that, as a mental health programs (Short-Doyle and Fee- result, less money has been available for core for-Service) into one service delivery system, the public health activities (see realignment sidebar county mental health plan. The state “carved on p. 17). out” mental health services from the Medi-Cal managed care program already implemented in 21 counties. Mental Health Counties are the primary providers of public These are the mental health services and mental health services in California for Medi-Cal programs administered by counties: and non Medi-Cal clients. The basic Section ■ Community mental health services. All 17000 safety net responsibility for indigent counties are required by law to establish a people generally applies to mental health services, community mental health service for the with some statutory and case law limitations speci- county and to establish a local mental health fic to mental health. For example, realignment advisory board. Counties must comply required counties to serve target populations — with reporting requirements of the state seriously mentally ill adults, seriously emotionally Department of Mental Health and report disturbed children, and people in acute psychia- annual information on performance measures tric crisis — to the extent resources are available. to the state and to the local advisory board. Counties also directly administer the local mental Counties generally have the discretion to health plans for Medi-Cal, although they are not determine local funding levels, eligibility, and statutorily required to do so. Counties have the services provided to non-Medi-Cal-eligible first right of refusal and can choose not to clients, consistent with the target populations administer the Medi-Cal mental health plan. outlined in state law and funds available. In addition, counties have two other significant ■ Medi-Cal mental health. Although counties statutorily mandated responsibilities related to have the option to operate the local mental mental health services: 1) provision of services health plan for Medi-Cal, once they choose to to individuals who are involuntarily committed do so, they must operate the plan according to for 72 hours because they pose a danger to state and federal Medi-Cal eligibility, service, themselves or the community and 2) services to and benefit standards. Each local mental special-education students identified as needing health plan directly provides or contracts for mental health services by their school. specialty services for Medi-Cal patients if they During the 1990s, several major changes occurred meet diagnostic and impairment criteria. in the mental health delivery system in California. Medi-Cal patients must receive their mental 16 | CALIFORNIA HEALTHCARE FOUNDATION Health and Welfare Realignment What is realignment? The health and welfare realignment program was established in 1991 to transfer certain health and mental health programs to the counties and adjust the cost-sharing ratios between the state and the counties for social services and health programs. Realignment also provided counties with dedicated revenues to support the increased financial obligations. How is realignment funded and allocated? State funding is provided through two dedicated revenue sources: 5 percent of the sales tax and 24.3 percent of vehicle license fee (VLF) revenue. The Local Revenue Fund contains a Sales Tax Account, a Sales Tax Growth Account, a Vehicle License Fee Account, a Vehicle License Fee Growth Account, and several subaccounts. The revenues deposited into these accounts are distributed by the state Controller’s Office to all counties and four cities monthly, according to various formulas. Each year an annual allocation base is determined, consisting of the total amount allocated in the previous year, including growth allocations. Revenues in excess of the base are deposited in the growth accounts and are allocated based on different formulas. Funds allocated by the state controller are deposited into and expended from the Mental Health, Social Services, and Health Trust funds at the local level. Revenues in these funds must be expended for programs according to state law. Growth funds are distributed according to complicated formulas in state law. The first claim on sales tax growth goes to entitlement programs, primarily caseload-driven social services programs. The two programs with the greatest cost and caseload increases have been child welfare/foster care and In-Home Supportive Services. The remaining growth in sales tax and VLF revenue is distributed to the counties according to a statutory formula. As a practical matter, the increasing costs of the social services caseloads have significantly reduced the allocations of growth funds to health and mental health services. How are funds allocated and spent? Generally, realignment funds must be spent for the purposes intended. For example, health realignment funds can be spent only for indigent health care and for the public health programs the state paid for before realignment. However, state law permits counties to reallocate up to 10 percent of the funds in the health, mental health, or social services funds to either one of the other two accounts. If a county has allocated 10 percent of both the health and mental health allocations to social services, counties can shift another 10 percent from health to social services. If counties have extra funds in the social services account, after funding all of the caseload and costs, counties can transfer 10 percent of the social services account to health and mental health. Transfers apply only for the year in which they are made. What are “poison pill” provisions? The original realignment legislation included several “poison pill” provisions that would invalidate components of the realignment program. Generally, the poison pill provisions would invalidate elements of realignment or the tax increases if the courts or the Commission on State Mandates found state reimbursable mandates or the courts found specified constitutional problems with the revenue increases in realignment. A December 2003 court case did trigger one poison pill related to services for medically indigent adults, invalidating the increase in the VLF, but the legislature passed temporary legislation continuing the flow of realignment dollars to counties until a more permanent solution is reached. The Crucial Role of Counties in the Health of Californians: An Overview | 17 health services through the county mental Counties serve about 31,000 students each health plan. Two counties — San Mateo and year. Counties have historically funded the Solano — administer Medi-Cal mental health program using realignment, categorical funds through their COHS for general Medi-Cal. provided for that purpose (eliminated in 2002), Several counties joined together to operate a and mandated claims reimbursement (deferred managed health plan: Sutter County’s plan in 2002 and 2003). In 2003–04, federal includes Yuba County, and Placer County’s special-education funds were made available plan includes Sierra County. As of this writing, to defray a portion of the program costs. mental health plans are operational in all ■ Services for involuntarily committed 58 counties. individuals. California law authorizes local ■ Healthy Families mental health services. law enforcement and county mental health Counties are also required to provide mental agencies to take into custody and admit for health services to seriously emotionally treatment for 72 hours any person with a disturbed children enrolled in the Healthy mental disorder who is a danger to himself Families Program. County mental health plans or others or is gravely disabled. Counties bill for the 66 percent federal matching funds. designate and approve the facility and are obligated to provide mental health evaluation ■ Medi-Cal mental health services for and treatment services to them while they are children: EPSDT. The federal Early Periodic detained. If the person is not detained but is Screening Diagnosis and Treatment (EPSDT) found to need mental health services, the program requires states to provide Medi-Cal county must offer available alternative mental recipients under age 21 with medically health services. After a person’s release, he or necessary health and mental health services. she must be offered necessary follow-up The mental health component of EPSDT has services on a voluntary basis. State law been delegated to the county mental health includes specific and detailed procedures to plans, but the eligibility and scope of services be followed by local law enforcement, county is determined by state and federal policy. mental health agencies, and the treating Litigation against California in the 1990s facilities. This process is often referred to as required California to expand the mental a “5150” process because it is in California health services available to children, and the Welfare and Institutions Code Section 5150. program costs have grown substantially as a result. Counties currently pay 17 percent of ■ Optional special programs and services. the costs of the EPSDT program. State law authorizes, but does not require, counties to implement specific special projects ■ Services for special-education students. and grant programs to improve mental health Federal law requires that states provide services service delivery or to meet the needs of special to children enrolled in special education, as populations. Participating counties may receive well as related services they need to benefit state or federal grants for the programs. The from their education. Mental health services Adult and Children’s System of Care programs are considered related services. Since 1984, are models based on interagency coordination county mental health departments have been and collaboration, case management, and mandated by state law to provide mental client- and family-centered services. Counties health services for these children. Children are may choose to implement the program methods entitled to services regardless of income if the whether or not they receive specific state school district determines they are needed. 18 | CALIFORNIA HEALTHCARE FOUNDATION funding. State funding for the adult program cover the growing costs of their match for Medi- was eliminated in 2003, but limited funding Cal, leaving less money available for mental remains through the federal Substance Abuse health services for people who are not eligible and Mental Health Services Administration for Medi-Cal. (SAMHSA) block grant. Other special projects In 2002, the state Department of Mental Health include: the Early Mental Health Initiative, reviewed the impact of the realignment of mental the Integrated Services for the Homeless health programs on mental health services and Mentally Ill programs, the Supportive Housing provided a status report as required by legislation. Demonstration Projects, and the Projects for DMH found that realignment had stabilized Assistance in Transition from Homelessness. funding for mental health services by providing dedicated funding and improved access to Funding for Mental Health outpatient services. This is because the counties Funding for the community mental health have additional flexibility regarding the use of services provided by counties comes from a mental health funds, financial incentives to variety of sources, including realignment, county properly manage mental health resources, and funds, state general fund revenue, federal funds, the ability to use funds to reduce high-cost including Medicaid matching funds and Healthy institutional placements. At the same time, Families matching funds, and patient fees and DMH found that realignment funds [for mental insurance recoveries. In 2001–02, funding for health] have not kept pace with 1991 funding community mental health statewide was $2.9 levels when population changes and medical billion from all funds, and about 626,000 clients inflation are taken into account. In many received services. counties, realignment funds allocated to both Counties use realignment funds, state funds, and health and mental health programs have been county funds to draw down federal Medicaid transferred by counties to pay for the rising costs matching funds for the services they provide to of social services programs, especially foster care Medi-Cal clients. County mental health plans and IHSS. Caseload growth in child welfare/ receive a fixed amount of non-federal funds foster care and IHSS has also limited the amount (primarily realignment and state general fund) of realignment growth funds available for both based on what the state was spending for health and mental health programs. Medi-Cal mental health in 1994–95, which is DMH also reported that counties have had supposed to be adjusted annually for both differing experiences with realignment. The medical inflation and caseload, subject to the extent to which counties have transferred mental state budget process. In the context of the health funding to social services programs differs current state budget crisis, counties have not significantly by region. Moreover, there were received the inflation adjustment for several years. different levels of funding at the county level California must provide a 50 percent match to before realignment, and these differences were receive federal Medicaid funds. In 2001–02, essentially carried forward because realignment counties contributed 46 percent of the state’s was based on historical funding levels. Many match, and the state contributed 54 percent observers also believe that realignment carried of the match. Counties vary greatly in their forward historically low funding levels for expenditure of county funds and in their rate community mental health services. Realignment of capturing federal funds for Medi-Cal mental included a complicated formula for improving health services. Many counties report that they the equity of mental health funding among are using realignment mental health dollars to The Crucial Role of Counties in the Health of Californians: An Overview | 19 counties, but, to some extent, pre-realignment inequities in county mental health funding CalWORKS as a Funding Source for continue. Mental Health and Substance Abuse In 1997, California enacted the California Work Opportunity and Responsibility to Kids Substance Abuse Treatment (CalWORKs) program to implement federal welfare reform. As part of the CalWORKs California’s public substance abuse treatment program, the legislature included separate system is administered by county drug and funding for counties to provide substance alcohol treatment programs under a contract abuse and mental health treatment services. with the state Department of Alcohol and Drug The purpose of the funds is to provide Programs (DADP). All 58 counties are currently necessary services for CalWORKs participants contracting with the DADP, either individually to obtain and retain employment. These funds may be transferred between the two services or jointly, to administer local drug and alcohol at the discretion of the county welfare director. treatment programs and receive an annual Counties have substantial flexibility in designing allocation of state and federal funds for that and implementing their CalWORKs programs purpose. However, counties have no statutory while meeting specific service requirements. obligation to offer or provide alcohol and drug The CalWORKs treatment funds provided treatment services, with the exception of services strong incentives for county welfare provided to non-violent drug offenders under the departments, mental health, and substance terms of a statewide ballot initiative passed in abuse agencies to work more closely together. 2000 (Proposition 36). For other substance abuse Some county welfare departments co-located treatment staff members with CalWORKs staff treatment services, counties could choose not to members. Some counties implemented multi- be the local administrator of the programs and disciplinary teams. Although initially counties give the state 60 days’ notice of their intent to were not spending all of the funds allocated terminate the contract. Local treatment services for mental health and substance abuse, the are also provided by other public entities, funds are now fully being spent. In 2003–04, including the correctional system and the counties received about $120 million for both mental health and substance abuse treatment California Youth Authority. This section focuses in CalWORKs. on county alcohol and drug treatment programs. County alcohol and drug programs must meet state and federal requirements regarding program Friday Night Live teen prevention program. administration, provider licensing, and use of Counties receive an annual allocation of federal specific funds. Some counties provide counseling and state funds each year, a portion of which and other treatment services directly, some must be matched with county funds. contract with private treatment programs, and In 1995, the legislature directed DADP to investi- some counties offer both direct and contract gate the feasibility of a managed care model for services. In general, urban counties are likely to treatment services. The DADP formed a stake- contract for a larger percentage of treatment holder advisory committee, which recommended services than rural counties. Residential treatment a “system of care redesign.” The current thrust providers must be licensed by the DADP. Specific of that effort is to develop and implement a state and federal funding streams establish computerized outcome measurement system and program and treatment priorities and set-asides collect client data that will help counties and for special populations, such as perinatal users, providers choose the most effective treatment for HIV users, and for special projects such as the each client. 20 | CALIFORNIA HEALTHCARE FOUNDATION Drug Medi-Cal Implementation required and continues to require All but 19 California counties participate in the collaboration among many state and local agencies, Drug Medi-Cal program. In counties not including the judiciary, law enforcement, health, participating, the DADP contracts with and drug treatment, and social services. reimburses providers directly. The current Since its implementation, outpatient treatment program, administered through DADP under programs have increased by 81 percent, and an interagency agreement with the DHS, covers licensure of residential facilities increased by limited treatment services: narcotics replacement 17 percent, with an overall 42 percent increase in (methadone detoxification and maintenance the number of programs licensed and certified to programs and naltrexone), restricted outpatient provide drug treatment services. Most clients are drug-free services, and day care rehabilitative and using outpatient recovery treatment programs residential treatment for pregnant and parenting (76 percent), and about 12 percent are using women. The Drug Medi-Cal program covers long-term residential recovery programs. only services provided at a treatment site certified by DADP. Funding for Substance Abuse Treatment The state does not track the extent to which Proposition 36: The Substance Abuse and county governments spend money on treatment Crime Prevention Act of 2000 (SACPA) beyond the annual allocation of state and federal In November 2000, California voters passed funds. Funding for county substance abuse Proposition 36, which requires that non-violent treatment programs comes from the federal adults convicted of use or possession of illegal Substance Abuse Prevention and Treatment drugs receive drug treatment in the community, (SAPT) block grant through SAMHSA; Drug rather than incarceration. Beginning July 1, 2001, Medi-Cal (state and federal funds); state general SACPA required that $120 million in state funds fund (including the Proposition 36 set-aside); be set aside each year for the purposes of the act, and county funds. Many counties also employ a through 2005–06. Under SACPA, counties must variety of special state funds for drug and alcohol provide eligible offenders with up to one year of treatment, including Proposition 10, tobacco drug treatment and six months of after-care. settlement funds, and Juvenile Justice Crime Funds are allocated to local counties based on Prevention Act funds. a formula that differs somewhat from the basic county allocation formula. Counties must The 2003–04 state budget for DADP included develop and submit a collaboratively developed about $598 million from all fund sources, local plan and designate a county lead agency to ($233 million state general fund). The largest administer the program. portion of the funds are for treatment programs (80 percent), with an additional 8 percent speci- The initiative is operational in all 58 counties. fically dedicated to perinatal treatment services, The primary state agencies involved in the and the remaining 12 percent for prevention implementation of SACPA are the DADP, the services. In 2003–04, $557 million was allocated Board of Prison Terms, and the California to county alcohol and drug programs (including Department of Corrections (CDC). The primary state and federal Drug Medi-Cal funds and local entities involved include county alcohol Proposition 36 treatment funds.) The basic and drug treatment agencies, trial courts, county county allocation formula provides each county probation departments, and educational, social, with a base level of funding ($2,500) and then and health services agencies and providers. allocates any remaining funds according to The Crucial Role of Counties in the Health of Californians: An Overview | 21 population. Proposition 36 funding is allocated As a result of the state fiscal crisis, county to counties under a different formula based on programs have seen a reduction in discretionary population, caseload, and arrest rates. state general fund dollars, and at the same time funding was substantially increased for drug The federal SAPT block grant includes a state offenders under Proposition 36. Cuts in maintenance-of-effort obligation. If a state does discretionary funds are particularly difficult for not meet the requirement, it risks losing part of smaller counties because many do not have the the federal funding. In addition, states must set staff capacity or sufficient numbers of clients in aside a portion of the funds in three specific target program areas, such as HIV, to administer priority areas: primary prevention for people who and get funding for categorical programs. There do not need treatment (20 percent); HIV Early is also some question about whether California Intervention Services (5 percent minimum and might jeopardize a portion of the federal SAPT maximum), and services to pregnant women and grant in 2004–05. The legislative analyst women with dependent children ($15.5 million). reported that the governor’s January budget for To ensure that federal set-aside requirements are substance abuse treatment might place California met, ADP allocates SAPT block grant funds to below the federally required maintenance-of- counties in each program area. effort level, which could result in a reduction in the federal allocation. Table 1. Funding Streams for County Health Programs and Services Indigent Health Care* Public Health Mental Health Substance Abuse Treatment • Realignment • Realignment • Realignment • State general fund • Sales tax • Vehicle license fees • State Public Health • Medi-Cal (state and • Drug Medi-Cal (state Subvention federal funds) and federal funds) • Proposition 99 revenues ($1 million statewide) • State general fund • Substance Abuse • County match and • State and federal Treatment Trust Fund overmatch (county categorical programs • Federal Mental Health (Proposition 36 set aside general fund) • Proposition 99 • Block grant (Substance $120 million state revenues Abuse and Mental general fund) • Some counties: Federal Disproportionate • Maternal and Health Services • Federal Substance Abuse Share Hospital (DSH) Child Health Administration, Block Grant (SAMHSA) funding for counties • TB Control SAMHSA) operating their own • State and federal • HIV/AIDs • State and federal grants categorical programs hospitals • Federal bioterrorism and categorical programs • CalWORKs • County general fund • Other revenues Patient fees, insurance • Reimbursements • CalWORKs • Corrections • California Youth • County general fund Authority *Non Medi-Cal • County general fund 22 | CALIFORNIA HEALTHCARE FOUNDATION III. Issues for Consideration The combination of state and THIS SECTION HIGHLIGHTS SOME OF THE POTENTIAL threats and challenges facing the state and counties that could federal budgetary challenges, have significant implications for county health programs and and growing pressures on suggests some issues for consideration by policymakers. county general purpose revenues, make all of the Threats and Challenges Policymakers are faced with multiple funding challenges and programs highlighted in with rising demands for health programs and services. The this report vulnerable to combination of state and federal budgetary challenges, and reductions at the local level. growing pressures on county general purpose revenues, make all of the programs highlighted in this report vulnerable to reductions at the local level. Several specific, and, in some cases immediate, challenges affect these programs: County health systems confront financial and organizational challenges. Counties that operate public hospitals, health facilities, and COHSs are experiencing severe fiscal challenges. The San Mateo Health Plan, a COHS for Medi-Cal patients, has been losing money, and the county is considering terminating its contract with the health plan because of the impact on county resources and the financial viability of the county-run hospital. Other COHSs are report- ing similar fiscal crises. County-run hospitals are experiencing fiscal problems, and additional public hospital closures could occur, depending on budget choices at the state and county levels. The overall impact of these challenges on the availability and the delivery of county health services could be substantial. The Los Angeles County health system continues to experience significant fiscal pressure. The county currently has a federal Medicaid 1115 waiver, which brought additional financial resources to the health system, but the waiver will expire on June 30, 2005. The county is struggling to find creative ways to restructure the system and reduce costs while responding to soaring demands for services. Given the size of the county and its health budget challenges, the future of its health system and the financial viability of that system have statewide implications for the funding of health care programs. Realignment program faces challenges. Realignment is a major source of funding for county health programs. At this juncture, the realignment program is facing significant The Crucial Role of Counties in the Health of Californians: An Overview | 23 challenges and fiscal pressures, including: revenue sources) to provide matching funds or to augment funding for health programs. ■ Continuing impact of vehicle license fee revenue uncertainty. In 2003, the vehicle However, state budgetary actions have reduced license fee was first increased and then county general revenues, threatening funding for reduced. The shifting policy actions related county health services. For example, the amount to changes in the VLF rates during 2003 of property tax revenues shifted to education created delays in counties receiving anticipated increased from $2.5 billion in 1993–94 to realignment revenue. Counties are still $3.9 billion in 2003–04. The governor reached millions of dollars short for 2003–04, and agreement with the counties to cut an additional the shortages are estimated in the hundreds $1.3 billion shift in 2004–05 and 2005–06, of millions of dollars. in exchange for more certain future revenues. The agreement is subject to legislative approval ■ No growth in funding for health and mental through the budget process. health. Exponential growth in social services program costs and caseload, child welfare, In 2003–04, some counties reduced funding foster care, and particularly IHSS (in-home for health and/or mental health. For example, care services for people with age- or disability- Alameda County cut county general fund contri- related impairments), continues to reduce butions to health care by $28 million. Many funds available for health and mental health counties currently preparing their 2004–05 programs. County health and mental health budgets are considering new or additional cuts programs are facing potentially dramatic in health and mental health care. As just one program cutbacks as counties build their example, Orange County is considering eliminat- budgets for 2004–05. ing $50 million in funding to local health care programs, including mental health and substance ■ “Poison pill” trigger. A December 2003 abuse treatment and family clinics. court ruling in San Diego County held that the 1982 state transfer of responsibility for the Frequent users challenge systems and resources. Medically Indigent Adult (MIA) program to The evidence increasingly suggests that one of the counties constituted a reimbursable state the major cost pressures facing health programs mandate. This ruling triggered “poison pill” and systems is the cost associated with individ- language in the original realignment statute, uals who have multiple risk factors and complex repealing the original increase in the vehicle care needs that can lead to frequent and repeated license fee. The repeal was effective March 1, use of health and mental health resources. For 2004, canceling the distribution of VLF funds example, DMH reports that 7 percent of the into the realignment accounts. The legislature clients in their system account for 50 percent of enacted temporary legislation to keep the costs. Individuals with either substance abuse realignment dollars flowing to counties until or mental health disorders, or both, who also lack a more permanent solution can be found. access to health care, housing, and other basic resources can become frequent users of expensive State cuts to county general purpose revenues hospital emergency room care. Their complex threaten funding for health care programs. care requirements challenge the existing categori- Health programs are extremely vulnerable to cal and fragmented nature of programs and cutbacks when counties have fewer discretionary services because their service needs do not fit funds. Most counties contribute significant neatly into one program or service category. county general funds (from general purpose Despite the fiscal pressures resulting from failure 24 | CALIFORNIA HEALTHCARE FOUNDATION to meet the complex needs of these clients, federally mandated services to special-education policymakers have limited awareness and focus students with mental health needs. Counties have on this issue. historically funded the program using realign- ment, categorical funds provided for that purpose Counties confront unmet needs and increased (eliminated in 2002), and mandated claims demands for services. In the preparation of this reimbursement (deferred in 2002 and 2003). report, county administrators, program officials, For 2003–04, $69 million in federal special- and advocates reported substantive needs they are education funds was allocated to counties to unable to meet at current funding levels. These partially cover their costs in this program. How- unmet needs include but are definitely not limited ever, counties estimate that annual costs for the to: the inability of many local jurisdictions to program exceed $100 million. To the extent that operate full-scope public health and emergency the costs are not fully reimbursed, counties might preparedness programs; rising numbers of have fewer funds available for other mental uninsured and underinsured people; the lack of health clients and services. substance abuse treatment services for youth; and the lack of mental health resources for people Proposition 36 funding set-aside ends, but the who are not eligible for Medi-Cal. The state fiscal mandate remains. The Proposition 36 require- crisis, and reductions in county revenues, will put ment of a state general fund set-aside for alcohol increasing pressure on existing programs. Further and drug treatment programs for drug offenders funding reductions could lead to greater unmet ends in 2005–06. However, courts will still be needs in many areas. legally bound to refer eligible offenders for treatment. Counties would be required to Proposition 99 revenue has declined 85 percent provide the services whether or not specific since 1988. Revenue generated by Proposition funding is available. At the same time, some local 99 tobacco taxes has declined dramatically since communities indicate the $120 million set-aside its inception because Californians continue to use statewide is already insufficient to meet demand. fewer tobacco products. Health and public health In addition, while the governor’s 2003–04 programs have been hit hard as the legislature budget proposed to exclude Proposition 36 funds grapples with the reduced funding level. For from the state’s federal maintenance-of-effort example, Proposition 99 funding for the CHIP calculation, the federal SAMHSA disapproved program for large county indigent medical care this proposal. This means that SAMHSA will programs declined from $350 million initially consider the funds allocated for Proposition 36 to below $50 million in 2003–04 (including in calculating the state’s future maintenance-of- $22 million specifically targeted for allocation effort requirement. to physicians). Proposition 99 funding for the CMSP was completely eliminated in 2002–03. Emerging infectious diseases and bioterrorism. At the same time, the legislature has maintained County public health programs are being asked funding for some Proposition 99 funded to prepare for and respond to new threats, programs, such as the Access for Infants and including the possibility of bioterrorism attacks, Mothers (AIM) program, and established new as well as emerging and re-emerging infectious Proposition 99 programs, such as the Breast diseases, such as the West Nile virus, severe acute Cancer Treatment Program. respiratory syndrome (SARS), and outbreaks of tuberculosis. Local preparedness for these Special-education mandate increases local challenges requires sufficient resources and public mental health costs. County mental health health expertise at both the state and local levels plans are statutorily responsible for providing The Crucial Role of Counties in the Health of Californians: An Overview | 25 to ensure adequate training, surveillance, and Fragmented systems are costly and less effective. community education. The types of services provided, the clients served, and the goals of all of these programs overlap substantially. However, they are administered Key Policy Questions at the state and local level by different agencies This report highlights the central role that with different requirements, funding levels, and California counties play in the delivery of health professional philosophies. The administrative services at the local level. Proposals to reorganize structures at the state and local level increase government services or funding, or to shift program costs. Moreover, counties and providers responsibilities between the state and counties, are often seriously challenged to respond to often become part of the larger policy delibera- people’s real everyday needs, which might extend tions when the state faces a serious fiscal crisis. across the boundaries of multiple programs or This section includes questions policymakers agencies, or exist completely outside of any may wish to consider as they review comprehen- existing categorical program or funding stream. sive proposals that will affect health services at Some counties have implemented local strategies the local level. to better coordinate programs and services, but County programs and program administration they must overcome significant administrative is at risk under fiscal pressures. California has barriers. How can county programs be most to a large extent avoided requiring counties to effectively funded and organized to minimize administer or to implement specific programs administrative costs and facilitate coordinated and systems at the local level. The state generally service delivery? has established program funding streams and Financial incentives might be inconsistent with attached specific requirements to the funding. For important policy goals and priorities. The way example, counties are not statutorily required to that county health programs are administered and operate a local mental health plan for Medi-Cal funded at the state and federal level determines or to deliver substance abuse treatment services how programs and services are delivered at the (beyond those required under Proposition 36). local level. Basically, funding becomes a major As the available funding is reduced, counties may driver of programs and policies. However, the choose to limit or eliminate their involvement in resulting financial incentives might be inconsistent important programs. This has already occurred with other policy and program goals. Funding for with Proposition 99 funding for indigent care. health programs might be tied to the most costly As the funding declined, many smaller rural alternatives. For example, Los Angeles County is counties stopped accepting the funds because currently exploring how it might use the Medi-Cal the related reporting and treatment costs were Disproportionate Share Hospital (DSH) payment more expensive than the funding they received. program in a more flexible way to support Placer County recently chose to stop accepting outpatient care and services rather than limiting its Proposition 99 allocation for the same reason, the program to funding for inpatient care, the and other counties report that they are most expensive level of care. Funding strategies considering similar action. What would be the and mandates that apply to other county- impact of counties being unable or unwilling to administered programs may also influence the continue to administer important local health delivery of county health services. What are the programs? Should the state set minimum standards financial incentives underlying important funding and priorities to ensure some base level of services streams for health programs? What policy goals and throughout the state? priorities do they reinforce? 26 | CALIFORNIA HEALTHCARE FOUNDATION Vague mandates limit accountability. In each of these program areas, expected county roles and responsibilities have evolved. The statutory mandates are vague and often unclear. The only way to clearly identify the specific roles and responsibilities of counties in these programs areas is to search volumes of statutes, regulations, state policies, program guidelines, and court cases. Many of the requirements counties must meet are contractual by program. County discretion leads to dramatic differences in access to services for Californians in different regions of the state. This makes it very difficult for policymakers to monitor existing programs effectively, to assess unmet needs in communities, or to identify the potential impact of new legislative ideas or programs. How can policymakers balance the need for accountability with the goal of ensuring local communities have the flexibility to implement local priorities? Collection of program data and information is burdensome but is not systematic or practical. Depending on the health and public health pro- grams that counties administer, some statutory, some contractual, counties might be required to submit more than 100 different reports annually to different divisions of DHS or to other state agencies. And yet, policymakers do not receive regular, usable information about county health programs or services. Requiring counties to report on their programs is an opportunity to improve accountability and to monitor the implementation of legislative strategies and priorities. Collecting boxes of data reports with no clear intended use of the information, and limited ability to analyze and assess the data, is costly but does not accomplish the goal of accountability. What information do policymakers need in order to assess and monitor programs? What is the most efficient, practical way to obtain the information? The Crucial Role of Counties in the Health of Californians: An Overview | 27 V. Methodology and Sources DATA AND INFORMATION ABOUT COUNTY HEALTH and public health programs, revenues, and expenditures are available from a variety of sources, but no central resource collects and regularly reports, in a user-friendly manner, consistent program and financial information about county health and public health programs. Given the purpose of this report, as well as the tremendous diversity among county health programs and funding, this document should be considered a snapshot of the role of counties in health services, rather than a thorough review and analysis of county health revenues, expenditures, or programs. To the greatest extent possible, data and funding information are from the most recent time period available, although in many instances that information is several years old. Kelch Associates relied on multiple sources for the information contained in this report, including informant interviews. The report includes data and information that might have known limitations or inconsistencies from county to county or could be obtained primarily only through interviews as long as it contributes to an informed picture of county health programs and services in California. Information sources included state program and financial reports, related statutes and regulations, state budget documents, legislative staff analyses and reports, and the annual analyses of the state budget by the Legislative Analyst’s Office. In addition, information from the Insure the Uninsured Project was very helpful in the profile of medical care for the uninsured. 28 | CALIFORNIA HEALTHCARE FOUNDATION Appendix A: County General Purpose Revenues County general fund revenues are the discretionary Most observers report that reductions in county funds available to counties for local programs and general purpose revenues affect county funding levels priorities. The primary funding sources are property for health programs more than any other program taxes, vehicle license fees (non-realignment), sales taxes area. Some of the most recent changes to county (1 percent) and local taxes, such as utility and hotel revenues include: taxes. The California Constitution requires voter The ERAF shift. Property taxes remains the largest approval for local agencies to impose or increase local source of county general-purpose revenue, but the taxes or assessments. percent of property taxes allocated to county general Some of the uses for county general purpose revenues funds has declined in recent years. This is because in include: 1992 and 1993 the state budget shifted a higher percentage of property taxes to schools and into the ■ Matching funds for state-mandated programs such Educational Revenue Augmentation Fund (ERAF), as child welfare services and foster care resulting in a loss of $5 billion for counties or about ■ Support for local law enforcement, fire protection, 17 percent of total property tax revenue. The governor district attorneys, jails, and probation proposed an additional $1.3 billion property tax shift ■ Indigent care, public health, mental health, in 2004–05. and substance abuse treatment above state and The VLF “gap.” Changes in vehicle license fee levels federal funds in 2003 — first an increase then a reduction — left a ■ General Relief income support programs for “gap” in VLF revenue at the county level from delays indigent adults in payments, estimated to be more than $700 million. ■ General local government costs, such as elections, property tax administration and planning ■ Debt payments The Crucial Role of Counties in the Health of Californians: An Overview | 29 Appendix B: Proposition 99 Proposition 99, the Tobacco Tax and Health EAPC. Proposition 99 resulted in the Expanded Protection Act, was approved by voters in 1988, Access to Primary Care (EAPC) program, which increasing the tobacco excise tax rate in California and reimburses non-county clinics per visit for services establishing the Proposition 99 Cigarette and Tobacco to the uninsured. EAPC increasingly is funded by Products Surtax Fund with very specific funds and state general fund revenue. funding allocations. Because Californians are now Access for Infants and Mothers (AIM) program. using fewer tobacco products, Proposition 99 revenues Provides low-cost health insurance coverage to have dramatically declined. uninsured, low-income pregnant women and their The specific Proposition 99 programs and actual infants. AIM enrollees receive their care from one of allocation of those funds has evolved over the past nine health plans participating in the program, and 12 years through state legislative and budget action the state supplements the subscriber contribution to and has somewhat complex funding formulas and cover the full cost of care. requirements. Health care programs funded by Proposition 99 contract-back programs. Over time, Proposition 99 include: smaller CMSP counties found that the combination County indigent care. Under California law, a of the CHDP treatment mandate and declining portion of the tobacco tax funds is allocated to Proposition 99 revenue made it less attractive to counties for health care services to people who accept Proposition 99 funds. Solano and Sutter are the cannot afford to pay all or part of their medical care only CMSP counties still participating in the RHS and are not covered by any other federally reimbursed program. Legislation then allowed DHS to administer program. In the larger counties, the allocation is two programs in behalf of CMSP counties choosing accomplished through the California Healthcare not to accept Proposition 99 funds: for Indigents Program (CHIP) and in the smaller ■ Physician services contract-back program. counties through the Rural Health Services (RHS) Reimburses Medi-Cal physicians for program. Funding for these programs dropped from uncompensated care. A total of 30 CMSP $350 million in 1989–90 to less than $50 million counties participate. in 2003–04. ■ Children’s treatment program. Reimburses CHIP and RHS funds come from both the Hospital Medi-Cal and Denti-Cal providers for CHDP Services Account and the Physician Services Account. treatment on a fee-for-service basis. For the Physician Services Account, 50 percent must Other programs that receive small allocations of go to emergency physicians for uncompensated care, Proposition 99 funds include the Breast Cancer and 50 percent goes to private physicians for Early Detection Program, children’s hospitals, and uncompensated care. Comprehensive Perinatal Outreach. In the hospital services account, 50 percent is formula-driven and goes to hospitals in each county for their uncompensated care, including emergency room and trauma care, based on their report of uncompensated care levels to the Office of Statewide Health Planning and Development (OSHPD). The remaining 50 percent is given to hospitals as determined by the county. 30 | CALIFORNIA HEALTHCARE FOUNDATION Appendix C: Program Overviews Indigent Health Care at the County Level Large Counties (formerly known as County Medically Indigent Services Program counties) Summary ■ Provider counties. Operate county hospitals and Medical care for low-income people, primarily adults outpatient clinics. Currently, 15 counties operate without children, as well as undocumented adults and 19 publicly owned hospitals, and four counties children, who have no other source of care. contract with local University of California hospital medical centers to serve as public hospitals. Statutory Obligations of Counties ■ Payer counties. Contract with one or more ■ Section 17000—provider of last resort. Since private hospitals for inpatient services and with 1933, counties have been legally required to provide community clinics and private physicians for “relief and support,” including health care, for outpatient services. “incompetent, poor, indigent persons and those ■ Hybrid counties. Pay for hospital services incapacitated by age, disease, or accident, lawfully but operate public clinics. May also pay private resident therein” (California Welfare and physicians and clinics. Institutions Code Section 17000). In the 1970s, California initially assumed responsibility for Small Counties (CMSP) ■ Thirty-four small counties (population less than low-income uninsured adults 21 to 64, as “medically indigent adults” but transferred the 300,000 in 1982) contract with CMSP, a centrally program back to counties in 1982. administered health coverage program similar to Medi-Cal. ■ Financial maintenance of effort. As a condition of receiving Proposition 99 funds for inpatient and Funding outpatient care, counties have a statutory “mainte- ■ Primary funding sources for indigent health care nance of effort” or county match requirement, for indigent care and public health programs and must are realignment funds (dedicated sales tax and report expenditures and patient data to the state. motor vehicle license fees) and county general fund revenue (county match). ■ CHDP treatment mandate. Counties that receive Proposition 99 funds for indigent care must provide ■ Large counties and two smaller rural counties follow-up treatment identified through a Child receive a relatively small and declining allocation of Health and Disability Prevention program Proposition 99 tobacco tax revenue for indigent care. screening. ■ County owned hospitals receive Disproportionate Share Hospital funds by statutory formula; these County Discretion are Medi-Cal funds provided to public and private ■ Funding levels for indigent care, along with who is hospitals serving high numbers of Medi-Cal eligible for services, what services are provided, and patients. the methods and providers used. ■ In 2001–02, 23 of the 25 counties receiving ■ Some counties also increase access to care locally by Proposition 99 funds reported expenditures of establishing county-owned and operated inpatient $1.5 billion total funds to serve about 1.4 million and outpatient facilities, which serve not only indigent patients. In 2002, CMSP served about indigent but Medi-Cal and other clients. 115,000 people at a cost of $222 million. Programs/Care System County indigent care programs vary significantly by county and by region, and counties do not report programmatic information such as their scope of services, eligibility criteria, or methods of provider reimbursements. There are four main strategies counties use to arrange for indigent health care: The Crucial Role of Counties in the Health of Californians: An Overview | 31 County Public Health Services ■ Large counties may also have a health administrator to manage and oversee public health and other Summary related health care programs. The general responsibility to protect and improve the ■ Eleven small counties participate in the Local health of the community through preventive medicine, Public Health Services Program, which provides health education, control of communicable diseases, state-employed environmental specialists and public application of sanitation standards, and monitoring of health nurses who work in and for those counties. environmental hazards, often referred to as core public ■ County public health programs vary substantially health functions. in structure, scope, funding levels, staffing, and specific services and categorical programs offered. Statutory Obligations of Counties However, no statewide resource exists that regularly ■ Administer a local public health program, including profiles county public health programs or funding. public health nursing, communicable disease ■ Some counties have relatively small public health control, and environmental health, with a physician nursing programs that concentrate on communica- health officer in charge of public health. ble disease follow-up and immunizations, and other ■ Public health officers have broad authority and counties have extensive programs that include com- responsibility to protect the public health and to munity health education, home visiting programs, respond to public health threats, including ordering and outreach to pregnant women and children. communicable disease testing, quarantines, and ■ Some counties operate limited public health clinics closures of public and private facilities they for communicable-disease-related control activities, determine are endangering public health or safety. and some combine those services with county- ■ Receive and track reports from health providers operated primary care clinics and indigent care on more than 80 reportable diseases. programs. ■ Respond to local emergencies such as floods and other natural disasters, disease outbreaks, or Funding bioterrorism attacks. ■ Funding sources include realignment, county ■ Administer local categorical health and public general fund revenue, and a relatively small state health programs consistent with state and federal general fund account (known as the public health requirements (some mandatory, some voluntary subvention), of $1 million allocated by formula to and contractual). all jurisdictions. ■ Submit required state and federal public health ■ Other small categorical programs for core public statistical, surveillance, and program reports. health activities, such as Tuberculosis Control. ■ Environmental health programs are generally County Discretion supported by fees. ■ Significant discretion to set funding levels and deter- ■ Categorical public health programs, which have mine the structure of local public health services. separate categorical funding streams, including the ■ Determine levels of service, what services are Maternal, Child, and Adolescent Health (MCAH) provided, and the methods and providers used. program and the California Children’s Services ■ Participate in and contribute county funds to (CCS) program. optional categorical programs based on local needs. ■ Federal bioterrorism funding available since 2002. Federal bioterrorism funds are subject to federal Programs/Care System priorities and restrictions and to the terms of ■ 61 local health jurisdictions in California: the 58 detailed contracts between the state and counties. counties and the cities of Berkeley, Long Beach, and Pasadena. 32 | CALIFORNIA HEALTHCARE FOUNDATION County Mental Health Services County Discretion ■ Option to administer the local mental health plan Summary for Medi-Cal. Treatment for mental disorders and mental health ■ Selection of providers (certified by the state) for parti- problems for low-income people, including those cipation in Medi-Cal and indigent care services. eligible for Medi-Cal and those without any public ■ Service methods, care management and system or private coverage. coordination, consistent with state and federal Statutory Obligations of Counties requirements. ■ County mental health program. All counties are ■ Funding levels for local mental health services required to establish (or join with other counties to for people who are not eligible for or enrolled in establish) a community mental health service pro- Medi-Cal. gram for the county and to create a local mental health advisory board. Program/Care System ■ Medi-Cal services are administered at the county ■ Section 1700—provider of last resort. Since level through county-operated mental health plans. 1933, counties have been legally required to provide “relief and support,” for “incompetent, poor, ■ Counties directly provide or contract for mental indigent persons and those incapacitated by age, health services. disease, or accident, lawfully resident therein” ■ Counties use state funds, realignment funds, and (California Welfare and Institutions Code Section county funds to draw down federal Medicaid 17000). In the case of mental health, this broad matching funds. mandate is limited: Counties must provide mental ■ County mental health departments provide services health services for specific target populations to the to indigent people not on Medi-Cal to the extent the extent resources are available (enacted as part of county has funds remaining from realignment or realignment in 1991). other county revenue sources to pay for the services. ■ Services for the involuntarily committed. ■ In 2001–02, 626,000 clients received services. Evaluation and treatment of people who are involuntarily detained for 72 hours because they Funding are deemed to be a danger to themselves or others Funding for the community mental health services or gravely disabled (often referred to as “5150” provided by counties comes from a variety of sources. detainees). Mental health funding levels and programs vary ■ Services for special-education students. Mental significantly by county. health services for special-education students, regardless of income, identified by the school Figure 2. Community Mental Health Funding as needing treatment. (About 31,000 students 2001–02 Total Funding annually.) $2.9 billion ■ State standards and requirements. Counties County Funds (8%) Realignment choosing to operate the local mental health plan (36%) for Medi-Cal must meet state and federal eligibility, Other Revenues* (12%) benefits, and service standards and must manage the program as a Medi-Cal entitlement. Counties State Funds must follow statutory priorities and standards for (16%) indigent mental health care to the extent funds are available. Federal Funds (27%) *Includes patient fees and insurance recoveries. The Crucial Role of Counties in the Health of Californians: An Overview | 33 County Alcohol and Drug Programs Funding ■ Funding sources include: Summary ■ Federal Substance Abuse and Mental Health Services designed to prevent or minimize the effects Services Administration (SAMHSA) block grant of addiction and abuse of alcohol and other drugs. ■ Drug Medi-Cal (state and federal) Services include prevention, early intervention, detoxification, and recovery. ■ State general fund (including the Proposition 36 set-aside of $117 million) Statutory Obligations of Counties ■ County funds ■ Provide treatment services to non-violent drug ■ Some counties also employ a variety of special state offenders under the terms of Proposition 36, funds for drug and alcohol treatment, including The Substance Abuse and Crime Prevention Act Proposition 10, tobacco settlement funds, and of 2000. Counties must provide eligible offenders Juvenile Justice Crime Prevention Act funds. with up to one year of drug treatment and six ■ The largest portion of the funds allocated to months of after-care. DADP in 2003–04 were for treatment programs ■ Administer contractual (but voluntary) alcohol (67 percent), with an additional 8 percent and drug treatment programs, including Drug specifically dedicated to perinatal treatment Medi-Cal, according to state and federal services, and the remaining 12 percent for requirements. prevention services. ■ Counties received $557 million in 2003–04 County Discretion (including state and federal Drug Medi-Cal funds ■ May petition the state for funding for local drug and Proposition 36 treatment funds). and alcohol treatment services and can terminate ■ The basic county allocation formula provides each the state contract with 60 days’ notice. county with a base level of funding ($2,500) and ■ Option to administer a local Drug Medi-Cal then allocates any remaining funds according to program. population. ■ Determine local funding levels for treatment ■ Proposition 36 funding ($117 million per year programs and services. through 2005–06) is allocated to counties under a different formula based on population, caseload, Program/Care System and arrest rates. ■ Some counties provide counseling and other ■ County programs have seen a reduction in treatment services directly, some contract with discretionary state general fund dollars, and at the private treatment programs, and some counties same time funding was substantially increased for offer both direct and contract services. drug offenders under Proposition 36. ■ All but 19 counties participate in the Drug Medi- Cal program. The state Department of Alcohol and Drug Treatment contracts with and reimburses providers in the non-participating counties. Covers limited treatment services: narcotics replacement (methadone detoxification and maintenance programs and naltrexone), restricted outpatient drug-free services, and day care rehabilitative and residential treatment for pregnant and parenting women. Covers only services provided on a face-to- face basis, if the services are provided at a treatment site certified by DADP. 34 | CALIFORNIA HEALTHCARE FOUNDATION