CBAS centers warn of closures after erroneous rate posting and long‑standing reimbursement gap
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Summary
A Department of Health Care Services systems error briefly posted a 10% higher CBAS fee schedule rate; providers and advocates say long‑standing Medi‑Cal reimbursement shortfalls and uncertainty over recoupment threaten program sustainability and have already led to recent center closures.
California’s Community‑Based Adult Services (CBAS) program — previously called adult day health care — is facing a financial squeeze that providers say is leading to center closures across the state.
Mark Beckley of the California Department of Aging told legislators there are 304 operating CBAS centers serving about 42,000 participants, with higher center concentration in Los Angeles. The Department of Health Care Services later described a systems error that published an erroneous 10% rate increase on the Medi‑Cal fee schedule in June 2024, temporarily showing a basic per‑diem rise from $76.27 to $83.90. The department acknowledged the mistake, said it would correct the fee schedule retroactively, and told managed‑care plans the erroneous posting was not related to a separate SB 159‑authorized rate increase that became inoperative after Proposition 35.
"Because our managed care plans use the Medi‑Cal fee schedule rate as a benchmark in their negotiations with CBAS providers, some managed care plans began paying their contracted CBAS providers at the higher rate," Susan Phillip, deputy director at DHCS, told the committees. DHCS said it is not requiring plans to recoup payments but that some plans might have contract provisions that allow clawbacks.
Providers say the program’s financial problems predate the systems error and stem from Medi‑Cal rates that have not kept pace with costs. Brian Rutledge, executive director of the California Association for Adult Day Services, said six CBAS centers closed since June 2024 and urged the Legislature to fund a $74.8 million ongoing general fund increase in 2025–26 to close roughly half the estimated statewide reimbursement gap. Rutledge warned that clawbacks related to the rate posting would accelerate closures and described families facing higher costs and loss of services when centers close: "My dad keeps asking when the bus will pick him up," he read from caregiver testimony.
DHCS and advocates also described workforce pressures and post‑pandemic staffing shortages. The Legislature’s staff and the Legislative Analyst’s Office urged continued review of caseloads and access, and asked DHCS for data on the scale of any recoupment liabilities. CAO and plan representatives and county officials discussed fiscal impacts and access in rural and underserved areas.
Lawmakers pressed DHCS on what it could require of managed‑care plans; DHCS said it lacked statutory authority to force plans not to seek recoupment and had communicated to plans that recoupment was not required. Policy options discussed included partial general‑fund investments to raise the Medi‑Cal benchmark, continuing targeted grants (Bridge to Recovery) for workforce and infection control, and exploring the 2.7% targeted increase from SB 159 that was negated by Proposition 35.
Several witnesses urged the Legislature to act in the 2025 budget to stabilize CBAS financing to avert more closures and preserve a service that advocates say keeps older adults with dementia and other needs in the community rather than in more costly institutional care.
