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State reviews CBAS finances after erroneous 10% rate posting and recent center closures
Summary
Officials and providers told the Assembly budget subcommittees that community‑based adult services (CBAS) centers face an ongoing rate‑sustainability crisis exacerbated by a DHCS system error that temporarily posted a 10% higher rate and by the nullification of a smaller targeted increase after Proposition 35.
Members of the Assembly Budget subcommittees heard testimony that California’s community‑based adult services (CBAS) program — formerly adult day health care — is facing immediate fiscal stress and program closures.
Mark Beckley, chief deputy director at the California Department of Aging (CDA), said there are currently 304 CBAS centers operating in 28 counties serving about 42,000 participants and that demand is stable but access gaps persist, particularly in northern and Central California. Beckley said workforce shortages and staffing burnout following the COVID‑19 pandemic continue to affect centers.
Susan Philip of DHCS explained the recent rate‑setting events. A targeted Medi‑Cal increase authorized by Senate Bill 159 (2024) would have raised the basic CBAS per‑diem by roughly 2.7% (from $76.27 to about $78.33 effective Jan. 1, 2025), Philip said, but that increase became inoperative after voters approved a ballot measure in November 2024. Separately, DHCS discovered a system error that erroneously posted a 10% increase to the Medi‑Cal fee schedule effective July 1, 2024 (the fee schedule listed $83.90). DHCS said the error was identified in October, corrected in a mid‑April publication update and that whether managed‑care plans recouped any additional payments depends on their contracts: DHCS is not requiring recoupments.
Brian Rutledge, executive director of the California Association for Adult Day Services (CADS), said the CBAS program is “facing a financial crisis” and reported at least six center closures across six counties since June 2024 and other centers at risk. CADS is seeking $74.8 million ongoing general‑fund support in 2025–26 to close roughly half of the statewide gap between current Medi‑Cal reimbursement and provider costs; CADS said even that would be only an intermediate step toward full cost recovery.
Legislators and the Legislative Analyst’s Office (LAO) pressed agencies for estimates of the fiscal exposure. LAO provided an early, external back‑of‑the‑envelope figure of about $25 million if the 10% rate persisted for a full fiscal year, while CADS estimated the SB 159 increase negated by the ballot measure cost providers about $8 million ongoing. Lawmakers expressed concern that managed‑care recoupments could accelerate closures in programs that already run thin margins.
DHCS noted contract and rate‑setting complexities: managed‑care plans negotiate with providers using the Medi‑Cal fee schedule as a benchmark and some plans pay higher rates; whether a plan seeks recoupment depends on its contractual rights. Committee chairs urged more transparent, timely communication with providers and asked for follow‑up cost analyses to help shape a budget response this year.
