Budget Subcommittee Staff Recommend DHCS Consider Alternatives to 75% Fee Increase on SUD Providers

In his presentation at the budget hearing, Robb noted CAADPE’s opposition to the DHCS proposed 75% increase in SUD provider licensing and certification fees. DHCS Director Michelle Baas gave the Department’s estimates of the fee increase impacts, in which they projected that an outpatient provider would pay an additional $1,400 per year in certification fees, and a 50-bed residential facility would face an increase of about $6,000 annually in licensing fees. Robb emphasized that, given the circumstances of record overdose fatalities and a declining workforce, a licensure and certification fee increase of the magnitude proposed by DHCS would financially hurt many SUD treatment programs, increase costs to already struggling programs, and prevent additional programs from coming into the field. He said the fee increase runs counter to actions taken by the state to increase access to SUD treatment.

The Budget Staff report noted that the 2022 Governor’s Budget included a similar proposal to increase the licensing rates for SUD facilities, and it was not supported by the Legislature due to concerns about the financial impact the fee increase would have on many struggling facilities. The Legislature urged DHCS to work with providers to develop a sustainable, long-term financing system that is not likely to put providers out of business, thereby further reducing access to SUD services. The Subcommittee requested that DHCS respond to the following: (1) What impact will the proposed 75% increase in licensing fees have on the quantity of SUD providers? (2) Is DHCS concerned about the potential reduction in the number of providers that may result from a 75% fee increase? (3) Has DHCS collaborated with providers to develop this proposal? Providers are concerned that the Department did not consult with them prior to issuing the fee increase proposal. Staff urged DHCS to consider a phased increase in licensing fees along with alternative financing schemes for this program.

In his presentation Robb noted that CAADPE supports the Department’s proposal to mandate certification for outpatient programs. But in order to avoid loopholes and ensure the right provider types are captured by this proposal, the Department should distinguish individual providers i.e. licensed therapists in private practice, from structured outpatient program providers. CAADPE also requests that DHCS refine the application process for new sites with already approved provider organizations, in order to reduce the redundant nature of providers having to undergo the full application process for each new service location.