The Department of Alcohol and Drug Programs (DADP) directs and coordinates the state's efforts to prevent or minimize the effects of alcohol-related problems, narcotic addiction, and drug abuse. Services include prevention, early intervention, detoxification, and recovery. The treatment system serves approximately 500,000 clients annually. The DADP allocates funds to local governments and contract providers and negotiates service contracts. The department also coordinates the California Mentor Initiative, a multidepartmental effort targeting youth at risk of substance abuse, teen pregnancy, educational failure, and criminal activity.
The budget proposes $448 million from all funds for support of DADP programs in 2000-01, an increase of less than 1 percent above estimated current-year expenditures. The budget proposes $99 million from the General Fund, which is a decrease of $9 million, or 8 percent, from estimated current-year expenditures. The decrease is primarily due to a one-time carryover of $12 million from the prior year to the current year for substance abuse programs. The budget proposes an increase of $2.5 million in General Fund expenditures in 2000-01 to backfill for a reduction in federal funding for perinatal substance abuse programs.
We recommend the adoption of budget bill language requiring the department to implement a fee reduction for the Driving-Under-the-Influence program provider licenses, because the program fund's year-end balance is sufficiently high to support reduced fees.
Under the Driving-Under-the-Influence program, individuals convicted of driving while under the influence of alcohol or other drugs are required to successfully complete a state-licensed alcohol and drug education and counseling program. The department issues biennial licenses to approximately 265 providers of these services, serving roughly 135,000 participants. The costs of administering the programwhich cover initial licensing and biennial licensing reviews, training, and developing regulationsare supported by the Driving-Under-the-Influence Licensing Trust Fund. The fund consists of program provider license fees. Initial licensing fees range from an average of $445 for first-offender programs to $1,219 for multiple-offender programs. In addition, each provider deposits fees of $12 per enrolled participant on a quarterly basis.
The budget projects a year-end fund balance of $2 million in 2000-01, as shown in Figure 1.
| Figure 1 | |||
| Department of Alcohol and Drug Programs
Driving-Under-the-Influence Program Licensing Trust Fund | |||
| (In Thousands) | |||
| 1998-99 | 1999-00 | 2000-01 | |
| Beginning balance | $1,991 | $1,963 | $1,929 |
| Revenues | 1,585 | 1,675 | 1,810 |
| Expenditures | 1,613 | 1,709 | 1,735 |
| Year-end balance | $1,963 | $1,929 | $2,004 |
Current law provides that the department shall set the licensing fees in an amount sufficient to cover projected expenditures, and that any excess fees shall be carried forward and taken into consideration in the establishment of fees for the next fiscal year. Based on revenue and expenditure trends, we believe that the reserve is sufficiently large to support a fee reduction. Our review indicates that a fee reduction of 15 percent could be sustained over the next five years, while maintaining a projected reserve of approximately $670,000 at the end of this time period. Accordingly, we recommend adoption of budget bill language requiring the department to implement a fee reduction for program provider licenses.
Our recommendation could be implemented by adoption of the following language in budget bill Item 4200-001-0139:
The department shall implement a fee reduction based on the amount of the unencumbered balance, taking into account the need to maintain a prudent reserve.
We recommend the adoption of budget bill language to transfer the amount of the year-end balance in excess of $20,000 from the Audit Repayment Trust Fund to the General Fund, because a balance of $20,000 would constitute a prudent reserve and it is appropriate to return these repayment revenues to their original source, the General Fund. (Increase General Fund revenues by $206,000.)
The Audit Repayment Trust Fund consists of the recovery of state funds found not to have been spent in accordance with the requirements of state or federal regulations regarding substance abuse services. Revenues from the fund are used to support program audits.
As Figure 2 shows, the budget projects revenues of $50,000 and expenditures of $67,000 in 2000-01, and a year-end balance of $226,000. However, based on past-year trends, we estimate that expenditures will be less than projected in the budget. Consequently, we believe the year-end balance will be higher. Our review of this fund indicates that a balance of $20,000 in 2000-01 would be approximately one-third of projected expenditures, thereby constituting a prudent reserve against unanticipated costs. Accordingly, we recommend any balance in excess of $20,000 be transferred to the General Fund. This would be appropriate because the activity supported by this fund consists of the recovery of state funds. We estimate this would result in increased General Fund revenues of $206,000.
| Figure 2 | |||
| Department of Alcohol and Drug Programs
Audit Repayment Trust Fund | |||
| (In Thousands) | |||
| 1998-99 | 1999-00 | 2000-01 | |
| Beginning balance | $222 | $260 | $243 |
| Revenues | 56 | 50 | 50 |
| Expenditures | 18 | 67 | 67 |
| Year-end balance | $260 | $243 | $226 |
Our recommendation could be implemented by adoption of the following language in budget bill Item 4200-001-0816:
For support of the Department of Alcohol and Drug Programs, the amount of the unencumbered balance exceeding $20,000 in the Audit Repayment Trust Fund as of June 30, 2001, shall be transferred to the General Fund.
A statutorily required report on the programmatic and fiscal implications of adopting the Medicaid rehabilitation option under the Medi-Cal Drug Treatment Program is more than six months overdue. We recommend that the department advise the Legislature on the status of the report and its recommendations regarding adoption of the option.
The federal Health Care Financing Administration , which administers the Medicaid program, gives states the option of including drug and alcohol rehabilitative services as a Medicaid benefit. These services may be provided outside of the traditional clinic-based setting, and include preventive care, case management, day care habilitative, residential, and other services.
Pursuant to Chapter 389, Statutes of 1998 (SB 2015, Wright), the department is required to submit, by July 1, 1999, a report that identifies the key policy, program, and fiscal issues regarding the adoption of the Medicaid rehabilitation option. The department indicates it submitted the report to the Health and Human Services Agency (HHSA) in October 1999. At the time this analysis was prepared, however, HHSA had not released the report.
The department should be prepared at the time of budget hearings to advise the Legislature on the status of the report or, if the report has been submitted by that time, on its findings and recommendations.
We recommend the adoption of budget bill language requiring the department to submit by December 1, 2000 a statewide strategic plan to address the need for substance abuse treatment.
Gap in Substance Abuse Treatment. In our July 1999 report, Substance Abuse Treatment in California, we indicated that research demonstrates that substance abuse treatment is cost-effective to society, primarily due to reduced criminal activity. We also identified a gap between the need for, and the availability of, substance abuse treatment in California. The department has estimated that an additional $330 million would be needed annually to serve everyone who would access publicly funded treatment, if it were available.
We also reported a substantial gap in treatment specifically for adolescents. Compared to adults, a significantly lower percentage of adolescents who need publicly funded treatment receive such services. We identified several barriers to serving adolescents through California's treatment system, including a limited number of residential facilities and service models that are not tailored to address the unique developmental stages of adolescence.
Our report recommended that the department develop short- and long-term statewide plans to address the need for more services in general, and to identify effective treatment models and strategies to more effectively serve adolescents in particular.
At the time this analysis was prepared, the department had not submitted such a plan.
Recent funding increases for substance abuse treatment targeted to specific populations, such as pregnant and postpartum women and their children, the prison population, parolees, and drug court participants, have not been part of an overall statewide strategy to reduce substance abuse. We believe that a statewide strategic plan would enable the state to prioritize funding needs for substance abuse treatment and may help maximize federal funding.
Accordingly, we recommend the adoption of budget bill language requiring the department to submit a statewide strategic substance abuse treatment and prevention plan. Specifically, we recommend that, at a minimum, the plan include:
We discuss each of these components of a statewide plan below.
Moving Towards an Adolescent Treatment Program. Chapter 866, Statutes of 1998 (AB 1784, Baca), required the department to collaborate with counties and service providers to establish community-based nonresidential and residential programs for adolescents who are involved in, or at risk of involvement in, the criminal justice system. In April 1999, the department allocated nearly $5 million in Adolescent Treatment Program (ATP) grants to 20 counties. The funding is ongoing and included in the budget for 2000-01. The department indicates that it intends to develop an adolescent treatment system based on the findings from the participating counties on the most appropriate and effective services.
We believe that the preliminary findings from the participating counties should be used, to the extent possible, to develop the strategic plan's adolescent component. It is important to note, however, that it is uncertain whether the department will be able to obtain adequate information on the full range and amount of services that are needed to treat adolescents. This is primarily for two reasons. First, only $149,000 was allocated for a program-wide evaluation. Second, discussions with some of the participating counties' alcohol and drug program directors indicate that some of the grants, which average roughly $250,000, may not be enough to develop a new adolescent treatment system that would include a full continuum of services. Lacking a full array of service options, participating counties may not be able to test the most appropriate treatment services.
Given the potential limitations of the ATP findings, the department could rely on best practices information from the American Society of Addiction Medicine and the Center for Substance Abuse Treatment in developing our recommended plan. This information, for example, indicates that successful adolescent treatment systems (1) include a full continuum of services, from outpatient to intensive day treatment to residential programs, (2) allow clients to remain in treatment over an extended period of time, and (3) address the cognitive and social-emotional development of youth.
Standardized Assessment Tool Necessary to Ensure Uniform Treatment Across Counties. California has no statewide adolescent-specific assessment instrument to determine need level and appropriate treatment. This limits the department's ability to ensure that adolescents receive comparable treatment across counties. The National Institute on Drug Abuse reports that patients who receive services specifically matched to assessed need show statistically significant improvement in all assessed problem areas, such as academic performance and violent and criminal activity. A standardized assessment tool would help ensure that clients receive the most appropriate and cost-effective treatment.
A statewide assessment tool would also help in estimating the statewide need for adolescent treatment. While the department gathers waiting list information from the counties, such information is an imprecise measure of need because the availability of different types of services affects waiting lists for those services. For example, because there are so few adolescent residential treatment programs, many counties would not keep waiting lists for this service. Assessment data generated by a standard assessment tool, by contrast, would enable the department to estimate the need for different types of adolescent treatment.
Expansion of the Healthy Families Substance Abuse Treatment Benefit. The HFP, administered by the Managed Risk Medical Insurance Board (MRMIB), implements the federal Children's Health Insurance Program enacted in 1997. Under HFP, substance abuse treatment includes medically necessary inpatient hospital detoxification and 20 outpatient visits per year.
In September 1999, MRMIB submitted a statutorily required report to the fiscal and policy committees on the adequacy of substance abuse benefits in HFP. The report indicated that only 53 enrolled adolescents received at least one outpatient visit in the past year. The report cited several reasons for this small number of clients, including inaccurate utilization data. The report concluded that there is still insufficient utilization data available to determine the adequacy of the HFP substance abuse benefits.
In our field visits, providers and county administrators indicated that the HFP benefit is inadequate for adolescents with serious substance abuse problems, who require intensive outpatient or residential treatment. County officials we spoke with also suggested that the inadequacy of benefits may have discouraged doctors from making referrals to the health plans' treatment providers. If this is so, utilization data may not be an accurate measure of the adequacy of the benefits of the program. Finally, we note that national best practices research suggests that a full continuum of services and the option to remain in treatment for longer periods are instrumental for successful treatment. For these reasons, we believe that the department's plan should include consideration of expanding benefits under HFP and cost estimates of different expansion scenarios. We note that funding for HFP is generally on a 2-to-1 federal/state matching basis.
Expansion of the Drug Medi-Cal Benefit. The Medi-Cal Drug Treatment Program, or Drug Medi-Cal (D/MC), targets pregnant and postpartum women and children under age 21. The state match is included in the department's budget. The program covers four principal benefits: individual and group counseling under the Narcotic Treatment Program; individual and group counseling under outpatient drug-free services; day care habilitative services; and perinatal services, which is the only program that covers residential services. In 1995-96, in an effort to contain costs, the D/MC "trigger" was adopted in the budget act and trailer bill (Chapter 305, Statutes of 1995 [AB 911, Vasconcellos]). The legislation enacted a provision stating that if General Fund expenditures exceed a specified amount, outpatient drug-free services would be eliminated as a D/MC benefit. The trigger in the current year is $45 million. In addition, in order to reduce costs, the scope and duration of D/MC benefits were restricted and the provider reimbursement rates were lowered.
In our field visits, state and county officials and treatment providers indicated that these cost containment strategies have resulted in inadequate benefits under D/MC. Consequently, many Medi-Cal-eligible clients are treated instead in programs funded entirely by state funds, or not treated at all. In order to maximize federal funds, we believe the department should include in its plan a review of the impact of the "trigger" and should consider strategies to expand D/MC benefits if cost-effective. The plan should also include fiscal estimates of such strategies.
As noted above, the department is required to submit a report on the programmatic and fiscal implications of adopting the Medicaid rehabilitation option under the Medi-Cal Drug Treatment Program, which would expand the range of services covered under D/MC. We recommended above that the department advise the Legislature on the status of the report.
We note that expansion of D/MC benefits may require loosening the trigger. Since D/MC is an entitlement, and benefits must be provided statewide, expansion raises concerns about uncontrollable costs. As part of the strategic plan, the department could consider a managed care model as a potential longer-term solution to cost containment.
Summary. We recommend the adoption of budget bill language requiring the department to submit, by December 1, 2000, a statewide strategic plan to address the need for substance abuse treatment. The plan should include a specific component for adolescent treatment, including a standardized assessment tool. In order to serve more persons and maximize federal funding, the plan should consider expansion of the HFP substance abuse treatment benefits and the D/MC benefits.