BILL ANALYSIS Ó SB 74 Page 1 SENATE THIRD READING SB 74 (Budget and Fiscal Review Committee) As Amended March 14, 2011 2/3 vote. Urgency SENATE VOTE :Vote not relevant SUMMARY : Contains necessary statutory and technical changes to implement changes to the Budget Act of 2011. Specifically, this bill : 1)Outlines the process and parameters for the Department of Developmental Services (DDS) to develop purchase of service best practices. The best practices developed shall not endanger the health and safety of consumers or compromise the state's ability to meet its commitment for federal funding and must be submitted in a report by no later than May 15, 2011, for Legislative approval. 2)Increases Regional Center accountability and transparency through several measures: a) Requires Regional Center Boards to adopt written policies to review and approve contracts of $250,000 or more, before entering into the contract; b) Adopts the federal requirement, which declares certain individuals or entities ineligible to be Regional Center vendors if convicted of prescribed crimes or have been found liable for fraud or abuse in any civil proceeding within the previous 10 years; c) Requires Regional Centers to maintain and post on its Internet Web site information such as request for proposals and contract awards, service provider rates, negotiated rates, audits and their IRS form 990; d) Requires the Department of Social Services and Department of Public Health to notify the DDS of any administrative action initiated against a licensee serving consumers with developmental disabilities; e) Restricts for the 2011-12 fiscal year and subsequent years, Regional Center audits to be conducted by the same SB 74 Page 2 accounting firm more than five times in every 10-year period. Additionally, it specifies that an entity receiving payments in more than or equal to $250,000 but less than $500,000 from one or more Regional Centers shall contract with an independent accounting firm for an audit or review of its financial statements. When the amount exceeds $500,000 the entity shall obtain an independent audit; f) Provides the DDS and Regional Centers the authority to institute legal proceedings against a Third Party payer, as a result of an injury in which the Third Party payer is liable. Recovery of reasonable value for services provided is similar to Third Party payer language contained within the Medi-Cal Program administered by Department of Health Care Services. Lastly, the language establishes procedures for the enforcement of a lien by the DDS or Regional Center upon a judgment or award in favor of a consumer for a Third Party injury. This change effectively underscores that DDS and Regional Centers are the payers of last resort when Third Party payment is liable; g) Requires the DDS to adopt emergency and other regulations to establish standard conflict-of-interest reporting requirements regarding Regional Center board members, directors, and identified employees. Each Regional Center must submit a conflict-of-interest policy to the DDS by July 1, 2011 and post the policy online by August 1, 2011; and, h) Requires all Regional Center contracts or agreements with service providers in which rates are determined through negotiations between the Regional Center and the Service Provider, to expressly require that not more than 15% of Regional Center funds be spend on administrative cost. It also specifies that direct service expenditures are those costs immediately associated with the services to consumers being offered by the provider. Similarly, it requires that all contracts between the DDS and Regional Centers spend no more than 15% of all funds appropriated through the Regional Center's operations budget on administrative costs. 3)Makes the appropriate date changes to extend the 4.25% SB 74 Page 3 reduction to Regional Center Operations and Purchase of Service Payments. The bill also extends the dates for measures adopted to allow for provider relief such as the suspension of staffing ratios and expertise; modification of personnel requirements, functions, qualifications, staff training requirements; and prescribed annual reviews and reporting requirements. As in prior years, temporary modifications may not affect the health and safety of a consumer, impact the availability of federal funds, or violate licensing or labor laws or other provisions of Title 17. These changes are applicable until June 30, 2012. 4)Adds an urgency clause allowing this bill to take effect immediately upon enactment. Analysis Prepared by : Daisy Gonzales / BUDGET / (916) 319-2099 FN: 0000058