BILL ANALYSIS                                                                                                                                                                                                    Ó



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          SENATE THIRD READING
          SB 930 (Evans)
          As Amended  August 15, 2011
          Majority vote 

           SENATE VOTE  :23-16  
           
           HUMAN SERVICES      4-1         APPROPRIATIONS      11-6        
           
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          |Ayes:|Beall, Ammiano, Hall,     |Ayes:|Fuentes, Blumenfield,     |
          |     |Portantino                |     |Bradford, Charles         |
          |     |                          |     |Calderon, Campos, Davis,  |
          |     |                          |     |Hall, Hill, Lara,         |
          |     |                          |     |Mitchell, Solorio         |
          |     |                          |     |                          |
          |-----+--------------------------+-----+--------------------------|
          |Nays:|Jones                     |Nays:|Harkey, Donnelly, Gatto,  |
          |     |                          |     |Nielsen, Norby, Wagner    |
          |     |                          |     |                          |
           ----------------------------------------------------------------- 
           SUMMARY  :  Repeals requirements that In-Home Supportive Services 
          (IHSS) recipients provide fingerprint images and that provider 
          timesheets include spaces for provider and recipient 
          fingerprints; repeals the prohibition against providers using a 
          post office box address to receive their paychecks; and, 
          corrects problems with the provider appeals process.  
          Specifically,  this bill  :   

          1)Repeals the requirement that IHSS recipients provide 
            fingerprint images at the time of assessment or reassessment.

          2)Repeals the requirement that the standardized timesheet 
            include designated spaces for the index fingerprints of the 
            provider and the recipient.

          3)Deletes the requirements and prohibitions related to the use 
            of a post office box address by an IHSS provider.

          4)Requires the county or IHSS public authority to provide the 
            state Department of Social Services (DSS) with an unmodified 
            copy of the Department of Justice (DOJ) criminal offender 
            record information search response (CORI) if an IHSS provider 
            or provider applicant has requested an appeal of a denial of 








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            placement on the IHSS provider registry as a result of a DOJ 
            criminal background check.

          5)Requires the county or public authority to provide an IHSS 
            provider or provider applicant with an unmodified copy of his 
            or her CORI with any notice of denial, along with information 
            on how the individual may contest the accuracy or completeness 
            of, or refute any erroneous information in the CORI.

           FISCAL EFFECT  :  According to the Assembly Appropriations 
          Committee:  

                 Savings of $41.6 million ($21 million GF) spread over 
                 seven years associated with not implementing the finger 
                 imaging requirements.  Those savings would be offset to 
                 an unknown degree by forgone savings associated with 
                 deterring fraudulent activity.

               1)     Absent this bill, it is assumed that the 
                 administrations would need to comply at some point 
                 with current law and implement the finger imaging 
                 requirements and the prohibition against providers 
                 using post office boxes.  Previous budget estimates 
                 suggest that total costs for finger imaging would be 
                 approximately $41.6 million ($21 million GF) over 
                 seven years.  Therefore, this bill removes that cost 
                 pressure.

               2)     Though these anti-fraud provisions were never 
                 implemented, the Governor's 2010-11 budget assumed 
                 all of the anti-fraud initiatives adopted in 2009 
                 would result in approximately $390 million ($135 
                 million GF) in savings in the first full year.  It 
                 is unclear how much of that would have been 
                 attributable to finger imaging and the prohibition 
                 against post office boxes.  Proponents of this 
                 finger imaging policy would argue, however, that 
                 there are foregone savings of perhaps tens of 
                 millions of dollars associated with this 
                 legislation.

                 Proponents of this legislation, on the other hand, 
                 argue that there is no evidence of widespread fraud 
                 in the IHSS program and therefore it is unlikely the 








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                 level of savings assumed by the previous 
                 administration is realistic.

           COMMENTS  :  

          Anti-fraud measures  :  According to the author, this bill is 
          intended to repeal three untenable components of the "IHSS 
          Anti-Fraud Initiative" included in the 2009-10 budget trailer 
          bill related to IHSS, AB 19 X4 (Evans), Chapter 17, Statutes of 
          2009 Fourth Extraordinary Session.  The author says:

               In 2009, Governor Schwarzenegger persuaded the 
               Legislature to adopt the "IHSS Anti-Fraud Initiative." 
                The purpose of this effort was to ensure the identity 
               of IHSS applicants and to prevent duplicate aid.  The 
               initiative included ten separate components.  Three 
               components of this initiative have proven to be costly 
               and ineffective:  (1) fingerprinting for all 
               consumers, (2) provider and consumer fingerprints on 
               timesheets, and (3) prohibition of the use of P.O. 
               Boxes by providers on IHSS forms.  There is no 
               evidence to support the effectiveness of these three 
               "anti-fraud" mandates.  In the absence of this 
               evidence, the $41.6 million to be spent on this part 
               of the program should be spent on other priorities.
           
          Background  :  In 2004, comprehensive legislation was enacted to 
          standardize assessment of IHSS recipients' needs and to ensure 
          integrity in the IHSS program, SB 1104 (Budget & Fiscal Review 
          Committee), Chapter 224, Statutes of 2004.  SB 1104 directed DSS 
          and the Department of Health Care Services (DHCS) to develop a 
          new provider enrollment form that each person seeking to provide 
          supportive services must complete, sign under penalty of 
          perjury, and submit to the county.  SB 1104 also gave DHCS 
          authority to investigate suspected instances of fraud in the 
          IHSS program.  SB 1104 required DSS, DHCS, and county quality 
          assurance staff to work together and coordinate activities.

          In July 2009, AB 1 X4 (Evans), Chapter 1, Statutes of 2009 
          Fourth Extraordinary Session, allocated additional 2009-10 and 
          2010-11 funds to DHCS and DSS for a total of 25 new fraud 
          investigation and program integrity-related positions.  AB 1 X4 
          (Evans) additionally included $10 million in additional funds to 
          be allocated to counties based on their approved plans.  AB 4 X4 








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          (Evans), Chapter 4, Statutes of the 2009-10 Fourth Extraordinary 
          Session, the human services trailer bill, also included changes 
          to provisions governing the new provider enrollment form, 
          requiring documentation to be submitted in person by applicant 
          providers to county offices. 

          At the same time, AB 19 X4 (Evans), was enacted to enhance 
          program integrity and anti-fraud protections in the IHSS 
          program.  AB 19 X4 was considered through the budget process and 
          was not vetted through legislative policy committees.  It 
          included the following anti-fraud measures:  1) new provider 
          enrollment requirements; 2) fingerprinting and criminal 
          background checks for all providers; 3) increased data matching 
          with jail, death and other official records to eliminate 
          fraudulent claims; 4) provider acknowledgement of delivering 
          services; 5) provider orientations; 6) unannounced home visits; 
          7) fraud training for county staff; 8) prohibition on the use of 
          post office boxes by providers on IHSS forms; 9) fingerprinting 
          recipients; and, 10) fingerprints of  recipient and provider on 
          each timesheet.  This bill repeals the last three of these 
          measures.

          No cost-benefit analysis was done at the time to support the 
          anti-fraud measures of AB 19 X4, including the fingerprinting 
          requirements.  Nonetheless, the 2009-10 Budget included the 
          Schwarzenegger Administration's estimate of about $162 million 
          General Fund savings as a result of new anti-fraud activities in 
          the IHSS program.  The estimated savings were based on an 
          assumption of a basic 10% of program costs.  No further 
          empirical basis for the assumption was offered.  The 
          Administration's 2010-11 Budget estimated an annual General Fund 
          Savings of $130 million annually from anti-fraud measures.

           How common is IHSS fraud  ?  Statewide data on the incidence of 
          fraud in the IHSS program is lacking.  Federal participation in 
          the cost of IHSS services comes through the Medicaid program, 
          and because DHCS is California's single state agency for 
          Medicaid, the unit charged with investigating reports of 
          suspected fraud in the IHSS program is located within that 
          department.  As reported in June 2009, according to DHCS:

               Currently there is no accurate means of measuring or 
               monitoring IHSS fraud within the state.  This is 
               because of the number of jurisdictions involved and 








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               the various data collection systems in place . . . 
               Because there is no accurate means of measuring or 
               monitoring IHSS fraud within the state, we do not know 
               the exact number of providers or recipients committing 
               fraud.
           
           In-Home Supportive Services:  A Primer on Potential Fraud and 
          Suggestions for Curbing It, California Senate Office of 
          Oversight and Outcomes (June 26, 2009), p. 3.

          While accurate statewide data on the incidence of IHSS fraud is 
          lacking, there is no shortage of misinformation.  For example, 
          in support of the prior administration's anti-fraud proposals, 
          Governor Schwarzenegger and a number of district attorneys 
          repeatedly referenced a figure of 25% in fraudulent IHSS 
          payments.  This figure appears to have originated in a 2004 
          Spring Finance Letter in reference, not to fraud but, rather, to 
          weaknesses and deficiencies in the needs assessments conducted 
          at the time.  Based on state level case reviews conducted for a 
          number of years, the Finance Letter notes, "at least 10% of all 
          paid services may be over-assessed or have not actually been 
          provided."  The Finance Letter then references the Governor's 
          Budget for fiscal year 2004-05, which reportedly "acknowledged 
          that up to 25% of the hours may be over-assessed."  This 25% 
          figure was then picked up by news media and reported as a 
          reflection of fraud in the IHSS program, rather than 
          over-assessments due to problems with the need assessment 
          process then in use.

          In short, available data do not support the conclusion that 
          there is widespread fraud in the IHSS program.  Nonetheless, 
          this bill does not impact most of the anti-fraud measures 
          enacted through AB 19 X4 (Evans).  It would cancel only the 
          requirement that counties secure fingerprint images of 
          applicants for and recipients of IHSS at the time of application 
          or reapplication; the requirement that timesheets have a space 
          for an index-finger print of both the recipient and the provider 
          of IHSS; and, the prohibition against providers using a post 
          office box for receipt of wage checks.  In addition to "quality 
          assurance" provisions added by the Legislature in 2004, seven of 
          the ten measures included in AB 19 X4.

           Duplicate aid fraud  :  Fingerprinting of IHSS recipients is 
          purportedly intended to prevent duplicate aid fraud-i.e., 








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          receiving aid under more than one identity or in more than one 
          county.  Whatever the overall incidence of fraud in the IHSS 
          program, no data are available on the incidence of this type of 
          fraud.  In fact, it is difficult to even conceive of scenarios 
          of how such duplicate aid fraud might be perpetrated by the 
          seniors and people with disabilities who receive IHSS services.  
          As advocates opposing proposed 2010-11 Budget expenditures for 
          proceeding with recipient fingerprinting pointedly remarked at 
          the time, "Ýt]his is a solution in search of a problem; there is 
          no evidence that people are disguising themselves as someone 
          else to get IHSS, or that people are going from county to county 
          to be bathed."

           Arguments in support  :  Supporters of this bill note that the 
          state has estimated that it would need $8.2 million this year 
          alone, and a total of $41.6 million over the next 7 years, to 
          implement the recipient fingerprinting requirement.  "Clearly," 
          these supporters say, "in these difficult fiscal times, the 
          expenditure of millions to implement an anti-fraud initiative in 
          the absence of demonstrated widespread fraud would be imprudent 
          at best."  Supporters point to a May 8, 2010, letter to DSS from 
          the Obama Administration concerning fingerprinting in the 
          CalFresh program, which notes that "Ým]ost States satisfy the 
          requirement to establish a system to prevent duplicate 
          participation by matching names with social security numbers, 
          which is far less costly than finger image systems yet equally 
          effective at detecting duplicate participation."

          On the issue of post office boxes, supporters note that there 
          are many valid reasons that IHSS providers use post office 
          boxes.  Many IHSS providers live in rural areas where there are 
          no alternative means for receiving mail.  Also, many providers 
          live with relatives or roommates who do not allow them to get 
          mail sent to their residence.  The U.S. Postal Service itself 
          points out on its Web site that "Ým]any customers value the 
          privacy, security, and flexibility of a Post Office Box," 
          noting, for example, that:  "It's fast.  Mail typically arrives 
          faster at a PO Box than at a residential or business address" 
          and "It's permanent.  You can move around, but your PO Box 
          address stays the same."  Organizations representing counties 
          and county human services departments assert that limiting the 
          use of post office boxes may harm the ability of counties and 
          consumers to recruit and retain providers.  Supporters also 
          point out that no evidence was ever offered to connect post 








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          office boxes with fraud. 

           Arguments in opposition  :  In opposition, the California District 
          Attorneys Association (CDAA) suggests that the anti-fraud 
          measures in question, and particularly the fingerprinting 
          requirements have a deterrent effect and that repealing these 
          measures "will significantly hinder efforts to deter persons 
          from seeking duplicate aid and could potentially make the 
          discovery of such fraud more difficult."  CDAA also opposes 
          repeal of the prohibition on using post office boxes, asserting 
          that "Ýt]he less physical information law enforcement and 
          prosecutors have about persons who would defraud the IHSS 
          program, the harder it is to intercede and stop such activity."

           Provider appeals  :  As a condition of being placed or maintained 
          on a county's IHSS provider registry, AB 19 X4 required criminal 
          background checks to be completed for all prospective IHSS 
          providers as of October 1, 2009, and to be completed by July 2, 
          2010, for anyone already a provider on October 1, 2009.  

          Under California law, consistent with federal Medicaid law, an 
          individual may not serve as a provider of services under the 
          IHSS program for 10 years following a conviction for specified 
          crimes involving fraud against a government health care or 
          supportive services program, child endangerment, or elder or 
          dependent adult abuse.  (These are commonly referred to as "Tier 
          1" offenses.)  The 2010 human services budget trailer bill, AB 
          1612 (Budget Committee), Chapter 725, Statutes of 2010, provided 
          for the additional exclusion, with certain exceptions, of 
          provider applicants for 10 years following a conviction for a 
          violent or serious felony, as defined in the Penal Code, and 
          other specified felony offenses.  These exclusions, referred to 
          as "Tier 2" offenses, apply prospectively, to new provider 
          applicants, beginning 90 days following the effective date of 
          that bill.

          Persons disqualified from providing IHSS services based on prior 
          conviction for a Tier 1 or Tier 2 offense have appeal rights to 
          challenge the accuracy of a criminal background check.  The 
          author notes that there is a flaw in the statutory appeal 
          process in that it does not authorize counties and public 
          authorities to provide DSS with an actual copy of the 
          individual's CORI in the event of an appeal.  Instead, 
          information from the CORI must be manually extracted from the 








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          CORI and copied into a separate document, which is then 
          transmitted to DSS.  This process increases the likelihood of 
          DSS' receiving inaccurate information due to clerical errors or 
          omissions.

          This bill, by way of clean-up, corrects this situation by 
          requiring that DSS be provided with an unmodified copy of the 
          CORI itself.  This bill further clarifies that the individual 
          provider or provider applicant must be provided with an 
          unmodified copy of his or her CORI in the event of a denial of 
          eligibility to be placed on the IHSS registry, along with 
          information on how the individual may contest the accuracy of 
          information in the CORI.


           Analysis Prepared by  :    Eric Gelber / HUM. S. / (916) 319-2089 


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