BILL ANALYSIS Ó
SB 1529
Page 1
Date of Hearing: July 3, 2012
ASSEMBLY COMMITTEE ON HEALTH
William W. Monning, Chair
SB 1529 (Alquist) - As Amended: June 27, 2012
SENATE VOTE : 26-11
SUBJECT : Medi-Cal: providers: fraud.
SUMMARY : Revises various provisions related to the screening,
enrollment, disenrollment, suspensions, and other sanctions of
fee-for service (FFS) providers and suppliers participating in
the Medi-Cal Program to conform to requirements of the Patient
Protection and Affordable Care Act (Public Law 111-148), as
amended by the Health Care and Education Reconciliation Act of
2010 (Public Law 111- 152) (collectively known as the Affordable
Care Act or ACA). Specifically, this bill :
1) Lowers the threshold for imposing the sanction of a Medi-Cal
payment suspension from the current standard of "reliable
evidence of fraud or willful misrepresentation" to "credible
allegation of fraud."
2)Specifies that an allegation of fraud is considered credible
if it exhibits indicia of reliability as recognized by state
and federal courts or by other law sufficient to meet
constitutional prerequisite to a law enforcement search or
seizure of comparable business assets.
3)Changes "payments withheld" to "payments suspended" in current
provisions that allow the director of the Department of Health
Care Services (DHCS) to apply sanctions against a provider in
any program administered by DHCS, based on conduct in the
Medi-Cal program and makes other conforming changes.
4)Revises current provisions relating to the suspension of a
provider pending an investigation for fraud or for any other
authorized reason, to require the provider to be temporarily
placed under a payment suspension, unless it is determined
that a good cause exception applies not to suspend the payment
or to suspend the payments only in part.
5)Defines a good cause exception, by reference to federal
regulations effective March 25, 2011, as follows:
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a) Good cause not to suspend payments, or not to continue a
payment suspension previously imposed, to an individual or
entity against which there is an investigation of a
credible allegation of fraud exists if any of the following
are applicable:
i) Law enforcement officials have specifically
requested that a payment suspension not be imposed
because such a payment suspension may compromise or
jeopardize an investigation;
ii) Other available remedies implemented by the State
more effectively or quickly protect Medicaid funds;
iii) The State determines, based upon the submission of
written evidence by the individual or entity that is the
subject of the payment suspension, that the suspension
should be removed; or,
iv) Recipient access to items or services would be
jeopardized by a payment suspension because of either of
the following:
(1) An individual or entity is the sole community
physician or the sole source of essential specialized
services in a community; or,
(2) The individual or entity serves a large number
of recipients within a Health Resources and Services
Administration (HRSA)-designated medically underserved
area.
v) Law enforcement declines to certify that a matter
continues to be under investigation; or,
vi) The State determines that payment suspension is not
in the best interests of the Medicaid program;
b) Good cause exists to suspend payments in part, or to
convert a payment suspension previously imposed in whole to
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one only in part, to an individual or entity against which
there is an investigation of a credible allegation of fraud
if any of the following are applicable:
i) Recipient access to items or services would be
jeopardized by a payment suspension in whole or part
because of either of the following:
(1) An individual or entity is the sole community
physician or the sole source of essential specialized
services in a community; or,
(2) The individual or entity serves a large number
of recipients within a HRSA-designated medically
underserved area.
ii) The State determines, based upon the submission of
written evidence by the individual or entity that is the
subject of a whole payment suspension, that such
suspension should be imposed only in part;
iii) The credible allegation focuses solely and
definitively on only a specific type of claim or arises
from only a specific business unit of a provider; and the
State determines and documents in writing that a payment
suspension in part would effectively ensure that
potentially fraudulent claims were not continuing to be
paid;
iv) Law enforcement declines to certify that a matter
continues to be under investigation; or,
v) The State determines that payment suspension only in
part is in the best interests of the Medicaid program.
6)Revises current provisions relating to the temporary
suspension of a provider who is under investigation for fraud
or abuse by authorizing DHCS to lift the temporary suspension
when a resolution of the investigation occurs.
7)Adds a definition of "resolution of an investigation for fraud
or abuse" as meaning there is no documentation to indicate
either that a charge or accusation has been filed against the
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provider and the investigation has not been active at any time
during the previous 12 months or DHCS has been unable to
contact an investigator or any agency investigating the
provider.
8)Adds an exception to the current requirement of a notice to
providers within five days of a payment suspension that
authorizes a 30 day delay if there is a request in writing by
any law enforcement agency and authorizes the delay to be
renewed in writing up to two times for a maximum of 90 days.
9)Revises the basis of an appeal from a suspension from the
current "issue of the reliability of the evidence" to the
"credibility of the allegation" and deletes the current
language that the appeal may not encompass "fraud or abuse"
and replaces it with "investigation or adjudication of the
allegation".
10)Requires, quarterly reports from the Department of Justice or
any other law enforcement agency that has accepted referrals
for investigation from DHCS listing each referral and whether
it continues to be under investigation and whether it involves
a creditable allegation of fraud; authorizes DHCS to request
these reports if the agency fails to submit them and requires
the agency to respond within 30 days and exempts the reports
from public disclosure requirements.
11)Effective upon approval of a State Plan Amendment (SPA) as
required by the ACA), requires DHCS to deny enrollment to or
terminate, including deactivation of the provider's enrollment
number, any provider upon discovery that the provider has been
terminated under the Medicare Program, the Medicaid Program,
or the Children's Health Insurance Program. Exempts providers
terminated under this provision from the three year bar on
reapplying.
12)Effective upon approval of a SPA as required by the ACA, adds
ordering, referring, or prescribing providers to the
definition of Medi-Cal provider and applicant with the
following consequences:
a) Requires ordering, referring, or prescribing providers
to become enrolled as participating providers in the
Medi-Cal Program and applies existing provider enrollment
requirements to this new category; or,
b) With some exceptions, will add a requirement that all
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Medi-Cal provider reimbursement claims must specify the
ordering, referring, or prescribing provider and include
the providers National Provider Identifier (NPI).
13)Adds date of birth to the existing information that
applicants, providers, and persons with an ownership or
control interest, as specified, must submit to DHCS in order
to be enrolled or continue to be enrolled for the purposes of
verification and data base checks.
14)Requires corporations with an ownership or control interest,
as specified, to submit their taxpayer identifications number,
all business address locations, and post office box addresses.
15)Effective upon approval of a SPA as required by the ACA and
implementing regulations, authorizes DHCS to begin collecting
an annual Medi-Cal application fee from providers applying for
enrollment, revalidation of enrollment, enrollment at a new
location or change in location. Exempts individual physicians
and nonphysician practitioners who are enrolled in Medicare,
another state's Medicaid or Children's Health Insurance
Programs; or providers who have paid the fee to a Medicare
contractor, to another state or are exempt or are otherwise
subject to a waiver or exemption.
16)Effective upon approval of a SPA as required by the ACA and
implementing regulations, authorizes DHCS to deactivate
currently enrolled specified Medi-Cal providers, not only a
provider applying for continued enrollment or to operate a new
location, if the provider fails to resubmit a completed
application package within 60 days of notice of incompletion
and authorizes the deactivation to include all business
addresses.
17)Effective upon approval of a SPA as required by the ACA and
implementing regulations, for providers currently subject to
unannounced visits, preenrollment inspections, or background
checks, adds authority for DHCS to deactivate any currently
enrolled provider, not only providers applying for continued
enrollment or to operate a new location, if the provider fails
to remediate any discrepancies or failures that are identified
during unannounced visits, preenrollment inspections, or
background checks and authorizes the deactivation to include
all business addresses. Provides that deactivation at all
addresses for discrepancies during preenrollment must be
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material to the provider's continued enrollment and compliance
with program requirements at the additional addresses.
18)Effective upon approval of a SPA as required by the ACA and
implementing regulations, requires providers to be classified
as "limited," "moderate," or "high" risk according to
categories of provider types established by federal
regulations.
19)Requires DHCS, pursuant to 18) above to also designate a
provider as high risk if:
a) A payment suspension has been imposed based on a
credible allegation of fraud, waste, or abuse;
b) The provider has an existing Medicaid overpayment that
is based on fraud, waste, or abuse;
c) The provider has been excluded by the federal Office of
the Inspector General or another state's Medicaid Program
within the past 10 years; or,
d) The federal Centers for Medicare and Medicaid Services
(CMS) lifted a temporary moratorium on the particular
provider type that would have applied to the provider
within the previous six months.
20)Effective upon approval of a SPA as required by the ACA and
implementing regulations, if any provider, including currently
enrolled providers are designated as a "high" categorical risk
pursuant to 18) or 19) above, requires DHCS to conduct a
criminal background check, including requiring the submission
of fingerprints as required by the Department of Justice,
including any person with a 5% direct or indirect ownership
interest.
21)Effective upon approval of a SPA as required by the ACA and
implementing regulations, adds failure to submit fingerprints
as required by federal regulations as grounds to deny an
application for enrollment, continued enrollment, or
enrollment at a new location.
22)Effective upon approval of a SPA as required by the ACA and
implementing regulations, revises existing authority of DHCS
to make unannounced site visits to applicants or providers, to
also require enrolled providers to permit access to any and
all of their provider locations and requires DHCS, if a
provider fails to permit access for any site visit, to deny
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the provider's application, and requires the provider to be
subject to deactivation.
23)Effective upon approval of a SPA as required by the ACA and
implementing regulations, when CMS establishes a temporary
moratorium on provider enrollment, authorizes DHCS to impose a
corresponding temporary moratorium on the same provider types
and for the same time period even if the provider types are
exempt from the state moratorium provisions, unless DHCS
determines that the moratorium will adversely impact
beneficiaries access to medical assistance.
24)Effective January 1, 2012, authorizes DHCS to enter into
contracts with Medicaid Recovery Audit Contractors.
25)Deletes the requirement that a provider must request a meet
and confer process within 30 days of a notice of payment or
temporary suspension, in effect allowing the request at any
time.
26)Deletes references to the issuance of a provider number to
conform to the use of a NPI in place of a state specific
provider number.
27)Upon approval of the SPA required to implement the provisions
of this bill, requires the DHCS Director to execute a
declaration stating that approval has been obtained and the
effective date. Requires the declaration to be posted on the
DHCS Website and transmitted to the Legislature.
28)Authorizes the DHCS Director to implement and interpret the
provisions of this bill by means of provider bulletins or
similar instructions, without formal adoption of regulations
pursuant to the Administrative Procedures Act (APA).
29)Makes other technical and clarifying changes.
EXISTING LAW :
1)Requires the DHCS Director, when a provider is denied
continued enrollment or suspended from a program administered
by DHCS, based upon fraud or abuse, or when payments are
withheld based upon "reliable evidence of fraud or willful
misrepresentation," in any program administered by DHCS, to
review the evidence supporting the denial of continued
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enrollment, suspension, or withholding of payments and permits
the DHCS Director to deny continued enrollment, suspend, or
withhold payments to the provider with respect to any other
programs administered by DHCS if, in the opinion of the DHCS
Director, the evidence shows "a pattern or practice of fraud,
abuse, or willful misrepresentation" that if replicated in any
other health care program administered by DHCS, could cause
either fiscal loss to the state or harm to any participant.
2)Permits the DHCS Director to deny the application of an
applicant or provider to participate in any health care
program administered by DHCS when, based upon fraud or abuse,
the applicant or provider has been denied continued enrollment
in, or suspended from, any health care program administered by
DHCS, or has had payments withheld based upon reliable
evidence of fraud or willful misrepresentation in connection
with any health care program administered by DHCS, and remains
ineligible to participate.
3)Authorizes DHCS, upon receipt of reliable evidence that would
be admissible under the administrative adjudication provisions
of the APA of fraud or willful misrepresentation by a provider
under the Medi-Cal Program or upon the commencement of a
suspension, to take specified actions, including collecting
overpayments identified through an audit or examination and
withholding of payments.
4)Requires DHCS to notify the provider within five days of any
withholding of payment.
5)Requires each claim for reimbursement from the Medi-Cal
program to identify the place of services and the rendering
provider.
6)Defines a "provider" and an "applicant" and requires
applicants and providers seeking to enroll in Medi-Cal who are
licensed under the Business and Professions Code, such as
physicians, dentists, pharmacists, optometrists, nurse
practitioners, and physician assistants (or a corporation of
such health care providers), to be enrolled as either an
individual provider or as a rendering provider in a provider
group.
7)Requires, under state law, in order to be enrolled as a
Medi-Cal provider, or for enrollment as a provider to
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continue, an applicant or provider may be required to sign a
provider agreement and to disclose all information as required
in federal Medicaid regulations and any other information
required by DHCS.
8)Requires, under federal regulations, specified disclosures,
including the date of birth and Social Security Number (in the
case of an individual) or other tax identification number (in
the case of a corporation), with an ownership or control
interest in the disclosing entity (or fiscal agent or managed
care entity) or in any subcontractor in which the disclosing
entity (or fiscal agent or managed care entity) has a 5% or
more interest.
9)Requires, under federal regulations, state Medicaid agencies
to terminate or deny enrollment if the provider, or any person
with a 5% or greater direct or indirect ownership interest in
the provider, fails to submit sets of fingerprints in a form
and manner to be determined by the Medicaid agency within 30
days of a CMS or a state Medicaid agency request, unless the
state Medicaid agency determines that termination or denial of
enrollment is not in the best interests of the Medicaid
program and the state Medicaid agency documents that
determination in writing.
10)Requires DHCS, if a Medi-Cal application package that was
noticed as incomplete is not resubmitted with all requested
information and documentation within 60 days of the date on
the DHCS notice, to deny the application package. Allows the
applicant or provider to reapply by submitting a new
application package that is required to be reviewed de novo
(starting over as a new application). Makes a provider
subject to deactivation of the provider's number and all of
the business addresses used by the provider if the failure to
resubmit is by a provider applying for continued enrollment.
11)Requires DHCS, if DHCS exercises its authority to conduct
background checks, pre-enrollment inspections, or unannounced
visits, to provide the applicant or provider with notice from
DHCS after the conclusion of the background check,
pre-enrollment inspection, or unannounced visit of either of
the following:
a) The applicant or provider is granted provisional
provider status for a period of 12 months, effective from
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the date on the notice; or,
b) Discrepancies or failure to meet program requirements,
as prescribed by DHCS, have been found to exist during the
pre-enrollment period.
12)Requires the notice in 11) above to identify the
discrepancies or failures, whether remediation can be made,
and if so, the time period within which remediation must be
accomplished. Failure to remedy discrepancies and failures,
or notification that remediation is not available, results in
denial of the application. The applicant or provider may
reapply by submitting a new application package that is
required to be reviewed de novo.
13)Allows DHCS, if discrepancies are found to exist during the
pre-enrollment period, to conduct additional inspections prior
to enrollment. Failure to remedy discrepancies as prescribed
by the DHCS Director may result in denial of the application
for enrollment.
14)Makes a provider subject to deactivation of the provider's
number and all of the business addresses used by the provider
if the failure to remedy is by a provider applying for
continued enrollment.
15)Prohibits an applicant or provider from reapplying for
enrollment or continued enrollment in the Medi-Cal Program, or
for participation in any health care program administered by
DHCS or its agents or contractors, for a period of three years
from the date an application package is denied or provisional
provider status is terminated. Provides for exceptions to
this three-year bar that permanently prevent a provider from
enrollment.
16)Requires, if it is discovered that a provider is under
investigation by DHCS or any state, local, or federal
government law enforcement agency for fraud or abuse, that
provider to be subject to temporary suspension from the
Medi-Cal Program, including temporary deactivation of the
provider's number at all business addresses used by the
provider to obtain reimbursement from the Medi-Cal program.
17)Requires, under federal regulations, a state Medicaid agency
to screen all initial applications, including applications for
a new practice location, and any applications received in
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response to a re-enrollment or revalidation of enrollment
request based on a categorical risk level of ''limited,"
"moderate,'' or ''high.''
18)Requires, under federal regulations, a state Medicaid agency
to terminate or deny enrollment if the provider, or any person
with a 5% or greater direct or indirect ownership interest in
the provider, fails to submit sets of fingerprints in a form
and manner to be determined by the Medicaid agency within 30
days of a CMS or a state Medicaid agency request, unless the
state Medicaid agency determines that termination or denial of
enrollment is not in the best interests of the Medicaid
program and the state Medicaid agency documents that
determination in writing.
19)Permits DHCS to implement a 180-day moratorium on the
enrollment of providers in a specific provider service
category, on a statewide basis or within a geographic area
when the DHCS Director determines this action is necessary to
safeguard public funds or to maintain the fiscal integrity of
the program. Authorizes DHCS to extend or repeat moratorium
when the DHCS Director determines this action is necessary to
safeguard public funds or to maintain the fiscal integrity of
the program. Prohibits a moratorium from being implemented on
the enrollment of licensed and unlicensed clinics, and
individuals who are health care providers licensed or
certified under the Business and Professions Code, such as
physicians, pharmacists, physician assistants, optometrists,
and chiropractors.
20)Requires, under federal regulations, state Medicaid agencies
to impose temporary moratoria on the enrollment of new
providers, or provider types identified by the Secretary of
the federal Department of Health and Human Services (HHS) as
posing an increased risk to the Medicaid program. The
Medicaid agency is not required to impose such a moratorium if
the Medicaid agency determines that imposition of a temporary
moratorium would adversely affect beneficiaries' access to
medical assistance. If a Medicaid agency makes such a
determination, the Medicaid agency must notify the Secretary
of HHS in writing.
21)Federal regulations authorize Medicaid agencies to impose
temporary moratoria on enrollment of new providers, or impose
numerical caps or other limits that the Medicaid agency
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identifies as having a significant potential for fraud, waste,
or abuse and that the Secretary of HHS has identified as being
at high risk for fraud, waste, or abuse. Before implementing
the moratoria, caps, or other limits, the Medicaid agency must
determine that its action would not adversely impact
beneficiaries' access to medical assistance.
22)Permits DHCS to make unannounced visits to any applicant or
provider for the purpose of determining whether enrollment or
continued enrollment is warranted or as necessary for the
administration of the Medi-Cal Program. Exempts specified
licensed clinic and medical professionals unless DHCS has
reason to believe the provider will defraud or abuse the
Medi-Cal Program.
23)Requires DHCS to develop, in consultation with provider
representatives, including, but not limited to, physician,
pharmacy, and medical supplies providers, a process that
enables a provider to meet and confer with the appropriate
DHCS officials within 30 days after the issuance of a letter
notifying the provider of a withholding of payment or a
temporary suspension for the purpose of presenting and
discussing information and evidence that may impact DHCS'
decision to modify or terminate the sanction.
FISCAL EFFECT : According to the Senate Appropriations
Committee:
1)No additional costs to screen Medi-Cal providers. (DHCS
received five temporary positions in the 2011-12 Budget Act to
perform additional screening required by federal law and this
bill).
2)Unknown potential program savings due to reduced Medi-Cal
billing fraud (50% General Fund, 50% federal funds).
3)Unknown, but likely minor, local mandate claims due to
reporting requirements on local law enforcement agencies
investigating fraud allegations (General Fund). Whether or
not local law enforcement agencies will make reimbursement
claims is unknown. However, given the limited information
that such a report is required to contain, costs to any
individual law enforcement agency are likely to be minor.
4)Estimated annual licensing fee revenues of $600,000 (General
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Fund).
COMMENTS :
1)PURPOSE OF THIS BILL . According to the author, this bill is
sponsored by DHCS to conform state Medi-Cal fraud law to the
ACA by conforming state law to federal law in the areas of
screening, enrollment, payment suspensions, overpayment
recovery, and provider sanctions, DHCS will maintain
California's eligibility for federal funds. The author states
that CMS believes the new screening requirements will help
reduce fraud by moving Medi-Cal from a "pay and chase" model
to one that will prevent fraudulent providers from enrolling
in the first place. DHCS states that these new actions are
not provided for in existing California statutes or
regulations. Therefore, this bill is necessary to grant the
legal authority to implement the provisions that exceed or
conflict with current authority.
In March of 2012, the U.S. Supreme Court held three days of
testimony on the constitutionality of two major provision of
the ACA arising out of two cases in the 11th Circuit Court of
Appeals, National Federation of Independent Business v.
Sebelius , and Florida v. Department of Health and Human
Services (2011) 11th Circuit Nos. 11-11021 & 11-11067. The
two provisions under review were the individual mandate and
the Medicaid expansion. With regard to the individual
mandate, the ACA requires most people, with some exceptions,
to maintain minimum essential coverage for themselves and
their dependents. The mandate can be satisfied by obtaining
coverage through employer-sponsored insurance, an individual
insurance plan, including those offered through a health
benefit exchange, a grandfathered health plan, or government
sponsored coverage. On June 28, 2012, the U.S. Supreme Court,
in a 5-4 decision upheld the individual mandate provisions of
the ACA, but ruled unconstitutional the mandatory nature of
the Medicaid expansion provisions. With regard to the
individual mandate, the Court determined that it must be
construed as imposing a tax on those who do not have health
insurance and as such may be upheld as within Congress's power
under the Taxing Clause. The Court also determined the
Medicaid expansion violates the Constitution by threatening
states with the loss of their existing Medicaid funding if
they decline to comply with the expansion. However, because
of the Severability Clause in Medicaid, the constitutional
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violation is fully remedied by precluding the HHS Secretary
from applying the provision to withdraw existing Medicaid
funds for failure to comply with the expansion requirements,
but instead allowing the expansion as a state option.
The provisions of the ACA being implemented by this bill apply
to a state's existing Medicaid programs. As such, they remain
intact in light of the court's decision.
2)BACKGROUND . The ACA includes numerous provisions designed to
increase program integrity in Medicaid, including terminating
providers from Medicaid that have been terminated in other
programs, suspending Medicaid payments based on pending
investigations of credible allegations of fraud, and
preventing inappropriate payment of claims under Medicaid.
CMS issued final rules, effective March 25, 2011, to implement
many of these provisions. These included procedures under
which screening is conducted for providers of medical or other
services and supplier in Medicaid and in the Children's Health
Insurance Program (CHIP); an application fee imposed on
institutional providers and suppliers; temporary moratoria
that may be imposed if necessary to prevent or combat fraud,
waste, and abuse under the Medicare and Medicaid programs, and
CHIP; guidance for states regarding termination of providers
from Medicaid and CHIP if terminated by Medicare or another
Medicaid state plan or CHIP and requirements for suspension of
payments pending an investigation of credible allegations of
fraud in the Medicare and Medicaid programs. The state is
required to file a SPA to document Medi-Cal Program compliance
to CMS. As a consequence, many of the provisions are
contingent upon approval of the SPA.
3)FEE. The ACA imposed a new fee on each provider of medical
services in Medicare, Medicaid, and CHIP to be used by the
Secretary of HHS to cover the cost of screening and other
program integrity efforts. The ACA excludes eligible
professionals, such as physicians and nurse practitioners and
physician practitioner groups from the fee. According to CMS,
because the purpose of the application fee is to, in part,
cover the costs of conducting the provider and supplier
screening activities, a provider or supplier enrolled in more
than one program (that is, Medicare and Medicaid or CHIP, or
all three programs) would only be subject to the application
fee under Medicare and the fee would cover screening
activities for enrollment in all programs. However, if a
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provider has not paid the fee to enroll in Medicare or in
another state Medicaid or CHIP program, this bill provides the
statutory authority for DHCS to collect the fee and conduct
the necessary screening. The ACA set the base fee as $500 in
2010 with an adjustment based on the consumer price index.
The application fee for calendar year 2012 is $523.00. The
proceeds are shared with the state when the state collects the
fee. The ACA also permits the HHS Secretary to grant, on a
case-by-case basis, exceptions to the application fee in the
Medicare and Medicaid programs and CHIP if the HHS Secretary
determines that imposition of the fee would result in a
hardship. According to CMS, one instance that might support a
request for hardship exception is in the event of a national
public health emergency where a provider or supplier is
enrolling for purposes of furnishing services required as a
result of the national public health emergency situation.
Such requests will be considered on a case-by-case basis, as
required by the statute.
4)SCREENING. The ACA required the HHS Secretary to establish
levels of screening of providers and suppliers according to
the risk of fraud, waste, and abuse the Secretary determines
is posed by particular provider and supplier categories. In
considering how to establish consistent screening standards,
CMS proposed to designate provider and supplier categories
that are subject to certain screening procedures based on its
assessment of fraud, waste and abuse risk of the provider or
supplier category, taking into consideration a variety of
factors. These factors included its own experience with
claims data used to identify fraudulent billing practices as
well as the expertise developed by contractors charged with
investigating and identifying instances of Medicare fraud
across a broad spectrum of providers. In addition, CMS has
relied on insights gained from numerous studies conducted by
the HHS-Office of Inspector General (OIG), the Government
Accounting Office and other sources. Based on this, CMS set
three levels of screening and associated risk: ''limited,''
''moderate,'' and ''high'' and each provider/supplier category
is assigned to one of these three screening levels. The state
agency must adjust the categorical risk level from ''limited''
or ''moderate'' to ''high'' when any of the following occurs:
a) The State Medicaid agency imposes a payment suspension on a
provider based on credible allegation of fraud, waste, or
abuse, the provider has an existing Medicaid overpayment, or
the provider has been excluded by the OIG or another state's
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Medicaid program within the previous 10 years; or, b) The
state Medicaid agency or CMS in the previous six months lifted
a temporary moratorium for the particular provider type and a
provider that was prevented from enrolling based on the
moratorium applies for enrollment as a provider at any time
within six months from the date the moratorium was lifted
Examples of providers that are considered "limited" risk are
physician or nonphysician practitioners, medical groups or
clinics; ambulatory surgical centers; end-stage renal disease
facilities; Federally Qualified Health Centers; and,
hospitals, including critical access hospitals and skilled
nursing facilities. Providers in this category are required
to be screened for verification of provider specific
requirements, license verification and are required to have
identifying information run through specified database checks.
The "moderate" category includes comprehensive outpatient
rehabilitation facilities, hospice organizations; independent
diagnostic testing facilities, independent clinical
laboratories; and, ambulance services suppliers. This
category is subject to a pre-enrollment and post-enrollment
site visits and required to allow unannounced on-site
inspections of any and all provider locations, in addition to
those screening tools applicable to the limited level of
screening.
Providers and suppliers in the "high" category are also required
to submit fingerprints and are subject to criminal background
checks in addition to the screening tools applicable to
moderate and limited risk providers. This category includes
newly enrolling home health agencies, and providers of durable
medical equipment, prosthetics, orthotics, and supplies. The
screening requirements apply to all individuals who maintain a
5% or greater direct or indirect ownership interest in the
provider or supplier. In addition, the regulations allow for
denial of billing privileges to newly enrolled providers and
suppliers and revocation of billing privileges for
revalidating providers and suppliers if owners or officials of
providers or suppliers refuse to submit fingerprints when
requested to do so.
This bill revises the existing provider enrollment provisions to
conform to these requirements such as requiring fingerprints
from certain providers, requiring additional identifying
information such as taxpayer identification numbers, and
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expands DHCS authority to sanction a noncompliant provider by
denying continued enrollment.
5)SUPPORT . DHCS, sponsor of this bill writes in support that
this bill would align California's state law with the Federal
Regulations as it relates to screening, enrollment, payment
suspensions, overpayment suspensions, overpayment recovery,
and sanctions of Medi-Cal providers. According to DHCS, these
new actions are not provided for in existing statutes or
regulations. DHCS argues in support that California statute
must be amended in order for the state to have the necessary
legal authority to comply with federal requirements and the
ACA. DHCS states that this bill would make only the minimally
required amendments to existing law given that California has
held standards of participation more rigid than the federal
requirements in the past. According to DHCS, noncompliance
could result in loss of federal financial participation
funding program wide.
6)POLICY COMMENTS .
a) Current fraud, waste, and abuse . Even without this
bill, the current California Medi-Cal FFS provider
screening, enrollment, and fraud prevention system is very
robust; some might even characterize it as onerous. In
fact, the most recent Medi-Cal Payment Error Study (MPES)
found that only 1.16% of the total payments in the FFS
Medi-Cal Program were for claims that disclosed
characteristics of potential fraud. Furthermore, the MPES
overall payment error rate had declined from 8.4% in 2005
to 5.35% in 2009. Nonetheless, as described above, the ACA
has added additional requirements. The sponsor and author,
with input from providers and the legislature, have
attempted to limit the new requirements to the minimum
necessary to comply with federal law. Furthermore, in
order to moderate the impact, this bill revises existing
provisions to add new protections or limit the scope of
existing sanctions. For instance, the ACA requires that
payments must be suspended if there is a credible
allegation of fraud for which an investigation is pending
under the Medicaid program against an individual or entity
unless the agency has good cause to not suspend payments or
to suspend payment only in part. Providers believe that
this is a lesser standard than the current standard
requiring evidence of fraud or willful misrepresentation.
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A number of protections have been added to mitigate the
impact. To begin with, current law did not set any limits
on the suspension if the case had been referred to law
enforcement for investigation. This bill now provides for
the suspension to be lifted if there has been no active
investigation after 12 months. In addition, this bill
establishes a standard of review of the allegation that is
equal to that used by a court in approving a search
warrant.
b) Exception to APA . Existing state law allows the DHCS
Director, in consultation with interested parties, through
regulation, to adopt, readopt, repeal, or amend additional
measures to prevent or curtail fraud and abuse.
Regulations adopted, readopted, repealed, or amended under
this provision are deemed to be emergency regulations in
accordance with the APA. Existing law deems these
regulations as an emergency, and existing law exempts these
regulations from review by the Office of Administrative
Law.
Existing law also allows the DHCS Director, without taking
regulatory action under the APA, to implement, interpret,
or make specific specified provisions of existing law
dealing with Medi-Cal provider enrollment, including by
means of a provider bulletin or similar instruction. In
doing so, DHCS is required to notify and consult with
interested parties and appropriate stakeholders in
implementing, interpreting, or making specific those
provisions, including all of the following:
i) Notifying provider representatives of the proposed
action or change, including providing notice at least 10
business days prior to the meeting described below;
ii) Scheduling at least one meeting with interested
parties and appropriate stakeholders to discuss the
action or change;
iii) Allowing for written input regarding the action or
change; and,
iv) Providing at least 30 days' advance notice of the
effective date of the action or change.
Under this bill DHCS is requesting authority to implement
the provisions of this bill by means of the provider
bulletin requirements instead of adopting regulations
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through the APA.
REGISTERED SUPPORT / OPPOSITION :
Support
Department of Health Care Services (sponsor)
Los Angeles County District Attorney's Office
Opposition
None on file.
Analysis Prepared by : Marjorie Swartz / HEALTH / (916)
319-2097