BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 1529|
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THIRD READING
Bill No: SB 1529
Author: Alquist (D)
Amended: 8/21/12
Vote: 21
SENATE HEALTH COMMITTEE : 6-2, 4/18/12
AYES: Hernandez, Alquist, De León, DeSaulnier, Rubio, Wolk
NOES: Harman, Anderson
NO VOTE RECORDED: Blakeslee
SENATE APPROPRIATIONS COMMITTEE : 5-2, 5/7/12
AYES: Kehoe, Alquist, Lieu, Price, Steinberg
NOES: Walters, Dutton
SENATE FLOOR : 26-11, 5/14/12
AYES: Alquist, Blakeslee, Calderon, Corbett, Correa, De
León, DeSaulnier, Evans, Hancock, Hernandez, Kehoe, Leno,
Lieu, Liu, Lowenthal, Negrete McLeod, Padilla, Pavley,
Price, Rubio, Simitian, Steinberg, Vargas, Wolk, Wright,
Yee
NOES: Anderson, Berryhill, Cannella, Dutton, Emmerson,
Fuller, Gaines, Harman, Huff, La Malfa, Walters
NO VOTE RECORDED: Runner, Strickland, Wyland
ASSEMBLY FLOOR : 52-26, 8/23/12 - See last page for vote
SUBJECT : Medi-Cal: providers: fraud
SOURCE : Author
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DIGEST : This bill revises various provisions related to
the screening, enrollment, disenrollment, suspensions, and
other sanctions against fee-for service 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).
Assembly Amendments delete the Senate provisions which
would have allowed the Department of Health Care Services
(DHCS) to deactivate all of a provider's business addresses
if the provider does not remediate discrepancies found
during pre-enrollment. The amendments also require that
once approval of the State Plan Amendment has been made, it
requires the declaration by the Director of DHCS of the
approval be posted on the DHCS Web site and sent to the
Legislature.
ANALYSIS : Existing federal and state law includes many
provisions designed to prevent billing fraud in the
Medi-Cal program. Existing law puts into place
requirements on health care providers wising to enroll in
Medi-Cal to provide services to Medi-Cal clients. Existing
law also puts in place a process for investigating alleged
instances of fraud by the DHCS.
The federal Patient Protection and Affordable Care Act made
a variety of changes to federal law in this area, with the
overall purpose of reducing fraud.
Existing state law contains a higher standard than the new
federal standard of "a credible allegation of fraud" for
health care programs administered by DHCS. For example,
existing state law:
1.Requires the DHCS Director, when a letter or order of
denial of continued enrollment or suspension of any type
or duration, based upon fraud or abuse, or when a
withholding of payments, based upon "reliable evidence of
fraud or willful misrepresentation," is issued by DHCS to
a provider, to review the evidence supporting the denial
of continued enrollment, suspension, or withholding of
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payments.
2.Permits the Director to deny continued enrollment,
suspend, or withhold payments to the provider with
respect to those other health care programs if, in the
opinion of the 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.
3.Permits the 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.
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. 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.
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4. Defines a good cause exception, by reference to
federal regulations effective March 25, 2011 and
specifies circumstances that qualify as good cause to
suspend payments.
5. Revises current provisions relating to the temporary
suspension of a provider who is under investigation for
fraud or abuse by authorizing the DHCS to lift the
temporary suspension when a resolution of the
investigation occurs.
6. 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 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.
7. Adds an exception to the current requirement of a
notice to providers within five days of a payment
suspension authorizing 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.
8. 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."
9. 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.
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10. 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 Medi-Cal provider reimbursement claims must
specify the ordering, referring, or prescribing
provider and include the providers National Provider
Identifier (NPI).
1. Adds new information 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.
2. 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, including
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.
3. Adds failure to pay the application fee, as specified
in #12 above, to the reasons that DHCS may include in
the notice to an applicant or provider that an
application for enrollment or continued enrollment
package is denied.
4. Effective upon approval of a SPA as required by the
ACA and implementing regulations, authorizes DHCS to
deactivate currently enrolled specified Medi-Cal
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providers, not only a provider applying for continued
enrollment or to operate a new location, under
specified circumstances, including failure to remediate
discrepancies.
5. 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.
6. 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 #14 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.
7. 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.
8. 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 the
provider's application, and requires the provider to be
subject to deactivation.
9. Effective upon approval of a SPA as required by the
ACA and implementing regulations, when the Centers for
Medicare and Medicaid Services 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
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moratorium provisions, unless DHCS determines that the
moratorium will adversely impact beneficiaries access
to medical assistance.
10. Effective January 1, 2012, authorizes DHCS to enter
into contracts with Medicaid Recovery Audit
Contractors.
11. 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.
12. 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 Web site and
transmitted to the Legislature.
13. 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.
14. Makes other technical and clarifying changes.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
According to the Assembly Appropriations Committee:
Negligible additional costs to DHCS. In general, the
adjustments to the screening, enrollment, and
investigation process required by this bill are required
to comply with federal law.
Estimated annual fee revenues of $600,000 collected
pursuant to federal law, and specified by this bill, will
offset some General Fund costs related to provider
screening and enrollment of providers.
This bill requires the Department of Justice (DOJ), as
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well as any other law enforcement agency that has
accepted referrals for investigation from DHCS, to
provide DHCS quarterly reports listing each referral and
investigation status. Costs to DOJ are expected to be
minor and absorbable. There is a potential for
state-reimbursable mandate costs related to this
requirement, but as the reporting requirement is minimal,
any costs are expected to be minor.
SUPPORT : (Verified 8/27/12)
Department of Health Care Services (source)
California Advocates of Nursing Home Reform
ARGUMENTS IN SUPPORT : This bill is sponsored by DHCS to
align California's state law with the ACA-related changes
to federal regulations, as it relates to screening,
enrollment, payment suspensions, overpayment recovery and
sanctions of Medi-Cal providers. DHCS states this bill
would provide DHCS with the authority to establish
procedures for California to comply with ACA provisions
required by federal regulations. DHCS states CMS believes
the new screening requirements will move Medicare and
Medicaid from a "pay and chase" model to one that will
prevent fraudulent providers from enrolling as Medicare and
Medicaid providers. DHCS continues that the intent of this
bill is to prevent fraud from occurring in the Medi-Cal
program, and the federal regulations require states to
implement these measures and ensure compliance. Currently,
California statutes provide authority to DHCS and other
state departments to take actions to protect the fiscal
integrity of the Medi-Cal program but the new federal
regulatory requirements are not provided for in existing
California statutes or regulations. Therefore, California
statute must be amended in order for the state to have the
necessary legal authority and comply with federal
requirements. DHCS states this bill would make only the
minimally-required amendments to existing law to gain the
statutory authority to carry out the federal requirements.
Given California has had standards of participation more
rigid than the federal requirements in the past, minimal
changes to California codes are necessary for a majority of
the new requirements established by the regulations. As
the state Medicaid agency, if DHCS does not comply with the
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regulations, there is the potential loss of federal
financial participation program-wide.
ASSEMBLY FLOOR : 52-26, 8/23/12
AYES: Alejo, Allen, Ammiano, Atkins, Beall, Block,
Blumenfield, Bonilla, Bradford, Brownley, Buchanan,
Butler, Charles Calderon, Campos, Carter, Cedillo,
Chesbro, Davis, Dickinson, Eng, Feuer, Fletcher, Fong,
Fuentes, Furutani, Galgiani, Gatto, Gordon, Hall,
Hayashi, Hill, Huber, Hueso, Huffman, Lara, Bonnie
Lowenthal, Ma, Mendoza, Mitchell, Monning, Pan, Perea, V.
Manuel Pérez, Portantino, Skinner, Solorio, Swanson,
Torres, Wieckowski, Williams, Yamada, John A. Pérez
NOES: Achadjian, Bill Berryhill, Conway, Cook, Donnelly,
Beth Gaines, Garrick, Grove, Hagman, Halderman, Harkey,
Jeffries, Jones, Knight, Logue, Mansoor, Miller, Morrell,
Nestande, Nielsen, Norby, Olsen, Silva, Smyth, Valadao,
Wagner
NO VOTE RECORDED: Gorell, Roger Hernández
CTW:n 8/27/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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