BILL ANALYSIS                                                                                                                                                                                                    Ó






                             SENATE COMMITTEE ON HEALTH
                          Senator Ed Hernandez, O.D., Chair

          BILL NO:       SB 1315
          AUTHOR:        Monning 
          AMENDED:       April 3, 2014
          HEARING DATE:  April 24, 2014
          CONSULTANT:    Bain

           SUBJECT  : Medi-Cal: providers.
           
          SUMMARY  : Requires a notice of temporary suspension issued to a  
          health care provider by the Department of Health Care Services  
          Medi-Cal Provider Enrollment Division to include a list of  
          discrepancies required to be remediated and the timeframe in  
          which a provider can demonstrate that the discrepancies  
          identified have been remediated. Requires the provider to be  
          removed from enrollment as a Medi-Cal provider if a provider  
          fails to remediate the discrepancies identified.

          Existing law:
          1.Requires an applicant, a health care provider who is licensed  
            or certificated under state law or who is a professional  
            corporation, to be enrolled in the Medi-Cal program as either  
            an individual provider or as a rendering provider in a  
            provider group for each application package submitted and  
            approved.

          2.Requires an applicant that currently is not enrolled in the  
            Medi-Cal program, or a provider applying for continued  
            enrollment (upon written notification from the Department of  
            Health Care Services (DHCS), and a provider not currently  
            enrolled at a location where the provider intends to provide  
            services to Medi-Cal beneficiaries, to submit a complete  
            application package to DHCS for enrollment, continuing  
            enrollment, or enrollment at a new location or a change in  
            location.

          3.Makes a provider subject to temporary suspension from the  
            Medi-Cal program, which includes temporary deactivation of the  
            provider's number, including all business addresses used by  
            the provider to obtain reimbursement from the Medi-Cal program  
            if the provider has failed to remediate significant  
            discrepancies in information provided to DHCS by the provider  
            or significant discrepancies that are discovered as a result  
            of an announced or unannounced visit, for purposes of  
                                                         Continued---



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            enrollment, continued enrollment, or certification.

          4.Requires the DHCS director to notify the provider in writing  
            of the temporary suspension and deactivation of provider  
            numbers, which is required to take effect 15 days from the  
            date of the notification.
          
          This bill:
          1.Requires a notice of temporary suspension to a Medi-Cal  
            provider to include the following:

                  a.        A list of discrepancies required to be  
                    remediated; and,
                  b.        The timeframe in which a provider may  
                    demonstrate to DHCS that the discrepancies identified  
                    have been remediated.

          2.Requires DHCS to lift the temporary suspension and to notify  
            the provider that he or she is eligible to receive Medi-Cal  
            reimbursement for services provided after the date the  
            temporary suspension was lifted if a provider demonstrates to  
            DHCS that:

                  a.        The discrepancies identified have been  
                    remediated; and,
                  b.        The provider meets the standards of  
                    participation within the timeframe specified.
                   
          3.Requires a provider who has received a notice of temporary  
            suspension to be removed from enrollment as a Medi-Cal  
            provider by operation of law, if a provider fails to remediate  
            the discrepancies identified within the timeframe specified.

           FISCAL EFFECT  : This bill has not been heard by a fiscal  
          committee.

           COMMENTS  :  
           1.Author's statement.  According to the author, for the few  
            Medi-Cal fee-for-service providers who fail to remediate  
            deficiencies and are subject to existing temporary suspension  
            and deactivation requirements, there is a gap of enforcement  
            that must be cleaned up. Current law fails to require any  
            final action pertaining to providers temporarily suspended and  
            temporarily deactivated as part of administrative enforcement  
            actions. Requiring the additional action to deactivate under  
            this bill closes this gap, and has the potential to reduce the  




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            prevalence of fraud and increase program integrity in the  
            Medi-Cal program and compliance with the Affordable Care Act  
            (ACA).

          2.Background on Medi-Cal Provider Enrollment Process. State law  
            governing Medi-Cal and federal Medicaid law and regulations  
            contain provisions to prevent and address fraud in the  
            Medicaid program. For example, existing state law requires a  
            health care provider seeking to provide services in the  
            fee-for-service Medi-Cal program to submit a complete  
            application package for enrollment, continued enrollment,  
            enrollment at a new location or a change in location. DHCS'  
            Provider Enrollment Division indicates it receives 1,400  
            applications from providers each month. 

            Existing law authorizes DHCS to temporarily suspend and  
            temporarily deactivate a provider when DHCS discovers that the  
            provider cannot demonstrate program compliance. DHCS informs a  
            provider of discrepancies that must be remediated when issuing  
            a letter to the provider informing them of the temporary  
            suspension. Examples of issues that warrant a temporary  
            suspension include:


                  a.        Failing to report a change of address;
                  b.        Failing to be open and available to the  
                    general public;
                  c.        Failing to have regularly established and  
                    posted business hours;
                  d.        Failing to report a change in ownership;
                  e.        Failing to have the necessary equipment and  
                    facilities to carry out day-to-day business; and,
                  f.        Failing to have the appropriate business or  
                    professional license.

            However, DHCS does have the authority to take a final action  
            against a provider if the provider fails to remediate the  
            deficiencies that triggered the temporary suspension or  
            deactivation. In addition, current law also does not specify a  
            time period for a provider to become compliant, nor does it  
            specify the timeframe a temporary suspension can remain in  
            place. 

            A provider subject to a temporary suspension cannot receive  
            reimbursement from the Medi-Cal program. A provider who is  




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            subject to a temporary suspension can appeal DHCS' decision,  
            and a provider who is removed from Medi-Cal as a result of a  
            temporary suspension can also reapply.
            
          1.Prior legislation. SB 1529 (Alquist), Chapter 797, Statutes of  
            2012, revises screening, enrollment, disenrollment,  
            suspensions, and other sanctions for fee-for service Medi-Cal  
            providers and suppliers to conform to the federal ACA.

            SB 857 (Speier), Chapter 601, Statutes of 2003, made numerous  
            changes to the Medi-Cal program intended to address provider  
            fraud, including establishing new Medi-Cal application  
            requirements for new providers, existing providers at new  
            locations, and providers applying for continued enrollment.  
          
          2.Support. DHCS writes in support that existing law does not  
            grant it the authority to take a final action against a  
            provider if the provider fails to remediate the deficiencies  
            that triggered the temporary suspension or deactivation. In  
            addition, DHCS argues current law does not specify a time  
            period for a provider to become compliant or a timeframe a  
            temporary suspension can remain in place. This bill would  
            provide DHCS with a corrective action plan to fully address  
            program compliance issues found in an application or  
            discovered during an on-site inspection. DHCS concludes that  
            authorizing the additional action to deactivate noncompliant  
            providers could also reduce the prevalence of fraud and  
            increase program integrity.
          
          3.Amendments. This bill refers in two places to a timeframe to  
            remediate discrepancies but it does not establish a timeframe  
            in this bill. DHCS indicates the current temporary suspension  
            notice issued by DHCS does not specify a timeframe for  
            remediation. An amendment is needed to clarify this provision.
          
           SUPPORT AND OPPOSITION  :
          Support:  Department of Health Care Services

          Oppose:   None received



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