BILL ANALYSIS Ó
SENATE COMMITTEE ON HEALTH
Senator Ed Hernandez, O.D., Chair
BILL NO: SB 1339
AUTHOR: Cannella
INTRODUCED: February 21, 2014
HEARING DATE: April 24, 2014
CONSULTANT: Diaz
SUBJECT : Medi-Cal: Drug Medi-Cal Program providers.
SUMMARY : Requires the Department of Health Care Services or a
county to obtain state summary criminal history information and
subsequent arrest notification on a Drug Medi-Cal provider's
owner and key staff, as defined, prior to entering into a
contract. Allows the department or a county to enter into a
contract with a Drug Medi-Cal provider irrespective of the
contents of the state summary criminal history information.
Existing law:
1.Establishes the Medi-Cal program, which is administered by the
Department of Health Care Services (DHCS), under which
qualified low-income individuals receive health care services.
The Medi-Cal program is, in part, governed and funded by
federal Medicaid program provisions.
2.Allows DHCS to enter into Drug Medi-Cal (DMC) Treatment
Program contracts with each county for the provision of
alcohol and drug use services within the county service area.
3.Requires DHCS to contract for DMC services in a county as
necessary that does not enter into or terminates its DMC
contract with DHCS to ensure beneficiary access to alcohol and
drug use services. Requires contracts be made in accordance
with federal Medicaid and state Medi-Cal laws and in
accordance with the federal court order and any future action
in the case of Sobky v. Smoley (E.D.Cal 1994) 855 F.Supp.
1123.
4. Requires a DMC contract in order for DMC services to be
reimbursed to DMC-certified providers.
5.Permits counties to negotiate contracts only with providers
certified by DHCS to provide DMC services.
This bill:
Continued---
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1.Requires DHCS or a county to obtain state summary criminal
history information (CHI) from the Department of Justice (DOJ)
on a DMC provider's owner and key staff prior to entering into
a contract. Defines "key staff" as a person employed by or
working as a contractor for the DMC provider and who has
either supervisory duties or duties that give him or her
access to money.
2. Allows DHCS or a county to contract with a DMC-certified
provider irrespective of the contents of the CHI.
3.Requires the DMC provider's owner and key staff to submit
fingerprint images and related information to DOJ to obtain
information on the existence and content of a record of state
or federal convictions and arrests. Requires DOJ to review and
compile the information and disseminate a response to DHCS or
a county. Requires DHCS or a county to request a subsequent
arrest notification service from DOJ for those subject to
fingerprinting as related to this bill.
FISCAL EFFECT : This bill has not been analyzed by a fiscal
committee.
COMMENTS :
1.Author's statement. According to the author, a yearlong
investigation by CNN's Special Investigations Unit and the
Center for Investigative Reporting (CIR) uncovered a
widespread "rehab racket" within the DMC outpatient treatment
program. There is an obvious oversight in DMC that has allowed
individuals to profit from deceptive practices. California
referred 16 clinics to the Department of Justice in July 2013.
Fraudulent facilities are detrimental to the integrity of
legitimate clinics that undeniably help people on the path to
substance abuse recovery.
The Joint Legislative Audit Committee approved an audit of the
DMC program in August 2013 (2013-119). The audit report has
not yet been released; however the initial analysis and
investigation support the reports of clinic operators
fabricating patient's claims, overcharging the state for
reimbursements, and employing individuals with disqualifying
criminal records. More concerning is the fact that clinics
continued to receive reimbursements.
This bill supplements any fraud prevention measures taken by
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the administration by providing more information on contracted
individuals who bill the agency. Providing DHCS and county
agencies that oversee these programs with CHI contributes to
transparency and accountability in the DMC program.
2.DMC. According to DHCS, the DMC program provides substance use
disorder treatment services to Medi-Cal beneficiaries. Funding
for the program was realigned to the counties as part of the
2011 Public Safety Realignment, but the delivery system
remained unchanged. DHCS certifies and monitors DMC treatment
providers to ensure adherence to Title 9 and Title 22,
California Code of Regulations, which govern DMC treatment.
According to DHCS, as of January 1, 2014, responsibility for
initial and ongoing DMC certification was shifted to the
Medi-Cal Provider Enrollment Division (PED) from the Substance
Use Disorder Compliance Division, which used to be part of the
Department of Alcohol and Drug Programs (ADP) prior to its
elimination and transfer to DHCS. PED is beginning to align
DMC certification with the Medi-Cal Fee-For-Service provider
enrollment process. Existing law prohibits DHCS from enrolling
any provider that has been convicted of any felony or
misdemeanor involving fraud or abuse in any government
program, as specified. DHCS has the authority to complete a
background check on applicants to verify the accuracy of
information provided to be enrolled in the Medi-Cal program,
which may include, but is not limited to, onsite inspections
prior to enrollment, review of business records, and data
searches.
The Medi-Cal program imposes a variety of sanctions on
providers that fail to comply with requirements or fail to
meet the program's standards of participation. Sanctions range
from temporary suspension of submitting claims for
reimbursement to permanent suspension from participating in
the program.
3.Allegations of fraud and DHCS response. According to DHCS, the
CNN/CIR report in July 2013 alleged that providers hired
individuals who were on the federal list of Medicaid excluded
providers and had been convicted of a felony or misdemeanor
involving fraud or abuse in a government program, or had been
convicted of neglect or abuse of a patient while providing a
health care service. Additionally, some DMC-certified
facilities were suspected of violating state and federal laws
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by providing services not deemed medically necessary. Others
were suspected of fraudulently billing DMC for services that
were never rendered.
In July 2013, DHCS began a process to recertify all current
DMC-certified providers. According to DHCS, other steps have
been taken to ensure DMC program integrity since the transfer
of all DMC program oversight to DHCS from ADP in July 2013,
which include a statewide sweep of providers, taking actions
against unscrupulous DMC program medical directors, engaging
county entities to assist in monitoring efforts, and securing
additional resources to fight DMC fraud. In February 2014,
DHCS stated that it had suspended 68 providers operating 214
facilities that had credible allegations of fraud, and
referred the providers to DOJ for criminal prosecution.
Approximately 440 providers total were inactivated for not
billing. Providers that have not billed for 12 months or more
are automatically suspended. DHCS stated that those who have
been deactivated for not billing will be removed from the
deactivation list if DHCS receives a letter stating that the
DMC-certified program intends to bill in the future.
Other reforms DHCS has implemented include requiring all
DMC-certified provider medical directors to be enrolled in the
Medi-Cal program by PED; conducting monthly checks against the
Medicare Exclusion Database to identify exclusions and
reinstatements of existing DMC providers; amending the next
state-county contract to increase county monitoring of DMC
providers; and developing a regulatory revision package to
increase DMC program integrity.
4.CHI. According to the Attorney General's (AG) office, state
and local summary CHI is confidential and access is strictly
regulated by statute. DOJ provides an automated service for
CHI checks that may be required as a condition of such things
as employment, licensing, and certification. Digitally scanned
fingerprints and related information can be submitted
electronically to DOJ within a matter of minutes and allows
CHI to be processed usually within 72 hours, according to the
AG's Web site. DOJ's record retention policy is to maintain
CHI until the subject reaches 100 years of age.
Although DHCS has the authority to conduct background checks
on applicants prior to enrollment, existing law currently only
requires CHI checks and fingerprints for providers that DHCS
designates as high risk, meaning providers for whom DHCS
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imposes a payment suspension based on a credible allegation of
fraud, waste, or abuse; providers with an existing Medicaid
overpayment based on fraud, waste, or abuse; providers
excluded by the Office of Inspector General or another state's
Medicaid program within the previous 10 years; and
providers/applicants for whom a moratorium has been lifted
within the previous six months prior to applying for the
Medicaid program and the provider/applicant would have been
prevented from enrolling due to the moratorium. However, DHCS
has determined that it currently lacks the statutory authority
to receive the results of the CHI and will be pursuing trailer
bill language this year to be given the authority to receive
the results of the CHI of applicants and providers from DOJ.
5.Double referral. This bill has been double referred. Should it
pass out of this committee, it will be referred to Senate
Public Safety Committee.
Related legislation. AB 1644 (Medina) would require DMC
providers to be designated as a "high" categorical risk and be
subject to CHI checks as a condition of certification. AB 1644
is currently in the Assembly Appropriations Committee.
AB 1967 (Pan) would require DHCS to promptly notify each
county that currently contracts with a DMC provider if DHCS
has commenced or concluded an investigation of the provider.
This bill is currently in the Assembly Appropriations
Committee.
6.Prior legislation. SB 1529 (Alquist), Chapter 797, Statutes of
2012, revised screening, enrollment, disenrollment,
suspensions, and other sanctions for fee-for service Medi-Cal
providers and suppliers to conform to the federal Affordable
Care Act.
SB 857 (Speier), Chapter 601, Statutes of 2003, made changes
to the Medi-Cal program to address provider fraud, such as
establishing new Medi-Cal application requirements for new
providers, existing providers at new locations, and providers
applying for continued enrollment.
7.Support. Supporters of the bill cite the need for a CHI
process, which would assist counties and DHCS with protecting
against fraud and misuse of taxpayer dollars within the DMC
program.
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8.Policy Comments.
a. Contents of the state summary CHI. This bill allows
DHCS or a county to contract with a certified DMC
provider irrespective of the contents of the CHI. The
author's office has indicated that the intent of this
bill is not to screen out providers or staff based on
previous criminal convictions. However, this bill is
unclear, as written, that those who submit to CHI should
not be screened out based solely on the existence of a
criminal past. The staff suggests an amendment to clarify
this point.
b. Definition of key staff. This bill defines "key
staff" as a person employed by or working as a contractor
for the DMC provider and who has either supervisory
duties or duties that give him or her access to money. It
is unclear how someone who only has supervisory duties
would contribute to defrauding the DMC program more than
a staff person without such responsibility. Likewise, it
is unclear how someone who only has access to money, such
as someone who collects patients' copays, would
contribute to defrauding the DMC program more than
another staff person. The medical director of the DMC
program has primary responsibility for signing off on
patient/client treatment plans and consulting
patients/clients face-to-face, as well as documenting
that a service was rendered. The staff suggests
amendments to delete "key staff" and instead require a
DMC provider's owner and the medical director to submit
to a CHI check.
9.Amendments. The staff suggests the following amendments.
14124.27. (a) A county or the department, before contracting
with a certified Drug Medi-Cal (DMC) provider, shall obtain
state summary criminal history information from the Department
of Justice for the DMC provider's owner and key staff medical
director . A county or the department may contract with a
certified DMC provider irrespective of the contents of the
state summary criminal history information.
(b) The owner and key staff medical director of the DMC
provider shall submit fingerprint images and related
information to the Department of Justice for purposes of
obtaining information as to the existence and content of a
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record of state or federal convictions, and state or federal
arrests for which the Department of Justice establishes that
the person is free on bail or on his or her own recognizance
pending trial or appeal. The Department of Justice shall
review the available information and compile and disseminate a
response to the county or the department, as appropriate,
pursuant to Section 11105 of the Penal Code.
(c) The county or department contracting with the DMC provider
shall request subsequent arrest notification service from the
Department of Justice, as provided under Section 11105.2 of
the Penal Code, for the owner and key staff medical director
of the DMC provider.
(d) For purposes of this section, "key staff" means a person
employed by or working as a contractor for the DMC provider
and who has either supervisory duties or duties that give him
or her access to money.
(d) For purposes of this section, except as provided in
federal law, a provider's owner and medical director shall not
be excluded from participation in the DMC program based solely
on the existence of a past criminal record.
SUPPORT AND OPPOSITION :
Support: Alameda County Sheriff's Office
California Welfare Fraud Investigators Association
Howard Jarvis Taxpayers Association
Los Angeles County Board of Supervisors
Oppose: None received.
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