Amended in Senate May 12, 2015

Amended in Senate April 6, 2015

Senate Bill No. 123

Introduced by Senator Liu

January 15, 2015

An act to begin delete add and repeal Section 33134 of the Education Code, and to end delete amend Section 14132.47 begin delete of end delete begin insert of, and to add and repeal Section 14132.465 of, end insert the Welfare and Institutions Code, relating to Medi-Cal.

LEGISLATIVE COUNSEL’S DIGEST

SB 123, as amended, Liu. begin delete Superintendent of Public Instruction: report: end delete begin insert Report: end insert School-Based Medi-Cal Administrative Activities program.

Existing law provides for the Medi-Cal program, which is administered by the State Department of Health Care Services, under which qualified low-income individuals receive health care services. The Medi-Cal program is, in part, governed by, and funded pursuant to, federal Medicaid Program provisions. Existing law establishes an administrative claiming process under which local governmental agencies and local educational consortia contract with the department for the purpose of obtaining federal matching funds to assist with the performance of administrative activities relating to the Medi-Cal program. Existing law defines a local educational agency for these purposes as a local educational agency that participates under the process as a subcontractor to the local educational consortium in its service region.

This bill would require the begin delete Superintendent of Public Instruction end delete begin insert Legislative Analyst, in consultation with the State Department of Education and the State Department of Health Care Services, end insert to review and prepare specific recommendations relative to the administration and oversight of the School-Based Medi-Cal Administrative Activities program. The bill would require the begin delete Superintendent end delete begin insert Legislative Analyst end insert to submit a report containing the specific recommendations to the Legislature and the Governor by July 1, 2016, and would require the report to include, but not necessarily be limited to, an evaluation of specified entities, administrative structures, and information.

Existing law authorizes a participating local governmental agency or a local educational consortium to charge an administrative fee to any entity claiming Administrative Claiming through that agency.

This bill would require the begin delete department end delete begin insert State Department of Health Care Services end insert to annually post on its Internet Web site the administrative fee percentage charged by each local governmental agency or local educational consortium.

This bill also would make various technical and nonsubstantive changes.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

begin delete

SECTION 1.  

Section 33134 is added to the Education Code,
to read:

33134.  

end delete

begin insert

begin insert SECTION 1. end insert   

end insert

begin insert Section 14132.465 is added to the end insert begin insert Welfare and
Institutions Code end insert begin insert , end insert immediately following Section 14132.46 begin insert , to
read: end insert

begin insert

begin insert 14132.465. end insert   

end insert

(a) The begin delete Superintendent end delete begin insert Legislative Analyst, in
consultation with the State Department of Education and the State
Department of Health Care Services, end insert shall review and prepare
specific recommendations relative to the administration and
oversight of the School-Based Medi-Cal Administrative Activities
program. A report containing the specific recommendations shall
be submitted to the Legislature and the Governor by July 1, 2016.
The begin delete Superintendent’s end delete report shall consider the report on the
School-Based Medi-Cal Administrative Activities program issued
by the California State Auditor in 2015, and shall include, but not
necessarily be limited to, an evaluation of all of the following:

(1) The appropriate state agency or agencies to administer the
program.

(2) Oversight of the administration of the program, including
oversight of the state agency, local governmental agencies, and
local educational consortia.

(3) The structure of the program and role of each entity,
including the local governmental agencies and local educational
consortia, how the structures and roles vary across the state, and
the efficiency of those structures and roles in providing funds to
local educational agencies.

(4) The relationships, interactions, and communications state
agencies have with the federal Centers for Medicare and Medicaid
Services, and the process used to disseminate information from
the federal Centers for Medicare and Medicaid Services to local
educational agencies.

(5) The process for reimbursing claims submitted by local
educational agencies, including the amount reimbursed compared
to the amount claimed, the time between submission of a claim
and the reimbursement of that claim, and how the claim and
reimbursement process varies across the state.

(6) The purposes for which local educational agencies use
program funds.

(7) The relationship between local governmental agencies or
local educational consortia and the private or public entities that
have been subcontracted to assist with the performance of
administrative activities.

(8) The rates charged by the local governmental agency and
local educational consortia, how those rates vary across the state,
and how rates are determined.

(9) The ability of a local educational agency to contract with a
local governmental agency or a local educational consortium of
its choosing.

(10) The feasibility of convening a local educational agency
advisory body for the purposes of providing technical assistance
to local educational agencies and communicating with the
administering state agency.

(11) The extent to which the state is maximizing federal funds
available for the program.

(12) How capacity to operate the program can be built within
local educational agencies.

(b) For purposes of this section, “local governmental agency”
shall have the same meaning as specified in subdivision (n) of
Section 14132.47 of the Welfare and Institutions Code, “local
educational agency” shall have the same meaning as specified in
subdivision (o) of Section 14132.47 of the Welfare and Institutions
Code, and “local educational consortium” shall have the same
meaning as specified in subdivision (p) of Section 14132.47 of the
Welfare and Institutions Code.

(c) (1) A report to be submitted to the Legislature pursuant to
subdivision (a) shall be submitted in compliance with Section 9795
of the Government Code.

(2) Pursuant to Section 10231.5 of the Government Code, this
section is repealed on January 1, 2021.

SEC. 2.  

Section 14132.47 of the Welfare and Institutions Code
is amended to read:

14132.47.  

(a) It is the intent of the Legislature to provide local
governmental agencies the choice of participating in either or both
of the Targeted Case Management (TCM) and Administrative
Claiming process programs at their option, subject to the
requirements of this section and Section 14132.44.

(b) The department may contract with each participating local
governmental agency or each local educational consortium to assist
with the performance of administrative activities necessary for the
proper and efficient administration of the Medi-Cal program,
pursuant to Section 1903(a) of the federal Social Security Act (42
U.S.C. Sec. 1396b(a)), and this activity shall be known as the
Administrative Claiming process.

(c) (1) Subject to the requirements of paragraph (2) of
subdivision (f), as a condition for participation in the
Administrative Claiming process, each participating local
governmental agency or each local educational consortium shall,
for the purpose of claiming federal Medicaid reimbursement, enter
into a contract with the department and shall certify to the
department the total amount the local governmental agency or each
local educational consortium expended on the allowable
administrative activities.

(2) The department shall deny the claim if it determines that the
certification is not adequately supported, or does not otherwise
comply with federal requirements, for purposes of claiming federal
financial participation.

(d) Each participating local governmental agency or local
educational consortium may subcontract with private or public
entities to assist with the performance of administrative activities
necessary for the proper and efficient administration of the
Medi-Cal program under the conditions specified by the department
in regulations.

(e) Each Administrative Claiming process contract shall include
a requirement that each participating local governmental agency
or each local educational consortium submit a claiming plan in a
manner that shall be prescribed by the department in regulations
developed in consultation with local governmental agencies.

(f) (1) The department shall require that each participating local
governmental agency or each local educational consortium certify
to the department both of the following:

(A)  The expenditure of 100 percent of the cost of performing
Administrative Claiming process activities. The funds expended
for this purpose shall be from the local governmental agency’s
general fund or the general funds of local educational consortia or
from any other funds allowed under federal law and regulation.

(B) In each fiscal year that its expenditures represent costs that
are eligible for federal financial participation for that fiscal year.
The department shall deny the claim if it determines that the
certification is not adequately supported for purposes of federal
financial participation.

(2) (A) (i) A city that is not a participating local governmental
agency, or any other local public entity, that contracts with a local
governmental agency pursuant to subdivision (d) and that is located
within a county that is a participating local governmental agency
pursuant to this section, may submit certification to the local
governmental agency of amounts expended for Administrative
Claiming services in accordance with Section 433.51 of Title 42
of the Code of Federal Regulations.

(ii) A city or other local public entity that submits certification
pursuant to this paragraph shall comply with the requirements of
paragraph (1), with other requirements applicable to local
governmental agencies that the department determines, by
regulation, to be applicable, and with all applicable federal
requirements.

(iii) The local governmental agency shall forward the city’s or
local public entity’s certification to the department for the purposes
of claiming federal financial participation.

(iv) As applicable, the local governmental agency shall obtain
and retain appropriate certifications from the expending city or
local public entity, together with documentation of the underlying
expenditures, as required by the department.

(B) A tribe or tribal organization, as defined in subdivision (n),
that is not participating in Administrative Claiming process
activities as a local governmental agency, may contract with, and
submit to a tribe or tribal organization that is contracting with, the
department pursuant to subdivision (b) amounts expended for
Administrative Claiming process activities that it is certifying in
accordance with Section 433.51 of Title 42 of the Code of Federal
Regulations and other applicable federal law and regulations. The
tribe or tribal organization receiving the certification shall forward
it to the department for purposes of claiming federal financial
participation. The certification shall comply with all of the
requirements for certification set forth in subparagraph (A).

(g) (1) Notwithstanding any other provision of this section, in
accordance with paragraphs (2) and (3), the state shall be held
harmless from any federal audit disallowance and interest resulting
from payments made to a participating local governmental agency
or local educational consortium pursuant to this section, for the
disallowed claim.

(2) To the extent that a federal audit disallowance and interest
results from a claim or claims for which any participating local
governmental agency or local educational consortium has received
reimbursement for Administrative Claiming process activities, the
department shall recoup from the local governmental agency or
local educational consortium that submitted the disallowed claim,
through offsets or by a direct billing, amounts equal to the amount
of the disallowance and interest, in that fiscal year, for the
disallowed claim. All subsequent claims submitted to the
department applicable to any previously disallowed administrative
activity or claim, may be held in abeyance, with no payment made,
until the federal disallowance issue is resolved.

(3) Notwithstanding paragraph (2), to the extent that a federal
audit disallowance and interest results from a claim or claims for
which the participating local governmental agency or local
educational consortium has received reimbursement for
Administrative Claiming process activities performed by an entity
under contract with, and on behalf of, the participating local
governmental agency or local educational consortium, the
department shall be held harmless by that particular participating
local governmental agency or local educational consortium for
100 percent of the amount of the federal audit disallowance and
interest, for the disallowed claim.

(h) The use of local funds required by this section shall not
create, lead to, or expand the health care funding obligations or
service obligations for current or future years for any participating
local governmental agency or local educational consortium, except
as required by this section or as may be required by federal law.

(i) The department shall deny any claim from a participating
local governmental agency or local educational consortium if the
department determines that the claim is not adequately supported
in accordance with criteria established pursuant to this subdivision
and implementing regulations before it forwards the claim for
reimbursement to the federal Medicaid Program. In consultation
with local governmental agencies and local educational consortia,
the department shall adopt regulations that prescribe the
requirements for the submission and payment of claims for
administrative activities performed by each participating local
governmental agency and local educational consortium.

(j) Administrative activities shall be those determined by the
department to be necessary for the proper and efficient
administration of the state’s Medicaid plan and shall be defined
in regulation.

(k) If the department denies any claim submitted under this
section, the affected participating local governmental agency or
local educational consortium may, within 30 days after receipt of
written notice of the denial, request that the department reconsider
its action. The participating local governmental agency or local
educational consortium may request a meeting with the director
or his or her designee within 30 days to present its concerns to the
department after the request is filed. If the director or his or her
designee cannot meet, the department shall respond in writing
indicating the specific reasons for which the claim is out of
compliance to the participating local governmental agency or local
educational consortium in response to its appeal. Thereafter, the
decision of the director shall be final.

(l) To the extent consistent with federal law and regulation,
participating local governmental agencies or local educational
consortium may claim the actual costs of nonemergency,
nonmedical transportation of Medi-Cal eligibles to Medi-Cal
covered services, under guidelines established by the department,
to the extent that these costs are actually borne by the participating
local governmental agency or local educational consortium. A
local educational consortium may only claim for nonemergency,
nonmedical transportation of Medi-Cal eligibles for Medi-Cal
covered services, through the Medi-Cal administrative activities
program. Medi-Cal medical transportation services shall be claimed
under the local educational agency Medi-Cal billing option,
pursuant to Section 14132.06.

(m) As a condition of participation in the Administrative
Claiming process and in recognition of revenue generated to each
participating local governmental agency and each local educational
consortium in the Administrative Claiming process, each
participating local governmental agency and each local educational
consortium shall pay an annual participation fee through a
mechanism agreed to by the state and local governmental agencies
and local educational consortia, or, if no agreement is reached by
August 1 of each year, directly to the state. The participation fee
shall be used to cover the cost of administering the Administrative
Claiming process, including, but not limited to, claims processing,
technical assistance, and monitoring. The department shall
determine and report staffing requirements upon which projected
costs will be based. The amount of the participation fee shall be
based upon the anticipated salaries, benefits, and operating
expenses, to administer the Administrative Claiming process and
other costs related to that process.

(n) (1) For the purposes of this section, “participating local
governmental agency” means a county, chartered city, Native
American Indian tribe, tribal organization, or subgroup of a Native
American Indian tribe or tribal organization, under contract with
the department pursuant to subdivision (b).

(2) Each participating Native American Indian tribe, tribal
organization, or subgroup of a Native American Indian tribe or
tribal organization may claim, as a Medi-Cal Administrative
Activity, facilitating Medi-Cal applications, which includes, but
is not limited to, using the California Healthcare Eligibility,
Enrollment, and Retention System.

(o) For purposes of this section, “local educational agency”
means a local educational agency, as defined in subdivision (h) of
Section 14132.06, that participates under the Administrative
Claiming process as a subcontractor to the local educational
consortium in its service region.

(p) (1) For purposes of this section, “local educational
consortium” means a local agency that is one of the service regions
of the California County Superintendent Educational Services
Association.

(2) Each local educational consortium shall contract with the
department pursuant to paragraph (1) of subdivision (c).

(q) (1) Each participating local educational consortium shall
be responsible for the local educational agencies in its service
region that participate in the Administrative Claiming process.
This responsibility includes, but is not limited to, the preparation
and submission of all administrative claiming plans, training of
local educational agency staff, overseeing the local educational
agency time survey process, and the submission of detailed
quarterly invoices on behalf of any participating local educational
agency.

(2) Each participating local educational consortium shall ensure
local educational agency compliance with all requirements of the
Administrative Claiming process established for local governmental
agencies.

(3) Ninety days prior to the initial participation in the
Administrative Claiming process, each local educational
consortium shall notify the department of its intent to participate
in the process, and shall identify each local educational agency
that will be participating as its subcontractor.

(r) (1) Each local educational agency that elects to participate
in the Administrative Claiming process shall submit claims either
through its local educational consortium or through the local
governmental agency, but not both.

(2) Each local educational agency participating as a
subcontractor to a local educational consortium shall comply with
all requirements of the Administrative Claiming process established
for local governmental agencies.

(s) A participating local governmental agency or a local
educational consortium may charge an administrative fee to any
entity claiming Administrative Claiming through that agency. The
department shall annually post on its Internet Web site the
administrative fee percentage charged by each local governmental
agency or local educational consortium.

(t) The department shall continue to administer the
Administrative Claiming process in conformity with federal
requirements.

(u) The department shall provide technical assistance to all
participating local governmental agencies and local educational
consortia in order to maximize federal financial participation in
the Administrative Claiming process.

(v) This section shall be applicable to Administrative Claiming
process activities performed, and to moneys paid to participating
local governmental agencies for those activities in the 1994-95
fiscal year and thereafter, and to local educational consortia in the
1998-99 fiscal year and thereafter.

(w) This section or Section 14132.44 shall not be construed to
prevent any state agency from participating in the Administrative
Claiming process or from contracting with others to engage in
these activities.