Amended in Assembly May 16, 2016

Amended in Senate May 12, 2015

Amended in Senate April 6, 2015

Senate Bill No. 123

Introduced by Senator Liu

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(Principal coauthor: Assembly Member Santiago)

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January 15, 2015

An act to begin delete amend Section 14132.47 of, and to add and repeal Section 14132.465 of, end delete begin insert amend, repeal, and add Sections 14115.8 and 14132.47 of, and to add Sections 14005.272, 14005.273, 14132.471, 14132.472, and 14132.473 to, end insert the Welfare and Institutions Code, relating to Medi-Cal.

LEGISLATIVE COUNSEL’S DIGEST

SB 123, as amended, Liu. begin delete Report: School-Based Medi-Cal Administrative Activities program. end delete begin insert Medi-Cal: school-based administrative activities. end insert

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.

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This bill would require the Legislative Analyst, in consultation with the State Department of Education and the State Department of Health Care Services, 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 Legislative Analyst 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.

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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.

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

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This bill also would make various technical and nonsubstantive changes.

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Existing law provides that specified services provided by local educational agencies (LEAs) are covered Medi-Cal benefits and requires the department to perform various activities with respect to the billing option for services provided by LEAs. Existing law establishes the Local Educational Agency Medi-Cal Recovery Fund, which consists of proportionately reduced federal Medicaid funds allocable to LEAs, to be used, upon appropriation by the Legislature, only to support the department to meet the requirements relating to the LEA billing option, the annual amount of which may not exceed $1,500,000.

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This bill would, commencing with the 2017-18 fiscal year, recast and revise the Administrative Claiming process for local educational agencies that conduct school-based administrative activities relating to the Medi-Cal program. The bill would require the department to contract with each participating local educational agency to perform administrative activities necessary for the proper and efficient administration of the Medi-Cal program, as specified, and would designate this activity as the School-Based Administrative Claiming process program. The bill would eliminate the authority for the establishment of local educational consortia in this regard, as well as the authority of local governmental agencies or local educational consortia, to 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. The bill would require the department to administer or oversee the administration of a single statewide random moment time survey for the purposes of the program. The bill would make related legislative findings and declarations.

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This bill would require the department to prepare and file an annual report with the Legislature for the School-Based Administrative Claiming process program, which would include specified information relating to the operation, components, and rates of school-based Medicaid systems. The bill would require the department to prepare and post on its Internet Web site an annual report of the costs of administering the School-Based Administrative Claiming process program and the LEA billing option and list local educational agency participation in each.

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This bill would require the department to enter into an interagency agreement or memorandum of understanding (MOU) with the State Department of Education to coordinate the efforts of both departments with respect to the process. The bill would require the department and the State Department of Education to develop an appeals process, as specified, to contest an action of the department or the State Department of Education. Any savings available to the department from the restructuring of the Administrative Claiming process made by the bill would be directed toward the implementation of the interagency agreement or MOU described in the bill, including, but not limited to, providing necessary State Department of Education staff support.

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This bill would authorize the State Department of Health Care Services to withhold a percentage of funds to be reimbursed to local educational agencies for the purpose of defraying the cost of operating the School-Based Administrative Claiming process program, the LEA billing option, and the appeals process, as specified. The bill would provide that the Local Educational Agency Medi-Cal Recovery Fund shall fund the LEA billing option program until the earlier of the termination of federal financial participation in the LEA billing option, or January 1, 2018. The bill would require the department to return funds in the Local Educational Agency Medi-Cal Recovery Fund to local educational agencies, as specified, no later than January 1, 2018.

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This bill would require the department to establish a School-Based Health Program and Policy Workgroup, as specified, for the purpose of advising the department on issues related to the delivery of school-based Medi-Cal services to students in the state. The bill would require the department to consult with the advisory group in connection with developing the interagency agreement or MOU described above.

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

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

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begin insert SECTION 1. end insert   

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(a) The Legislature finds and declares all of the
following:

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(1) Effective cross-agency collaboration is vital to deliver
high-quality school-based health services to California students.

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(2) Existing federal directives require the chief executive officer
of a state or designee of that officer to ensure that an interagency
agreement or other mechanism for interagency coordination is in
effect between each noneducational public agency (health) and
the state education agency to ensure that a Free Appropriate Public
Education (FAPE) is provided for students. California does not
currently have the required interagency agreement.

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(3) The federal Department of Education and the federal
Department of Health and Human Services, in a key January 2016
policy letter, recognize the critical role that health care coverage
and health services play in ensuring all students are ready and
able to learn, and recommend action steps to better coordinate
health and education services to build strong and sustainable
partnerships and commitments between health and education
agencies at the local, state, and federal levels.

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(4) The student success strategic priority in State Superintendent
of Public Instruction Tom Torlakson’s 2015 Blueprint 2.0 includes
Section 3.13, which prioritizes the development of infrastructure
at the State Department of Education to improve cross-agency
collaboration in support of student health.

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(5) In Report 2014-130 issued on August 20, 2015, the State
Auditor recommended that the State Department of Health Care
Services institute significant structural changes to school-based
Medi-Cal programs in order to improve administration and
oversight, increase federal funding, and cut costs.

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(6) Building an effective, transparent infrastructure and
accountability system to fully utilize all available federal Medicaid
funds is a critical component of developing the capacity to deliver
school-based health and mental health programs.

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(7) These vital programs must be operated at a level that meets
the benchmark of national best practices in order to meet the needs
of California’s most vulnerable children.

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(b) It is the intent of the Legislature to ensure effective
coordination between health and education agencies at the state,
county, and local levels to address the achievement gap in our
schools and health and education equity issues in California.

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begin insert SEC. 2. end insert   

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begin insert Section 14005.272 is added to the end insert begin insert Welfare and
Institutions Code end insert begin insert , to read: end insert

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begin insert 14005.272. end insert   

(a) The department, in consultation with the State
Department of Education, shall establish a School-Based Health
Program and Policy Workgroup for the purpose of advising the
department on issues related to the delivery of school-based
Medi-Cal services to students in the state. The scope of the
workgroup shall include, but not be limited to, improving the
operation of and participation in all of the following school-based
health programs:

(1) The School-Based Administrative Claiming process program
described in Section 14132.471.

(2) The local educational agency Medi-Cal billing option
described in Section 14132.06.

(3) The Early and Periodic Screening, Diagnosis, and Treatment
(EPSDT) Program described in Section 14700.

(4) Other school-based health and mental health programs,
including school-based health centers which may receive Medi-Cal
funding.

(b) The workgroup shall also provide input to the department
and the State Department of Education on the development and
continuing operations of an office of school-based health programs
within the State Department of Education.

(c) The workgroup shall be representative of the diversity of
California local education agencies with respect to size, type, and
geographic diversity and shall include representatives from county
offices of education and urban, suburban, and rural local
educational agencies. The workgroup shall also include the LEA
Ad Hoc Workgroup described in Section 14132.06 and members
with expertise in the school-based health programs described in
paragraphs (1) to (4), inclusive, of subdivision (a).

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begin insert SEC. 3. end insert   

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begin insert Section 14005.273 is added to the end insert begin insert Welfare and
Institutions Code end insert begin insert , to read: end insert

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begin insert 14005.273. end insert   

Commencing with the 2017-18 state fiscal year,
and annually for each year thereafter, the department shall publish
the following information together on a section of its Internet Web
site

(a) An annual report that details the costs of operating the
School-Based Administrative Claiming process program described
in Section 14132.471, including the cost of conducting the random
moment time survey described in subdivision (b) of Section
14132.471 and any vendor fees. The report shall also list each
participating local educational agency. The initial report prepared
and posted pursuant to this subdivision shall also report on cost
savings realized through the restructuring of the Administrative
Claiming process program through implementation of the
School-Based Administrative Claiming process program described
in Section 14132.471.

(b) An annual report that details the costs of operating the local
educational agency (LEA) Medi-Cal billing option program
described in Section 14132.06. The report shall also list each local
educational agency participating in the LEA Medi-Cal billing
option program.

(c) An annual report regarding the rate of participation of local
educational agencies in the Early and Periodic Screening,
Diagnosis, and Treatment (EPSDT) Program described in Section
14700.

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begin insert SEC. 4. end insert   

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begin insert Section 14115.8 of the end insert begin insert Welfare and Institutions Code end insert

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14115.8.  

(a) (1) The department shall amend the Medicaid
state plan with respect to the billing option for services by local
educational agencies (LEAs), to ensure that schools shall be
reimbursed for all eligible services that they provide that are not
precluded by federal requirements.

(2) The department shall examine methodologies for increasing
school participation in the Medi-Cal billing option for LEAs so
that schools can meet the health care needs of their students.

(3) The department, to the extent begin delete possible end delete begin insert possible, end insert shall
simplify claiming processes for LEA billing.

(4) The department shall eliminate and modify state plan and
regulatory requirements that exceed federal requirements when
they are unnecessary.

(b) If a rate study for the LEA Medi-Cal billing option is
completed pursuant to Section 52 of Chapter 171 of the Statutes
of 2001, the department, in consultation with the entities named
in subdivision (c), shall implement the recommendations from the
study, to the extent feasible and appropriate.

(c) In order to assist the department in formulating the state plan
amendments required by subdivisions (a) and (b), the department
shall regularly consult with the State Department of Education,
representatives of urban, rural, large and small school districts,
and county offices of education, the local education consortium,
and local educational agencies. It is the intent of the Legislature
that the department also consult with staff from Region IX of the
federal Centers for Medicare and Medicaid Services, experts from
the fields of both health and education, and state legislative staff.

(d) Notwithstanding any other law, or any other contrary state
requirement, the department shall take whatever action is necessary
to ensure that, to the extent there is capacity in its certified match,
an LEA shall be reimbursed retroactively for the maximum period
allowed by the federal government for any department change that
results in an increase in reimbursement to local educational agency
providers.

(e) The department may undertake all necessary activities to
recoup matching funds from the federal government for
reimbursable services that have already been provided in the state’s
public schools. The department shall prepare and take whatever
action is necessary to implement all regulations, policies, state
plan amendments, and other requirements necessary to achieve
this purpose.

(f) The department shall file an annual report with the
Legislature that shall include at least all of the following:

(1) A copy of the annual comparison required by subdivision
(i).

(2) A state-by-state comparison of school-based Medicaid total
and per eligible child claims and federal revenues. The comparison
shall include a review of the most recent two years for which
completed data is available.

(3) A summary of department activities and an explanation of
how each activity contributed toward narrowing the gap between
California’s per eligible student federal fund recovery and the per
student recovery of the top three states.

(4) A listing of all school-based services, activities, and
providers approved for reimbursement by the federal Centers for
Medicare and Medicaid Services in other state plans that are not
yet approved for reimbursement in California’s state plan and the
service unit rates approved for reimbursement.

(5) The official recommendations made to the department by
the entities named in subdivision (c) and the action taken by the
department regarding each recommendation.

(6) A one-year timetable for state plan amendments and other
actions necessary to obtain reimbursement for those items listed
in paragraph (4).

(7) Identification of any barriers to local educational agency
reimbursement, including those specified by the entities named in
subdivision (c), that are not imposed by federal requirements, and
a description of the actions that have been, and will be, taken to
eliminate them.

(g) (1) These activities begin delete shall end delete begin insert shall, until the earlier of the
termination of federal financial participation in the billing option
for services by LEAs pursuant to this section or January 1, 2018, end insert
be funded and staffed by proportionately reducing federal Medicaid
payments allocable to LEAs for the provision of benefits funded
by the federal Medicaid program under the billing option for
services by LEAs specified in this section. Moneys collected as a
result of the reduction in federal Medicaid payments allocable to
LEAs shall be deposited into the Local Educational Agency
Medi-Cal Recovery Fund, which is hereby established in the
Special Deposit Fund established pursuant to Section 16370 of the
Government Code. These funds shall be used, upon appropriation
by the Legislature, only to support the department to meet all the
requirements of this section. If at any time this section is repealed,
it is the intent of the Legislature that all funds in the Local
Educational Agency Medi-Cal Recovery Fund be returned
proportionally to all LEAs whose federal Medicaid funds were
used to create this fund. The annual amount funded pursuant to
this paragraph shall not exceed one million five hundred thousand
dollars ($1,500,000).

(2) Moneys collected under paragraph (1) shall be
proportionately reduced from federal Medicaid payments to all
participating LEAs so that no one LEA loses a disproportionate
share of its federal Medicaid payments.

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(3) No later than January 1, 2018, the department shall
proportionately return all funds in the Local Educational Agency
Medi-Cal Recovery Fund to all LEAs whose federal Medicaid
funds were used to create the fund.

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(h) (1) The department may enter into a sole source contract
to comply with the requirements of this section.

(2) The level of additional staff to comply with the requirements
of this section, including, but not limited to, staff for which the
department has contracted for pursuant to paragraph (1), shall be
limited to that level that can be funded with revenues derived
pursuant to subdivision (g).

(i) The activities of the department shall include all of the
following:

(1) An annual comparison of the school-based Medicaid systems
in comparable states.

(2) Efforts to improve communications with the federal
government, the State Department of Education, and local
educational agencies.

(3) The development and updating of written guidelines to local
educational agencies regarding best practices to avoid audit
exceptions, as needed.

(4) The establishment and maintenance of a local educational
agency user-friendly, interactive Internet Web site.

(5) Collaboration with the State Department of Education to
help ensure LEA compliance with state and federal Medicaid
requirements and to help improve LEA participation in the
Medi-Cal billing option for LEAs.

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(j) This section shall remain in effect only until January 1, 2018,
and as of that date is repealed, unless a later enacted statute, that
is enacted before January 1, 2018, deletes or extends that date.

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begin insert SEC. 5. end insert   

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begin insert Section 14115.8 is added to the end insert begin insert Welfare and Institutions
Code end insert begin insert , to read: end insert

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begin insert 14115.8. end insert   

(a) (1) The department shall amend the Medicaid
state plan with respect to the billing option for services by local
educational agencies (LEAs) to ensure that schools shall be
reimbursed for all eligible services that they provide that are not
precluded by federal requirements.

(2) The department shall examine methodologies for increasing
school participation in the Medi-Cal billing option for LEAs so
that schools can meet the health care needs of their students.

(3) The department, to the extent possible, shall simplify
claiming processes for LEA billing.

(4) The department shall eliminate and modify state plan and
regulatory requirements that exceed federal requirements when
they are unnecessary.

(b) If a rate study for the LEA Medi-Cal billing option is
completed pursuant to Section 52 of Chapter 171 of the Statutes
of 2001, the department, in consultation with the entities named
in subdivision (c), shall implement the recommendations from the
study to the extent feasible and appropriate.

(c) In order to assist the department in formulating the state
plan amendments required by subdivisions (a) and (b), the
department shall regularly consult with the State Department of
Education, representatives of urban, rural, large and small school
districts, county offices of education, the local education
consortium, and local educational agencies. It is the intent of the
Legislature that the department also consult with staff from Region
9 of the federal Centers for Medicare and Medicaid Services,
experts from the fields of both health and education, and state
legislative staff.

(d) Notwithstanding any other law, or any other contrary state
requirement, the department shall take whatever action is
necessary to ensure that, to the extent there is capacity in its
certified match, an LEA shall be reimbursed retroactively for the
maximum period allowed by the federal government for any
department change that results in an increase in reimbursement
to local educational agency providers.

(e) The department may undertake all necessary activities to
recoup matching funds from the federal government for
reimbursable services that have already been provided in the
state’s public schools. The department shall prepare and take
whatever action is necessary to implement all regulations, policies,
state plan amendments, and other requirements necessary to
achieve this purpose.

(f) The department shall file an annual report with the
Legislature that shall include at least all of the following:

(1) A copy of the annual comparison required by subdivision
(i).

(2) A state-by-state comparison of school-based Medicaid total
and per eligible child claims and federal revenues. The comparison
shall include a review of the most recent two years for which
completed data is available.

(3) A summary of department activities and an explanation of
how each activity contributed toward narrowing the gap between
California’s per eligible student federal fund recovery and the per
student recovery of the top three states.

(4) A listing of all school-based services, activities, and
providers approved for reimbursement by the federal Centers for
Medicare and Medicaid Services in other state plans that are not
yet approved for reimbursement in California’s state plan and the
service unit rates approved for reimbursement.

(5) The official recommendations made to the department by
the entities named in subdivision (c) and the action taken by the
department regarding each recommendation.

(6) A one-year timetable for state plan amendments and other
actions necessary to obtain reimbursement for those items listed
in paragraph (4).

(7) Identification of any barriers to local educational agency
reimbursement, including those specified by the entities named in
subdivision (c), that are not imposed by federal requirements and
a description of the actions that have been, and will be, taken to
eliminate those barriers.

(g) The activities described in this section shall be funded
pursuant to Section 14132.473.

(h) (1) The department may enter into a sole source contract
to comply with the requirements of this section.

(2) The level of additional staff to comply with the requirements
of this section, including, but not limited to, staff for which the
department has contracted for pursuant to paragraph (1), shall
be limited to that level that can be funded with revenues derived
pursuant to subdivision (g).

(i) The activities of the department shall include all of the
following:

(1) An annual comparison of the school-based Medicaid systems
in comparable states.

(2) Efforts to improve communications with the federal
government, the State Department of Education, and local
educational agencies.

(3) The development and updating of written guidelines to local
educational agencies regarding best practices to avoid audit
exceptions, as needed.

(4) The establishment and maintenance of a local educational
agency user-friendly, interactive Internet Web site.

(5) Collaboration with the State Department of Education to
help ensure LEA compliance with state and federal Medicaid
requirements and to help improve LEA participation in the
Medi-Cal billing option for LEAs.

(j) This section shall become operative on January 1, 2018.

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begin insert SEC. 6. end insert   

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begin insert Section 14132.47 of the end insert begin insert Welfare and Institutions Code end insert

begin insert is amended to read: end insert

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 1903a 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 agencies 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, in
regulations, 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, the
state shall be held harmless, in accordance with paragraphs (2)
and (3), 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 regulations,
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 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.

(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)  begin delete This end delete begin insert (1) end insert begin insert   end insert begin insert Subject to paragraph (2), this end insert 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.

begin insert

(2) This section shall not be applicable to Administrative
Claiming process activities performed in the 2017-18 fiscal year
and thereafter.

end insert

(w) Nothing in this section or Section 14132.44 shall be
construed to prevent any state agency from participating in the
Administrative Claiming process or from contracting with others
to engage in these activities.

begin insert

(x) This section shall remain in effect only until January 1, 2018,
and as of that date is repealed, unless a later enacted statute, that
is enacted before January 1, 2018, deletes or extends that date.

end insert

begin insert

begin insert SEC. 7. end insert   

end insert

begin insert Section 14132.47 is added to the end insert begin insert Welfare and
Institutions Code end insert begin insert , to read: end insert

begin insert

begin insert 14132.47. end insert   

(a) It is the intent of the Legislature to provide local
governmental agencies the choice of participating in the Targeted
Case Management (TCM) or the Administrative Claiming process
program, or both, 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 to assist with the performance of
administrative activities necessary for the proper and efficient
administration of the Medi-Cal program, pursuant to Section
1903a 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 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 expended on the allowable administrative
activities.

(2) The department shall deny the claim if the department
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 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
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 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 from any other funds allowed under federal law
and regulation.

(B) That the agency’s expenditures represent costs that are
eligible for federal financial participation for each fiscal year.
The department shall deny the claim if the department 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, in
regulations, 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, or
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
the certification 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, the
state shall be held harmless, in accordance with paragraphs (2)
and (3), from any federal audit disallowance and interest resulting
from payments made to a participating local governmental agency,
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 has received reimbursement for
Administrative Claiming process activities, the department shall
recoup from the local governmental agency 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 has received
reimbursement for Administrative Claiming process activities
performed by an entity under contract with, and on behalf of, the
participating local governmental agency, the department shall be
held harmless by that particular participating local governmental
agency 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, 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 if the department determines that the
claim is not adequately supported in accordance with criteria
established pursuant to this subdivision and implementing
regulations before the department forwards the claim for
reimbursement to the federal Medicaid program. In consultation
with local governmental agencies, 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.

(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 may,
within 30 days after receipt of written notice of the denial, request
that the department reconsider its action. The participating local
governmental agency may request a meeting with the director or
his or her designee within 30 days to present the agency’s 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 to the participating local governmental agency in response
to its appeal, indicating the specific reasons for which the claim
is out of compliance. The decision of the director shall be final.

(l) To the extent consistent with federal law and regulations,
participating local governmental agencies 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.

(m) As a condition of participation in the Administrative
Claiming process and in recognition of revenue generated to each
participating local governmental agency in the Administrative
Claiming process, each participating local governmental agency
shall pay an annual participation fee through a mechanism agreed
to by the state and local governmental agencies, 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, charter 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). A participating local
governmental agency for the purposes of this section does not
include a local educational agency or an agency under contract
with the department for the purpose of claiming reimbursement
for school-based administrative activities related to the Medi-Cal
program.

(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) A participating local governmental agency may charge an
administrative fee to any entity claiming Administrative Claiming
through that agency.

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

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

(r) 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.

(s) Nothing in this section or Section 14132.44 shall be
construed to prevent any state agency from participating in the
Administrative Claiming process or from contracting with others
to engage in these activities.

(t) This section shall become operative on January 1, 2018.

end insert

begin insert

begin insert SEC. 8. end insert   

end insert

begin insert Section 14132.471 is added to the end insert begin insert Welfare and
Institutions Code end insert begin insert , to read: end insert

begin insert

begin insert 14132.471. end insert   

(a) It is the intent of the Legislature to provide
local governmental agencies with the option to participate in the
Targeted Case Management (TCM) program and to provide local
educational agencies with the option to participate in the
Administrative Claiming process program, subject to the
requirements of this section and Section 14132.44.

(b) (1) Beginning no later than the 2017-18 state fiscal year,
the department shall administer, or oversee the administration of,
a single statewide quarterly random moment time survey for the
School-Based Administrative Claiming process program.

(2) The statewide quarterly random moment time survey
described in paragraph (1) shall not apply to the Los Angeles
Unified School District (LAUSD), which shall conduct its own
random moment time survey. Data from the random moment time
survey conducted by LAUSD shall not be included in the statewide
random moment time survey described in paragraph (1).

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

(d) (1) As a condition of participation in the School-Based
Administrative Claiming process program, each participating
local educational agency, for the purpose of claiming federal
Medicaid reimbursement, shall enter into a contract with the
department and shall certify to the department, pursuant to
subdivision (f), the total amount the local educational agency
expended on the allowable administrative activities.

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

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

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

(A) That the local educational agency expended funds from its
general fund or from any other fund allowed under federal law
and regulation to pay for 100 percent of the cost of performing
School-Based Administrative Claiming process program activities.

(B) For each fiscal year, that the local educational agency’s
expenditures represent costs that are eligible for federal financial
participation for that fiscal year.

(2) A tribe or tribal organization, as described in subdivision
(n), may contract with, or submit to a tribe or tribal organization
that is contracting with, the department pursuant to subdivision
(b) amounts expended for School-Based 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 the
certification 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) of
paragraph (1).

(g) (1) Notwithstanding any other provision of this section, the
state shall be held harmless, in accordance with paragraphs (2)
and (3), from any federal audit disallowance and interest resulting
from payments made to a participating local educational agency
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 a participating local
educational agency has received reimbursement for School-Based
Administrative Claiming process activities, the department shall
recoup from the local educational agency 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 a 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 educational agency has received
reimbursement for School-Based Administrative Claiming process
activities performed by an entity under contract with, and on behalf
of, the participating local educational agency, the department
shall be held harmless by that particular participating local
educational agency 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 a participating
local educational agency, except as required by this section or as
may be required by federal law.

(i) (1) The department shall, in consultation with local
educational agencies, adopt regulations that prescribe the
requirements for the submission and payment of claims for
administrative activities performed by each participating local
educational agency.

(2) The department shall deny a claim from a participating local
educational agency if the department determines that the claim is
not adequately supported in accordance with criteria established
pursuant to this subdivision and implementing regulations before
the department forwards the claim for reimbursement to the federal
Medicaid Program.

(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 a claim submitted under this section,
the affected participating local educational agency, within 30 days
after receipt of written notice of the denial, may request that the
department reconsider its action. The participating local
educational agency 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 to
the participating local educational agency in response to its request
for reconsideration, indicating the specific reasons for which the
claim is out of compliance. The local educational agency may
appeal the decision of the director pursuant to the appeals process
established by the department and the State Department of
Education pursuant to paragraph (3) of subdivision (a) of Section
14132.471.

(l) To the extent consistent with federal law and regulations,
participating local educational agencies 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 educational agencies. A
local educational agency 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 School-Based
Administrative Claiming process and in recognition of revenue
generated to each local educational agency in the School-Based
Administrative Claiming process, each local educational agency
shall pay an annual participation fee through a mechanism agreed
to by the state and local educational agencies. The participation
fee shall be used to cover the cost of administering the
School-Based 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 School-Based
Administrative Claiming process and other costs related to that
process.

(n) (1) For the purposes of this section, “participating local
educational agency” includes a 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 (c).

(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, including, but not
limited to, using the California Healthcare Eligibility, Enrollment,
and Retention System.

(o) For purposes of this section, “local educational agency”
includes county offices of education, special education local plan
areas, Healthy Start programs, and local educational agencies,
as defined in subdivision (h) of Section 14132.06, that participate
in the School-Based Administrative Claiming process program as
a contractor with the department.

(p) (1) Each participating local educational agency shall be
responsible for the preparation and submission of all
administrative claiming plans, training of local educational agency
staff, and the submission of detailed quarterly invoices.

(2) Each participating local educational agency shall comply
with all requirements of the School-Based Administrative Claiming
process program.

(3) Ninety days prior to the initial participation in the
School-Based Administrative Claiming process program, each
local educational agency shall notify the department of its intent
to participate in the program.

(q) Each local educational agency that elects to participate in
the School-Based Administrative Claiming process program shall
submit claims directly to the department.

(r) The department shall continue to administer the
School-Based Administrative Claiming process program in
conformity with federal requirements.

(s) The department shall, by July 1, 2017, in conjunction with
the State Department of Education pursuant to the interagency
agreement or memorandum of understanding developed pursuant
to Section 14132.471, provide technical assistance to all
participating local educational agencies in order to maximize the
allowable federal financial participation in the School-Based
Administrative Claiming process program.

(t) This section shall be applicable to School-Based
Administrative Claiming process activities performed in the
2017-18 fiscal year and thereafter.

(u) The department shall prepare and file an annual report with
the Legislature for the School-Based Administrative Claiming
process program, similar to the annual report the department is
required to file for the local educational agency Medi-Cal billing
option program pursuant to Section 14115.8.

(v) This section and Section 14132.44 shall not be construed to
prevent a state agency from participating in the School-Based
Administrative Claiming process program or from contracting
with others to engage in these activities.

(w) This section shall not be construed to prohibit county offices
of education or local government agencies from providing services
to local educational agencies to facilitate participation in
school-based health programs on a fee-for-service basis. This
section shall not be construed to prohibit a county office of
education or a local educational consortium providing services
to a local educational agency from contracting 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.

end insert

begin insert

begin insert SEC. 9. end insert   

end insert

begin insert Section 14132.472 is added to the end insert begin insert Welfare and
Institutions Code end insert begin insert , to read: end insert

begin insert

begin insert 14132.472. end insert   

(a) By July 1, 2017, the department shall enter
into an interagency agreement or memorandum of understanding
(MOU) with the State Department of Education to coordinate the
efforts of both departments with respect to the School-Based
Administrative Claiming process program described in Section
14132.471 and the local educational agency (LEA) Medi-Cal
billing option (the LEA billing option) described in Section
14132.06. The agreement or MOU shall focus on the following:

(1) Maximizing the department’s Medicaid Program expertise.

(2) Coordinating functions and resources between the
department and the State Department of Education, and building
personnel capacity at the State Department of Education, to assist
local educational agencies in implementing and meeting the
requirements of the School-Based Administrative Claiming process
and the LEA billing option at the local level. That coordination
shall include an agreement regarding the use of funds withheld
pursuant to Section 14132.473.

(3) Developing a process by which a local educational agency
may appeal an action of the department or the State Department
of Education with respect to the School-Based Administrative
Claiming process program or the LEA billing option. The appeals
process shall utilize the Office of Administrative Hearings, or
another neutral third party acceptable to the department and the
State Department of Education, as the appeals authority.

(b) In developing the interagency agreement or MOU described
in subdivision (a), the department shall do all of the following:

(1) Estimate the cost savings resulting from the restructuring
of the Administrative Claiming process program through
implementation of the School-Based Administrative Claiming
process program described in Section 14132.471. The department
shall provide the estimate of cost savings, data used to support
the estimate, and a description of the methodology used to calculate
the estimate to the State Department of Education.

(2) Consult with relevant nonprofit organizations involved in
facilitating information sharing among state Medicaid and
education agencies involved in the administration of Medicaid
claiming for school-based services to identify, and implement if
feasible, best practices that accomplish the coordination of efforts
required by subdivision (a).

(3) Consult with the School-Based Health Program and Policy
Workgroup established pursuant to Section 14005.272 regarding
the impact of the implementation of the School-Based
Administrative Claiming process program on operations at the
local level.

(c) Any savings resulting from the restructuring of the
Administrative Claiming process program through implementation
of the School-Based Administrative Claiming process program
and available to the department shall be directed toward
implementation of the interagency agreement or MOU entered
into pursuant to this section, including, but not limited to, providing
necessary State Department of Education staff support and support
to county offices of education.

end insert

begin insert

begin insert SEC. 10. end insert   

end insert

begin insert Section 14132.473 is added to the end insert begin insert Welfare and
Institutions Code end insert begin insert , to read: end insert

begin insert

begin insert 14132.473. end insert   

(a) Commencing with the 2017-18 state fiscal
year, and for each year thereafter, the department may withhold
up to 5 percent of the total funds to be reimbursed to local
educational agencies pursuant to the School-Based Administrative
Claiming process program described in Section 14132.471 and
the local educational agency Medi-Cal billing option program
described in Section 14132.06, for the following purposes:

(1) Defraying the costs of administering the School-Based
Administrative Claiming process program and the local
educational agency Medi-Cal billing option program.

(2) Implementing the interagency agreement or MOU entered
into pursuant to Section 14132.472.

(3) Providing necessary staff support to the State Department
of Education.

(4) Providing necessary staff support to county offices of
education and local educational agencies.

(5) Carrying out the duties and activities required by Section
14115.8.

(b) The State Department of Education may use funds from the
withholding described in subdivision (a) to support an office of
school-based health programs within the State Department of
Education.

(c) Commencing with the 2017-18 state fiscal year, and for
each year thereafter, the department may withhold an additional
1 percent of the total funds to be reimbursed to local educational
agencies pursuant to the School-Based Administrative Claiming
process program described in Section 14132.471 and the local
educational agency Medi-Cal billing option program described
in Section 14132.06, for the purpose of defraying the costs of the
appeals process developed pursuant to paragraph (3) of
subdivision (a) of Section 14132.472.

(d) To the extent that the department withholds reimbursed
funds pursuant to subdivision (a), the department shall adjust the
percentage withheld based on an annual reconciliation of the costs
necessary to carry out the purposes described in paragraphs (1)
to (5), inclusive, of subdivision (a).

(e) This section shall be implemented only to the extent that
federal financial participation is not jeopardized. The department
shall seek any federal approvals necessary for the implementation
of this section.

end insert

begin delete

SECTION 1.  

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

14132.465.  

(a) The Legislative Analyst, in consultation with
the State Department of Education and the State Department of
Health Care Services, 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 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.

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