Amended in Assembly June 16, 2016

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

(Principal coauthor: Assembly Member Santiago)

January 15, 2015

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

LEGISLATIVE COUNSEL’S DIGEST

SB 123, as amended, Liu. Medi-Cal: school-based administrative activities.

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 begin delete Program end delete begin insert program end insert provisions. Existing law establishes an administrative claiming process under which begin insert the department is authorized to contract with end insert local governmental agencies and local educational consortia begin delete contract with the department end delete 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.

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 begin delete 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. end delete begin insert LEAs, including amendment of the Medicaid state plan to ensure that schools shall be reimbursed for all eligible services they provide. Existing law requires the department to regularly consult with the State Department of Education, school district representatives, county offices of education, the local educational consortium, and local educational agencies to assist in formulating those state plan amendments. end insert

This bill begin delete 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 end delete begin insert would additionally authorize end insert the department to contract begin insert directly end insert with begin delete each participating end delete begin insert a end insert 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. begin delete 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. end delete

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.

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 begin delete process. end delete begin insert LEA billing option and the School-Based Administrative Claiming process program. end insert 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 begin delete support. end delete begin insert and support to county offices of education. end insert

begin delete

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.

end delete

This bill would require the department to establish a School-Based Health Program and Policy Workgroup, as specified, begin insert in order to assist the department in formulating state plan amendments required to implement the LEA billing option described above and end insert 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.

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

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

SECTION 1.  

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

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

(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.

(3) The begin delete federal end delete begin insert United States end insert Department of Education and the
begin delete federal end delete begin insert United States end insert 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.

(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.

(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.

(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.

(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.

(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.

SEC. 2.  

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

14005.272.  

(a) The department, in consultation with the State
Department of Education, shall establish a School-Based Health
Program and Policy Workgroup begin insert in order to assist the department
in formulating the state plan amendments required by subdivisions
(a) and (b) of Section 14115.8, and end insert 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 begin insert (LEA) end insert 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.

begin insert

(b) The workgroup shall, on a regular basis, provide input to
the department and the State Department of Education on the
degree to which the process and implementation of 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 is meeting
the needs of LEAs with respect to cost-effectiveness, program
structure, and operational effectiveness, including the process of
balancing withheld funds and actual expenses.

end insert begin delete

(b)

end delete

begin insert (c) end insert  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.

begin delete

(c)

end delete

begin insert (d) end insert  The workgroup shall be representative of the diversity of
California local begin delete education end delete begin insert educational end insert 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).

SEC. 3.  

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

14005.273.  

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

begin delete site end delete begin insert site: end insert

(a) An annual report that details the costs of operating the
School-Based Administrative Claiming process program described
in Section 14132.471, including begin delete the cost of conducting the random
moment time survey described in subdivision (b) of Section
14132.471 and end delete 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 begin delete through end delete begin insert from end insert 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.

SEC. 4.  

Section 14115.8 of the Welfare and Institutions Code
is amended to read:

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 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.

begin delete

(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.

end delete begin delete

(d)

end delete

begin insert (c) end insert  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.

begin delete

(e)

end delete

begin insert (d) end insert  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.

begin delete

(f)

end delete

begin insert (e) end insert  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.

begin delete

(g)

end delete

begin insert (f) end insert  (1) These activities begin delete 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 delete begin insert shall 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.

begin delete

(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.

end delete begin delete

(h)

end delete

begin insert (g) end insert  (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).

begin delete

(i)

end delete

begin insert (h) end insert  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.

begin delete

(j)

end delete begin delete

 
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 delete

begin delete

SEC. 5.  

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

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 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.

SEC. 6.  

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 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) (1) Subject to paragraph (2), 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.

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

(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.

(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.

SEC. 7.  

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

14132.47.  

(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 delete

begin delete SEC. 8. end delete

begin insert SEC. 5. end insert   

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

14132.471.  

(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.

begin delete

(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).

end delete begin delete

(c)

end delete

begin insert (b) end insert  The department begin delete shall end delete begin insert may end insert contract with begin delete each end delete begin insert a end insert 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.

begin delete

(d)

end delete

begin insert (c) end insert  (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.

begin delete

(e)

end delete

begin insert (d) end insert  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.

begin delete

(f)

end delete

begin insert (e) end insert  (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).

begin delete

(g)

end delete

begin insert (f) end insert  (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.

begin delete

(h)

end delete

begin insert (g) end insert  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.

begin delete

(i)

end delete

begin insert (h) end insert  (1) The department shall, in consultation with begin insert participating end insert
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.

begin delete

(j)

end delete

begin insert (i) end insert  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.

begin delete

(k)

end delete

begin insert (j) end insert  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.

begin delete

(l)

end delete

begin insert (k) end insert  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.

begin delete

(m)

end delete

begin insert ( end insert begin insert l end insert begin insert ) end insert  As a condition of participation in the School-Based
Administrative Claiming process and in recognition of revenue
generated to begin delete each end delete begin insert a participating end insert local educational agency in the
School-Based Administrative Claiming process, each begin insert participating end insert
local educational agency shall pay an annual participation fee
through a mechanism agreed to by the state and begin insert the participating end insert
local educational agencies. The participation fee shall be used to
cover the cost of administering the School-Based Administrative
Claiming begin delete process, including, but not limited to, claims processing,
technical assistance, and monitoring. end delete begin insert process. end insert 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.

begin delete

(n)

end delete

begin insert (m) end insert  (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.

begin delete

(o)

end delete

begin insert (n) end insert  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.

begin delete

(p)

end delete

begin insert (o) end insert  (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.

begin delete

(q)

end delete

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

begin delete

(r)

end delete

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

begin delete

(s)

end delete

begin insert (r) end insert  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.

begin delete

(t)

end delete

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

begin delete

(u)

end delete

begin insert (t) end insert  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.

begin delete

(v)

end delete

begin insert (u) end insert  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.

begin delete

(w)

end delete

begin insert (v) end insert  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.

begin delete SEC. 9. end delete

begin insert SEC. 6. end insert   

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

14132.472.  

(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 begin insert and the LEA billing
option end insert on operations at the local begin delete level. end delete begin insert level and any changes to
the MOU that the workgroup recommends. end insert

begin insert

(4) Develop a schedule for the regular ongoing meetings of the
School-Based Health Program and Policy Workgroup to provide
feedback to the department and the Department of Education.

end insert

(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 begin insert on an ongoing basis end insert 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.

begin delete

SEC. 10.  

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

14132.473.  

(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 delete