Amended in Assembly August 18, 2016

Amended in Assembly August 15, 2016

Amended in Assembly August 1, 2016

Amended in Assembly June 30, 2016

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)

(Coauthor: Assembly Member Thurmond)

January 15, 2015

An act to amend Section 14115.8 of, to amend, repeal, and add Section 14132.47 of, and to add Sections 14005.272, 14005.273, 14005.274, 14132.471, and 14132.472 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 program provisions. Existing law establishes an administrative claiming process under which the department is authorized to contract with local governmental agencies and local educational consortia 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 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 file an annual report with the Legislature that provides information related to these activities, as specified. 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. Existing law funds these activities by requiring the department to proportionately reduce federal Medicaid payments allocable to LEAs, collect the reductions, and deposit them into the Local Educational Agency Medi-Cal Recovery Fund, as specified.

This bill would additionally require the department to contract directly with begin delete a end delete begin insert an end insert LEA, if the LEA chooses and the department has developed a process governing direct contracting, to perform school-based administrative activities necessary for the proper and efficient administration of the Medi-Cal program, as specified. The bill would designate the contracting between the department and participating local educational agencies, local educational consortia, and local governmental agencies to perform those school-based administrative activities as the School-Based Administrative Claiming process program. The bill would authorize the department to administer or oversee the administration of a single statewide random moment time survey, or a reduction in the number of quarterly random moment time surveys conducted in the state, for the purposes of the program. The bill would make related legislative findings and declarations.

This 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. The bill would also require the department to include in that report the annual report related to the LEA billing option.

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 LEA billing option and the School-Based Administrative Claiming process program. The bill would require the department to develop an appeals process, as specified, to contest an action of the department.

This bill would require the department and the State Department of Education to establish and jointly administer begin delete and chair end delete a School-Based Health Program and Policy Workgroup, as specified, in order to assist the department in formulating state plan amendments required to implement the LEA billing option described above and for the purpose of advising the department on issues related to the delivery of school-based Medi-Cal services to students in the state, as specified. The bill would require the department to consult with the advisory group in connection with developing the interagency agreement or MOU described above. The bill would authorize the department and the State Department of Education to use moneys collected by the department to fund the LEA Medi-Cal billing option program activities and amounts withheld from LEAs by agreement with the department to meet the requirements of the interagency agreement or MOU described above and to fund staffing requirements for the workgroup.

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) The United States Department of Education and the United
States 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.

(3) 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.

(4) 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.

(5) 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.

(6) 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 and the State Department of
Education shall, no later than July 1, 2017, establish and jointly
administer begin delete and chair end delete a School-Based Health Program and Policy
Workgroup for the purpose of advising on issues related to the
delivery of school-based Medi-Cal services to students in the state.
begin insert The director of the department or his or her designee shall be
designated as the chair and the Superintendent of Public
Instruction or his or her designee shall be designated as the vice
chair of the workgroup. end insert The workgroup shall develop
recommendations for an interagency agreement between the
department and the State Department of Education pursuant to
Section 14132.472, and assist the department in formulating the
state plan amendments required by subdivisions (a) and (b) of
Section 14115.8. The scope of the workgroup shall include, but
not be limited to, improving the operation of and participation in
the following school-based health programs:

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

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

(b) The workgroup shall be representative of the diversity of
California LEAs with respect to size, type, and geographic diversity
and shall include representatives from county offices of education,
urban, suburban, and rural LEAs, and LECs and LGAs described
in Section 14132.471 and from Region IX of the federal Centers
for Medicare and Medicaid Services. The workgroup shall also
include begin insert representatives of end insert the LEA Ad Hoc Workgroup described
in Section 14132.06 and members with expertise in the
school-based health and mental health programs.

(c) The workgroup shall, no later than January 1, 2018, provide
input to the department and the State Department of Education on
the development and continuing operations of the interagency
agreement or memorandum of understanding described in Section
14132.472. The recommendations of the workgroup shall identify
opportunities for effective coordination between the state’s health
and education systems at the state, regional, and local level, identify
ways the department can maximize its school-based Medicaid
program expertise, recommend an appeals process for the
School-Based Administrative Claiming process program and the
LEA billing option, and identify necessary legislation or state plan
amendments to support its recommendations.

(d) (1) 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 LEA Medi-Cal billing option program
described in Section 14132.06 are meeting the needs of LEAs with
respect to cost-effectiveness, program structure, and operational
effectiveness, including the process of appeals and balancing
withheld funds and actual expenses.

(2) The workgroup shall advise the department and the State
Department of Education on creating consistency across local
educational consortia (LECs), local governmental agencies (LGAs),
and the department with respect to contracts and processes for the
School-Based Administrative Claiming process program described
in Section 14132.471.

(3) The workgroup shall make recommendations that include,
but are not limited to, determining the opportunities for and the
benefits, costs, and feasibility of the following:

(A) Increasing LEA participation and maximizing allowable
federal financial participation in the School-Based Administrative
Claiming process program and the LEA Medi-Cal billing option
program.

(B) Increasing contracting options for LEAs participating in the
School-Based Administrative Claiming process program, such as
allowing an LEA to contract with an LEC or LGA outside of the
LEA’s region.

(C) Reducing the number of quarterly random moment time
surveys.

(D) Identifying areas that may require a state plan amendment.

(E) Integrating and expanding other school-based health and
mental health programs with the School-Based Administrative
Claiming process program and the LEA Medi-Cal billing option
program, including, but not limited to, those being implemented
in accordance with the LEA’s local control and accountability plan
described in Section 52060 of the Education Code.

(F) Improving and streamlining the annual school-based
Medi-Cal report described in Section 14005.273.

(e) The workgroup may form technical advisory subcommittees
as necessary that shall report back to the workgroup on the
development of plans and timelines to implement the changes and
expanded options described in this section.

(f) The department shall make available to the workgroup staff
any information on other school-based dental, health, and mental
health programs, including, but not limited to, the mental health
programs described in Section 14700 and school-based health
centers that may receive Medi-Cal funding.

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 in a single annual school-based Medi-Cal
report on a section of its Internet Web site:

(a) The costs to the state of operating the School-Based
Administrative Claiming process program described in Section
14132.471 and any related fees passed on to local educational
agencies (LEAs).

(b) A list of all participating LEAs.

(c) The costs and fees being charged to LEAs as reported to the
department by local educational consortia and local governmental
agencies.

(d) Comparisons of costs with other states, summary of
department activities, workgroup recommendations for program
improvement, identifications of barriers to reimbursement and
actions taken to eliminate barriers, and other information in the
format required for the LEA Medi-Cal billing option program
report described in Section 14115.8.

(e) The costs of operating the 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.

SEC. 4.  

Section 14005.274 is added to the Welfare and
Institutions Code, to read:

14005.274.  

(a) The department shall develop a process by
which a local educational agency may appeal an action of the
department with respect to the School-Based Administrative
Claiming process program described in Section 14132.471 and
the LEA billing option described in Section 14115.8. The appeals
process shall use the Office of Administrative Hearings and
Appeals pursuant to Section 14171 or another neutral third party
acceptable to the department as the appeals authority and shall
require the local educational agency to pay for the cost of the
appeal.

(b) In developing the appeals process described in subdivision
(a), the department shall take into account the recommendations
of the workgroup described in Section 14005.272.

SEC. 5.  

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 (d) of Section 14005.272, shall implement the
recommendations from the study, to the extent feasible and
appropriate.

(c) 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.

(d) 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.

(e) The department shall file an annual report with the
Legislature that shall be included in the annual report referenced
in Section 14005.273 and that shall include at least all of the
following:

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

(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 (d) of Section 14005.272, that are not imposed by
federal requirements, and a description of the actions that have
been, and will be, taken to eliminate them.

(f) (1) These activities shall 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.

(3) Moneys collected under paragraph (1) and withheld amounts
agreed to by LEAs as a part of an LEA Medi-Cal billing option
program provider participation agreement administered by the
department may be used by the department and the State
Department of Education to meet the requirements of the
interagency agreement or memorandum of understanding
referenced in Section 14132.472 and the staffing needed to jointly
administer and chair the workgroup described in Section
14005.272.

(g) (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 (f).

(h) 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.

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 regulations.

(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 on or after begin delete July end delete begin insert January end insert 1,
2018.

(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
nonschool-based 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 regulations.

(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 be implemented to the extent that federal
financial participation is available and any necessary federal
approvals have been obtained.

(u) The department may seek approval of any state plan
amendments necessary to implement this section.

(v) Notwithstanding Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code,
the department may implement, interpret, or make specific this
section by means of all-county letters, provider bulletins, or similar
instructions.

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

SEC. 8.  

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.

(b) (1) Beginning no later than July 1, 2018, the department,
based on the input of the workgroup described in Section
14005.272, may administer, or oversee the administration of, a
single statewide quarterly random moment time survey for the
School-Based Administrative Claiming process program, or a
reduction in the number of random moment time surveys conducted
in the state.

(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) (1) The department may contract with a participating local
educational consortium or local governmental agency and shall,
if a local educational agency chooses and the department has
developed a process for direct contracting, contract with a local
educational agency to perform school-based 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)). This activity shall
be known as the School-Based Administrative Claiming process.

(2) A local educational agency that contracts with the department
pursuant to paragraph (1) may contract with a participating local
educational consortium or local governmental agency to perform
some or all of the duties imposed on a participant by this section.

(3) For purposes of this section, “participating local educational
agency, local educational consortium, or local governmental
agency” or “participant” means a local educational agency, local
educational consortium, or local governmental agency that
contracts with the department pursuant to paragraph (1).

(d) (1) As a condition of participation in the School-Based
Administrative Claiming process program, each participating local
educational agency, local educational consortium, or 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, pursuant to subdivision (f), the
total amount the local educational agency expended on the
allowable administrative activities. A local educational agency
may certify the amount expended on allowable administrative
activities either directly to the department or through a local
educational consortium or local governmental agency.

(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, local educational consortium, or local governmental 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, local educational consortia, and local
governmental agencies.

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

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

(B) For each fiscal year, that the expenditures of the participant
claiming federal Medicaid reimbursement 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,
local educational consortium, or 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 a participating local
educational agency, local educational consortium, or local
governmental agency has received reimbursement for School-Based
Administrative Claiming process activities, the department shall
recoup from the participant 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, local educational
consortium, or local governmental agency has received
reimbursement for School-Based Administrative Claiming process
activities performed by an entity under contract with, and on behalf
of, the participant, the department shall be held harmless by that
particular participant 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, local educational consortium, or local
governmental agency except as required by this section or as may
be required by federal law.

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

(2) The department shall deny a claim from a participating local
educational agency, local educational consortium, or 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.

(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, local
educational consortium, or local governmental agency, within 30
days after receipt of written notice of the denial, may request that
the department reconsider its action. The participant 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 participant in response to its request
for reconsideration, indicating the specific reasons for which the
claim is out of compliance. The participant may appeal the decision
of the director pursuant to the appeals process established by the
department pursuant to Section 14005.274.

(l) To the extent consistent with federal law and regulations,
participating local educational agencies, local educational consortia,
or 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
participants. A participant may only claim for nonemergency,
nonmedical transportation of Medi-Cal eligibles for Medi-Cal
covered services, through the School-Based Administrative
Claiming process. 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 a participating local educational agency, local
educational consortium, or local governmental agency in the
School-Based Administrative Claiming process, each participant
shall pay an annual participation fee through a mechanism agreed
to by the state and the participant. The participation fee shall be
used to cover the cost of administering the School-Based
Administrative Claiming process. 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
begin delete government end delete begin insert governmental end insert 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) (1) 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.

(2) 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.

(p) (1) Each participating local educational agency, local
educational consortium, or local governmental agency that
contracts with the department pursuant to paragraph (1) of
subdivision (c) 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) A participating local educational consortium shall be
responsible for a local educational agency with which it contracts
that participates in the School-Based Administrative Claiming
process program solely as a subcontractor to the local educational
consortium. 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, the submission of detailed
quarterly invoices on behalf of any participating local educational
agency, and ensuring that the local educational agency complies
with all requirements of the School-Based Administrative Claiming
process program.

(3) Each participating local educational agency, local educational
consortium, or local governmental agency shall comply with all
requirements of the School-Based Administrative Claiming process
program.

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

(q) Each local educational consortium or local governmental
agency that elects to participate in the School-Based Administrative
Claiming process program shall submit claims directly to the
department. A local educational agency that elects to participate
in the School-Based Administrative Claiming process program
may submit claims directly to the department, or to a local
educational consortium or local governmental agency.

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

(s) This section shall be applicable to School-Based
Administrative Claiming process program activities performed on
or after begin delete July end delete begin insert January end insert 1, 2018.

(t) 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.

(u) This section shall not be construed to prohibit county offices
of education, local educational consortia, or local governmental
agencies from providing services to local educational agencies to
facilitate participation in school-based health programs on a
fee-for-service basis; however, local governmental agencies and
local educational consortia shall only require local educational
agencies to contract for services that are actually provided and
necessary for the performance of oversight and monitoring
responsibilities, including training regarding random moment time
surveys, random moment time survey study tasks, roster updates,
and financial review. 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.

(v) This section shall be implemented to the extent that federal
financial participation is available and any necessary federal
approvals have been obtained.

(w) The department may seek approval of any state plan
amendments necessary to implement this section.

(x) Notwithstanding Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code,
the department may implement, interpret, or make specific this
section by means of all-county letters, provider bulletins, or similar
instructions.

SEC. 9.  

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

14132.472.  

(a) By July 1, 2018, 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 interagency agreement or MOU shall take into
consideration the recommendations of the workgroup established
by Section 14005.272 provided pursuant to subdivision (c) of
Section 14005.272.

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

(1) 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).

(2) Consult with the workgroup established pursuant to Section
14005.272 regarding the role of the State Department of Education
on the impact of the implementation of the School-Based
Administrative Claiming process program and the LEA billing
option on operations at the local level and any changes to the MOU
that the workgroup recommends.

(3) Develop a schedule for the regular ongoing meetings of the
workgroup established pursuant to Section 14005.272 to provide
feedback to the department and the State Department of Education.

(4) Ensure that the MOU components developed in collaboration
begin delete of end delete begin insert with end insert the State Department of Education and with the input of
the workgroup established pursuant to Section 14005.272 are
severable.