BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session SB 123 (Liu) - Report: School-Based Medi-Cal Administrative Activities program. ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: May 12, 2015 |Policy Vote: ED. 9 - 0, HEALTH | | | 9 - 0 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: No | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: May 18, 2015 |Consultant: Jillian Kissee | | | | ----------------------------------------------------------------- This bill meets the criteria for referral to the Suspense File. Bill Summary: This bill requires the Legislative Analyst's Office (LAO), in consultation with the California Department of Education (CDE) and the State Department of Health Care Services (DHCS) to review and prepare specific recommendations on the administration and oversight of the School-Based Medi-Cal Administrative Activities (SMAA) program and to submit recommendations to the Legislature and the Governor by July 1, 2016. This bill also requires DHCS to annually post on its website the administrative fee percentage charged by each local governmental agency or local educational consortium. Fiscal Summary: LAO indicates that it would need at least $150,000 to complete the report required by this bill. DHCS espresses the need for one limited-term position (about $100,000 General Fund) to provide the necessary SB 123 (Liu) Page 1 of ? support to LAO with regard to compiling data. DHCS and CDE indicate other workload required by this bill to be minor and absorbable. This bill also creates a potentially significant cost pressure to implement the LAO's recommendations. Background: The SMAA program provides federal reimbursements to local educational agencies (LEAs) for the federal share (50%) of certain costs for administering the Medi-Cal program. Those activities include: outreach and referral, facilitating the Medi-Cal application, arranging non-emergency/non-medical transportation, program planning and policy development, and Medi-Cal administrative activities claims coordination. The federal Centers for Medicare and Medicaid Services (CMS) administers the SMAA program at the federal level, and the California Department of Health Care Services (DHCS) administers the SMAA program for the state. Current law authorizes DHCS to contract with each participating local governmental agency or each local educational consortium to assist with the performance of administrative activities. In turn, local governmental agencies and local educational consortiums are allowed to subcontract with private or public entities. Local governmental agencies and local educational consortiums are required to certify to DHCS the total amount expended on the allowable administrative activities. DHCS is required to deny claims if it determines that the certification is not adequately supported or does not comply with federal requirements. For purposes of this program, a local educational consortium means a local agency that is one of the service regions of the California County Superintendent Educational Services Association. In addition, a LEA means the governing body of any school district or community college district, the county office of education, a state special school, a California State University campus, or a University of California campus that participates under the Administrative Claiming process as a subcontractor to the local educational consortium in its service region. SB 123 (Liu) Page 2 of ? In the 2010-11 fiscal year, CMS performed a Financial Management Report of SMAA to determine if California properly claimed federal Medicaid reimbursement for administrative costs consistent with federal regulations and California guidance. The review found serious deficiencies with the program which led to the deferral of claim payments imposed by CMS. DHCS indicates that despite corrective measures implemented, $122 million in deferred claims are outstanding. An audit of this program by the Bureau of State Audits is expected to be complete in August 2015. According to the author's office, the intent of this bill is for the LAO, in consultation with CDE and DHCS, to use information from the audit to develop recommendations on improving the structure and administration of the program through coordination with LEAs. Proposed Law: This bill requires the LAO, in consultation with CDE and DHCS, to review and prepare specific recommendations on the administration and oversight of SMAA and to submit recommendations to the Legislature and the Governor by July 1, 2016. This bill also requires DHCS to annually post on its website the administrative fee percentage charged by each local governmental agency or local educational consortium. Specifically, the report must consider the State Auditor's 2015 report and include an evaluation of: 1. The appropriate state agency to administer the program; 2. Oversight of the administration of the program, at the state and local level; 3. The structure of the program and role of each entity and the efficiency of those structures and roles in providing funds to LEAs; 4. The relationships state agencies have with the federal CMS, and the process used to disseminate information from the federal level to LEAs; SB 123 (Liu) Page 3 of ? 5. The process for reimbursing claims submitted by LEAs, including the amount reimbursed compared to the amount claimed and how the processes vary across the state; 6. The purposes for which LEAs use program funds; 7. The relationship between local governmental agencies or local educational consortia and other entities that have been subcontracted to assist with the performance of administrative activities; 8. The rates charged by the local governmental agencies and local educational consortia and how they vary across the state and are determined; 9. The ability of a LEA to contract with a local governmental agency or local educational consortium of its choosing; 10. The feasibility of convening a LEA advisory body to provide technical assistance to LEAs and communicating with the administering state agency. 11. The extent to which the state is maximizing federal funds available for the program; and 12. How capacity to operate the program can be built within LEAs. Related Legislation: AB 1955 (Pan, 2014), among other things, required DHCS and the CDE to cooperate and coordinate efforts in order to maximize receipt of federal financial participation under the Administrative Claiming process. AB 1955 was held on the Assembly Appropriations Committee's suspense file. -- END -- SB 123 (Liu) Page 4 of ?