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.
          
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          |Version: May 12, 2015           |Policy Vote: ED. 9 - 0, HEALTH  |
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          |Urgency: No                     |Mandate: No                     |
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          |Hearing Date: May 18, 2015      |Consultant: Jillian Kissee      |
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          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  







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               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.









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          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; 










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             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.


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