BILL ANALYSIS                                                                                                                                                                                                    Ó






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          |SENATE RULES COMMITTEE            |                        SB 123|
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                                   THIRD READING 


          Bill No:  SB 123
          Author:   Liu (D)
          Amended:  5/12/15  
          Vote:     21  

           SENATE EDUCATION COMMITTEE:  9-0, 4/22/15
           AYES:  Liu, Runner, Block, Hancock, Leyva, Mendoza, Monning,  
            Pan, Vidak

           SENATE HEALTH COMMITTEE:  9-0, 4/29/15
           AYES:  Hernandez, Nguyen, Hall, Mitchell, Monning, Nielsen,  
            Pan, Roth, Wolk

          SENATE APPROPRIATIONS COMMITTEE:  7-0, 5/28/15
          AYES:  Lara, Bates, Beall, Hill, Leyva, Mendoza, Nielsen

           SUBJECT:   Report:  School-Based Medi-Cal Administrative  
                     Activities program


          SOURCE:    Author


          DIGEST:  This bill requires the Legislative Analyst to review  
          and prepare recommendations relative to the administration and  
          oversight of the School-Based Medi-Cal Administrative Activities  
          program.


          ANALYSIS:   


          Existing law:








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          1)Authorizes the California Department of Health Care Services  
            (DHCS) to contract with each participating local governmental  
            agency (LGA) or each local educational consortium (LEC) to  
            assist with the performance of administrative activities.  

          2)Requires DHCS to deny the claim if it determines that the  
            certification is not adequately supported, or does not  
            otherwise comply with federal requirements.

          3)Authorizes each participating LGA or LEC to subcontract with  
            private or public entities to assist with the performance of  
            administrative activities.  (Welfare and Institutions Code §  
            14132.47)

          This bill:

          1)Requires the Legislative Analyst, in consultation with the  
            Department of Education (CDE) and DHCS, to review and prepare  
            specific recommendations relative to the administration and  
            oversight of the School-Based Medi-Cal Administrative  
            Activities (SMAA) program.

          2)Requires a report containing the recommendations to be  
            submitted to the Legislature and the Governor by July 1, 2016.

          3)Requires the report to consider the report that is expected to  
            be issued by the State Auditor in 2015, and requires the  
            report to include but not be limited to, an evaluation of all  
            of the following:

             a)   The appropriate state agency or agencies to administer  
               the SMAA program.

             b)   Oversight of the administration of the program,  
               including oversight of the state agency, LGAs, and local  
               educational consortia.

             c)   The structure of the SMAA program and the role of each  
               entity, including the LGAs and local educational consortia,  
               how the structures and roles vary across the state, and the  
               efficiency of those structures and roles in providing funds  
               to local educational agencies (LEAs).








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             d)   The relationships, interactions, and communications  
               state agencies have with the federal Centers for Medicare  
               and Medicaid Services (CMS), and the process used to  
               disseminate information from the CMS to LEAs.  

             e)   The process for reimbursing claims submitted by LEAs,  
               including the amount reimbursed compared to the amount  
               claimed, the time between submission of a claim and the  
               reimbursement of that claim, and how the claim and  
               reimbursement process varies across the state.

             f)   The purposes for which LEAs use SMAA program funds.  

             g)   The relationship between LGAs or LECs and the private or  
               public entities that have been subcontracted to assist with  
               the performance of administrative activities.

             h)   The rates charged by the LGA and LEC, how those rates  
               vary across the state, and how rates are determined.

             i)   The ability of an LEA to contract with an LGA or an LEC  
               of its choosing.

             j)   The feasibility of convening an LEA advisory body for  
               the purposes of providing technical assistance to LEAs and  
               communicating with the administering state agency.

             aa)  The extent to which the state is maximizing federal  
               funds available for the SMAA program.

             bb)  How capacity to operate the SMAA program can be built  
               within LEAs.

          1)Requires the DHCS to annually post on its Web site the  
            administrative fee percentage charged by each LGA or LEC.

          2)Uses existing definitions of "local governmental agency,"  
            "local educational agency," and "local educational consortia"  
            in Welfare and Institutions Code provisions relative to the  
            SMAA program, as follows:

             a)   "Local educational agency" as the governing body of any  
               school district or community college district, the county  
               office of education, a state special school, a California  







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               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.

             b)   "Local educational consortium" means a local agency that  
               is one of the service regions of the California County  
               Superintendent Educational Services Association.

             c)   "Local governmental agency" as a county, chartered city,  
               Native American Indian tribe, tribal organization, or  
               subgroup of a Native American Indian tribe or tribal  
               organization, under contract with DHCS.

          Background


          The SMAA program provides federal reimbursements to 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 CMS administers the SMAA program at the federal  
          level, and DHCS administers the SMAA program for the State.


          Comments


          1)The rules keep changing.  The audit of three LEAs conducted by  
            CMS determined that the entire State's SMAA claims did not  
            comply with the claiming plan approved by CMS.  CMS deferred  
            California's SMAA claims until additional documentation was  
            provided, including the requirement that LEAs provide  
            certification of activities performed to support submitted  
            invoices.  In addition, CMS required DHCS to submit a revised  
            time study methodology and statewide claiming plan.   
            [http://www.medicaidfor
          education.org/filelibrary-name/webcommittee/PDF/SMAA_Ltr_to_CA_
          Final.pdf]








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             a)   Accounting methodologies were subsequently implemented  
               as follows:
             A new Reasonableness Test Criteria was instituted by DHCS in  
               October 2013.  

             b)   A new settlement and Random Moment in Time Survey was  
               offered by CMS on October 7, 2014.   
               [http://www.dhcs.ca.gov/provgovpart/
             Documents/ACLSS/SMAA/SMAA_Deferral_Resolution_CMS.pdf]

             c)   DHCS agreed to the settlement on October 14, 2014.  
             [http://www.dhcs.ca.gov/provgovpart/Documents/ACLSS/SMAA/SMAA_ 

             SettlementProposal.pdf]

             d)   Revisions resulting in a February 20 settlement  
               proposal.   
               [http://www.dhcs.ca.gov/provgovpart/Documents/ACLSS/SMAA/CMC 
               S_letter_to_California_0315_2.pdf]

          2)Current status.  Beginning April 1, 2015, the structure of  
            reimbursing claims is as follows:

             a)   Claims under $25,000 will be reimbursed at 90% of the  
               invoice.

             b)   Claims between $25,001-$50,000, a choice of:

               i)     Accepting reimbursement at 75% of the claimed amount  
                 with backcasting, or:

               ii)    Accepting reimbursement of either 75% of the claimed  
                 amount or a flat $25,000, whichever is higher.

             c)   Claims over $50,000 will be reimbursed at 40% of the  
               claimed amount with backcasting.

            Backcasting involves the application of the current  
            reimbursement structure to prior claims that were submitted  
            using a different reimbursement structure.  

          3)Audit request.  The author requested an audit of the SMAA  
            program, which was approved by the Joint Legislative Audit  
            Committee in August 2014.  This bill requires an evaluation of  







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            additional and current information; there is marginal overlap  
            between the scope of the audit and the evaluation required by  
            this bill.  For example, the audit requested information  
            relative to how other states administer this program and  
            information specific to the accounting methodology that is no  
            longer utilized, as well as information specific to the LEA  
            Medi-Cal billing option.  This bill seeks an evaluation of the  
            LGA and LEC structure, addressing concerns of LEAs regarding  
            the ability for LGAs and LECs to change accounting codes and  
            claim amounts, and deny claims, submitted by LEAs, the lack of  
            a prohibition against individuals serving on an LGA or LEC and  
            being employed by the subcontractor hired by the LGA or LEC,  
            and the lack of clear rationale for administrative rates  
            charged by LGAs and LECs.  

          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:YesLocal:   No

          According to the Senate Appropriations Committee:

           The Legislative Analyst's Office (LAO) indicates that it would  
            need at least $150,000 to complete the report required by this  
            bill. 



           DHCS expresses the need for one limited-term position (about  
            $100,000 General Fund) to provide the necessary 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.



          SUPPORT:   (Verified5/29/15)








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          Auburndale Intermediate School
          California Pan-Ethnic Health Network
          California School-Based Health Alliance
          California School Boards Association
          California Teachers Association
          Compton Unified School District
          Los Angeles Trust for Children's Health
          Los Angeles Unified School District
          Mental Health America of California
          National Association of Social Workers, California Chapter
          Planned Parenthood Affiliates of California
          Riverside County Superintendent of Schools
          San Diego Unified School District
          San Francisco Unified School District
          Santa Clara County Office of Education
          Small School Districts' Association


          OPPOSITION:   (Verified5/28/15)


          None received


          ARGUMENTS IN SUPPORT:      According to the California School  
          Boards Association, the federal funding that supports a  
          significant number of health services for California's neediest  
          students has been stopped based on inadequate internal controls  
          and program oversight.  Due to issues with the administration of  
          the program, California school districts have not been  
          reimbursed for services they provided under the SMAA program for  
          years and are now owed hundreds of millions of dollars.


          Prepared by:Lynn Lorber / ED. / (916) 651-4105
          5/31/15 12:45:19


                                   ****  END  ****


          








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