BILL ANALYSIS Ó
SB 123
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Date of Hearing: June 23, 2015
ASSEMBLY COMMITTEE ON HEALTH
Rob Bonta, Chair
SB
123 (Liu) - As Amended May 12, 2015
SENATE VOTE: 39-0
SUBJECT: Report: School-Based Medi-Cal Administrative
Activities program.
SUMMARY: Requires the Legislative Analyst, in consultation with
the California Department of Education (CDE) and the State
Department of Health Care Services (DHCS), to make
recommendations relative to the administration and oversight of
the School-Based Medi-Cal Administrative Activities (SMAA)
program. Specifically, this bill:
1)Requires the Legislative Analyst to submit a report containing
recommendations to the Legislature and the Governor by July 1,
2016, as specified.
2)Requires the report to include, but not be limited to, an
evaluation of specified entities, administrative structures,
and information.
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3)Requires DHCS to annually post on its Internet Website the
administrative fee percentage charged by each local
governmental agency (LGA) or local educational consortium
(LEC).
EXISTING FEDERAL LAW:
1)Authorizes federal grants to states for a proportion of
expenditures for medical assistance under the approved
Medicaid state plan, and for expenditures necessary for
administration of the state plan.
2)Requires that claims for federal financial participation (FFP)
come directly from the single state Medicaid agency.
3)Authorizes FFP claims to be paid for health services and
health-related administrative activities provided in a school
setting through SMAA.
EXISTING STATE LAW:
1)Establishes the Medi-Cal program, which is administered by
DHCS under which qualified low-income individuals receive
health care services.
2)Permits DHCS to contract with each participating LGA or each
LEC to assist with the performance of administrative
activities necessary for the proper and efficient
administration of the SMAA program.
3)Requires each local education agency (LEA) that elects to
participate in SMAA to submit claims through its LEC or LGA,
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but not both.
4)Requires each LEA participating as a subcontractor to a LEC to
comply with all requirements of the SMAA claiming process
established for LGAs.
5)Defines a LEA for purposes of SMAA as 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 in the Administrative Claiming process as a
subcontractor to the LEC in its service region.
6)Permits a LGA or LEC to charge an administrative fee to any
entity claiming Administrative Claiming through that agency.
FISCAL EFFECT: According to the Senate Appropriations
Committee, the Legislative Analyst's Office would need at least
$150,000 to complete the report required by this bill, and DHCS
would need about $100,000 (General Fund) for one position to
provide the necessary data.
COMMENTS:
1)PURPOSE OF THIS BILL. According to the author, the SMAA
program typically supports school nurses, psychologists,
health aides, family resource centers, and other activities
ensuring that California's neediest students are accessing and
receiving health and mental health services. Improving
school-based health services requires effective coordination
between California's health and education systems. The author
states that based on significant issues with the
administration of the SMAA program by DHCS, over 800 school
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districts and charter schools are owed hundreds of millions in
federal funds.
The author concludes that improving school-based health services
is a critical strategy to address the achievement gap in our
schools and health and education equity issues in California.
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.
2)ADMINISTRATIVE FEE PROVISIONS. LGAs and LECs charge LEAs an
administrative fee for SMAA claiming. These fees vary by each
LEC and LGA but are typically expressed as a percentage of the
federal funds claimed from invoices submitted by LEAs to their
LEC or LGA. This bill would require that amount to be
disclosed on the DHCS Website. The author indicates these
fees are not currently publicly posted, and that many of the
LECs and LGAs are asking for significant fee increases in the
range of 50% or more. The author argues requiring the posting
of this information helps both with the overall transparency
of the SMAA program, and increases the ability of LEAs to have
adequate information and context when they develop contracts
with LECs and LGAs. The author states, in some cases, there
are multiple LECs or LGAs for districts to contract with, and
requiring the posting of administrative fee information is
important to LEAs as they seek to make the best local
decisions on developing agreements with LECs and LGAs.
3)BACKGROUND. SMAA allows LEAs to be reimbursed through federal
Medicaid matching funds for some of their administrative costs
associated with school-based health and outreach activities
that are not claimable under Medi-Cal generally. Those
activities include: outreach and referral; facilitating the
Medi-Cal application; arranging non-emergency/non-medical
transportation; program planning and policy development; and,
claims coordination. SMAA funds were typically reimbursed
directly to school districts for services already provided.
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In 2012-13, there were 825 LEAs were involved in the SMAA
program, a decrease from 836 from 2010-11. LEAs that elect to
participate in SMAA must submit its claims through its LEC or
an LGA. As a condition of participation in SMAA, each
participating LGA and LEC is required to pay an annual
participation fee to DHCS. The participation fee is used to
cover the DHCS' cost of administering the SMAA claiming
process, including claims processing, technical assistance,
and monitoring. Due to concerns regarding a lack of compliance
and oversight, the Centers for Medicare and Medicaid (CMS) has
deferred reimbursements for claims through the SMAA program
since 2012. Approximately half a billion dollars in
reimbursable funds has not been paid to California school
districts in the last five years.
a) Alphabet soup. A LEA is any school district or
community college district, a county office of education, a
state special school, a California State University campus,
or a University of California campus. A LEC is a group of
LEAs that are all in one same region out of the 11 service
regions established by the California County Superintendent
Educational Services Association. A LGA is a county,
chartered city, Native American Indian tribe, tribal
organization, or subgroup of a Native American Indian tribe
or tribal organization. DHCS contracts with LGAs and LECs
that consolidate claims provided by LEAs for a fee.
b) Federal financial report on SMAA. CMS performed a
Financial Management Report of SMAA for the period July
2010 through June 2011, during which time California
claimed $188.9 million in federal Medicaid matching funds.
The purpose of the review was to determine if California
properly claimed federal Medicaid reimbursement for
administrative costs in accordance with federal regulations
and California's approved School Based Administrative
Claiming Guide. CMS' review found serious deficiencies
within the program.
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The CMS review included visiting Turlock Unified School
District (Turlock), Tulare County Office of Education -
Special Services Division (Tulare) and Santa Barbara County
Education Office - Special Education (Santa Barbara). The
review found two (Turlock and Tulare) of the three entities
did not comply with federal regulations or the federal
Office of Management and Budget (OMB) Circular A-87
(described below). The review was critical of DHCS for a
lack of oversight and monitoring of invoices submitted, and
inconsistency across school districts over the oversight
that each individual LEC/LGA performs in a review over the
amounts claimed. CMS found a lack of internal controls,
operating procedures and financial oversight to ensure
compliance with federal regulation and the OMB circular,
and the approved claiming plan did not comply with federal
regulation and the OMB circular.
4)SMAA payment deferral. On June 26, 2012, the CMS informed
DHCS that the SMAA program was on payment deferral, because
implementation of DHCS's approved SMAA claiming plan did not
comply with the requirements detailed in the OMB Circular
A-87. OMB Circular A-87 requires that any costs claimed be
limited to those that are reasonable and necessary for the
proper and efficient administration of the Medi-Cal program.
Exceptions to the CMS payment deferral include Los Angeles
Unified School District, which uses a CMS-approved Random
Moment Time Study (RMTS) system (discussed below) and the
Santa Barbara County Education Office - Special Education,
which was found to be compliant with OMB Circular A-87. The
CMS payment deferral applies retroactively to claims
submitted. To lift the deferral, CMS required DHCS to
implement a revised claiming plan that is in compliance with
OMB Circular A-87. CMS also informed DHCS that any invoices
submitted for quarters after July 1, 2012, using the currently
approved methodology, may be subject to deferral.
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On April 1, 2015, DHCS submitted a backcasting methodology for
all deferred invoice claims submitted to the SMAA program
based on an October 7, 2014 CMS deferral settlement agreement.
Under that agreement, DHCS would apply the following criteria
to each unresolved deferred invoice:
a) Claims under $25,000 will be paid in whole and
backcasting will not be required;
b) Claims between $25,001 and $50,000 will require claiming
units to choose one of the following options:
i) An interim payment of 75% and agree to backcasting;
or,
ii) A settlement payment of 75% of the claimed amount or
$25,000, whichever is higher with no backcasting; and,
c) Claims greater than $50,001 will receive an interim
payment of 40 percent and backcasting will be required.
In February 2015, DHCS indicated $216 million in deferred
current placeholder claims that have yet to be paid to
date, and $122 million is the total deferred claims that
have been paid.
DHCS indicates all interim payments for under $25,000 have
been made, and DHCS hopes to have the interim payments made
in this fiscal year. The final reconciliation amounts will
depend upon CMS approval of the state's submission.
d) RMTS. The new RMTS claiming methodology will replace
the worker log methodology that has been used in the SMAA
program. Under the worker log methodology, SMAA
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participants fill out paper time surveys in which they
state the amount of time they spent on MAA and non-MAA
activities. Under the RMTS method of time surveying,
participants will receive an email questionnaire that asks
what they are doing at a specified time. That information
will be sent to the LECs and LGAs, who will code the answer
to MAA billable or MAA non-billable codes. The RMTS method
provides means of determining what portion of a
participant's workload is spent performing activities which
are reimbursable by Medicaid, and will be the basis for
claiming federal Medicaid matching funds.
e) Bureau of State Audits. In July 2014, Senator Liu
requested the Joint Legislative Audit Committee approve an
audit of SMAA and the LEA Billing Option, the effectiveness
of the LECs and LGAs associated with administering the
program, the extent to which the necessary administrative
controls and structures are in place to ensure schools
receive the allowed Medicaid funding. BSA indicates the
target date for completion of that audit is August 2015.
5)SUPPORT. This bill is sponsored by school districts, school
administrators and the California Teachers Association.
Proponents argue this bill will provide needed direction and
reform for the SMAA program, which plays a critical role in
ensuring that students have access to health insurance and
health services and it is a vital source of funding for
school-based health programs in California. Supporters argue
it is essential that this program be run efficiently to
maximize all allowable federal funds, and to ensure that as
many dollars as possible reach locals schools to provide
services to California's students. Supporters state the
delays in funding and administrative inefficiencies on the
part of DHCS have jeopardized the continued operations of the
SMAA program and health services in hundreds of California
school districts and charter schools. Supporters conclude this
bill will help to ensure that this funding source remains
viable and reliable for school districts in California.
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6)RELATED LEGISLATION.
a) AB 1133 (Achadjian) makes technical changes to existing
law regarding grants to LEAs to pay the state share of
costs of providing school-based early mental health
intervention and prevention services to eligible students.
AB 1133 was held in the Assembly Appropriations Committee.
b) AB 1018 (Cooper) requires DHCS and CDE to convene a
joint task force to examine the delivery of mental health
services to children eligible for Early and Periodic
Screening, Diagnosis, and Treatment services and for
services required by the federal Individuals with
Disabilities Education Act. AB 1018 is pending in the
Senate Education Committee.
7)PREVIOUS LEGISLATION. AB 1955 (Pan) of 2014, would have
required DHCS and 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.
8)DOUBLE REFERRAL. This bill is double referred; upon passage
in this Committee, this bill will be referred to the Assembly
Education Committee.
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REGISTERED SUPPORT / OPPOSITION:
Support
American Federation State, County and Municipal Employees
California School Boards Association
California School Employees Association
California Teachers Association
Los Angeles Unified School District
Riverside County Superintendent of Schools
San Francisco Unified School District
Santa Clara County Office of Education
Small School Districts' Association
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Opposition
None on file.
Analysis Prepared by:Paula Villescaz / HEALTH / (916)
319-2097