BILL ANALYSIS Ó
SB 123
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Date of Hearing: June 22, 2016
ASSEMBLY COMMITTEE ON EDUCATION
Patrick O'Donnell, Chair
SB
123 (Liu) - As Amended June 16, 2016
[This bill was double referred to the Assembly Health Committee
and was heard as it relates to that committee's jurisdiction.]
SENATE VOTE: 39-0
SUBJECT: Medi-Cal: School-Based Administrative Activities
SUMMARY: Revises the administrative claiming process for local
educational agencies (LEAs) that conduct school-based
administrative activities relating to the Medi-Cal program.
Specifically, this bill:
1)Requires the Department of Health Care Services (DHCS), in
consultation with the State Department of Education (CDE), to
establish a School-Based Health Program and Policy Workgroup
(Workgroup), in order to assist DHCS in formulating the state
plan amendments required and for the purpose of advising DHCS
on issues related to the delivery of school-based Medi-Cal
services to students. Requires the scope of the workgroup to
include, but not be limited to, improving the operation of and
participation in all of the following school-based health
programs:
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a) The School-Based Administrative Claiming process
program.
b) The LEA billing option
c) The Early and Periodic Screening, Diagnosis, and
Treatment (EPSDT) Program.
d) Other school-based health and mental health programs,
including school-based health centers which may receive
Medi-Cal funding.
2)Requires DHCS, beginning the 2017-18 state fiscal year, and
annually thereafter, to publish the following reports on a
section of its Internet Web site:
a) A report that details the costs of operating the
School-Based Administrative Claiming process program
including the cost of conducting the random moment time
survey (RMTS) and any vendor fees, lists each participating
LEA, and cost savings realized through the restructuring of
the Administrative Claiming process program through
implementation of the School-Based Administrative Claiming
process program.
b) A report that details the costs of operating the LEA
Medi-Cal billing option program that lists each
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participating LEA.
c) A report regarding the rate of participation of LEAs in
the EPSDT Program.
3)Establishes that it is the intent of the Legislature to
provide local governmental agencies (LGAs) with the option to
participate in the Targeted Case Management (TCM) program and
to provide LEAs with the option to participate in the
Administrative Claiming process program.
4)Authorizes DHCS to contract with a participating LEA to
perform administrative activities necessary for the proper and
efficient administration of the School-Based Administrative
Claiming process.
5)Requires each participating LEA, as a condition of
participation in the School-Based Administrative Claiming
process program for the purpose of claiming federal Medicaid
reimbursement, to enter into a contract with DHCS and to
certify to DHCS the total amount it expended on the allowable
administrative activities.
6)Requires DHCS to deny a claim if it determines that the
certification is not adequately supported, or otherwise does
not comply with federal requirements, for purposes of claiming
federal financial participation (FFP). Permits an LEA to
request a reconsideration of a denied claim within 30 days
after receipt of written notice of the denial and establishes
a denial review process, as specified. Permits DHCS to recoup
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the cost of disallowed claims that have been paid to an LEA
with interest.
7)Requires each School-Based Administrative Claiming process
contract to include a requirement for each participating LEA
to submit a claiming plan, as prescribed by DHCS in
regulations developed in consultation with LEAs.
8)Requires each participating LEA to certify to DHCS that: 1)
the LEA expended funds from its general fund or from any other
fund allowed under federal law and regulation to pay for 100
percent of the cost of performing School-Based Administrative
Claiming process program activities; and, 2) for each fiscal
year, that the LEA's expenditures represent costs that are
eligible for FFP for that fiscal year.
9)Holds the state harmless from any federal audit disallowance
and interest resulting from payments made to a participating
LEA for a disallowed claim. If a federal audit disallowance
results from a claim for a participating LEA that has already
received reimbursement, DHCS may recoup the disallowed claim
from the LEA, as specified.
10)Requires DHCS, in consultation with LEAs, to adopt
regulations that prescribe the requirements for the submission
and payment of claims for administrative activities performed
by each participating LEA.
11)Permits LEAs to claim the actual costs of nonemergency,
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nonmedical transportation of Medi-Cal eligibles to Medi-Cal
covered services, through, and only through, the Medi-Cal
administrative activities program.
12)Requires LEAs participating in the School-Based
Administrative Claiming process to pay an annual participation
fee through a mechanism agreed to by the state and LEAs to be
used to cover the cost of administering the School-Based
Administrative Claiming process, including, but not limited
to, claims processing, technical assistance, and monitoring.
Requires the amount of the participation fee to 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.
13)Defines LEA as county offices of education, special education
local plan areas, Healthy Start programs, any governing body
of any school district or community college district, the
county office of education, a charter school, a state special
school, a California State University campus, or a University
of California campus.
14)Requires each LEA to notify DHCS of its intent to participate
in the School-Based Administrative Claiming process program 90
days prior to the initial participation.
15)Requires each participating LEA to prepare and submit claims
directly to DHCS.
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16)Specifies that county offices of education or local
government agencies are not prohibited from providing services
to LEAs to facilitate participation in school-based health
programs on a fee-for-service basis.
17)Specifies that county office of education or a local
educational consortium providing services to a local
educational agency are not prohibited 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.
18)Requires DHCS, by July 1, 2017, to enter into an interagency
agreement or memorandum of understanding (MOU) with CDE to
coordinate the efforts of both departments with respect to the
School-Based Administrative Claiming process program and the
LEA billing option. The agreement or MOU shall focus on the
following:
a) Maximizing DHCS's Medicaid Program expertise;
b) Coordinating functions and resources between DHCS and
CDE, and building personnel capacity at CDE, to assist LEAs
in implementing and meeting the requirements of the
School-Based Administrative Claiming process and the LEA
billing option at the local level, including an agreement
of the use of funds provided for the administration of
these programs; and,
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c) Developing a process by which a LEA may appeal an action
of DHCS or CDE with respect to the School-Based
Administrative Claiming process program or the LEA billing
option. Requires the appeals process to utilize the Office
of Administrative Hearings, or another neutral third party
acceptable to the department and the State Department of
Education, as the appeals authority.
19)Requires DHCS to do the following in developing the
interagency agreement or MOU with CDE:
a) Estimate the cost savings resulting from the
restructuring of the Administrative Claiming process
program through implementation of the new School-Based
Administrative Claiming process program. Requires DHCS to
provide the estimate of cost savings, data used to support
the estimate, and a description of the methodology used to
calculate the estimate to CDE.
b) 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.
c) Consult with the School-Based Health Program and Policy
Workgroup regarding the impact of the implementation of the
School-Based Administrative Claiming process program on
operations at the local level.
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20)Requires any savings resulting from the restructuring of the
Administrative Claiming process program through implementation
of the School-Based Administrative Claiming process program
and available to DHCS to be directed toward implementation of
the interagency agreement or MOU.
EXISTING LAW:
1)Authorizes 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)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)
3)Requires each LEA that elects to participate in School-Based
Medi-Cal Administrative Activities (MAA) to submit claims
through its local educational consortium or LGA, but not both.
4)Defines a LEA for purposes of MAA 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 local educational consortium in its
service region.
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5)Permits a LGA or local educational consortium to charge an
administrative fee to any entity claiming Administrative
Claiming through that agency.
FISCAL EFFECT: Unknown
COMMENTS: Background: The School-Based Medi-Cal Administrative
Activities (MAA) program provides federal reimbursements to
local educational agencies for the federal share 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 administers the MAA
program at the federal level, and the DHCS administers the MAA
program for the State.
In 2012-13, 825 LEAs were involved in the MAA program, a
decrease from 836 in FY 2010-11. LEAs that elect to participate
in MAA must submit claims through a LEC or LGA. As a condition
of participation in MAA, each participating LGA and LEC is
required to pay an annual fee to DHCS. The participation fee is
used to cover the DHCS' cost of administering the MAA claiming
process, including claims processing, technical assistance, and
monitoring. Due to concerns regarding a lack of compliance and
oversight, CMS has deferred reimbursements for claims through
the MAA program since 2012. Approximately $0.5 billion in
reimbursable funds has not been paid to California school
districts in the last five years.
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According to the author, the MAA 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. The LEA Billing Option Program currently supports
health services for special education students. These programs
have been fraught with issues including the federal deferral of
funds for the MAA program that resulted in hundreds of millions
of dollars being owed to California schools going back to 2010.
This bill builds on the recommendations of the State Audit of
MAA programs issued last year which Senator Liu requested via
the Joint Legislative Audit Committee (JLAC). This bill
provides more options and local control for school districts,
charters and other LEAs to utilize technical support providers
they feel meet their needs rather than require them to use the
intermediary structure currently mandated in statute by allowing
local education agencies to contract directly with DHCS in a
more streamlined, accountable, and cost effective structure as
recommended by the state auditor.
Improving school-based health services requires effective
coordination between California's health and education systems.
This bill requires development of an interagency agreement
between DHCS and CDE to help ensure that collaboration is
institutionalized and represents the best practices outlined in
the recent federal guidance regarding high impact opportunities
to support healthy students through inter-agency collaboration
at the federal, state, and local level. Federal requirements
call for an interagency agreement between the health and
education agencies in states to operate these programs.
California currently does not have that interagency agreement.
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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.
Definitions. 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, county agency, chartered city,
Native American Indian tribe, tribal organization, or subgroup
of a Native American Indian tribe or tribal organization. DHCS
currently contracts with LGAs and LECs that consolidate claims
provided by LEAs for a fee.
2015 State Auditor's Report. In July 2014, Senator Liu
requested the Joint Legislative Audit Committee approve an audit
of MAA 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. The State Auditor concluded that while the
reasonableness test criteria process DHCS used to review
reimbursement claims for the MAA program from October 2013
through October 2014 was reasonable and not inconsistent with
federal requirements, DHCS approved fewer than 10% of the claims
submitted under this process. The entities with which DHCS
contracts to review reimbursement claims-LECs and LGAs-added
little value during this review process; they approved and
forwarded to DHCS claims that did not comply with the
reasonableness test criteria benchmarks and other limits. The
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Audit noted that at the time, DHCS was behind in its required
reviews of LECs and LGAs, which the Auditor noted increased the
risk that these entities are not performing the administrative
tasks for which they are responsible. DHCS also does not
effectively oversee the contracts between the LECs or LGAs and
the claiming units.
The Auditor also found that DHCS missed an opportunity to cut
costs through the implementation of a single statewide quarterly
time survey when it implemented the RMTS methodology. The Audit
estimated that the administrative activities program could save
as much as $1.3 million annually in coding costs alone if DHCS
conducted a single statewide quarterly time survey. However, if
DHCS implemented its own single statewide quarterly survey and
took over responsibility for overseeing the administrative
activities program, thus eliminating the need to use the LECs
and LGAs for these purposes, it would result in significant
savings to the administrative activities program.
The Auditor found that DHCS could increase federal funding by an
estimated $10.2 million annually if more claiming units
participated in the program and could have increased federal
reimbursements by about $4.6 million from February 2009 through
June 2015 if it increased the reimbursement rate for translation
activities to the rate allowed by federal law. Additionally,
DHCS has not complied with state law requiring the adoption of
regulations for its administrative activities program and has
failed to issue a required annual report for its billing option
program.
Federal financial report on MAA. The Centers for Medicare &
Medicaid Services (CMS) performed a Financial Management Report
of MAA 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
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administrative costs in accordance with federal regulations and
California's approved School-Based Administrative Claiming
Guide. CMS' review found serious deficiencies within the
program.
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 OMB Circular A-87. The
review was critical of DHCS for its 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.
Committee Amendments:
1)Specify additional members of the workgroup described in
Section 14005.272 and clarify the scope of the workgroup.
2)Specify that DHCS shall provide one annual report on all three
topics specified, not separate annual reports.
3)Clarify that DHCS shall contract with LEAs, at the LEA's
choosing, to perform administrative activities.
4)Clarify that LEAs shall only pay for services they contract
for from LECs and LGAs.
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5)Make clarifying changes regarding CDE's role in the workgroup
and the MOU.
6)Make technical and conforming changes.
Previous Legislation: AB 1955 (Pan) from 2014, which was held on
the Assembly Appropriations Committee's suspense file, among
other things, required DHCS and the California Department of
Education (CDE) to cooperate and coordinate efforts in order to
maximize receipt of federal financial participation under the
Administrative Claiming process, and required DHCS, through an
interagency agreement with the CDE, to provide technical advice
and consultation to local educational agencies participating in
a demonstration project established by the bill, in order to
meet requirements to certify and bill valid claims for allowable
activities under the Administrative Claiming process.
SB 231 (Ortiz), Chapter 655, Statutes of 2001, requires the
State Department of Health Services (DHS) to amend the Medicaid
state plan with respect to the billing option for services by
Local Education Agencies (LEAs) to ensure that schools are
reimbursed for all eligible services they provide that are not
precluded by federal requirements. Requires DHS to regularly
consult with specified entities to assist in the formulating of
the state plan amendments. Permits DHS to enter into a sole
source contract to comply with the requirements of this bill.
Authorizes DHS to 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.
REGISTERED SUPPORT / OPPOSITION:
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Support
California School-Based Health Alliance
California Teachers Association
Teachers for Healthy Kids
Opposition
Orange County Department of Education
Analysis Prepared by:Chelsea Kelley / ED. / (916)
319-2087