BILL ANALYSIS Ó SB 123 Page 1 Date of Hearing: August 10, 2016 ASSEMBLY COMMITTEE ON APPROPRIATIONS Lorena Gonzalez, Chair SB 123 (Liu) - As Amended August 1, 2016 ----------------------------------------------------------------- |Policy |Health |Vote:|11 - 0 | |Committee: | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | |Education | |5 - 0 | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: NoReimbursable: No SUMMARY: This bill revises claiming options for school-based activities that qualify for federal reimbursement through the Medi-Cal program, requires Department of Health Care Services (DHCS) and the California Department of Education (CDE) to form a workgroup and develop a memorandum of understanding (MOU), and requires DHCS to annually report additional information about school-based Medi-Cal claiming. Specifically, this bill: SB 123 Page 2 1)Requires DHCS and CDE to establish a School-Based Health Program and Policy workgroup by July 1, 2017, and specifies several workgroup tasks, including production of a report by January 1, 2018, with recommendations for coordination between state, local, and regional health and education systems. 2)Requires DHCS, beginning with the 2017-18 fiscal year and annually thereafter, to publish a school-based Medi-Cal report with specified information. 3)Subject to consultation with specified stakeholders and based on input from the workgroup created in (1), requires an interagency agreement or memorandum of understanding (MOU) between DHCS and CDE to address the coordination of functions between departments. 4)Requires DHCS to create an appeals process where LEAs can challenge a determination by DHCS or CDE with respect to the School-Based Administrative Claiming (SBAC) process and the Local Educational Agency (LEA) Billing process. 5)Allows funds currently collected through the LEA Billing process by proportionately reducing LEA reimbursement up to a collective maximum of $1.5 million, to be used to administer the MOU required in (3) or to staff the workgroup required in (1). 6)With respect to claiming for Medi-Cal administrative activities (commonly called MAA): a) Carves out provisions related to schools from a more broadly applicable section of current law that describes SB 123 Page 3 the claiming process whereby entities contract with DHCS to receive federal Medicaid reimbursement through MAA. b) Creates a new section specific to school-based administrative claiming (SBAC, formerly school-based MAA), and revises the SBAC process to: i. Authorize DHCS to administer a single statewide quarterly random moment time survey, or a reduction in the number of such time surveys, for purposes of the SBAC process. Specifies these provisions exclude the Los Angeles Unified School District. ii. Authorize LEAs to contract directly with DHCS if the department makes available such an option, and allows LEAs and other entities to appeal a determination subject to a new appeals process created in (4). FISCAL EFFECT: 1)This bill requires DHCS to develop an appeals process, staff a workgroup, and develop an MOU. Staffing the workgroup and developing the MOU would be a one-time cost in the hundreds of thousands. Costs for the appeals process could be in the range of $1.5 million ongoing (LEA reimbursement funds/federal). 2)Additional, unknown costs are possible if the workgroup recommends activities that are authorized under this bill, including a statewide random moment time survey or direct contracting with LEAs (LEA reimbursement funds/federal). SB 123 Page 4 3)Ongoing cost to CDE of $222,000 to jointly co-chair the workgroup, assist in developing recommendations for the SBAC and LEA Billing Option programs, provide consultation, and develop an interagency agreement or MOU with DHCS (likely LEA reimbursement funds/federal). 4)If the role and responsibilities of CDE increase upon completion of the workgroup MOU, potential additional costs to CDE (likely LEA reimbursement funds/federal/potentially GF). COMMENTS: 1)Purpose. According to the author, this bill builds on the recommendations of the State Audit of MAA programs issued last year requested by the author. This bill provides more options and local control for school districts, charters and other LEAs to use technical support providers they feel meet their needs, as opposed to the intermediary structure currently mandated in statute. In addition, improving school-based health services requires effective coordination between California's health and education systems, and federal requirements call for an interagency agreement between the health and education agencies in states to operate these programs. California currently does not have an interagency agreement in place; this bill would mandate such an agreement. 2)School-based Medicaid billing options. a) School-Based MAA. The School-based MAA program (renamed SBAC by this bill) reimburses school districts for the SB 123 Page 5 federal share (50%) of the certain costs for administering the Medi-Cal program. According to DHCS, such activities include: outreach and referral, facilitating a Medi-Cal application, arranging non-emergency/non-medical transportation (such as transportation to a medical clinic), program planning and policy development; and MAA claims coordination. b) LEA Billing Option Program. LEAs can be reimbursed for providing certain Medi-Cal services on a fee-for-service basis to Medi-Cal eligible children. Through the LEA Billing Option Program, LEAs pay for the services with local funds, then file claims for federal reimbursement. Similarly to School-based MAA, LEAs are generally reimbursed 50 cents for every dollar spent, minus funds withheld for DHCS administrative costs. Thus, the program is fully funded with a combination of local and federal funds. 3)Recent audit and activities. Both the Centers for Medicare & Medicaid Services (CMS) and the State Auditor have identified deficiencies in the state's administration of these school-based claiming processes. This bill addresses some of the federal and audit findings as well as complaints of system stakeholders about lack of coordination. Specifically: a) In 2012, CMS informed DHCS that their implementation of the school-based MAA did not comply with federal requirements that costs claimed be limited to those that are reasonable and necessary for the proper and efficient administration of the Medi-Cal program. CMS put the program on payment deferral until the department could implement a revised claiming methodology, which means school districts could not access federal matching funds until a revised methodology was approved and implemented. This has led to a multi-year process whereby prior claims have been paid. The new process is based on a random moment time study (RMTS), a sampling methodology to determine accurate claiming amounts, which is codified in SB 123 Page 6 this bill. b) Currently local government agencies and local educational consortia are direct contractors with DHCS, and they consolidate MAA claims provided by LEAs for a fee. A 2015 state audit noted DHCS ineffectively oversees these entities, which were doing a poor job ensuring accurate claims on behalf of LEAs. To address this issue, this bill allows an LEA the option to contract with DHCS directly in order to avoid being a subcontractor of an entity that may not be adding value. The state audit also noted DHCS's failure to produce statutorily required annual reports and to adopt regulations. This bill attempts to establish additional transparency by requiring more reports. 4)Related Legislation. SB 1113 (Beall), pending on the suspense file of this committee, establishes a grant program to incentivize partnerships between LEAs and county mental health plans to maximize federal Medi-Cal reimbursement for mental health services. 5)Prior Legislation. AB 1955 (Pan) of 2014, 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 suspense file of this committee. 6)Suggested Amendments. Staff suggests the following amendments. Amendment (a) is substantive, while (b) and (c) are technical and conforming. a) The Office of Administrative Hearings and Appeals is an independent hearing office within DHCS that processes appeals for providers and individuals who are dissatisfied with actions taken by the department. The appeals process created in section 14005.274 should be conducted by this office, instead of the Office of Administrative Hearings. SB 123 Page 7 b) Section 14132.471 (l) refers to "the Medi-Cal administrative activities program;" for consistency, this should be amended to refer instead to the "School-Based Administrative Claiming process." c) Section 14132.471 (n)(1) should establish a definition of "participating local government agency" instead of "participating local educational agency." Analysis Prepared by:Lisa Murawski / APPR. / (916) 319-2081