BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                     SB 123  


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          Date of Hearing:  August 10, 2016


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                               Lorena Gonzalez, Chair


          SB 123  
          (Liu) - As Amended August 1, 2016


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          |Policy       |Health                         |Vote:|11 - 0       |
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          |             |Education                      |     |5 - 0        |
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          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:









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          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  








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                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).









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          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  








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               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  








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               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.








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              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