BILL ANALYSIS Ó SB 123 Page 1 SENATE THIRD READING SB 123 (Liu) As Amended August 15, 2016 Majority vote SENATE VOTE: 39-0 ------------------------------------------------------------------ |Committee |Votes|Ayes |Noes | | | | | | | | | | | | | | | | |----------------+-----+----------------------+--------------------| |Health |11-0 |Wood, Bonilla, Burke, | | | | |Campos, Chiu, Roger | | | | |Hernández, Lackey, | | | | |Nazarian, | | | | | | | | | | | | | | |Ridley-Thomas, | | | | |Rodriguez, Thurmond | | | | | | | |----------------+-----+----------------------+--------------------| |Education |5-0 |O'Donnell, McCarty, | | | | |Santiago, Thurmond, | | | | |Weber | | | | | | | |----------------+-----+----------------------+--------------------| |Appropriations |20-0 |Gonzalez, Bigelow, | | | | |Bloom, Bonilla, | | SB 123 Page 2 | | |Bonta, Calderon, | | | | |Chang, Daly, Eggman, | | | | |Gallagher, Eduardo | | | | |Garcia, Holden, | | | | |Jones, Obernolte, | | | | |Quirk, Santiago, | | | | |Wagner, Weber, Wood, | | | | |McCarty | | | | | | | | | | | | ------------------------------------------------------------------ SUMMARY: Recasts and revises the administrative claiming process for local educational agencies (LEAs) that conduct school-based administrative activities relating to the Medi-Cal program and authorizes the State Department of Health Care Services (DHCS) to withhold a percentage of funds to be reimbursed to LEAs for the purpose of defraying the cost of operating the Administrative Claiming process and School-Based Administrative Claiming process programs, and the appeals process, as specified. Specifically, this bill: 1)Requires, no later than July 1, 2017, DHCS and the California Department of Education (CDE) to establish and jointly administer and chair a School-Based Health Program and Policy Workgroup (workgroup) for the purpose of advising on issues related to the delivery of school-based Medi-Cal services to students in the state. Requires the workgroup to develop recommendations for an interagency agreement between DHCS and CDE, assist DHCS in formulating state plan amendments, and establishes the scope and membership of the workgroup, as specified. 2)Permits moneys collected and withheld as agreed to by LEAs as a part of an LEA Medi-Cal billing option program provider participation agreement administered by the DHCS to be used by DHCS and CDE to fulfill the requirements of the interagency agreement or memorandum of understanding (MOU) required in 23) SB 123 Page 3 through 25) below, and the staffing needed to jointly administer and chair the workgroup. 3)Requires DHCS, beginning the 2017-18 state fiscal year, and annually thereafter, to publish a single annual school-based Medi-Cal report on a section of its Internet Web site that includes the costs to the state of operating the School-Based Administrative Claiming process program and any related fees passed on to LEAs, a list of all participating LEAs, the costs of operating the LEA Medi-Cal billing option program, a list of each LEA participating in the LEA Medi-Cal billing option program and other information as specified. 4)Permits DHCS to contract with each participating local governmental agency (LGA) to assist with the performance of nonschool-based administrative activities necessary for the proper and efficient administration of the Medi-Cal program, known as the Administrative Claiming process. 5)Permits DHCS to contract with a participating local educational consortium (LEC) or LGA, and requires, if a LEA chooses and DHCS has developed a process for direct contracting, contract with a LEA to perform school-based administrative activities necessary for the proper and efficient administration of the Medi-Cal program, known as the School-Based Administrative Claiming process. 6)Establishes that it is the intent of the Legislature to provide LGAs with the option to participate in the Targeted Case Management program and to provide LEAs with the option to participate in the Administrative Claiming process program. 7)Permits, commencing July 1, 2018, DHCS to contract with each participating LGA to assist with the performance of SB 123 Page 4 nonschool-based administrative activities necessary for the proper and efficient administration of the Administrative Claiming process and sets out contracting provisions, processes for the denial of claims, processes for the appeals of denials, and other requirements of participation, as specified. 8)Permits, commencing July 1, 2018, DHCS to administer, or oversee the administration of, a single statewide quarterly random moment time survey (RMTS) for the School-Based Administrative Claiming process program, or a reduction in the number of random moment time surveys conducted in the state. 9)Exempts the Los Angeles Unified School District (LAUSD) from the statewide quarterly RMTS and requires LAUSD to conduct its own RMTS. Requires data from the RMTS conducted by LAUSD to be excluded included in the statewide RMTS data collection. 10)Permits an LEA that contracts with DHCS to contract with an LEC or LGA to perform some or all of the services required by the School-Based Administrative Claiming process. 11)Requires, as condition of participation in the School-Based Administrative Claiming process program, each participating LEA, LEC or LGA to enter into a contract with DHCS and to certify the total amount expended on the allowable administrative activities. Permits an LEA to certify the amount expended on allowable administrative activities either directly to DHCS or through an LEC or LGA. 12)Requires DHCS to deny a claim if it not adequately supported, or otherwise does not comply with federal requirements, for purposes of claiming federal financial participation (FFP). SB 123 Page 5 13)Requires each School-Based Administrative Claiming process contract to include a requirement for each participating LEA, LEC, or LGA to submit a claiming plan as required by DHCS in regulations developed in consultation with LEAs, LECs, and LGAs. 14)Requires each participating LEA, LEC or LGA to certify to DHCS that the participant claiming federal Medicaid reimbursement expended funds appropriately and that the reimbursement represents costs that are FFP eligible. 15)Requires that the state be held harmless from any federal audit disallowance and interest resulting from payments made to a participating LEA, LEC or LGA for a disallowed claim and requires DHCS to recoup from the participant that submitted the disallowed claim the amount of the disallowance and interest as specified. 16)Permits DHCS to adopt regulations that prescribe the requirements for the submission and payment of claims for administrative activities performed by each LEA, LEC or LGA. 17)Specifies that administrative activities be those determined by DHCS to be necessary for the proper and efficient administration of the state's Medicaid plan and be defined in regulation. 18)Requires DHCS to establish provisions for an LEA, LEC or LGA to appeal a denied claim to DHCS, as specified. 19)Requires, as a condition in the School-Based Administrative Claiming process, each participating LEA, LEC, or LGA to pay SB 123 Page 6 an annual participation fee through a mechanism agreed to by the state and the participant to cover the cost of administering the School-Based Administrative Claiming process. Requires DHCS to determine and report staffing requirements upon which projected costs will be based and 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. 20)Requires each participating LEA, LEC, or LGA that contracts with DHCS to be responsible for the preparation and submission of all administrative claiming plans, training of local educational agency staff, and the submission of detailed quarterly invoices. 21)Requires a participating LEC to be responsible for a LEA with which it contracts that participates in the School-Based Administrative Claiming process program solely as a subcontractor to the LEC, including, but not limited to, the preparation and submission of all administrative claiming plans, training of local educational agency staff, overseeing the local educational agency time survey process, the submission of detailed quarterly invoices on behalf of any participating LEA, and ensuring that the LEA complies with all requirements of the School-Based Administrative Claiming process program. 22)Permits DHCS to seek any state plan amendments necessary, specifies that the School-Based Administrative Claiming process program only be implemented to the extent that FFP is available and permits DHCS to implement or interpret any provisions necessary by means of all-county letters, provider bulletins, or similar instructions. SB 123 Page 7 23)Requires DHCS, by July 1, 2018, to enter into an interagency agreement or 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. 24)Establishes similar provisions for each LGA contracting with DHCS to provide nonschool-based administrative activities necessary for the proper and efficient administration of the Administrative Claiming process. 25)Requires DHCS to do the following in developing the interagency agreement or MOU with CDE: a) 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. b) Consult with the workgroup regarding the impact of the implementation of the School-Based Administrative Claiming process program on operations at the local level and develop a schedule for the regular ongoing meetings of the workgroup. FISCAL EFFECT: According to the Assembly Appropriations Committee: 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 of $600,000. Costs for the appeals process could be in the range of $2 SB 123 Page 8 million or more ongoing, including informal and formal appeals, and related legal services (LEA reimbursement funds/federal). 2)Additional costs are possible if the workgroup recommends and DHCS conducts activities that are authorized (not required) under this bill, including the following: a) A statewide random moment time survey (cost of $9 million in year-one costs and $6 million ongoing. One-time costs would include $3 million in General Fund (GF) costs, while the fund source for the remainder and the ongoing costs would be LEA reimbursement funds/federal funds). b) Making available direct contracting with LEAs ($2.4 million ongoing in LEA reimbursement funds/federal funds). 3)Ongoing cost to CDE of $222,000 to jointly co-chair the workgroup, assist in developing recommendations for the Smarter Balanced Assessment Consortium (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: According to the author, the Medi-Cal Administrative Activities (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 SB 123 Page 9 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. 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. 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. The California School-Based Health Alliance states that this SB 123 Page 10 bill will provide needed reform for School-based Medi-Cal programs. These programs provide a vital source of funding for school-based health services in California. Effective cross-agency collaboration is vital to deliver high-quality school-based health services to California students. This bill will build an essential link between California's healthcare and education systems to provide support services for our state's most vulnerable students. The California Teachers Association states that the current program has become too cumbersome with many districts dropping out of the program over the last several years even through it can provide a vital source of funding for school-based health services in California. What is missing is an active role for the education community where the school community can bring to the program its expertise and help to create an effective program. California should maximize all allowable federal funds and ensure that as many dollars as possible reach local schools to provide services to children. Creating a hub within CDE to oversee the various health programs operated by school districts would help to sharpen the focus on these programs that provide vital support to students and their families. The California County Superintendent Educational Services Association states that there is merit in the priorities of this bill concerning the commitment to school-based health care centers and community schools, broad-based collaboration, and an improved appeals process. However, these potential positives are overwhelmed by the disruption that would occur by changing the organizational structure precisely when the program is beginning to stabilize again. The Kern County Superintendent of Schools states that while the bill purports to address a long history of confusion among governmental agencies in the federal MAA claiming process and attempts to implement recommendations that have been made by the SB 123 Page 11 State Auditor General designed to help LEAs better understand the claiming process, the bill replaces the current structure of LEC support and oversight of LEA reporting and claiming with a structure that requires LEAs to contract directly to CDE/DHCS. All LEAs, would be responsible for preparation and submission of claiming plans, training of staff and submission of detailed quarterly invoices. LEAs would now be required to pay for additional support and technical assistance in preparing claiming plans on a FFS basis. This bill will make it harder for LEAs to file accurate claims and may result in significant increased costs that school districts pay for claim filings by eliminating: 1) the essential role that LECs play in assisting districts with their School-based Medi-Cal Administrative Activities (SMAA) claims; and, 2) assurances that claims are filed in a manner that is consistent with the requirements of federal law. This is particularly true for the small districts with less than 5,000 average daily attendance. Analysis Prepared by: Paula Villescaz / HEALTH / (916) 319-2097 FN: 0004144