BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON HEALTH
                          Senator Ed Hernandez, O.D., Chair

          BILL NO:                    SB 276    
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          |AUTHOR:        |Wolk                                           |
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          |VERSION:       |March 26, 2015                                 |
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          |HEARING DATE:  |April 15, 2015 |               |               |
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          |CONSULTANT:    |Scott Bain                                     |
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           SUBJECT  : Medi-Cal:  local educational agencies

           SUMMARY  : Requires the Department of Health Care Services to seek federal  
          financial participation for covered services that are provided  
          by a local education agency (LEA) to a child who is an eligible  
          Medi-Cal beneficiary, regardless of whether the child has an  
          individualized education plan or an individualized family  
          service plan, or whether those same services are provided at no  
          charge to the beneficiary or to the community at large, if the  
          LEA takes all reasonable measures to ascertain and pursue claims  
          for payment of covered services against legally liable third  
          parties.
          
          Existing law:
          1.Establishes the Medi-Cal program, administered by the  
            Department of Health Care Services (DHCS), under which  
            qualified low-income persons receive health care benefits.

          2.Requires that specified services provided by a LEA are covered  
            Medi-Cal benefits, to the extent federal financial  
            participation (FFP) is available, are subject to utilization  
            controls and standards adopted by DHCS, and are consistent  
            with Medi-Cal requirements for physician prescription, order,  
            and supervision. 

          3.Defines the scope of covered services that an LEA may provide,  
            which include targeted case management services (TCM) for  
            children with an individualized education plan (IEP) or an  
            individualized family service plan (IFSP).

          4.Defines an LEA 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  







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            a University of California campus.
          
          This bill:
          1.Requires, subject to 2) below, DHCS to seek FFP for covered  
            services that are provided by a LEA to a child who is an  
            eligible Medi-Cal beneficiary, regardless of either of the  
            following:

                  a.        Whether the child has an IEP or an IFSP; and,
                  b.        Whether those same services are provided at no  
                    charge to the beneficiary or to the community at  
                    large.

          2.Implements the requirement in 1) above if the LEA takes all  
            reasonable measures to ascertain and pursue claims for payment  
            of covered services against legally liable third parties  
            pursuant to a specified provision of federal Medicaid law that  
            requires that states take all reasonable measures to ascertain  
            and pursue claims for payment of health care items and  
            services against legally liable third parties.

          3.Requires, if a legally liable third party denies a claim  
            submitted by a LEA pursuant to 2) above, the legally liable  
            third party to issue a notice of denial of non-coverage of  
            services or benefits.

          4.Makes legislative findings and declarations regarding this  
            bill, including that:

                  a.        LEAs must have an approved provider  
                    participant agreement with DHCS through the federal  
                    Centers for Medicare and Medicaid Services to be  
                    eligible to provide services;
                  b.        To participate in the LEA Medi-Cal billing  
                    option program, LEAs must reinvest the federal  
                    reimbursement they receive under this program in  
                    health and social services for children and families,  
                    and develop and maintain a collaborative committee to  
                    assist them in decisions regarding the reinvestment of  
                    federal reimbursements. 
                  c.        The providers and supervisors of staff for the  
                    assessment and medically necessary health services are  
                    school nurses;
                  d.        The LEA billing option facilitates  
                    reinvestment in health and social services for  








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                    students and their families so that schools can foster  
                    access to and provide comprehensive health services to  
                    eligible Medi-Cal students; and,
                  e.        The funds are reimbursement for services  
                    rendered and can be used as matching dollars to draw  
                    down FFP, and the funds are restricted in their use as  
                    they must supplement existing services, not supplant.

          5.States legislative intent in enacting this bill to ensure that  
            a school district or county office of education that is  
            authorized as an LEA Medi-Cal provider is assured that all  
            options for FFP are available, and the Legislature encourages  
            LEAs to utilize reimbursed funds to hire credentialed school  
            nurses to supplement, not supplant, existing LEA health  
            services personnel.

           FISCAL  
          EFFECT  :  This bill has not been analyzed by a fiscal committee.

           COMMENTS  :
          1.Author's statement.  According to the author, this bill will  
            allow LEAs to receive reimbursement for qualified services  
            provided for all Medi-Cal eligible students regardless of  
            whether the student has an IEP or IFSP or whether similar  
            services are provided to regular education students at no  
            cost. This bill will allow schools to be reimbursed for all  
            services provided to all Medi-Cal eligible students. This  
            increased funding would enable schools to be more active in  
            managing the conditions affecting all students, may increase  
            the services they provide and may result in the hiring of more  
            school nurses. With school districts and county offices of  
            education having the ability to be reimbursed for all covered  
            services to Medi-Cal eligible students, FFP will increase. 
          
          2.LEA.  The LEA Medi-Cal Billing Option Program was established  
            in 1993 and provides Medicaid FFP to LEAs for health-related  
            services provided by qualified medical practitioners.  
            Reimbursement is based upon a fee-for-service (FFS) model, and  
            school expenditures for qualified services rendered are  
            reimbursed at 50 percent of cost using federal Medicaid  
            matching funds. There is no state General Fund expense for the  
            program. Under the program, LEAs bill Medi-Cal for the direct  
            medical services they provide to Medi-Cal eligible students.  
            LEAs pay for the services and are reimbursed the FFP rate  
            relative to the cost of each individual service from federal  








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            funds. Subject to specified conditions, LEA covered services  
            can include the following: 

               a.     Health and mental health evaluations and health and  
                 mental health education;
               b.     Medical transportation;
               c.     Nursing services;
               d.     Occupational therapy;
               e.     Physical therapy;
               f.     Physician services;
               g.     Mental health and counseling services;
               h.     School health aide services;
               i.     Speech pathology services;
               j.     Audiology services; and,

               aa.    Targeted case management services for children with  
                 an IEP or an IFSP.


             Under the state's Medicaid State Plan, LEA services are  
             limited to a maximum of 24 services per 12 month period for a  
             beneficiary without prior authorization, provided that  
             medical necessity criteria are met. LEAs may obtain  
             authorization for LEA services beyond 24 services per  
             12-month period from the beneficiary's:


                a.      IEP or IFSP developed for the special education  
                  student;


                b.      California Childrens Services Program;


                c.      Short-Doyle Program;


                d.      Medi-Cal field office authorization (TAR); and,


                e.      Prepaid health plan authorization (including  
                  Primary Care Case Management).

          1.Recent federal guidance on Medicaid payment for "free care."  
            In December 2014, the federal Centers for Medicare & Medicaid  








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            Services (CMS) issued a State Medicaid Director Letter  
            regarding Medicaid payment for services covered under a  
            state's Medicaid plan to an eligible Medicaid beneficiary that  
            are available without charge to the beneficiary, including  
            services that are available without charge to the community at  
            large, or "free care." Historically, CMS guidance on "free  
            care" was that Medicaid payment was generally not allowable  
            for services that were available without charge to the  
            beneficiary, with some statutory and some policy exceptions  
            (such as services provided as part of an IEP or IFSP.) The  
            free care policy as previously applied effectively prevented  
            the use of Medicaid funds to pay for covered services  
            furnished to Medicaid eligible beneficiaries when the provider  
            did not bill the beneficiary or any other individuals for the  
            services.
          
            Under the new December 2014 guidance, Medicaid reimbursement  
            is available for covered services under the approved state  
            plan that are provided to Medicaid beneficiaries, regardless  
            of whether there is any charge for the service to the  
            beneficiary or the community at large. As a result, FFP is  
            available for Medicaid payments for care provided through  
            providers that do not charge individuals for the service, as  
            long as all other Medicaid requirements are met. As is the  
            case more generally, FFP for Medicaid payments is available  
            only when all of the following elements are satisfied: 

               a.     The individual is a Medicaid beneficiary; 
               b.     The service is a covered Medicaid service, provided  
                 in accordance with the approved state plan methodologies,  
                 including coverage under the Early and Periodic Screening  
                 Diagnostic and Treatment (EPSDT) benefit provided to  
                 children;
               c.     The provider is a Medicaid-participating provider  
                 and meets all federal and/or state provider qualification  
                 requirements; 
               d.     The state plan contains a payment methodology for  
                 determining rates that are consistent with efficiency,  
                 economy and quality of care; 
               e.     Third party liability (TPL) requirements are met;  
               f.     Medicaid payment does not duplicate other specific  
                 payments for the same service;  
               g.     The state and provider maintain auditable  
                 documentation to support claims for FFP; 
               h.     The state conducts appropriate financial oversight  








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                 of provider billing practices; and, 
               i.     All other program requirements (statutory,  
                 regulatory, policy) for the service, payment, and  
                 associated claiming are met. 

            CMS states the goal of its new guidance is to facilitate and  
            improve access to quality healthcare services and improve the  
            health of communities.
            
            Prior to the CMS guidance in 2014, DHCS indicated there are  
            two exceptions to the free care rule: (a) Medicaid covered  
            services provided as part of an IEHP or IFSP; and (b) services  
            provided by Title V of the Social Security Act (the Maternal  
            Child Health Services Block Grant). DHCS indicates services  
            provided as part of an IEP/IFSP are exempt from the fee care  
            rule, they are not exempt from the TPL requirement. If any  
            student has Other Health Coverage, those third party insurers  
            must be billed prior to billing Medi-Cal for the service. The  
            TPL requirement is based on the basic premise under federal  
            Medicaid law and regulation that Medicaid is generally the  
            payor of last resort.
            
          1.Prior legislation. AB 2608 (Bonilla), Chapter 755, Statutes of  
            2012, made permanent and expanded provisions relating to  
            program improvement activities in the Medi-Cal Local Billing  
            Option (LBO) program, through which LEAs can draw down federal  
            funding for health care services provided to Medi-Cal-eligible  
            students. AB 2608 also expanded the scope of transportation  
            services for which Medicaid reimbursements can receive  
            reimbursement. 

            SB 870 (Ducheny), Chapter 712, Statutes of 2010, (the 2010-11  
            Budget Bill) required DHCS to withhold one percent of LEA  
            reimbursements, not to exceed $650,000, for the purpose of  
            funding the work and related administrative costs associated  
            with the audit resources approved in a specified budget change  
            proposal to ensure fiscal accountability of the LEA Medi-Cal  
            LBO and to comply with the Medi-Cal State Plan.
          
            AB 1540 (Committee on Health), Chapter 298, Statutes of 2009,  
            extended the LEA LBO program improvement provision sunset date  
            from January 1, 2010, to January 1, 2013.

            AB 131 (Committee on Budget), Chapter 80, Statutes of 2005,  
            the 2005 health budget trailer bill, sunset the LEA program  








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            improvement provisions January 1, 2010.

            SB 231 (Ortiz), Chapter 655, Statutes of 2001, enacted the LEA  
            program improvement activities requirements, required DHCS to  
            obtain a state plan amendment to accomplish various goals to  
            enhance reimbursement for Medi-Cal services provided at school  
            sites and student access to those services, and sunset various  
            provisions of that bill January 1, 2006.

            SB 256 (Maddy), Chapter 654, Statutes of 1993, established the  
            LEA LBO program by requiring that services provided by a LEA  
            are a Medi-Cal-covered benefit. 

          2.Support. This bill is sponsored by the California School  
            Nurses Organization (CSNO), which writes that schools nurses  
            provide direct health care services that are medically  
            necessary and ordered by the child's physician for all  
            children in the schools. CSNO states the provision of these  
            services allows the schools to meet the requirements under the  
            federal Individuals with Disabilities Education Act (IDEA) for  
            students who are in the special education category. With the  
            revised guidance from CMS in December 2014, LEAs are now able  
            to seek reimbursement for all health care provided to all  
            Medi-Cal eligible students in both regular and special  
            education. CSNO states it has been well documented that health  
            care delivered in the schools is an economic and efficacious  
            model. With this CMS change and the access to increased  
            reimbursement, CSNO anticipates that LEAs will improve the  
            coordination of students with chronic conditions some which  
            impact their ability to be successful in school. CSNO believes  
            this will be a value added, particularly to those schools with  
            students less likely to have access to comprehensive care, and  
            it believes the increased emphasis on prevention, early  
            intervention and chronic disease management. CSNO conclude  
            enhanced LEA billing will augment the current system while  
            providing care for children who require medical services to  
            function in the least restrictive environment.
          
          3.Amendments. 
               a.     The findings and declarations in this bill state the  
                 providers and supervisors of staff for the assessment and  
                 medically necessary health services are school nurses.  
                 Staff recommends this language be broadened to include  
                 other types of providers who provide health care services  
                 in school who are not school nurses.








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               b.     One of the existing problems an LEA experiences is  
                 not receiving a response on a claims submission to a  
                 third party. This bill requires, if a legally liable  
                 entity denies a claim, that entity to issue a notice of  
                 denial. A written denial could be used by the LEA as an  
                 attempt to pursue claims for payment from legally liable  
                 third parties. However, as drafted, if there is no  
                 response from the legally liable third party, the  
                 existing language does not solve this problem. Amendments  
                 are needed to clarify this provision. 

           SUPPORT AND OPPOSITION  :
          Support:  California School Nurses Organization (sponsor)
                    American Nurses Association California
                    California Black Health Network
                    California Chapter National Association of Social  
                    Workers
                    California School Boards Association
                    Children Now
                    Lawndale Elementary School District
                    Manteca Unified School District
                    Nevada County Superintendent of Schools Holly  
                    Hermansen
                    San Joaquin County Office of Education
                    Sulphur Springs School District
                    An individual
          
          Oppose:   None received


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