BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                     SB 276


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          Date of Hearing:  July 15, 2015


                           ASSEMBLY COMMITTEE ON EDUCATION


                              Patrick O'Donnell, Chair


          SB  
          276 (Wolk) - As Amended July 7, 2015


          [This bill was double referred to the Assembly Health Committee  
          on and was heard as it relates to issues in its jurisdiction.]


          SENATE VOTE:  40-0


          SUBJECT:  Medi-Cal:  local educational agencies


          SUMMARY:  Requires the Department of Health Care Services (DHCS)  
          to seek federal financial participation (FFP) for covered  
          services that are provided by a local education agency (LEA) to  
          a Medi-Cal eligible child regardless of whether the child has an  
          individualized education plan (IEP) or an individualized family  
          service plan (IFSP), or whether those same services are provided  
          at no charge to the child or to the community at large.   
          Specifically, this bill:


          1.Requires 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 whether 1) the child has an IEP or  
            an IFSP, and 2) whether those same services are provided at no  
            charge to the beneficiary or to the community at large.









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          2.Requires LEAs to take all reasonable measures to ascertain and  
            pursue claims for payment of covered services against legally  
            liable third parties pursuant to federal law.





          3.Requires, if a legally liable third party receives a claim  
            submitted by an LEA, requires that party to either reimburse  
            the claim or issue a notice of denial of coverage of services.  
             



          4.States that there is no response to a claim within 45 days,  
            the LEA may bill the Medi-Cal program.



          5.Requires the LEA to retain a copy of the claim for a period of  
            three years.



          6.States that these provisions shall not be implemented until  
            any necessary federal approvals have been obtained by DCHS.

          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  








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            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 local educational agency, for the purpose of this  
            option, to include school districts, county offices of  
            education, state special schools, and California State  
            University and a University of California campuses.

          FISCAL EFFECT:  According to the Senate Appropriations  
          Committee, one-time administrative costs of about $250,000 to  
          develop a state plan amendment and make system changes by DHCS,  
          and unknown additional federal funding to LEAs to pay for  
          services to Medi-Cal beneficiaries.


          COMMENTS:  


          Need for the bill.  The author's office states, "SB 276 will  
          allow Local Educational Agencies (LEA) to receive reimbursement  
          for services provided to Medi-Cal eligible students regardless  
          of whether the student has an Individual Education Plan (IEP) or  
          Individualized Family Service Plan (IFSP) or whether similar  
          services are provided to regular education students at no cost. 


          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 and other qualified health care providers. With  
          school districts and county offices of education having the  
          ability to be reimbursed for all covered services to Medi-cal  
          eligible students, federal financial participation will  
          increase."









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          California historically poor at drawing down Medicaid funding  
          through LEA billing.  For many years California drawn down a low  
          share of Medicaid funding through the LEA billing option  
          relative to the number of eligible students in the state.  A  
          2000 report by the U.S. General Accounting Office found that  
          California ranked in the bottom quartile of states by funding  
          received through this option. The amount claimed has been  
          increasing in recent years: a 2012 report from the DHCS on the  
          LEA billing option found that statewide reimbursement increased  
          from $60 million in 2000-01 and to $130 million in 2009-10.  


          But while California receives the largest total share of federal  
          funds, the amount the state receives per eligible student is low  
          relative to other states.  In 2009-10, California served 240,000  
          of its 3.3 million eligible students, resulting in an average of  
          $159 per eligible student.  The average among the 32 states  
          surveyed was $544 per eligible student.  Nebraska (with 103,000  
          eligible students) received $796 per eligible student, Vermont  
          received $694 per eligible student, and Rhode Island received  
          $635 per eligible student (all figures include Medicaid  
          administrative funds).  


          Recent change in federal policy will expand services to many  
          more students.  The LEA Medi-Cal Billing Option Program was  
          established in 1993 and has provided Medicaid funds to LEAs for  
          health-related services provided to students who have IEPs or  
          IFSPs.   Reimbursement is based upon a fee-for-service model,  
          and school expenditures for qualified services rendered are  
          reimbursed at 50% of cost using federal Medicaid matching funds.  
           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 funds.  


          In December, 2014, the Centers for Medicare and Medicaid  








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          Services (CMS) issued new guidance which will allow LEAs to  
          serve all Medical-eligible students, whether or not they have an  
          IEP or an IFSP.  It is anticipated that this will result in  
          higher levels of claiming for services including:





                 Health and mental health evaluations 
                 Health and mental health education


                 Medical transportation


                 Nursing services


                 Occupational therapy


                 Physical therapy


                 Physician services


                 Mental health and counseling services


                 School health aide services


                 Speech pathology services


                 Audiology services









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





          "Free Care Rule" eliminated.  Under long-standing policy known  
          as the "free care rule," LEAs could not receive payment for  
          services which they made available without charge to Medi-Cal  
          eligible students or to the community at large unless all  
          students were billed for the service.



          For example, if all children in a school received hearing  
          evaluations, Medi-Cal could not be billed for the hearing  
          evaluations provided to Medi-Cal recipients unless all students,  
          regardless of insurance status, were billed for the services as  
          well.  This meant that before being able to bill, schools had to  
          bill a variety of private insurers as well as Medi-Cal.  This  
          was an administrative burden that many LEAs found prohibitive.



          In 2004 the state of Oklahoma won a legal challenge to the rule,  
          but the CMS continued to apply the rule to all other states.  A  
          subsequent challenge to the rule by San Francisco Unified School  
          District in 2013 was also successful, but the policy did not  
          change until December of 2014.





          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  








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          whether there is any charge for the service to the beneficiary  
          or the community at large. As a result, funding 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. 





          Denial by default after 45 days.  Under current law, LEAs may  
          bill the Medi-Cal program for services on behalf of a student  
          who has other coverage only if that student's insurance company  
          has denied the claim.  According to the author, LEAs have had  
          difficulty obtaining "denial of coverage" letters from insurance  
          companies.  In order to prevent LEAs from being unable to bill  
          Medi-Cal due to a circumstance beyond their control, this bill  
          authorizes an LEA to bill the Medi-Cal program if there is no  
          response to a claim for payment of covered services submitted to  
          a legally liable third party within 45 days.  After 45 days the  
          claim is considered denied, and billing may proceed.

          Charter schools and LEA billing option.  The current law  
          definition of LEA used for purposes of the LEA billing option  
          includes the governing boards of school districts, county  
          offices of education, state special schools, and CSU and UC  
          campuses.  It does not mention charter schools.  According to  
          DCHS, some charter schools bill through school districts.  It is  
          unclear if any charter schools currently bill independently,  
          though this does occur in other states.  With changes in federal  
          guidance expected to result in significant expansion of  
          eligibility and elimination of administrative barriers to LEA  
          billing, and in recognition of the growing number of public  
          school students attending charter schools, staff recommends that  
          this bill be amended to add "a charter school" to the definition  
          of LEA.


          Related legislation.  SB 123 (Liu) of this Session requires the  








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          Legislative Analyst, in consultation with CDE and DHCS, to make  
          recommendations relative to the administration and oversight of  
          the School Medi-Cal Administrative Activities program.  


          AB 1133 (Achadjian) of this Session would have established a  
          4-year pilot program, the School-Based Early Mental Health  
          Intervention and Prevention Services Support Program, to provide  
          outreach, free regional training, and technical assistance for  
          local educational agencies in providing mental health services  
          at schoolsites.  AB 1133 was approved by this Committee and held  
          in the Assembly Appropriations Committee.





          AB 1018 (Cooper) of this Session requires DHCS and CDE to  
          convene a joint task force to examine the delivery of mental  
          health services to children eligible for ESPDT services and for  
          services required by the federal Individuals with Disabilities  
          Education Act.  AB 1018 is pending in the Senate Education  
          Committee.





          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. 












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          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.





          The Budget Act of 1998 provided $3 million in one-time  
          Proposition 98 funding to support technical assistance to school  
          districts in LEA billing through a consortium of county offices  
          of education.  Related supplemental report language required the  
          consortium to report to the JLBC and the appropriate fiscal and  
          policy committees of the Legislature on the amount of Medi-Cal  
          LEA billing generated by this program in each fiscal year of the  
          program and on barriers to LEA billing and recommendations on  
          improving rates of LEA billing in the future.





          REGISTERED SUPPORT / OPPOSITION:




          Support


          California School Nurses Organization (sponsor)


          American Federation of State, County, and Municipal Employees








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          American Nurses Association/California


          Anaheim City School District


          Association of California School Administrators 


          California Federation of Teachers


          California School Boards Association


          California School Employees Association


          California School-Based Health Alliance


          Children Now


          Emery Unified School District


          Lawndale Elementary School District


          Magnolia School District


          National Association of Social Workers - California Chapter


          Nevada Joint Union High School District








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          Special Education Local Plan Area Administrators of California


          Sulphur Springs Union School District


          Several individuals




          Opposition


          None on file




          Analysis Prepared by:Tanya Lieberman / ED. / (916)  
          319-2087