BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
152 (Cox)
Hearing Date: 04/27/09 Amended: 04/14/09
Consultant: Dan Troy Policy Vote: Health 11-0
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BILL SUMMARY: SB 152 would, commencing March 1, 2010, require
the Department of Mental Health to send a reimbursement claim to
the State Controller within 90 days after the receipt of a
mental health service claim from county contractors, with
specified exceptions. The bill would further provide that
interest would accrue on the claim beginning on the 91st day
after submission, to be paid in equal parts from the budgets of
DMH, the Department of Health Care Services, and the California
Health and Human Services.
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Fiscal Impact (in thousands)
Major Provisions 2009-10 2010-11 2011-12 Fund
Interest Payments Unknown, depending
on number and General
extent of future late
reimbursements, if any
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STAFF COMMENTS: This bill may meet the criteria for referral to
the Suspense File.
DMH provides mental health services to Medi-Cal beneficiaries
through contracts with local counties and other agencies.
Current law requiring reimbursement of claims within 45 days of
receipt does not apply to the Medi-Cal program. As of March 1,
2010, this bill would establish a 90-day repayment requirement
and apply interest at the daily Pooled Money Investment Account
rate for payments not meeting that timeframe. The bill also
requires DMH to request the Director of Finance to include
amounts necessary to satisfy claims in a request for a
deficiency appropriation should sufficient funding be
unavailable. Interest would not accrue in the event of
insufficient fund availability. The bill exempts claims from
the 90-day requirement that are in the dispute resolution
process or that have been returned to the claiming entity for
additional information or necessary changes.
In 2007, the Department of Finance's Office of State Audits and
Evaluations (OSAE) released a report on the fiscal processes DMH
uses in the payment of local assistance claims. The report
confirmed that payments were no being made in a timely manner.
Problems identified in the report included ineffective and
decentralized program governance between DMH and the Department
of Health Care Services and information systems that are
defective and outdated.
Among the steps DMH has undertaken to address the OSAE report is
the development of a new claims system, which will begin being
utilized in July of 2009 and will be fully in place by February
of 2010. Under this new system, claims are expected to be paid
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SB 152 (Cox)
within 30 days, adjustments will be automated, and data will be
standardized for reporting purposes.
DMH processes approximately 1.5 million claims per month
totaling about $1 billion, annually. Imposing payment of
interest on late reimbursements could result in significant
General Fund costs. DMH reports that a total of $3.5 million in
interest would have been owed had this bill been in effect
during the 2006-07 fiscal year. However, it may be that the new
systems scheduled to be fully in effect just prior to the
operational date of this bill will result in an end to late
payments.
Similar legislation, SB 1349 (Cox), was held in submission by
the Assembly Appropriations Committee.