BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
SB 1529 (Alquist) - Medi-Cal fraud
Amended: April 24, 2012 Policy Vote: Health 6-2
Urgency: No Mandate: Yes
Hearing Date: May 7, 2012 Consultant: Brendan McCarthy
This bill does not meet the criteria for referral to the
Suspense File.
Bill Summary: SB 1529 would make a number of changes to state
law governing the Medi-Cal fee for service program to conform
with federal requirements designed to reduce fraud. The bill
would make changes to the code sections that deal with
enrollment in Medi-Cal by providers, claims for reimbursement by
providers, and investigation of allegations of fraud.
Fiscal Impact:
No additional costs to screen Medi-Cal providers. (The
Department of Health Care Services received five temporary
positions in the 2011-12 Budget Act to perform additional
screening required by federal law and this bill.)
Unknown potential program savings due to reduced Medi-Cal
billing fraud (50% General Fund, 50% federal funds).
Unknown, but likely minor, local mandate claims due to
reporting requirements on local law enforcement agencies
investigating fraud allegations (General Fund). Whether or
not local law enforcement agencies will make reimbursement
claims is unknown. However, given the limited information
that such a report is required to contain, costs to any
individual law enforcement agency are likely to be minor.
Estimated annual licensing fee revenues of $600,000
(General Fund).
Background: Existing federal and state law includes many
provisions designed to prevent billing fraud in the Medi-Cal
program. Existing law puts into place requirements on health
care providers wising to enroll in Medi-Cal to provide services
to Medi-Cal clients. Existing law also puts in place a process
SB 1529 (Alquist)
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for investigating alleged instances of fraud by the Department
of Health Care Services.
The federal Patient Protection and Affordable Care Act
(Affordable Care Act) made a variety of changes to federal law
in this area, with the overall purpose of reducing fraud.
Proposed Law: SB 1529 would make a variety of changes to the
code sections that deal with fraud prevention in the Medi-Cal
fee for service program. Specifically, the bill would:
Change the standard for taking action against a provider to
"a credible allegation of fraud" which is considered a lower
standard than existing law.
Require claims for reimbursement to identify the
prescribing or ordering provider.
Expand the definition of Medi-Cal provider, to include
ordering, referring, or prescribing individuals.
Require applicants, providers, and owners of facilities
that claim Medi-Cal reimbursement to provide additional
information such as taxpayer identification numbers and all
related business addresses.
Require an application fee to be paid by Medi-Cal
providers.
Requires the Department to deny an application by a
provider if the provider fails to submit fingerprints for a
background check.
Gives the Department discretion when deciding when to
deactivate a provider's participation in Medi-Cal when
certain conditions of enrollment or reenrollment have not
been met.
Allows a provider that has been terminated from Medicare or
another state's Medicaid program to reapply for enrollment
only when a temporary suspension has been lifted after the
resolution of an investigation for fraud or abuse.
Allows the Department to lift a temporary suspension when
the resolution of an investigation occurs.
Requires the Department to make use of federal designations
of risk based on provider type when screening applications
for enrollment by providers.
Allows the Department to deactivate all of a provider's
business addresses if the provider does not remediate
discrepancies found during pre-enrollment.
Puts into place restrictions on the Department's ability to
institute temporary moratoria on provider types.
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Authorizes unannounced visits to provider facilities by the
Department.
Limits the issues that can be considered in the appeal of a
suspension of payment.
Allows the Department to use provider bulletins (rather
than the adoption of regulations) to implement the
enrollment fee and provider risk classification system.
Delete a requirement that the Department meet and confer
with a provider that has had payment withheld within 30 days
of a request.
Authorize the Department to enter into contracts with audit
recovery contractors.
When the Department refers allegations of fraud to the
Department of Justice or local law enforcement agencies for
investigation, the bill requires those agencies to report
quarterly to the Department on the status of open
investigations.
Staff Comments: The provisions in the bill are required for the
state to be in conformity with federal requirements of the
Affordable Care Act. According to the Department, failure to
make these changes to the Medi-Cal program jeopardizes the
state's federal matching funds.
Unlike other bills that have been heard by this committee
implementing other aspects of the Affordable Care Act, this bill
does not have provisions stating that it shall only be
implemented to the extent required by federal law. If the
Affordable Care Act were to be entirely struck down or repealed,
the changes imposed by this bill would not be mandated by
federal law.