BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 1529|
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THIRD READING
Bill No: SB 1529
Author: Alquist (D)
Amended: 4/24/12
Vote: 21
SENATE HEALTH COMMITTEE : 6-2, 4/18/12
AYES: Hernandez, Alquist, De Le�n, DeSaulnier, Rubio, Wolk
NOES: Harman, Anderson
NO VOTE RECORDED: Blakeslee
SENATE APPROPRIATIONS COMMITTEE : 5-2, 5/7/12
AYES: Kehoe, Alquist, Lieu, Price, Steinberg
NOES: Walters, Dutton
SUBJECT : Medi-Cal: providers: fraud
SOURCE : Author
DIGEST : This bill makes 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 makes 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.
ANALYSIS : 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
CONTINUED
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Medi-Cal to provide services to Medi-Cal clients. Existing
law also puts in place a process for investigating alleged
instances of fraud by the Department of Health Care
Services (DHCS).
The federal Patient Protection and Affordable Care Act made
a variety of changes to federal law in this area, with the
overall purpose of reducing fraud.
Existing state law contains a higher standard than the new
federal standard of "a credible allegation of fraud" for
health care programs administered by DHCS. For example,
existing state law:
1.Requires the DHCS Director, when a letter or order of
denial of continued enrollment or suspension of any type
or duration, based upon fraud or abuse, or when a
withholding of payments, based upon "reliable evidence of
fraud or willful misrepresentation," is issued by DHCS to
a provider, to review the evidence supporting the denial
of continued enrollment, suspension, or withholding of
payments.
2.Permits the Director to deny continued enrollment,
suspend, or withhold payments to the provider with
respect to those other health care programs if, in the
opinion of the Director, the evidence shows "a pattern or
practice of fraud, abuse, or willful misrepresentation"
that, if replicated in any other health care program
administered by DHCS, could cause either fiscal loss to
the state or harm to any participant.
3.Permits the Director to deny the application of an
applicant or provider to participate in any health care
program administered by DHCS when, based upon fraud or
abuse, the applicant or provider has been denied
continued enrollment in, or suspended from, any health
care program administered by DHCS, or has had payments
withheld based upon reliable evidence of fraud or willful
misrepresentation in connection with any health care
program administered by DHCS, and remains ineligible to
participate.
This bill makes a variety of changes to the code sections
that deal with fraud prevention in the Medi-Cal fee for
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service program. Specifically, the bill:
1. Changes the standard for taking action against a
provider to "a credible allegation of fraud" which is
considered a lower standard than existing law.
2. Requires claims for reimbursement to identify the
prescribing or ordering provider.
3. Expands the definition of Medi-Cal provider, to
include ordering, referring, or prescribing
individuals.
4. Requires 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.
5. Requires an application fee to be paid by Medi-Cal
providers.
6. Requires the Department to deny an application by a
provider if the provider fails to submit fingerprints
for a background check.
7. 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.
8. 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.
9. Allows the Department to lift a temporary suspension
when the resolution of an investigation occurs.
10. Requires the Department to make use of federal
designations of risk based on provider type when
screening applications for enrollment by providers.
11. Allows the Department to deactivate all of a
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provider's business addresses if the provider does not
remediate discrepancies found during pre-enrollment.
12. Puts into place restrictions on the Department's
ability to institute temporary moratoria on provider
types.
13. Authorizes unannounced visits to provider facilities
by the Department.
14. Limits the issues that can be considered in the
appeal of a suspension of payment.
15. Allows the Department to use provider bulletins
(rather than the adoption of regulations) to implement
the enrollment fee and provider risk classification
system.
16. Deletes a requirement that the Department meet and
confer with a provider that has had payment withheld
within 30 days of a request.
17. Authorizes the Department to enter into contracts
with audit recovery contractors.
18. 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.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
According to the Senate Appropriations Committee:
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).
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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).
SUPPORT : (Verified 5/8/12)
Department of Health Care Services (source)
California Advocates of Nursing Home Reform
OPPOSITION : (Verified 5/8/12)
California Medical Association
ARGUMENTS IN SUPPORT : This bill is sponsored by DHCS to
align California's state law with the ACA-related changes
to federal regulations, as it relates to screening,
enrollment, payment suspensions, overpayment recovery and
sanctions of Medi-Cal providers. DHCS states this bill
would provide DHCS with the authority to establish
procedures for California to comply with ACA provisions
required by federal regulations. DHCS states CMS believes
the new screening requirements will move Medicare and
Medicaid from a "pay and chase" model to one that will
prevent fraudulent providers from enrolling as Medicare and
Medicaid providers. DHCS continues that the intent of this
bill is to prevent fraud from occurring in the Medi-Cal
program, and the federal regulations require states to
implement these measures and ensure compliance. Currently,
California statutes provide authority to DHCS and other
state departments to take actions to protect the fiscal
integrity of the Medi-Cal program but the new federal
regulatory requirements are not provided for in existing
California statutes or regulations. Therefore, California
statute must be amended in order for the state to have the
necessary legal authority and comply with federal
requirements. DHCS states this bill would make only the
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minimally-required amendments to existing law to gain the
statutory authority to carry out the federal requirements.
Given California has had standards of participation more
rigid than the federal requirements in the past, minimal
changes to California codes are necessary for a majority of
the new requirements established by the regulations. As
the state Medicaid agency, if DHCS does not comply with the
regulations, there is the potential loss of federal
financial participation program-wide.
ARGUMENTS IN OPPOSITION : The California Medical
Association (CMA) writes it is opposed to this bill unless
it is amended. CMA writes that it understands that the
bulk of the content of this bill was contained in the ACA
and its implementing regulations, and that it is necessary
to make changes to California statute to comport with these
new federal requirements. CMA states that, though it
supports efforts to stem fraud, if these efforts are overly
punitive, could severely impact the financial solvency of a
medical practice, and CMA urges they be used sparingly and
with the utmost discretion. CMA indicates there appears to
be some room in the ACA's provisions that allow some
flexibility for states in their interpretation of the code,
and CMA is currently drafting amendments to ensure that the
bill's requirements are as targeted as possible in order to
avoid the unintended but potentially significant impacts
this bill could have on individual physician offices seeing
a high volume of Medi-Cal and Medicare patients.
CTW:nl 5/9/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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