BILL ANALYSIS                                                                                                                                                                                                    �



                                                                  AB 1644
                                                                  Page  1

          Date of Hearing:   April 30, 2014

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                  Mike Gatto, Chair

                   AB 1644 (Medina) - As Amended:  April 10, 2014 

          Policy Committee:                              HealthVote:18-0

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:              No

           SUMMARY  

          This bill requires the Department of Health Care Services (DHCS)  
          to designate providers in the Drug Medi-Cal Treatment Program as  
          high categorical risk, subjecting providers to background  
          checks.   It also authorizes DHCS to lower the risk level after  
          January 1, 2018 if the department executes a related  
          declaration.  

           FISCAL EFFECT  

          Significant one-time costs to DHCS (GF/federal funds) to conduct  
          background checks on all Drug Medi-Cal providers.  DHCS would  
          retain discretion on the activities conducted as part of  
          background checks.  Therefore, costs could range from hundreds  
          of thousands to millions of dollars in staff resources.    

           COMMENTS  

           1)Purpose  .  This bill is intended to protect the Drug Medi-Cal  
            program by revealing whether clinic owners have been involved  
            in fraudulent or illegal activity prior to opening a clinic.

           2)Background  .  Drug Medi-Cal services are reimbursed on a  
            fee-for-service basis at maximum rates set by the state.   
            Prior to this year, services included outpatient drug-free  
            services, which consist mostly of group counseling and some  
            limited individual counseling for people in crisis, and   
            narcotic treatment programs, which provide methadone  
            replacement therapy. There were about 800 active Drug Medi-Cal  
            providers in the state providing these services. Drug Medi-Cal  
            is also expanding services. As of January 1 of this year,  
            intensive outpatient services, residential services, and  








                                                                  AB 1644
                                                                  Page  2

            inpatient detoxification are available to the general  
            population.

            After recent allegations in the media of systemic fraud in the  
            Drug Medi-Cal system, DHCS conducted a special review of Drug  
            Medi-Cal, suspending numerous providers and referring some to  
            the Department of Justice.  DHCS indicates additional Drug  
            Medi-Cal program integrity efforts are ongoing. 

           3)Oversight Hearing  .  In September 2013, the Assembly Health  
            Committee and Assembly Accountability and Administrative  
            Review Committee held a joint oversight hearing on fraud in  
            the Drug Medi-Cal program.  This hearing made clear that the  
            certification standards for Drug Medi-Cal providers needed to  
            be updated.  Creating standards for criminal background checks  
            of Drug Medi-Cal providers was one suggestion for improving  
            program integrity.

           
            4)Related Legislation  . 

             a)   AB 1967 (Pan) requires DHCS, when it commences or  
               concludes an investigation of a Drug Medi-Cal provider, to  
               notify counties that contract with the provider.  AB 1967  
               is being heard today in this committee.

             b)   SB 1339 (Cannella) requires a county or DHCS, before  
               contracting with a Drug Medi-Cal provider, to obtain  
               criminal background checks for the owner and key staff.  SB  
               1339 is pending in the Senate.

             c)   SB 1045 (Beall) decreases, from four to two, the minimum  
               number of participants in a group counseling session  
               provided by certain Drug Medi-Cal providers and eliminates  
               the maximum of 10 participants.  SB 1045 is pending in the  
               Senate.  


           Analysis Prepared by  :    Lisa Murawski / APPR. / (916) 319-2081