BILL ANALYSIS �
AB 1967
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Date of Hearing: April 8, 2014
ASSEMBLY COMMITTEE ON HEALTH
Richard Pan, Chair
AB 1967 (Pan) - As Amended: March 28, 2014
SUBJECT : Drug Medi-Cal.
SUMMARY : Requires the Department of Health Care Services
(DHCS), if it commences or concludes an investigation of a Drug
Medi-Cal provider, to notify counties that contract with the
provider.
EXISTING LAW :
1)Establishes the Medi-Cal program, administered by DHCS, under
which qualified low-income persons receive health care
benefits. Medi-Cal is California's version of the federal
Medicaid program and is jointly funded by the state and
federal government.
2)Establishes the Drug Medi-Cal program, which provides
substance use disorder services to Medi-Cal recipients.
3)Allows DHCS to enter into contracts with counties for the
provision of Drug Medi-Cal services. If a county declines to
contract with DHCS, existing law requires DHCS to contract for
services in the county to ensure beneficiary access.
4)Requires each county to fund the nonfederal share for Drug
Medi-Cal services through realignment funds, as specified.
5)Requires providers of Drug Medi-Cal services to obtain
certification from DHCS to provide those services.
6)Requires DHCS to adopt emergency regulations governing the
Drug Medi-Cal program by July 1, 2014.
FISCAL EFFECT : This bill has not yet been analyzed by a fiscal
committee.
COMMENTS :
1)PURPOSE OF THIS BILL . According to the author, this bill is
intended to improve oversight and prevent fraud in the Drug
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Medi-Cal program by requiring the state to share information
with counties related to providers under investigation. The
author writes, in September 2013, the Assembly Health
Committee and Assembly Accountability and Administrative
Review Committee held a joint oversight hearing to examine
fraud in the Drug Medi-Cal program. One issue highlighted at
the hearing was the lack of information sharing between the
state and county entities that are responsible for monitoring
and auditing clinics. In particular, counties expressed a
concern that individuals who were being investigated in one
county could simply move operations to a new county in order
to avoid further investigation.
2)BACKGROUND . Drug Medi-Cal services are reimbursed on a
fee-for-service basis at rates set by the state, and are not
provided through Medi-Cal managed care plans. These services
are carved out from the regular Medi-Cal program: they are
delivered by a specialized system of providers certified by
the state rather than through participating physicians or
health plans. Drug Medi-Cal services include outpatient drug
free services, which consist mostly of group counseling and
some limited individual counseling for persons in crisis;
narcotic treatment programs, which provide methadone
replacement therapy; intensive outpatient services; and
residential services. There are about 800 active Drug
Medi-Cal providers in the state.
Current regulations create requirements for oversight of Drug
Medi-Cal providers at both the state and county levels. DHCS
is tasked with administrative and fiscal oversight,
monitoring, auditing, utilization review, and recovery of
improper payments. Counties that elect to contract with DHCS
to provide Drug Medi-Cal services are required to maintain a
system of fiscal disbursement and controls, monitor to ensure
that billing is within established rates, and process claims
for reimbursement. Most counties choose to contract with
DHCS; however, 13 counties (Alpine, Amador, Calaveras, Colusa,
Del Norte, Inyo, Modoc, Mono, Plumas, Sierra, Siskiyou,
Trinity, and Tuolumne) do not participate in Drug Medi-Cal.
In addition, 15 providers statewide currently operate without
a county contract, instead contracting directly with DHCS.
Beginning in July 2013, the Center for Investigative Reporting
(CIR) published a series of reports on fraud in the Drug
Medi-Cal program in conjunction with a three-part series on
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CNN entitled 'Rehab Racket.' The reports alleged that Drug
Medi-Cal paid $94 million over the prior two fiscal years to
56 Southern California providers with histories of
questionable billing practices. The reports alleged that a
number of clinics in Southern California engaged in practices
that included:
a) Busing of teenagers without drug problems from group
homes;
b) Fabricating patient treatment documents;
c) Paying clients for showing up to counseling sessions;
d) Billing for patients who were incarcerated or dead;
e) Billing for group counseling for dozens of clients on a
day when clinic staff told reporters that no group
counseling was offered; and,
f) Billing for counseling sessions that did not occur.
The reports suggested that the state's oversight and
enforcement bodies were not working well in tandem: county
audits of providers identified a number of serious
deficiencies, but failed to terminate contracts or prevent the
problems from continuing.
In July 2013, DHCS began reviewing Drug Medi-Cal providers and
ordering temporary suspensions due to credible allegations of
fraud. As of January of 2014, DHCS had suspended 68 providers
operating 177 facilities and referred the providers to the
Department of Justice for criminal prosecution. After an
extensive internal review, DHCS announced a number of steps it
was taking to improve integrity in Drug Medi-Cal:
a) Requiring all 816 active Drug Medi-Cal providers to
submit applications for recertification and decertifying
providers that have not billed Drug Medi-Cal in the last 12
months;
b) Requiring counties, through the state-county contract,
to increase monitoring of Drug Medi-Cal providers;
c) Continuing targeted investigations of Drug Medi-Cal
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providers by DHCS auditors, nurse evaluators and peace
officers;
d) Mining and analyzing of data to identify suspicious Drug
Medi-Cal providers for additional review, including onsite
visits, fingerprinting, and background checks; and,
e) Developing emergency regulations to clarify the
requirements and responsibilities of providers, medical
directors, and other provider personnel.
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.
Among the issues raised at the hearing was an indication that
communication between DHCS and counties could be improved. In
particular, counties indicated that they were generally not
informed when providers were being investigated by DHCS.
Because counties are responsible for routine monitoring of
providers, this lack of communication served as an impediment
to the effective oversight of potentially fraudulent
providers.
3)SUPPORT . The County Alcohol and Drug Program Administrators
Association of California (CADPAAC), in support, writes that,
with the expansion of substance use disorder treatment
benefits in the state's Medi-Cal program, there will be
upwards of 116,000 beneficiaries that are newly-eligible for
substance use disorder treatment by 2019. Given the importance
of these services, it is crucial that the integrity of the
program be preserved and that vital services not be
jeopardized by bad actors. CADPAAC writes that this bill will
help the state and counties maintain good providers in the DMC
program and preserve the integrity of these needed services.
4)RELATED LEGISLATION .
a) AB 1644 (Medina) requires Drug Medi-Cal providers to be
designated as a 'high' categorical risk and be subject to
criminal background checks as a condition of Drug Medi-Cal
certification. AB 1644 is pending in the Assembly
Appropriations Committee.
b) SB 1339 (Cannella) requires a county or DHCS, before
contracting with a Drug Medi-Cal provider, to obtain
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criminal background checks for the owner and key staff. SB
1339 is pending in the Senate Health Committee.
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 Health Committee.
5)PREVIOUS LEGISLATION .
a) SB 1529 (Alquist), Chapter 797, Statutes of 2012,
revises screening, enrollment, disenrollment, suspensions,
and other sanctions for fee-for service Medi-Cal providers
and suppliers to conform to the federal Patient Protection
and Affordable Care Act.
b) SB 857 (Speier), Chapter 601, Statutes of 2003, makes
numerous changes to the Medi-Cal program intended to
address provider fraud, including establishing new Medi-Cal
application requirements for new providers, existing
providers at new locations, and providers applying for
continued enrollment.
6)TECHNICAL AMENDMENT . This bill currently requires DHCS to
notify counties if an investigation is commenced or concluded.
To eliminate any potential ambiguity, this bill should be
amended to require DHCS to notify counties when an
investigation is commenced and when an investigation is
concluded.
REGISTERED SUPPORT / OPPOSITION :
Support
The County Alcohol & Drug Program Administrators Association of
California
Opposition
None on file.
Analysis Prepared by : Ben Russell / HEALTH / (916) 319-2097
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