BILL ANALYSIS �
SENATE COMMITTEE ON HEALTH
Senator Ed Hernandez, O.D., Chair
BILL NO: AB 1967
AUTHOR: Pan
AMENDED: April 10, 2014
HEARING DATE: June 18, 2014
CONSULTANT: Bain
SUBJECT : Drug Medi-Cal.
SUMMARY : Requires the Department of Health Care Services (DHCS)
to promptly notify each county that currently contracts with a
Drug Medi-Cal provider that an investigation has commenced, if
DHCS commences an investigation of a certified Drug Medi-Cal
provider.
Existing law:
1.Establishes the Medi-Cal program, which is administered by
DHCS, under which qualified low-income individuals receive
health care services. Defines Drug Medi-Cal reimbursable
services for purposes of these provisions.
2.Establishes the Drug Medi-Cal Treatment Program (Drug
Medi-Cal) under which DHCS is authorized to enter into
contracts with counties for various drug treatment services to
Medi-Cal recipients, or is required to directly arrange for
these services if a county elects not to do so.
3.Requires a county to negotiate contracts only with providers
certified to provide Drug Medi-Cal services.
This bill:
1.Requires DHCS, if it commences an investigation of a certified
Drug Medi-Cal provider, to promptly notify each county that
currently contracts with the provider for Drug Medi-Cal
services that an investigation has commenced.
2.Requires DHCS to promptly notify each county that currently
contracts with the provider for Drug Medi-Cal services that an
investigation has concluded, if DHCS concludes an
investigation of a certified provider.
FISCAL EFFECT : According to the Assembly Appropriations
Committee analysis, negligible state fiscal effect. DHCS has
already committed to improved communication with counties for
Continued---
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purposes of program integrity in the Drug Medi-Cal program.
PRIOR VOTES :
Assembly Health: 19- 0
Assembly Appropriations:17- 0
Assembly Floor: 73-0
COMMENTS :
1.Author's statement. According to the author, in July 2013, an
investigation by the Center for Investigative Reporting (CIR)
and CNN uncovered allegations of widespread fraud in the Drug
Medi-Cal program. The investigative report alleged that, over
the past two fiscal years, the program paid $94 million to 56
drug and alcohol rehabilitation clinics in Southern California
that have shown signs of deceptive or questionable billing. In
September 2013, the Assembly Health Committee and
Accountability and Administrative Review Committee held a
joint oversight hearing to examine current oversight of the
Drug Medi-Cal program by DHCS. 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. This bill is intended to improve
oversight and prevent fraud in the Drug Medi-Cal program by
requiring the state to share information with counties related
to providers under investigation.
2.Background on Drug Medi-Cal. Per the state's Medicaid State
Plan, substance use disorder services are to stabilize and
rehabilitate Medi-Cal beneficiaries diagnosed as having a
substance-related disorder. 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 and are delivered by providers certified by the state
rather than through participating health plans. Funding for
pre-2014 Drug Medi-Cal services was realigned to the counties
as part of 2011 Public Safety Realignment, with counties
putting up the state match to draw down federal Medicaid
matching funds. Counties can choose to contract with DHCS and
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administer the program directly. Thirteen smaller counties
(Alpine, Amador, Calaveras, Colusa, Del Norte, Inyo, Modoc,
Mono, Plumas, Sierra, Siskiyou, Trinity, and Tuolumne) do not
participate in Drug Medi-Cal.
3.Fraud in Drug Medi-Cal. Beginning in July 2013, CIR published
a series of reports on fraud in the Drug Medi-Cal program in
conjunction with a three-part series on 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 and inadequate program oversight. These include:
a. The state failing to inform counties of providers who
had been convicted of Medi-Cal fraud;
b. Drug Medi-Cal providers billing for patients who did not
go to therapy, including teens from foster care homes who
did not have addictions;
c. Drug Medi-Cal providers fabricating counseling notes;
d. Drug Medi-Cal providers paying kickbacks for patients
from board and care homes, and paying patients to attend
therapy sessions;
e. The state failing to require criminal background checks
for clinic leaders; and,
f. Drug Medi-Cal providers falsifying patient charts and
billing for care by counselors who were not working.
4.DHCS Action in Response to Drug Medi-Cal Fraud. In July 2013,
DHCS began reviewing Drug Medi-Cal providers and ordering
temporary suspensions due to credible allegations of fraud. In
January 2014, DHCS announced it had suspended payments to 68
providers operating 177 drug treatment facilities. DHCS
indicated all 68 of these cases have been referred to the
California Department of Justice for criminal prosecution
based on the credible allegations of fraud. DHCS also
completed an assessment of the Drug Medi-Cal program, which
included a program audit conducted by its Audits and
Investigations Division, and DHCS' plan for implementing the
recommended changes to ensure integrity in the Drug Medi-Cal
program. These included:
a. Requiring all 816 Drug Medi-Cal providers that are
actively billing to submit to a recertification process.
Providers that have not billed Drug Medi-Cal in the last 12
months will be decertified, beginning January 2014;
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b. Amending the state-county contract for fiscal year
2014-15 to increase county monitoring of Drug Medi-Cal
providers, in order to ensure that appropriate services are
provided by qualified providers to individuals who
genuinely need them;
c. Continuing to direct investigative staff, including
trained auditors, nurse evaluators and peace officers to
continue to root out and eliminate complex scams aimed at
profiting from Medi-Cal, rather than providing vital
services that low-income individuals need;
d. Extensive mining and analyzing of data to identify
suspicious Drug Medi-Cal providers, designating them as
"high risk" providers who will be subject to additional
onsite visits, fingerprinting and background checks; and,
e. Developing emergency regulations that strengthen Drug
Medi-Cal program integrity by clarifying the requirements
and responsibilities of Drug Medi-Cal providers, Drug
Medi-Cal Medical Directors, and other provider personnel.
5.Related legislation. AB 1644 (Medina) would require 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.
SB 1339 (Cannella) would require a certified DMC provider's
owner and medical director to submit to the Department of
Justice fingerprint images and related information required by
the Department of Justice for the purpose of obtaining
information as to the existence and content of a record of
state and federal convictions and arrests.
6.Prior legislation. SB 1529 (Alquist), Chapter 797, Statutes of
2012, revised 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.
SB 857 (Speier), Chapter 601, Statutes of 2003, made 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.
AB 106 (Committee on Budget), Chapter 32, Statutes of 2011,
required the transfer of the administration of Drug Medi-Cal
from the Department of Alcohol and Drug Programs to DHCS on
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July 1, 2012.
7.Support. The County Alcohol and Drug Program Administrators
Association of California (CADPAAC) writes in support that
this bill would improve oversight and prevent fraud in Drug
Medi-Cal by requiring the state to share information with
counties related to providers under investigation. CADPAAC
states 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, CADPAAC states 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 Drug Medi-Cal program and preserve the
integrity of these needed services.
8.Drafting issue. DHCS indicates it is seeking additional
clarification on the phrase "commence an investigation" as
used in this bill (for example, does "commence an
investigation" begin when DHCS receives a complaint, or a
referral from the county, or when a DHCS investigator from its
Investigations Branch performs visits to a provider's
business).
SUPPORT AND OPPOSITION :
Support: California Opioid Maintenance Providers
County Alcohol & Drug Program Administrators
Association of California
Los Angeles County Board of Supervisors
Oppose: None received
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