BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 1967|
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THIRD READING
Bill No: AB 1967
Author: Pan (D)
Amended: 7/1/14 in Senate
Vote: 21
SENATE HEALTH COMMITTEE : 8-0, 6/25/14
AYES: Hernandez, Morrell, Beall, De Le�n, DeSaulnier, Evans,
Monning, Nielsen
NO VOTE RECORDED: Wolk
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 73-0, 5/8/14 (Consent) - See last page for vote
SUBJECT : Drug Medi-Cal
SOURCE : Author
DIGEST : This bill requires the Department of Health Care
Services (DHCS) to promptly notify each county that currently
contracts with a Drug Medi-Cal provider that a preliminary
investigation has commenced, if DHCS commences a preliminary
investigation of a certified Drug Medi-Cal provider.
ANALYSIS :
Existing law:
1. Establishes the Medi-Cal program, which is administered by
DHCS, under which qualified low-income individuals receive
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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 a preliminary criminal
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 a preliminary
criminal investigation has commenced.
2. Requires DHCS to promptly notify each county that currently
contracts with the provider for Drug Medi-Cal services that a
preliminary criminal investigation has concluded, if DHCS
concludes a preliminary criminal investigation of a certified
provider.
3. Requires notice of the commencement and conclusion of a
preliminary criminal investigation to be made to the county
behavioral health director or his/her equivalent.
4. Defines "commenced" to mean the time at which a complaint or
allegation is assigned to an investigator for a field
investigation.
5. Defines "preliminary criminal investigation" to mean an
investigation to gather information to determine if criminal
law or statutes have been violated.
6. Requires communication between DHCS and a county specific to
the commencement or conclusion of a preliminary criminal to
be deemed confidential and not be subject to any disclosure
request, including, but not limited to, the Information
Practices Act of 1997, the California Public Records Act,
requests pursuant to a subpoena, or for any other public
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purpose, including, but not limited to, court testimony.
7. Requires information shared by DHCS with a county regarding
a preliminary criminal investigation to be maintained in a
manner to ensure protection of the confidentiality of the
criminal investigation.
8. Specifies the information provided to a county to only
include the provider name, national provider identifier
number, address, and the notice that an investigation has
commenced or concluded.
9. Prohibits a county from taking any adverse action against a
provider based solely upon the preliminary criminal
investigation information disclosed to the county.
10.Specifies that in the event of a preliminary criminal
investigation of a county-owned or operated program, DHCS has
the option to, but is not required to, notify the county when
DHCS commences or concludes a preliminary criminal
investigation.
11.Clarifies these provisions do not limit the voluntary or
otherwise legally mandated or contractually mandated sharing
of information between DHCS and a county of information
regarding audits and investigations of Drug
Medi-Cal providers.
12.Makes legislative findings and declarations related to
protecting the rights of Drug Medi-Cal providers during a
preliminary criminal investigation.
Comments
According to the author's office, in July 2013, an investigation
by the Center for Investigative Reporting (CIR) and CNN
uncovered allegations of widespread fraud in Drug Medi-Cal. The
investigative report alleged that, over the past two fiscal
years, the Drug Medi-Cal 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
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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.
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 administer the program directly. 13
smaller counties (Alpine, Amador, Calaveras, Colusa, Del Norte,
Inyo, Modoc, Mono, Plumas, Sierra, Siskiyou, Trinity, and
Tuolumne) do not participate in Drug Medi-Cal.
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:
1. The state failing to inform counties of providers who had
been convicted of Medi-Cal fraud;
2. Drug Medi-Cal providers billing for patients who did not go
to therapy, including teens from foster care homes who did
not have addictions;
3. Drug Medi-Cal providers fabricating counseling notes;
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4. Drug Medi-Cal providers paying kickbacks for patients from
board and care homes, and paying patients to attend therapy
sessions;
5. The state failing to require criminal background checks for
clinic leaders; and
6. Drug Medi-Cal providers falsifying patient charts and
billing for care by counselors who were not working.
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
Department of Justice (DOJ) 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.
Related Legislation
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.
SB 1339 (Cannella) requires a certified Drug Medi-Cal provider's
owner and medical director to submit to the DOJ fingerprint
images and related information required by the DOJ for the
purpose of obtaining information as to the existence and content
of a record of state and federal convictions and arrests.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 8/6/14)
County Alcohol and Drug Program Administrators Association of
California
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Los Angeles County Board of Supervisors
ARGUMENTS IN SUPPORT : The County Alcohol and Drug Program
Administrators Association of California (CADPAAC) writes in
support that this bill improves oversight and prevents 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
helps the state and counties maintain good providers in the Drug
Medi-Cal program and preserve the integrity of these needed
services.
ASSEMBLY FLOOR : 73-0, 5/8/14
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom,
Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian
Calderon, Campos, Chau, Ch�vez, Chesbro, Conway, Cooley,
Dababneh, Dahle, Daly, Dickinson, Donnelly, Fong, Fox,
Frazier, Beth Gaines, Garcia, Gatto, Gomez, Gonzalez, Gordon,
Grove, Hagman, Harkey, Roger Hern�ndez, Holden, Jones,
Jones-Sawyer, Levine, Linder, Logue, Lowenthal, Maienschein,
Medina, Melendez, Mullin, Muratsuchi, Nazarian, Nestande,
Olsen, Pan, Patterson, Perea, Quirk, Quirk-Silva, Rendon,
Ridley-Thomas, Rodriguez, Salas, Skinner, Stone, Ting, Wagner,
Waldron, Weber, Wieckowski, Wilk, Williams, Yamada, John A.
P�rez
NO VOTE RECORDED: Eggman, Gorell, Gray, Hall, Mansoor, V.
Manuel P�rez, Vacancy
JL:k 8/6/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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