BILL ANALYSIS �
AB 1967
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CONCURRENCE IN SENATE AMENDMENTS
AB 1967 (Pan)
As Amended July 1, 2014
Majority vote
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|ASSEMBLY: |73-0 |(May 8, 2014) |SENATE: |35-0 |(August 20, |
| | | | | |2014) |
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Original Committee Reference: HEALTH
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.
The Senate amendments clarify that notification of an
investigation must occur when a preliminary criminal
investigation has commenced, define certain terms, and specify
what provider information can be included in the notifications.
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
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Drug Medi-Cal program by July 1, 2014.
AS PASSED BY THE ASSEMBLY , this bill required DHCS, if it
commences or concludes an investigation of a Drug Medi-Cal
provider, to notify counties that contract with the provider.
FISCAL EFFECT : According to the Senate Appropriations
Committee, pursuant to Senate Rule 28.8, negligible state costs.
COMMENTS : According to the author, 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. 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.
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.
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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
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. The reports alleged that a number of clinics in
Southern California engaged in practices that included:
1)Busing of teenagers without drug problems from group homes;
2)Fabricating patient treatment documents;
3)Paying clients for showing up to counseling sessions;
4)Billing for patients who were incarcerated or dead;
5)Billing for group counseling for dozens of clients on a day
when clinic staff told reporters that no group counseling was
offered; and,
6)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:
1)Requiring all 816 active Drug Medi-Cal providers to submit
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applications for recertification and decertifying providers
that have not billed Drug Medi-Cal in the last 12 months;
2)Requiring counties, through the state-county contract, to
increase monitoring of Drug Medi-Cal providers;
3)Continuing targeted investigations of Drug Medi-Cal providers
by DHCS auditors, nurse evaluators and peace officers;
4)Mining and analyzing of data to identify suspicious Drug
Medi-Cal providers for additional review, including onsite
visits, fingerprinting, and background checks; and,
5)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.
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.
Analysis Prepared by : Paula Villescaz / HEALTH / (916)
319-2097
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FN:
0004457