BILL ANALYSIS �
SB 1339
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Date of Hearing: August 13, 2014
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
SB 1339 (Cannella) - As Amended: August 12, 2014
Policy Committee: HealthVote:17-0
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill specifies that, for purposes of identifying potential
fraud, waste, or abuse in the Medi-Cal program, criminal
background checks are to be conducted on the officers and
executive director of the provider or applicant, if the provider
or applicant is a nonprofit organization.
FISCAL EFFECT
Negligible state costs.
COMMENTS
1)Purpose . This bill is intended to clarify whose criminal
background information is checked when a Drug Medi-Cal
provider is a nonprofit organization. The intent is 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
inpatient detoxification are available to the general
population.
SB 1339
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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, including
mining and analyzing data.
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)DHCS "High-Risk" Categorical Designation . DHCS announced on
August 7th, 2014 that any DMC provider seeking certification
or enrollment in Medi-Cal for the first time or seeking
revalidation, with the exception of DMC providers operated by
governmental entities, are designated as a high categorical
risk. DHCS indicates it is designating newly enrolling or
certifying and revalidating DMC providers as high risk because
this action will reduce the risk of fraud, waste and abuse in
the DMC program.
5)Related Legislation .
a) AB 1644 (Medina) required DHCS to designate Drug
Medi-Cal providers as high-risk, and was held on the
Suspense File of this committee.
b) 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 pending in the Senate Appropriations Committee.
c) SB 1045 (Beall), Chapter 80, Statutes of 2014 decreases,
from four to two, the minimum number of participants in a
group counseling session provided by certain Drug Medi-Cal
providers and changes the maximum number of participants
from 10 to 12.
Analysis Prepared by : Lisa Murawski / APPR. / (916) 319-2081
SB 1339
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