BILL NUMBER: AB 1098 AMENDED
BILL TEXT
AMENDED IN SENATE MAY 18, 2000
AMENDED IN ASSEMBLY JANUARY 3, 2000
INTRODUCED BY Assembly Member Romero
(Coauthors: Assembly Members Aroner, Firebaugh, Honda, and
Keeley)
FEBRUARY 25, 1999
An act to amend Section 14171.6 of
Sections 1265, 1287, 1301, and 1320 of, and to add Sections 1281.1,
1282.1, 1282.2, 1311, and 1320.5 to, the Business and Professions
Code, and to amend Sections 14040, 14040.5, 14043.1, 14043.2,
14043.36 14043.37, 14043.65, 14043.7, 14043.75, 14100.75, 14107,
14107.11, 14115.5, 14124.1, 14124.2, 14170, 14170.8, 14171.6, and
24005 of, and to add Sections 14040.1, 14043.34, 14043.61, 14043.62,
and 14123.25 to, the Welfare and Institutions Code, relating to
health.
LEGISLATIVE COUNSEL'S DIGEST
AB 1098, as amended, Romero. Medi-Cal
Health .
Existing law contains provisions governing the licensure and
registration of clinical laboratories, which are administered by the
State Department of Health Services.
This bill would make various modifications to these requirements,
including the provision of additional grounds for denial, suspension,
or revocation of licensure or registration, as well as provisions
relating to the retention of records.
The bill would also provide that a violation of provisions that
constitute grounds for denial, registration suspension, or revocation
of clinical laboratory licensure or registration that results in
bodily harm to a human being or involves the taking of blood from a
minor child or dependent adult shall be a crime, punishable as
specified.
The bill would also make it unlawful, and subject to criminal
penalties, for any person to: (1) provide any form of payment or
gratuity for human blood or any other human specimen provided for the
purpose of clinical laboratory testing or practice, (2) solicit, or
to provide any form of payment or gratuity to, another person for the
procurement of that person's blood or any other specimen from his or
her body, unless the solicitor is serving as the agent of either a
clinical laboratory performing tests or examinations for purposes of
research or teaching or a licensed biologics producer, or (3) perform
venipuncture, skin puncture, or arterial puncture, unless authorized
by law.
Existing law provides for the Medi-Cal program, which is
administered by the State Department of Health Services, pursuant to
which medical benefits are provided to public assistance recipients
and certain other low-income persons.
Existing law defines a provider for the purposes of the Medi-Cal
program.
This bill would revise the definition of a provider for that
purpose.
Existing law provides for the State-Only Family Planning Program,
under which family planning services are provided to eligible
individuals.
Existing law also establishes the Family Planning Access, Care,
and Treatment Waiver Program, as part of the Medi-Cal program.
The bill would enact various provisions relating to billing for
Medi-Cal and family planning services, including provisions relating
to provider billing agents.
Existing law provides that any person, with intent to defraud,
presents for allowance or payment any false or fraudulent claim for
furnishing Medi-Cal program services or merchandise, knowingly
submits false information for the purpose of obtaining greater
compensation than that to which he or she is legally entitled, or
knowingly submits false information for the purpose of obtaining
authorization of obtaining Medi-Cal program services or merchandise
is guilty of a crime.
This bill would, instead, make it a crime for any person,
including a Medi-Cal provider, an applicant for provider status, or a
billing agent, who engages in specified activities, punishable as
prescribed.
The bill would also permit, subject to specified requirements, the
forfeiture of property of persons engaging in these activities.
Because the bill creates additional crimes, the bill would
constitute a state-mandated local program.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no yes .
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 14171.6 of the Welfare and
SECTION 1. Section 1265 of the Business and Professions Code is
amended to read:
1265. (a) (1) A clinical laboratory performing clinical
laboratory tests or examinations classified as of moderate or of high
complexity under CLIA shall obtain a clinical laboratory license
pursuant to this chapter. The department shall issue a clinical
laboratory license to any person who has applied for the license on
forms provided by the department and who is found to be in compliance
with this chapter and the regulations pertaining thereto. No
clinical laboratory license shall be issued by the department unless
the clinical laboratory and its personnel meet the CLIA requirements
for laboratories performing tests or examinations classified as of
moderate or high complexity, or both.
(2) A clinical laboratory performing clinical laboratory tests or
examinations subject to a certificate of waiver or a certificate of
provider-performed microscopy under CLIA, shall register with the
department. The department shall issue a clinical laboratory
registration to any person who has applied for the registration on
forms provided by the department and is found to be in compliance
with this chapter, the regulations pertaining thereto, and the CLIA
requirements for either a certificate of waiver or a certificate of
provider-performed microscopy.
(b) An application for a clinical laboratory license or
registration shall include the name or names of the owner or the
owners, the name or names of the laboratory director or directors,
the name and location of the laboratory, a list of the clinical
laboratory tests or examinations performed by the laboratory by name
and total number of test procedures and examinations performed
annually (excluding tests the laboratory may run for quality control,
quality assurance, or proficiency testing purposes). The
application shall also include a list of the tests and the test kits,
methodologies, and laboratory equipment used, and the qualifications
(educational background, training, and experience) of the personnel
directing and supervising the laboratory and performing the
laboratory examinations and test procedures, and any other relevant
information as may be required by the department. If the laboratory
is performing tests subject to a provider-performed microscopy
certificate, the name of the provider or providers performing those
tests shall be included on the application. Application shall be
made by the owners of the laboratory and the laboratory directors
prior to its opening. A license or registration to conduct a
clinical laboratory if the owners are not the laboratory directors
shall be issued jointly to the owners and the laboratory directors
and the license or registration shall include any information as may
be required by the department. The owners and laboratory directors
shall be severally and jointly responsible to the department for the
maintenance and conduct thereof or for any violations of this chapter
and regulations pertaining thereto.
(c) The department shall not issue a license or registration until
it is satisfied that the clinical laboratory will be operated within
the spirit and intent of this chapter, that the owners and
laboratory directors are each of good moral character, and that the
granting of the license will not be in conflict with the interests of
public health.
(d) A separate license or registration shall be obtained for each
laboratory location, with the following exceptions:
(1) Laboratories that are not at a fixed location, that is,
laboratories that move from one testing site to another, such as
mobile units providing laboratory testing, health screening fairs, or
other temporary testing locations, may apply for and obtain one
license or registration for the designated primary site or home base,
using the address of that primary site.
(2) Not-for-profit, or federal, state, or local government
laboratories that engage in limited (not more than a combination of
15 moderately complex or waived tests, as defined under CLIA, per
license) public health testing may apply for and obtain a single
license or registration.
(3) Laboratories within a hospital that are located at contiguous
buildings on the same campus and under common direction, may file a
single application or multiple applications for a license or
registration of laboratory locations within the same campus or street
address.
(4) Locations within a single street and city address that are
under common ownership may apply for and obtain a single license or
registration or multiple licenses or registrations, at the discretion
of the owner or owners.
(e) A license or registration shall be automatically
revoked in 30 days if there is a major change of laboratory
directorship or ownership. The license or registration
shall be valid for the calendar year or remainder thereof for which
it is issued unless revoked or suspended. A license or
registration shall be automatically revoked if there is a major
change of laboratory directorship or ownership, in which case the
clinical laboratory shall be required to obtain a new clinical
laboratory license or registration prior to engaging in clinical
laboratory practice.
(f) If the department does not within 60 days after the date
of receipt of the application issue a license or registration, it
shall state the grounds and reasons for its refusal in writing,
serving a copy upon the applicant by certified mail addressed to the
applicant at his or her last known address.
(f)
(g) The department shall be notified in writing by the
laboratory owners or directors within 30 days of any change in
ownership, name, location, or and by the
laboratory owners and directors , 30 days prior
to any change in laboratory directors, including any additions or
deletions . Laboratory owners and directors to whom the
current license or registration is issued shall remain jointly and
severally responsible to the department for the operation,
maintenance, and conduct of the clinical laboratory and for any
violations of this chapter or the regulations adopted thereunder,
including any failure to provide the notifications required by this
subdivision. In addition, failure of the laboratory owners or
directors to notify the department at least 30 days prior to any
change in laboratory directors, including any additions or deletions,
shall result in the automatic revocation of the clinical laboratory'
s license or registration.
(h) The withdrawal of an application for a license or registration
or for a renewal of a license, or registration, issuable under this
chapter, shall not, after the application has been filed with the
department, deprive the department of its authority to institute or
continue a proceeding against the applicant for denial of the
license, registration, or renewal upon any ground provided by law or
to enter an order denying the license, registration, or renewal upon
any such ground, unless the department consents in writing to the
withdrawal.
(i) The suspension, expiration, or forfeiture by operation of law
of a license or registration issued under this chapter, or its
suspension, forfeiture, or cancellation by order of the department or
by order of a court of law, or its surrender without the written
consent of the department, shall not deprive the department of its
authority to institute or continue an action against a license or
registration issued under this chapter or against the laboratory
owner or laboratory director upon any ground provided by law or to
enter an order suspending or revoking the license or registration
issued under this chapter.
(j) (1) The department shall be notified within 10 days whenever a
clinical laboratory ceases operations or suspends clinical
laboratory practice for any reason.
(2) If a clinical laboratory ceases operation or suspends clinical
laboratory practice, it shall preserve all of its records for a
minimum of seven years and shall maintain an ability to provide the
results of clinical laboratory tests or examinations performed during
its operation when requested pursuant to Section 123148 of the
Health and Safety Code. The records preserved shall include all
those showing compliance during the laboratory's operation with this
chapter and the regulations adopted thereunder, including, but not
limited to, records for test performance, test reporting, personnel,
and the purchase or lease of supplies or equipment. In addition, all
records of tests or examinations classified under the specialties or
subspecialties of pathology or cytology shall be retained as
required by this chapter, the regulations adopted thereunder or the
federal Clinical Laboratory Improvement Amendments of 1988 (42 U.S.C.
Sec. 263a), whichever period is longer.
(3) The department or any person injured as a result of a
laboratory's abandonment or failure to retain records pursuant to
this section may bring an action in a court of proper jurisdiction
for the amount of any damages suffered as a result thereof.
(4) Failure to retain records as required by this section shall
also subject a laboratory to a civil penalty of one thousand dollars
($1,000) for each record not retained and the recovery of any
department costs.
SEC. 2. Section 1281.1 is added to the Business and Professions
Code, to read:
1281.1. It is unlawful for any person, including a person who
owns, operates, or directs a clinical laboratory, to provide any form
of payment or gratuity for human blood or any other human specimen
provided for the purpose of clinical laboratory testing or clinical
laboratory practice.
SEC. 3. Section 1282.1 is added to the Business and Professions
Code, to read:
1282.1. It is unlawful for any person to solicit, or to provide
any form of payment or gratuity to, another person for the
procurement of that person's blood, or any other specimen from his or
her body, unless the solicitor is serving as the agent of either a
clinical laboratory performing tests or examinations for purposes of
research or teaching, only, or an entity licensed under Chapter 4
(commencing with Section 1600) of Division 2 of the Health and Safety
Code.
SEC. 4. Section 1282.2 is added to the Business and Professions
Code, to read:
1282.2. It is unlawful for any person to perform venipuncture,
skin puncture, or arterial puncture unless he or she is authorized to
do so under this chapter, the regulations adopted thereunder, or
under other provisions of law.
SEC. 5. Section 1287 of the Business and Professions Code is
amended to read:
1287. (a) Any person who violates any provision of
this chapter is guilty of a misdemeanor punishable upon conviction by
imprisonment in the county jail for a period not exceeding six
months or by fine not exceeding one thousand dollars ($1,000) or by
both.
(b) Notwithstanding subdivision (a), a violation of Section
1281.1, 1282.1, or 1282.2 is a public offense and is punishable upon
a first conviction by imprisonment in the county jail for not more
than one year, or by imprisonment in the state prison, or by a fine
not exceeding ten thousand dollars ($10,000), or by both that
imprisonment and fine. A second or subsequent conviction is
punishable by imprisonment in the state prison.
SEC. 6. Section 1301 of the Business and Professions Code is
amended to read:
1301. (a) The annual renewal fee for a clinical
laboratory license or registration set under this chapter shall
be paid during the 30-day period before the first day of
January of each calendar year expiration date of the
license or registration . Failure to pay the annual fee in
advance during the time the license remains in force shall, ipso
facto, work a forfeiture of said license after a period of 60 days
from the first day of January of each year
expiration date of the license or registration .
The
(b) The department shall give written notice to all
licensees persons licensed pursuant to Sections 1260,
1260.1, 1261, 1261.5, 1262, 1264, or 1270 30 days in advance
of the regular renewal date that a renewal fee has not been paid. In
addition, the department shall give written notice to licensed
clinical laboratory bioanalysts or doctoral degree specialists and
clinical laboratory scientists or limited clinical laboratory
scientists by registered or certified mail 90 days in advance of the
expiration of the fifth year that a renewal fee has not been paid and
if not paid before the expiration of the fifth year of delinquency
the licensee may be subject to reexamination.
If
(c) If the renewal fee is not paid for five or more years,
the department may require an examination before reinstating the
license, except that no examination shall be required as a condition
for reinstatement if the original license was issued without an
examination. No examination shall be required for reinstatement if
the license was forfeited solely by reason of nonpayment of the
renewal fee if the nonpayment was for less than five years.
If
(d) If the license is not renewed within 60 days after its
expiration, the licensee, as a condition precedent to renewal, shall
pay the delinquency fee identified in subdivision (l) of Section
1300, in addition to the renewal fee in effect on the last preceding
regular renewal date. Payment of the delinquency fee will not be
necessary if within 60 days of the license expiration date the
licensee files with the department an application for inactive
status.
SEC. 7. Section 1311 is added to the Business and Professions
Code, to read:
1311. The department shall have seven years from the date of
discovery by the department of a violation of this chapter or of a
regulation adopted thereunder to file an action in a court of
competent jurisdiction.
SEC. 8. Section 1320 of the Business and Professions Code is
amended to read:
1320. The department may deny, suspend, or revoke any license or
registration issued under this chapter for any of the following
reasons:
(a) Conduct involving moral turpitude or dishonest reporting of
tests.
(b) Violation by the applicant, licensee, or registrant of this
chapter or any rule or regulation adopted pursuant thereto.
(c) Aiding, abetting, or permitting the violation of this chapter,
the rules or regulations adopted under this chapter or the Medical
Practice Act, Chapter 5 (commencing with Section 2000) of Division 2.
(d) Permitting a licensed trainee to perform tests or procure
specimens unless under the direct and responsible supervision of a
person duly licensed under this chapter or physician and surgeon
other than another licensed trainee.
(e) Violation of any provision of this code governing the practice
of medicine and surgery.
(f) Proof that an applicant, licensee, or registrant has made
false statements in any material regard on the application for a
license, registration, or renewal issued under this chapter.
(g) Conduct inimical to the public health, morals, welfare, or
safety of the people of the State of California in the maintenance or
operation of the premises or services for which a license or
registration is issued under this chapter.
(h) Proof that the applicant or licensee has used any
degree, or certificate, as a means of qualifying for licensure that
has been purchased or procured by barter or by any unlawful means or
obtained from any institution that at the time the degree,
certificate, or title was obtained was not recognized or accredited
by the department of education of the state where the institution is
or was located to give training in the field of study in which the
degree, certificate, or title is claimed Conduct that
may cause harm to a patient by affecting the integrity of a
biological specimen or the clinical laboratory test or examination
result, through improper collection, handling, storage, or labeling
of the specimen or the erroneous transcription or reporting of test
or examination results .
(i) Violation of any of the prenatal laws or regulations
pertaining thereto in Chapter 2 (commencing with Section 120675) of
Part 3 of Division 105 of the Health and Safety Code and Article 1
(commencing with Section 1125) of Group 4 of Subchapter 1 of Chapter
2 of Part 1 of Title 17 of the California Code of Regulations.
(j) Knowingly accepting an assignment for clinical laboratory
tests or specimens from and the rendering of a report thereon to
persons not authorized by law to submit those specimens or
assignments.
(k) Rendering a report on clinical laboratory work actually
performed in another clinical laboratory without designating clearly
the name and address of the laboratory in which the test was
performed.
(l) Conviction of a felony or of any misdemeanor involving moral
turpitude under the laws of any state or of the United States arising
out of or in connection with the practice of clinical laboratory
technology. The record of conviction or a certified copy thereof
shall be conclusive evidence of that conviction.
(m) Unprofessional conduct.
(n) The use of drugs or alcoholic beverages to the extent or in a
manner as to be dangerous to a person licensed under this chapter, or
any other person to the extent that that use impairs the ability of
the licensee to conduct with safety to the public the practice of
clinical laboratory technology.
(o) Misrepresentation in obtaining a license or registration.
(p) Performance of, or representation of the laboratory as
entitled to perform, a clinical laboratory test or examination or
other procedure that is not within the specialties or subspecialties,
or category of laboratory procedures authorized by the license or
registration.
(q) Refusal of a reasonable request of HCFA, a HCFA agent, the
department, or any employee, agent or contractor of the department,
for permission to inspect, pursuant to this chapter, the laboratory
and its operations and pertinent records during the hours the
laboratory is in operation.
(r) Failure to comply with reasonable requests of the department
for any information, work, or materials that the department concludes
is necessary to determine the laboratory's continued eligibility for
its license or registration, or its continued compliance with this
chapter or the regulations adopted under this chapter.
(s) Failure to comply with a sanction imposed under Section 1310.
(t) Proof that the applicant or licensee has used any degree or
certificate as a means of qualifying for licensure, if the degree or
certificate has been purchased or procured by barter or by any
unlawful means or obtained from any institution that, at the time the
degree, certificate, or title was obtained, was not recognized or
accredited by the state department of education of the state where
the institution is or was located to give training in the field of
study in which the degree, certificate, or title is claimed.
(u) Performance by unlicensed laboratory personnel of any activity
that is not authorized by Section 1269.
SEC. 9. Section 1320.5 is added to the Business and Professions
Code, to read:
1320.5. A violation of Section 1320 that results in bodily harm
to a human being or involves the taking of blood from a minor child
or dependent adult shall be punishable by imprisonment in the county
jail for not more than one year, or in a state prison for not more
than 10 years, or by a fine not exceeding fifty thousand dollars
($50,000) or by both imprisonment and fine.
SEC. 10. Section 14040 of the Welfare and Institutions Code is
amended to read:
14040. (a) Each contract for fiscal intermediary services shall
allow, to the extent practicable, providers to utilize electronic
means for transmitting claims to the fiscal intermediary contractor.
Means of transmission, and the manner and format used, shall be
approved by the director. In determining which electronic means are
acceptable, the director shall consider magnetic tape,
computer-to-computer via telephone, diskettes, and any other methods
which may become available through technological advancements.
(b) A provider , as defined in Section 14043.1, may
assign , by written contract do either or
both of the following:
(1) Authorize a billing agent to submit claims, including
electronic claims, on behalf of the provider for reimbursement for
services, goods, supplies, or merchandise rendered or provided by the
provider to a Medi-Cal beneficiary or under the Medi-Cal program.
(2) Assign signature authority for transmission of claims to
an authorized representative or the
authorized billing agent.
(c) The department shall develop reasonable standards for
participation and continued participation by
providers or persons who bill on behalf of providers
billing agents in the use of claim transmission methods
utilized pursuant to this section. These standards shall be designed
to ensure that participants are able to
billing agents submit technically complete claims and to
reduce the potential for fraud and abuse. A "technically
complete claim" means any billing request for payment from a provider
or the billing agent of a the
provider, including an original claim, claim inquiry, or
appeal, that is submitted on the correct Medi-Cal claim form or
electronic billing format, is fully and accurately completed, and
includes all information and documentation required to be submitted
on or with the claim pursuant to Medi-Cal billing and documentation
requirements.
(d) To the extent required by federal and state law, the fiscal
intermediary shall retain claim data submitted by providers or
the billing agent of the provider pursuant to this section.
The department shall, however, return to a health care
provider or the billing agent of the provider
original tapes, diskettes, and any other similar devices
which that are used by the provider or the
billing agent of the provider pursuant to this section.
(e) In order to reduce the amount of paperwork or attachments
which are required to be completed by a provider or the billing
agent of the provider submitting a bill for services
claim for reimbursement under this chapter to
the fiscal intermediary, the department shall direct the fiscal
intermediary to investigate and develop the means to incorporate as
much information as possible on the electronic format.
SEC. 11. Section 14040.1 is added to the Welfare and Institutions
Code, to read:
14040.1. (a) "Billing agent" or "billing agent of the provider"
means any individual, partnership, group, association, corporation,
institution, or entity, and the officers, directors, owners, managing
employees, or agents of any partnership, group, association,
corporation, institution, or entity, that submits claims on behalf of
the provider, as defined in Section 14043.1, for reimbursement for
services, goods, supplies, or merchandise rendered or provided
directly or indirectly to a Medi-Cal beneficiary or under the
Medi-Cal program. As used in this section a billing agent shall not
include a nonmanaging salaried employee of a provider.
(b) The department shall establish standards for the registration
or continued registration of each billing agent. The standards shall
establish time periods, no longer than a year from the date the
standards become effective, after which, no person or entity shall
submit a claim on behalf of a provider, as defined in Section
14043.1, for reimbursement for services, goods, supplies, or
merchandise rendered or provided directly or indirectly by the
provider to a Medi-Cal beneficiary or under the Medi-Cal program,
unless that person or entity has been registered with the department
as a billing agent. The department shall establish the standards for
the registration or continued registration of billing agents
pursuant to this subdivision by the adoption of emergency regulations
in accordance with the Administrative Procedure Act (Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title 2 of
the Government Code). The adoption of these emergency regulations
or readoption of the regulations shall be deemed to be an emergency
necessary for the immediate preservation of the public peace, health
and safety, or general welfare. Notwithstanding Chapter 3.5
(commencing with Section 11340 of Part 1 of Division 3 of Title 2 of
the Government Code, emergency regulations adopted or readopted
pursuant to this subdivision shall be exempt from review by the
Office of Administrative Law. The emergency regulations authorized by
this subdivision shall be submitted to the Office of Administrative
Law for filing with the Secretary of State and publication in the
California Code of Regulations.
(c) The department may complete a background check on
applicants for registration or continued registration as a billing
agent and on those persons who currently act as billing agents,
billing intermediaries, authorized representatives, or any other
person or entity billing for services rendered under this chapter,
for the purpose of verifying the accuracy of information provided by
an applicant for registration or continued registration as a billing
agent or in order to prevent fraud and abuse. The background check
may include, but not be limited to, onsite inspection, review of
business records, and data searches.
(d) As a condition of registration, or continued registration, as
a billing agent, an applicant for registration as a billing agent
shall provide to the department a surety bond of not less than fifty
thousand dollars ($50,000).
(e) A billing agent's compensation for the submission of claims to
the Medi-Cal program on behalf of a provider shall be related to the
cost of processing the billing, but shall not be related on a
percentage or other basis, such as a contingency fee, to the amount
that is billed or collected. A billing agent's compensation for the
submission of claims to the Medi-Cal program on behalf of a provider
shall not be dependent upon the collection of the payment.
(f) Each billing agent shall be liable for ensuring that each
claim, for reimbursement for services, goods, supplies, or
merchandise rendered or supplied by the provider to a Medi-Cal
beneficiary or under the Medi-Cal program, is a technically complete
claim, as defined in subdivision (c) of Section 14040.
SEC. 12. Section 14040.5 of the Welfare and Institutions Code is
amended to read:
14040.5. (a) Billing intermediaries
agents shall register with the director and shall obtain
an a unique identifier code
which prior to submitting any claims for
reimbursement. This unique identifier shall be part of
all Medi-Cal claims each claim for
reimbursement submitted by any the
billing intermediary agent .
(b) A provider may, by written contract, do either of the
following:
(1) Authorize a billing agent to submit claims, including
electronic claims, on behalf of the provider for reimbursement for
services, goods, supplies, or merchandise provided by the provider to
the Medi-Cal program.
(2) Assign signature authority for transmission of claims by the
authorized billing agent. Any provider using a billing
intermediary agent to bill
submit claims for reimbursement to the Medi-Cal
program shall , at least 30 days prior to any claims for
reimbursement being submitted by the billing agent, provide
written notification to the director of the name and
, including the legal and any fictitious or "doing
business as" names used by the billing agent, and address
, and telephone number of the billing intermediary
agent .
(c) (1) Any Medi-Cal claim submitted by a billing
intermediary agent or provider failing to comply
with the requirements of this section or Section 14040 or
14040.1 or the regulations adopted under these sections, shall
be subject to denial nonpayment by the
director.
(2) The director may deny, suspend, or withdraw
revoke the registration or continued registration
of a billing intermediary agent
based upon failure any of the following:
(A) Failure of the billing agent or provider to comply with
this section, or for involvement of a billing intermediary
in illegal submission of claims.
(3) The director may immediately withdraw or suspend the
registration of a billing intermediary upon the involvement of
Section 14040 or 14040.1, or the regulations adopted
under these sections.
(B) Determination by the director that the
billing intermediary in the filing of agent
has submitted a claim containing false or misleading
information on claims submitted for regarding
services rendered, or allegedly rendered, or
regarding goods, supplies, or merchandise furnished or allegedly
furnished, or when a that the
billing intermediary agent has
demonstrated a pattern of filing claims which are not technically
complete claims as defined in subdivision (c) of Section 14040.
(4) Proceedings for suspension or withdrawal of the registration
of a billing intermediary pursuant to this section shall be conducted
in accordance with Chapter 5 (commencing with Section 11500) of Part
1 of Division 3 of Title 2 of the Government Code, except that
hearings may be conducted by departmental hearing officers appointed
by the director. The director may periodically contract with the
Office of Administrative Hearings to conduct these hearings.
(5) The director shall notify the billing intermediary 30 days in
advance of a proposed suspension and shall allow the billing
intermediary to demonstrate why the suspension notice should not be
issued.
(6) The director shall notify the billing intermediary of the
suspension and the effective date thereof and at the same time shall
serve the billing intermediary with the accusation. Upon receipt of
a notice of defense by the billing intermediary, the director shall
set the matter for hearing within 30 days of the receipt of the
notice. The suspension shall remain in effect until the hearing is
completed and the director has made a final determination on the
merits. The suspension shall, however, be deemed vacated if the
director fails to make a final determination on the merits within 60
days of the completion of the original hearing.
(6) This subdivision shall not apply where the suspension of a
billing intermediary is based upon the conviction for any crime
involving fraud, abuse of the Medi-Cal program, or suspension from
the federal Medicare program. In those instances, suspension shall
be automatic.
(d) For purposes of this section, a billing intermediary includes
any entity including a partnership, corporation, sole proprietorship,
or person which bills Medi-Cal on behalf of a provider pursuant to a
contractual relationship with the provider. As used in this section
a billing intermediary does not include salaried employees of a
provider.
(e) As used in this section "provider" means any individual,
partnership, clinic, group, association, corporation, or institution
as defined in Section 51051 of Title 22 of the California
Administrative Code, and includes any officer, director, agent, or
employee thereof.
(C) The determination by the director that the billing agent is
under investigation for fraud or abuse, has been convicted of fraud
or abuse in a criminal proceeding, found liable for fraud or abuse in
a civil proceeding, or settled a criminal or civil proceeding
alleging fraud or abuse.
(3) The director shall notify the billing agent and each provider
utilizing the services of the billing agent of the denial,
suspension, or revocation of the billing agent's registration or
continued registration and the effective date thereof.
Notwithstanding Section 100171 of the Health and Safety Code,
proceedings after the imposition of denial, suspension, or revocation
pursuant to this subdivision shall be in accordance with Section
14043.65, except that this subdivision shall not apply where the
denial, suspension, or revocation of a billing agent's registration
or continued registration is based upon conviction for any crime
involving fraud or abuse of the Medi-Cal program or the federal
medicaid or Medicare programs, or exclusion by the federal government
from the medicaid or Medicare programs. In those instances and
notwithstanding any other provision of law, the denial, suspension,
or revocation shall be automatic and not subject to appeal or
hearing.
(d) As used in this section, "provider" has the same meaning as
defined in Section 14043.1.
SEC. 13. Section 14043.1 of the Welfare and Institutions Code is
amended to read:
14043.1. As used in this article:
(a) "Abuse" means either of the following:
(1) Practices that are inconsistent with sound fiscal or business
practices and result in unnecessary cost to the Medicare
program, the federal medicaid and Medicare programs,
the Medi-Cal program, another state's medicaid program, or
other health care programs operated, or financed in whole or in part,
by the federal government or any state or local agency in this state
or any other state.
(2) Practices that are inconsistent with sound medical practices
and result in reimbursement by the federal medicaid and Medicare
programs, the Medi-Cal program or other health care programs
operated, or financed in whole or in part, by the federal government
or any state or local agency in this state or any other state, for
services that are unnecessary or for substandard items or services
that fail to meet professionally recognized standards for health
care.
(b) "Applicant" means any individual, partnership, group,
association, corporation, institution, or entity, and the officers,
directors, owners, managing employees, or agents thereof,
that applies to the department for enrollment as a provider in the
Medi-Cal program.
(c) "Convicted" means any of the following:
(1) A judgment of conviction has been entered against an
individual or entity by a federal, state, or local court, regardless
of whether there is a posttrial motion or an appeal pending or the
judgment of conviction or other record relating to the criminal
conduct has been expunged or otherwise removed.
(2) A federal, state, or local court has made a finding of guilt
against an individual or entity.
(3) A federal, state, or local court has accepted a plea of guilty
or nolo contendere by an individual or entity.
(4) An individual or entity has entered into participation in a
first offender, deferred adjudication, or other program or
arrangement where judgment of conviction has been withheld.
(d) "Fraud" means an intentional deception or misrepresentation
made by a person with the knowledge that the deception could result
in some unauthorized benefit to himself or herself or some other
person. It includes any act that constitutes fraud under applicable
federal or state law.
(e) "Provider" means any individual, partnership, group,
association, corporation, institution, or entity, and the officers,
directors, owners, managing employees, or agents
thereof of any partnership, group association,
corporation, institution, or entity , that provides services,
goods, supplies, or merchandise, directly or indirectly, to a
Medi-Cal beneficiary and that has been enrolled in the Medi-Cal
program.
(f) "Enrolled or enrollment in the Medi-Cal program" means
authorized under any and all processes by the department or its
agents or contractors to receive, directly or indirectly,
reimbursement for the provision of services, goods, supplies, or
merchandise to a Medi-Cal beneficiary.
(g) "Professionally recognized standards of health care"
means statewide or national standards of care, whether in writing or
not, that professional peers of the individual or entity whose
provision of care is an issue, recognize as applying to those peers
practicing or providing care within a state. When the United States
Department of Health and Human Services has declared a treatment
modality not to be safe and effective, practitioners that employ that
treatment modality shall be deemed not to meet professionally
recognized standards of health care. This definition shall not be
construed to mean that all other treatments meet professionally
recognized standards of care.
(g)
(h) "Unnecessary or substandard items or services" means
those that are either of the following:
(1) Substantially in excess of the provider's usual charges or
costs for the items or services.
(2) Furnished, or caused to be furnished, to patients, whether or
not covered by Medicare, medicaid, or any of the state health care
programs to which the definitions of applicant and provider apply,
and which are substantially in excess of the patient's needs, or of a
quality that fails to meet professionally recognized standards of
health care. The department's determination that the items or
services furnished were excessive or of unacceptable quality shall be
made on the basis of information, including sanction reports, from
the following sources:
(A) The professional review organization for the area served by
the individual or entity.
(B) State or local licensing or certification authorities.
(C) Fiscal agents or contractors, or private insurance companies.
(D) State or local professional societies.
(E) Any other sources deemed appropriate by the department.
SEC. 14. Section 14043.2 of the Welfare and Institutions Code is
amended to read:
14043.2. (a) Whether or not regulations for certification are
adopted under Section 14043.15, in order to be enrolled as a
provider, or for enrollment as a provider to continue, an applicant
or provider may be required to sign a provider agreement and shall
disclose all information as required in federal medicaid regulations
and any other information required by the department.
Applicants, providers, and persons with an ownership or control
interest, as defined in federal medicaid regulations, shall submit
their social security number or numbers to the department, to the
full extent allowed under federal law. The director may
designate the form of a provider agreement by provider type. Failure
to disclose the required information, or the disclosure of false
information, shall , prior to any hearing, result
in denial of the application for enrollment or shall make the
provider subject to temporary suspension from the Medi-Cal
program , which shall include temporary deactivation of all
provider numbers used by the provider to obtain reimbursement from
the Medi-Cal program.
(b) The director shall notify the provider of the temporary
suspension and deactivation of the provider's Medi-Cal provider
number or numbers and the effective date thereof. Notwithstanding
Section 100171 of the Health and Safety Code and Section 14123,
proceedings after the imposition of sanctions provided for in
subdivision (a) shall be in accordance with Section 14043.65.
SEC. 15. Section 14043.34 is added to the Welfare and Institutions
Code, to read:
14043.34. (a) As a condition of a pharmacy's participation in the
Medi-Cal program, the pharmacy shall have in stock and regularly
dispense prescription drugs.
(b) For purposes of this section, "prescription drugs" means any
drug unsafe for self use by a person, and includes either of the
following:
(1) Any drug that bears the legend: "Rx Only" or "Caution:
federal law prohibits dispensing without prescription" or words of
similar import.
(2) Any other drug that by federal or state law can be lawfully
dispensed by the prescription of a licensed physician and surgeon.
SEC. 16. Section 14043.36 of the Welfare and Institutions Code is
amended to read:
14043.36. (a) The department shall not enroll any applicant that
has been convicted of any felony or misdemeanor involving fraud or
abuse in any government program, or related to neglect or abuse
of a patient in connection with the delivery of a health care item or
service, or in connection with the interference with or obstruction
of any investigation into health care related fraud or abuse or
that has been found guilty of liable for
fraud or abuse in any civil proceeding, or that has entered
into a settlement in lieu of conviction for a
civil or criminal proceeding alleging fraud or abuse in
any government program , within the previous five
10 years. In addition, the department may deny
enrollment to any applicant that, at the time of application, is
under investigation by any state, local, or federal government
agency for fraud or abuse pursuant to Subpart A (commencing
with Section 455.12) of Part 455 of Title 42 of the Code of Federal
Regulations. The Except where there has been
a settlement, the department shall not deny enrollment to an
otherwise qualified applicant whose felony or misdemeanor charges did
not result in a conviction solely on the basis of the prior charges.
If it is discovered that a provider is under investigation by
any state, local, or federal government agency for fraud or
abuse, that provider shall be subject to temporary suspension
from the Medi-Cal program , which shall include temporary
deactivation of all provider numbers used by the provider to obtain
reimbursement from the Medi-Cal program.
(b) The director shall notify the provider of the temporary
suspension and deactivation of the provider's Medi-Cal provider
number or numbers and the effective date thereof. Notwithstanding
Section 100171 of the Health and Safety Code, proceedings after the
imposition of sanctions provided for in subdivision (a) shall be in
accordance with Section 14043.65.
SEC. 17. Section 14043.37 of the Welfare and Institutions Code is
amended to read:
14043.37. The department may complete a background check on
applicants for the purpose of verifying the accuracy of the
information provided in the application to
the department for purposes of enrolling in the Medi-Cal program
and in order to prevent fraud and abuse. The background check
may include, but is not be limited to,
the following:
(a) Onsite inspection prior to enrollment.
(b) Review of business records.
(c) Data searches.
SEC. 18. Section 14043.61 is added to the Welfare and Institutions
Code, to read:
14043.61. (a) A provider shall be subject to suspension if claims
for payment are submitted under any provider number used by the
provider to obtain reimbursement from the Medi-Cal program for the
services, goods, supplies, or merchandise provided, directly or
indirectly, to a Medi-Cal beneficiary, by an individual or entity,
including a billing agent, as defined in Section 14040.1, that has
been previously suspended, excluded, or otherwise made ineligible to
receive, directly or indirectly, reimbursement from the Medi-Cal
program and the individual or entity has previously been listed on
either the Suspended and Ineligible Provider List, published by the
department, to identify suspended and otherwise ineligible providers,
or any list published by the federal Office of Inspector General
regarding the suspension or exclusion of individuals or entities from
the federal Medicare and medicaid programs, to identify suspended,
excluded, or otherwise ineligible providers.
(b) Notwithstanding Section 100171 of the Health and Safety Code,
the imposition of the sanction provided for in subdivision (a) shall
be appealable in accordance with Section 14043.65.
SEC. 19. Section 14043.62 is added to the Welfare and Institutions
Code, to read:
14043.62. (a) The department shall deactivate, immediately and
without prior notice, the provider numbers used by a provider to
obtain reimbursement from the Medi-Cal program when warrants or
documents mailed to a provider's mailing address or its pay to
address, if any, or its service or business address, are returned by
the United States Postal Service as not deliverable or when a
provider has not submitted a claim for reimbursement from the
Medi-Cal program for one year. Prior to taking this action the
department shall attempt to contact the provider at its last known
telephone number and ascertain if the return by the United States
Postal Service is by mistake. If deactivation pursuant to this
section occurs, the provider shall meet the requirements for
reapplication as specified in this article or the regulations adopted
thereunder.
(b) For purposes of this section:
(1) "Mailing address" means the address that the provider has
identified to the department in its application for enrollment as the
address at which it wishes to receive general program
correspondence.
(2) "Pay to address" means the address that the provider has
identified to the department in its application for enrollment as the
address at which it wishes to receive warrants.
(3) "Service or business address" means the address that the
provider has identified to the department in its application for
enrollment as the address at which the provider will provide services
to program beneficiaries.
SEC. 20. Section 14043.65 of the Welfare and Institutions Code is
amended to read:
14043.65. (a) Notwithstanding any other provision of
law, any applicant whose application for enrollment as a provider or
whose certification is denied, denied;
or any provider who is denied continued enrollment or certification,
who has been temporarily suspended, or who has had
payments withheld, who has had one or more provider numbers used to
obtain reimbursement from the Medi-Cal program deactivated ,
pursuant to this article or Section 14107.11,
or who has had a civil penalty imposed pursuant to Section
14123.25; or any billing agent, as defined in Section 14040, when the
billing agent's registration or continued registration has been
denied, suspended, or revoked, pursuant to subdivision (c) of Section
14040.5, may appeal this action by submitting a written
appeal, including any supporting evidence, to the director or
the director's designee . Where the appeal is of a withholding
of payment pursuant to Section 14107.11, the appeal to the director
or the director's designee shall be limited to the issue
of the reliability of the information or evidence
supporting the withhold and shall not encompass fraud or abuse. The
appeal procedure shall not include a formal administrative hearing
under the Administrative Procedure Act and shall not result in
reactivation of any deactivated provider numbers during appeal. An
applicant or provider that appeals an action taken
files an appeal pursuant to this article
section shall submit the written appeal
along with all pertinent documents and all other relevant
evidence to the director or to the director's designee within 60 days
of the date of notification of the department's action. The
director or the director's designee shall review all of the relevant
materials submitted and shall issue a decision within 90 days of the
receipt of the evidence appeal . The
decision may provide that the action taken should be upheld,
continued, or reversed, in whole or in part. The decision of the
director or the director's designee shall be final. Any further
appeal shall be required to be filed in accordance with Section 1085
of the Civil Code of Civil Procedure .
(b) No applicant whose application for enrollment, as a provider,
has been denied pursuant to Section 14043.2, 14043.36, or 14043.4 may
reapply for a period of three years from the date the application is
denied or from the date of final action by the director or the
director's designee under this section if the denial is appealed.
SEC. 21. Section 14043.7 of the Welfare and Institutions Code is
amended to read:
14043.7. (a) The department may make unannounced visits to any
applicant or to any provider for the purpose of determining whether
enrollment, continued enrollment, or certification is warranted, or
as necessary for the administration of the Medi-Cal program. At the
time of the visit, the applicant or provider shall be required to
demonstrate an established place of business appropriate and adequate
for the services billed or claimed to the Medi-Cal program, as
relevant to his or her scope of practice, as indicated by, but not
limited to, the following:
(1) Being open and available to the general public.
(2) Having regularly established and posted business hours.
(3) Having adequate supplies in stock on the premises.
(4) Meeting all local laws and ordinances regarding business
licensing and operations.
(5) Having the necessary equipment and facilities to carry out
day-to-day business for his or her practice.
(b) An unannounced visit pursuant to subdivision (a) shall be
prohibited with respect to clinics licensed under Section 1204 of the
Health and Safety Code, clinics exempt from licensure under Section
1206 of the Health and Safety Code, health facilities licensed under
Chapter 2 (commencing with Section 1250) of Division 2 of the Health
and Safety Code, and natural persons licensed or certified under
Division 2 (commencing with Section 500) of the Business and
Professions Code, the Osteopathic Initiative Act, or the Chiropractic
Initiative Act, unless the department has reason to believe that the
provider will defraud or abuse the Medi-Cal program or lacks the
organizational or administrative capacity to provide services under
the program.
(c) Failure to remediate discrepancies in information
provided to the department or discrepancies that are discovered
as a result of an announced or unannounced visit to a
provider shall , prior to hearing, make the
provider subject to temporary suspension from the Medi-Cal
program , which shall include temporary deactivation of all
provider numbers used by the provider to obtain reimbursement from
the Medi-Cal program. The director shall notify the provider of the
temporary suspension and deactivation of provider numbers, and the
effective date thereof. Notwithstanding Section 100171 of the Health
and Safety Code, proceedings after the imposition of sanctions in
this paragraph shall be in accordance with Section 14043.65.
SEC. 22. Section 14043.75 of the Welfare and Institutions Code is
amended to read:
14043.75. The director may, by regulation, adopt , readopt,
repeal, or amend additional measures to prevent or curtail
fraud and abuse. Regulations adopted, readopted, repealed, or
amended pursuant to this section shall be deemed emergency
regulations in accordance with the Administrative Procedure Act
(Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3
of Title 2 of the Government Code). These emergency regulations
shall be deemed necessary for the immediate preservation of the
public peace, health and safety, or general welfare. Emergency
regulations adopted, amended, or repealed pursuant to this section
shall be exempt from review by the Office of Administrative Law. The
emergency regulations authorized by this section shall be submitted
to the Office of Administrative Law for filing with the Secretary of
State and publication in the California Code of Regulations.
SEC. 23. Section 14100.75 of the Welfare and Institutions Code is
amended to read:
14100.75. (a) (1) Any Each provider
of goods or services and each applicant, as
defined in Section 14043.1, when applying for enrollment and
continued enrollment, shall provide, to the department, a bond,
or other security satisfactory to the department, of an amount
determined by the department, pursuant to regulations adopted by the
department.
(2) The department, in determining the amount of bond or security
required by paragraph (1), shall base the determination on the level
of estimated billings, and shall not be less than twenty-five
thousand dollars ($25,000).
(b) (1) After three years of continuous operation as a provider, a
Medi-Cal provider may apply to the department for an exemption from
the requirements of subdivision (a).
(2) The department shall adopt regulations establishing conditions
for the approval or denial of applications for exemption pursuant to
paragraph (1).
(c) The department shall establish a mechanism to track rates of
participation among providers who are subject to the requirement of
subdivision (a) to determine if the requirement is a deterrent to
Medi-Cal program participation among provider applicants.
(d) Subdivisions (a) and (b) do not apply to individuals
who are natural persons licensed or
certified pursuant to Division 2 (commencing with Section 500)
of the Business and Professions Code, the Osteopathic Initiative
Act, or the Chiropractic Initiative Act, or to any clinic
licensed pursuant to subdivision (a) of Section 1204 of the Health
and Safety Code, to any health facility licensed pursuant to
under Chapter 2 (commencing with Section
1250 1250) of Division 2 of the Health
and Safety Code, or to any provider that is operated by a city,
county, school district, county office of education, or state special
school.
(e) Nothing in this section shall relieve an applicant or provider
of durable medical equipment or home health agency services from
complying with subdivisions (a) and (b) of Sections 14100.8 and
14100.9, as applicable.
SEC. 24. Section 14107 of the Welfare and Institutions Code is
amended to read:
14107. (a) (1) Any person who ,
with intent to defraud, presents for allowance or payment
any false or fraudulent claim for furnishing services or merchandise,
knowingly submits false information for the purpose of obtaining
greater compensation than that to which he is legally entitled for
furnishing services or merchandise, or knowingly submits false
information for the purpose of obtaining authorization for furnishing
services or merchandise under this chapter or Chapter 8 (commencing
with Section 14200) including any applicant or
provider as defined in Section 14043.1, or billing agent, as defined
in Section 14040.1, who engages in any of the activities identified
in subdivision (b) is punishable by imprisonment in
the county jail not longer than one year or in the
state prison 10 years , or by fine not
exceeding five thousand dollars ($5,000)
three times the amount of the fraud or improper reimbursement ,
or by both such this fine and
imprisonment.
The
(2) If the activity results in serious bodily injury to any
person, or bodily injury to a person under 18 years of age, or is a
threat to the public health, the person shall be fined in accordance
with paragraph (1) or imprisoned in the state prison for not more
than 20 years, or both. If the activity results in death, the person
shall be fined in accordance with paragraph (1), or imprisoned in
the state prison for any term of years or for life, or both.
(3) The length of imprisonment under this section shall be
determined based on the sentencing guidelines used by the federal
government for false or fraudulent claims.
(b) (1) A person, with intent to defraud, presents for allowance
or payment any false or fraudulent claim for furnishing services or
merchandise under this chapter or Chapter 8 (commencing with Section
14200).
(2) A person knowingly submits false information for the purpose
of obtaining greater compensation than that to which he or she is
legally entitled for furnishing services or merchandise under this
chapter or Chapter 8 (commencing with Section 14200).
(3) A person knowingly submits false information for the purpose
of obtaining authorization for furnishing services or merchandise
under this chapter or Chapter 8 (commencing with Section 14200).
(4) A person knowingly and willfully executes, or attempts to
execute, a scheme or artifice to do either of the following:
(A) Defraud the Medi-Cal program or any other health care program
administered by the department or its agents or contractors.
(B) Obtain, by means of false or fraudulent pretenses,
representations, or promises, any of the money or property owned by,
or under the custody or control of, the Medi-Cal program or any other
health care program administered by the department or its agents or
contractors, in connection with the delivery of or payment for health
care benefits, services, goods, supplies, or merchandise.
(c) For purposes of this section, the following definitions apply:
(1) "Serious bodily injury" means bodily injury that involves any
of the following:
(A) A substantial risk of death.
(B) Extreme physical pain.
(C) Protracted and obvious disfigurement.
(D) Protracted loss or impairment of the function of a bodily
member, organ, or mental faculty.
(2) "Bodily injury" means any of the following:
(A) A cut, abrasion, bruise, burn, or disfigurement.
(B) Physical pain.
(C) Illness.
(D) Impairment of the function of a bodily member, organ, or
mental faculty, no matter how temporary.
(E) Any other injury to the body, no matter how temporary.
(d) (1) Any of the following property of a person, including any
applicant or provider as defined in Section 14043.1, who has engaged
in any of the activities subject to fine or imprisonment under
subdivision (a), shall be subject to the forfeiture provisions of
subdivision (e):
(A) Any property, real or personal, involved in a transaction or
attempted transaction in violation of this chapter or Chapter 8
(commencing with Section 14200), or any health care program
administered by the department, its agents or contractors, or any
property traceable to that property.
(B) Any property, real or personal, that constitutes, is derived
from, or is traceable to, any proceeds obtained directly or
indirectly, from a violation of this chapter or Chapter 8 (commencing
with Section 14200), or any health care program administered by the
department or its agents or contractors.
(2) Property subject to forfeiture under this section includes,
but is not limited to, real property, including things growing on,
affixed to, and found in land, and personal property, including
tangible and intangible personal property, including rights,
privileges, interests, claims, and securities.
(e) All right, title, and interest in the property described in
subdivision (d), shall vest in the state upon the commission of the
act giving rise to forfeiture under this section. Any such property
that is subsequently transferred to another person shall be subject
to forfeiture, unless the transferee establishes in a hearing that he
or she is a bona fide purchaser for value of the property, who at
the time of purchase was reasonably without cause to believe that the
property was subject to forfeiture under this section.
(f) Upon application of the state, the court may enter a
restraining order or injunction, require the execution of a
satisfactory performance bond, or take any other action to preserve
the availability of property described in subdivision (d) for
forfeiture under this section. Upon the filing of information
charging a violation of this chapter or Chapter 8 (commencing with
Section 14200), or any health care program administered by the
department or its agents or contractors and alleging that the
property with respect to which the order is sought would, in the
event of a conviction, be subject to forfeiture under this section.
Prior to the filing of this information, if, after notice to persons
appearing to have an interest in the property and opportunity for a
hearing, the court determines that there is substantial probability
that the state will prevail on the issue of forfeiture and that
failure to enter the order will result in the property being
destroyed, removed from the jurisdiction of the court, or otherwise
made unavailable for forfeiture, and the need to preserve the
availability of the property through the entry of the requested order
outweighs the hardship on any party against whom the order is to be
entered.
(g) A temporary restraining order under this section may be
entered upon application of the state without notice or opportunity
for a hearing when information has not yet been filed with respect to
the property, if the state demonstrates that there is probable cause
to believe that the property with respect to which the order is
sought would, in the event of conviction or if the person enters into
a settlement in a civil or criminal proceeding, be subject to
forfeiture under this section and that provision of notice will
jeopardize the availability of the property for forfeiture. The
temporary order shall expire not more than 10 days after the date on
which it is entered, unless extended for good cause shown or unless
the party against whom it is entered consents to an extension for a
longer period. A hearing requested concerning an order entered under
this subdivision shall be held at the earliest possible time, and
prior to the expiration of the temporary order. The court may
receive and consider, at a hearing held pursuant to this subdivision,
information and evidence that would be inadmissible under the
Evidence Code.
(h) Upon conviction of a person for engaging in the activities
subject to fine or imprisonment under subdivision (a), or if the
person has entered into a settlement in a civil or criminal
proceeding alleging fraud or abuse in the Medi-Cal program or in any
other health care program administered by the department or its
agents or contractors, the court shall enter a judgment of forfeiture
of the property to the state and shall authorize the Attorney
General to seize all property ordered forfeited upon such terms and
conditions as the court shall deem proper. Following the entry of an
order declaring the property forfeited, the court may, upon
application of the state, enter appropriate restraining orders or
injunctions, require the execution of satisfactory performance bonds,
appoint receivers, conservators, appraisers, accountants, or
trustees, or take any other action to protect the interest of the
state in the property ordered forfeited. Any income accruing to, or
derived from, an enterprise or an interest in an enterprise that has
been ordered forfeited under this section may be used to offset
ordinary and necessary expenses to the enterprise, as required by
law, or as necessary to protect the interests of the state or third
parties.
(i) Following the seizure of property ordered forfeited under this
section, the Attorney General shall direct the disposition of the
property by sale or any other commercially feasible means, making due
provision for the rights of any innocent person. Any property right
or interest not exercisable by, or transferable for value to, the
state, shall expire and shall not revert to the provider, nor shall
the provider or any person acting in concert with or on behalf of the
provider be eligible to purchase forfeited property at any sale held
by the state. Upon application of a person, other than the provider
or a person acting in concert with or on behalf of the provider, the
court, may restrain or stay the sale or disposition of the property
pending the conclusion of any appeal of the case giving rise to the
forfeiture, if the applicant demonstrates that proceeding with the
sale or disposition of the property will result in irreparable
injury, harm, or loss to him or her.
(j) If the Attorney General convenes a state grand jury related to
health care fraud or abuse, the grand jury may investigate and
indict for any of the activities subject to fine, imprisonment, or
asset forfeiture under this section on a statewide basis.
(k) The enforcement remedies provided under this section are
not exclusive and shall not preclude the use of any other criminal
or civil remedy.
SEC. 25. Section 14107.11 of the Welfare and Institutions Code is
amended to read:
14107.11. (a) Upon receipt of reliable information or
evidence , including evidence that would be inadmissible under
the Evidence Code, of fraud or willful misrepresentation by a
provider as defined in Section 14043.1, under the Medi-Cal
program or the commencement of a suspension under Section 14123
, the department may do any of the following :
(1) Collect any Medi-Cal program overpayment identified through an
audit or examination, or any portion thereof from any provider.
Notwithstanding Section 100171 of the Health and Safety Code, a
provider may appeal the collection of overpayments under this section
pursuant to procedures established in Article 5.3 (commencing with
Section 14170). Overpayments collected under this section shall not
be returned to the provider during the pendency of any appeal and may
be offset to satisfy audit or appeal findings if the findings are
against the provider. Overpayments will be returned to a provider
with interest if findings are in favor of the provider.
(2) Withhold payment for any goods or ,
services, supplies, or merchandise, or any portion
thereof , from any Medi-Cal program provider .
The department shall notify the provider within five days of any
withholding of payment under this section. The notice shall do all
of the following:
(A) State that payments are being withheld in accordance with this
subdivision and that the withholding is for a temporary period and
will not continue after it is determined that there is insufficient
evidence of fraud or willful misrepresentation or when legal
proceedings relating to the alleged fraud or willful
misrepresentation are complete.
(B) Cite the circumstances under which the withholding of the
payments will be terminated.
(C) Specify, when appropriate, the type or types of
claimed payments claims for which payment is
being withheld.
(D) Inform the provider of the right to submit written
information or evidence , including evidence that would be
inadmissible under the Evidence Code, for consideration by the
department.
(3) Notwithstanding Section 100171 of the Health and Safety Code,
a provider may appeal a withholding of payment pursuant to Section
14043.65. Payments withheld under this section shall not be returned
to the provider during the pendency of any appeal and may be offset
to satisfy audit or appeal findings.
(b) The director may adopt regulations to implement this section
as necessary. These regulations may be adopted as emergency
regulations in accordance with the Administrative Procedure Act
(Chapter 3.5 (commencing with Section 11340) Part 1 of Division 3 of
Title 2 of the Government Code) and the adoption of the regulations
shall be deemed to be an emergency and necessary for the immediate
preservation of the public peace, health and safety, or general
welfare. The director shall transmit these emergency regulations
directly to the Secretary of State for filing and the regulations
shall become effective immediately upon filing. Upon completion of
the formal regulation adoption process and prior to the expiration of
the 120-day duration period of emergency regulations, the director
shall transmit directly to the Secretary of State the adopted
regulations, the rulemaking file, and the certification of compliance
as required by subdivision (e) of Section 11346.1 of the Government
Code.
(c) For purposes of this section, "provider" means any individual,
partnership, group, association, corporation, institution, or
entity, and the officers, directors, employees, or agents thereof,
that provide services, goods, supplies, or merchandise, directly or
indirectly, to a Medi-Cal beneficiary, and that has been enrolled in
the Medi-Cal program.
SEC. 26. Section 14115.5 of the Welfare and Institutions Code is
amended to read:
14115.5. (a) Moneys payable or rights existing under
this chapter shall be subject to any claim, lien or offset of the
State of California, and any claim of the United States of America
made pursuant to federal statute, but shall not otherwise be subject
to enforcement of a money judgment or other legal process, and no
transfer or assignment, at law or in equity, of any right of a
provider of health care to any payment shall be enforceable against
the state, a fiscal intermediary or carrier.
(b) If a provider, as defined in Section 14043.1, is under any
investigation for fraud or abuse by any state, local, or federal
government agency, the director may withhold the reimbursement of
funds due and payable to that provider from the Medi-Cal program or
any other health care program administered by the department or its
agents or contractors, as assets pending the outcome of the
investigation of fraud or abuse. The withholding of payments
authorized by this subdivision shall not be subject to Section
14107.11 and, notwithstanding Section 100171 of the Health and Safety
Code or any other provision of law, shall not be subject to appeal
or hearing.
SEC. 27. Section 14123.25 is added to the Welfare and Institutions
Code, to read:
14123.25. (a) In lieu of, or in addition to, the imposition of
any other sanction available to it, including the sanctions and
penalties authorized under Section 14123.2 or 14171.6, and as the
"single state agency" for California vested with authority to
administer the Medi-Cal program, the department shall exercise the
authority granted to it in Section 1002.2 of Title 42 of the Code of
Federal Regulations, and may also impose the mandatory and permissive
exclusions identified in Section 1128 of the federal Social Security
Act (42 U.S.C. Sec. 1320a-7), and its implementing regulations, and
impose civil penalties identified in Section 1128A of the federal
Social Security Act (42 U.S.C. Sec. 1320a-7a), and its implementing
regulations, against applicants and providers, as defined in Section
14043.1 or against billing agents, as defined in Section 14040.1.
The department may also terminate, or refuse to enter into, a
provider agreement authorized under Section 14043.2 with an applicant
or provider, as defined in Section 14043.1, upon the grounds
specified in Section 1866(b)(2) of the federal Social Security Act
(42 U.S.C. Sec. 1395cc(b)(2). Notwithstanding Section 100171 of the
Health and Safety Code or any other provision of law, any appeal by
an applicant, provider, or billing agent of the imposition of a civil
penalty, exclusion, or other sanction pursuant to this subdivision
shall be in accordance with Section 14043.65, except that where the
action is based upon conviction for any crime involving fraud or
abuse of the Medi-Cal, medicaid, or Medicare programs, or exclusion
by the federal government from the medicaid or Medicare programs the
action shall be automatic and not subject to appeal or hearing.
(b) In addition, the department may impose the intermediate
sanctions identified in Section 1846 of the Social Security Act (42
U.S.C. Sec. 1395w-2), and its implementing regulations, against any
provider that is a clinical laboratory, as defined in Section 1206 of
the Business and Professions Code. The imposition and appeal of
this intermediate sanction shall be in accordance with Article 8
(commencing with Section 1065) of Chapter 2 of Division 1 of Title 17
of the California Code of Regulations.
SEC. 28. Section 14124.1 of the Welfare and Institutions Code is
amended to read:
14124.1. Each provider , as defined in Section 14043.1,
of health care services rendered to any beneficiary
under this chapter under the Medi-Cal program or any
other health care program administered by the department or its
agents or contractors, shall keep and maintain records of each
such service rendered, the beneficiary or person to whom
rendered, the date the service was rendered , and such
additional information as the department may by regulation require.
Records herein required to be kept and maintained shall be retained
by the provider for a period of three years from the date the service
was rendered.
SEC. 29. Section 14124.2 of the Welfare and Institutions Code is
amended to read:
14124.2. (a) (1) During normal working hours, the
department may make any examination of the books and records of
any provider pertaining to services rendered to any
beneficiary under this chapter or Chapter 8 (commencing with Section
14200) of this part , and may visit and inspect the
premises or facilities of any provider , those
identified in paragraphs (2) and (3), that it may deem
necessary to carry out the provisions of this chapter or Chapter
8 (commencing with Section 14200) and regulations adopted
thereunder . A provider shall furnish this ,
or the law under which the department or its agents or contractors
administer any other health care program.
(2) Any applicant or provider, as defined in Section 14043.1,
pertaining to services, goods, supplies, or merchandise rendered or
supplied, directly or indirectly, or to be rendered or supplied,
directly or indirectly, to any beneficiary under this chapter or
Chapter 8 (commencing with Section 14200).
(3) Any person or entity that provides services, goods, supplies,
or merchandise, directly or indirectly, under, or seeks reimbursement
from, any other health care program administered by the department
or its agents or contractors.
(b) (1) Applicants, providers, or others receiving or seeking
reimbursement under the Medi-Cal program or other health care
programs administered by the department or its agents or contractors
shall provide a reasonable amount of assistance, and furnish
information or copies of the records and
documentation upon request by the
department. Unannounced visits to request this information
shall be reserved for those exceptional situations where arrangement
of an appointment beforehand is clearly not possible or is clearly
inappropriate to the nature of the intended visit. Only those
related books and records of each service rendered, the beneficiary
to whom rendered, the date, and additional information as the
department may by regulation require shall be subject to the
requirement of furnishing copies. This information may include
records to support and document the recipient's eligibility for
services and, to the extent necessary, records to provide proof of
the quantity and receipt of the services, and that the services were
provided by proper personnel. Providers and others subject to
this section shall be reimbursed for reasonable
photocopying-related expenses as determined by the department.
Failure to comply with the request department'
s authority under this section shall be grounds for immediate
suspension of the provider or others subject to this section
under subdivision (b) of Section 14123 or under the other
health care programs administered by the department or its agents or
contractors .
(b)
(2) Any copies furnished pursuant to this section shall be
used only to investigate and pursue criminal , civil, or
administrative sanctions for Medi-Cal fraud and
or abuse or , including the
provision of dental services that are below or less than the standard
of acceptable quality as prescribed by subdivision (f) of Section
14123, or fraud or abuse under any other health care program
administered by the department or its agents or contractors and
the copies shall be destroyed when that purpose has been satisfied.
This section shall not be construed to prohibit the referral of
investigative findings, including copies of books and records, to the
appropriate federal, state , or local
licensing, certifying, or regulatory , or
prosecutorial authority.
(c) For purposes of this section and Section 14124.1 ,
"provider" shall, in addition to the provider of health care services
, "provider" shall be defined as follows:
(1) "Provider" shall have the meaning contained in Section
14043.1.
(2) "Provider" shall also include any person or entity under
contract with the provider of health care services
, as defined in paragraph (1), to assist in the
application process or eligibility determination.
SEC. 30. Section 14170 of the Welfare and Institutions Code is
amended to read:
14170. (a) (1) Amounts paid for services provided to Medi-Cal
beneficiaries shall be audited by the department in the manner and
form prescribed by the department. The department shall maintain
adequate controls to ensure responsibility and accountability for the
expenditure of federal and state funds. Cost reports and other data
submitted by providers to a state agency for the purpose of
determining reasonable costs for services or establishing rates of
payment shall be considered true and correct unless audited or
reviewed by the department within 18 months after July 1, 1969, the
close of the period covered by the report, or after the date of
submission of the original or amended report by the provider,
whichever is later. Moreover the cost reports and other data for
cost reporting periods beginning on January 1, 1972, and thereafter
shall be considered true and correct unless audited or reviewed
within three years after the close of the period covered by the
report, or after the date of submission of the original or amended
report by the provider, whichever is later.
(2) (A) Nothing in this section shall be construed to
limit the correction of cost reports or rates of payment when
inaccuracies are determined to be the result of intent to defraud, or
when a delay in the completion of an audit is the result of willful
acts by the provider or inability to reach agreement on the terms of
final settlement.
(B) Nothing in this section shall be construed to preclude the
department from further review of cost reports and other data for
cost reporting periods beginning on January 1, 1972, after the
three-year period contained in paragraph (1) of subdivision (a),
where after that time information not customarily contained in these
cost reports and other data for the fiscal periods in question
indicates the provider may have engaged in practices that have
resulted in overreimbursement.
(3) Notwithstanding any other provision of law, nursing facilities
and all categories of intermediate care facilities for the
developmentally disabled which have received and are receiving funds
for salary increases pursuant to Sections 14110.6 and 14110.7 shall
maintain payroll and personnel records for examination by auditors
from the department and the Labor Commissioner beginning March 1985
until the records have been audited, or until December 31, 1992,
whichever occurs first.
(b) Notwithstanding any other provision of law, costs reported for
reimbursement purposes relative to Medi-Cal beneficiaries in nursing
facilities that are distinct parts of acute care hospitals shall be
audited by the department at least annually. The audits may be
performed on a sample basis and, when the sample is statistically
reliable, as determined by the department, may be used for
ratesetting purposes.
SEC. 31. Section 14170.8 of the Welfare and Institutions Code is
amended to read:
14170.8. (a) Notwithstanding any other provision of law, every
primary supplier of pharmaceuticals or ,
medical equipment and , or
supplies shall maintain accounting records to demonstrate the
manufacture, assembly, purchase, or acquisition and subsequent sale,
of any pharmaceuticals, or medical equipment and
, or supplies to Medi-Cal providers
, as defined in Section 14043.1 . Accounting records
shall include, but not be limited to, inventory records, general
ledgers, financial statements, purchase and sales journals and
invoices, prescription records, bills of lading, and delivery
records. For purposes of this section the term "primary suppliers"
shall mean any manufacturer, principal labeler, assembler,
wholesaler, and any other primary supplier
or retailer .
(b) Accounting records maintained pursuant to subdivision (a)
shall be subject to audit or examination by the department or
the Controller during regular business hours
its agents . This audit or examination may include, but
is not limited to, verification of the costs claimed by providers.
These accounting records shall be maintained for three years
from the date of sale or the date of service.
(c) This section shall not apply to any clinic licensed pursuant
to subdivision (a) of Section 1204 of the Health and Safety Code or
to any manufacturer of prescription drugs registered with the federal
Food and Drug Administration in accordance with Section 510 of the
Food, Drug, and Cosmetic Act (21 U.S.C. Sec. 360).
SEC. 32. Section 14171.6 of the Welfare and Institutions Code is
amended to read:
14171.6. (a) (1) Any provider, as defined in paragraph (3), that
obtains reimbursement under this chapter to which it is not entitled
shall be subject to interest charges or penalties as specified in
this section.
(2) When it is established upon audit that the provider has not
received reimbursement to which it the
provider is entitled, the department shall pay the provider
interest assessed at the rate, and in the manner, specified in
subdivision (h) (g) of Section 14171.
(3) For purposes of this section, "provider" means any provider
of services , as defined in subdivision
(a) of Section 51051 of Title 22 of the California Code of
Regulations Section 14043.1 .
(b) When it is established upon audit that the provider has
claimed payments under this chapter to which it is not entitled, the
provider shall pay, in addition to the amount improperly received,
interest at the rate specified by subdivision (h) of Section 14171.
(c) (1) When it is established upon audit that the provider
claimed payments related to services or costs that the department had
previously notified the provider in an audit report that the costs
or services were not reimbursable, the provider shall pay, in
addition to the amount improperly claimed, a penalty of 10 percent of
the amount improperly claimed after receipt of the notice, plus the
cost of the audit.
(2) In addition to the penalty and costs specified by paragraph
(1), interest shall be assessed at the rate specified in subdivision
(h) of Section 14171.
(3) Providers that wish to preserve appeal rights or to challenge
the department's positions regarding appeal issues may claim the
costs or services and not be reimbursed therefor if they are
identified and presented separately on the cost report.
(d) (1) When it is adjudicated established
that the provider fraudulently claimed and received payments
under this chapter, the provider shall pay, in addition to that
portion of the claim that was improperly claimed, a penalty of 300
percent of the amount improperly claimed, plus the cost of the audit.
(2) In addition to the penalty and costs specified by paragraph
(1), interest shall be assessed at the rate specified by subdivision
(h) of Section 14171.
(3) For purposes of this subdivision, a fraudulent claim is a
claim upon which the provider has been convicted of fraud upon the
Medi-Cal program.
(e) Nothing in this section shall prevent the imposition of any
other civil or criminal penalties to which the provider may be
liable.
(f) Any appeal to any action taken pursuant to subdivision (b),
(c), or (d) is subject to the administrative appeals process provided
by Section 14171.
(g) As used in this section, "cost of the audit" includes actual
hourly wages, travel, and incidental expenses at rates allowable by
rules adopted by the State Board of Control and applicable overhead
costs that are incurred by employees of the state in administering
this chapter with respect to the performance of audits.
(h) This section shall not apply to any clinic licensed pursuant
to subdivision (a) of Section 1204 of the Health and Safety Code
, clinics exempt from licensure under Section 1206 of the Health and
Safety Code, health facilities licensed under Chapter 2 (commencing
with Section 1250) of Division 2 of the Health and Safety Code, or to
any provider that is operated by a city, county, or school district
.
SEC. 33. Section 24005 of the Welfare and Institutions Code is
amended to read:
24005. (a) This section shall apply to the Family Planning
Access Care and Treatment Waiver program identified in subdivision
(aa) of Section 14132 and this program.
(b) Only licensed medical personnel with family planning
skills, knowledge, and competency may provide the full range of
family planning medical services covered in this program.
(b) The following requirements shall apply to the Family Planning
Access Care and Treatment Waiver program identified in subdivision
(aa) of Section 14132 and this program:
(1)
(c) Medi-Cal enrolled providers, as determined by the
department, shall be eligible to provide family planning services
under the program when these services are within their scope of
practice and licensure. Those clinical providers electing to
participate in the program and approved by the department shall
provide the full scope of family planning education, counseling, and
medical services specified for the program, either directly or by
referral, consistent with standards of care issued by the department.
(2)
(d) The department shall require providers to enter into
clinical agreements with the department to ensure compliance with
standards and requirements to maintain the fiscal integrity of the
program. Provider applicants, providers, and persons with an
ownership or control interest, as defined in federal medicaid
regulations, shall be required to submit to the department their
social security numbers to the full extent allowed under federal law.
All state and federal statutes and regulations pertaining to
the audit or examination of Medi-Cal providers shall apply to this
program.
(3)
(e) Clinical provider agreements shall be signed by the
provider under penalty of perjury. The department may screen
applicants at the initial application and at any reapplication
pursuant to requirements developed by the department to determine
provider suitability for the program.
(c)
(f) The department may complete a background check on
clinical provider applicants for the purpose of verifying the
accuracy of information provided in the application
to the department for purposes of enrolling in the
program and in order to prevent fraud and abuse. The
background check may include, but not be limited to, unannounced
onsite inspection prior to enrollment, review of business records,
and data searches. If discrepancies are found to exist during the
preenrollment period, the department may conduct additional
inspections prior to enrollment. Failure to remediate discrepancies
as prescribed by the director may result in denial of the application
for enrollment. Providers that do not provide services consistent
with the standards of care or that do not comply with the department'
s rules related to the fiscal integrity of the program may be
disenrolled as a provider from the program at the sole discretion of
the department.
(d)
(g) The department shall not enroll any applicant
that has who, within the previous 10 years:
(1) Has been convicted of any felony or misdemeanor
involving that involves fraud or abuse in any
government program, that has relates to
neglect or abuse of a patient in connection with the delivery of a
health care item or service, or that is in connection with the
interference with, or obstruction of, any investigation into health
care related fraud or abuse.
(2) Has been found guilty of liable
for fraud or abuse in any civil proceeding, or that has entered
into a settlement in lieu of conviction for
a civil or criminal proceeding alleging fraud or abuse
, within the previous five years. In in any
government program.
(h) In addition, the department may deny enrollment to any
applicant that, at the time of application, is under investigation
by any local, state, or federal government agency for fraud or
abuse . The Except where there has
been a settlement, the department shall not deny enrollment to
an otherwise qualified applicant whose felony or misdemeanor charges
did not result in a conviction solely on the basis of the prior
charges. If it is discovered that a provider is under investigation
by any local, state, or federal government agency for
fraud or abuse, that provider shall be subject to immediate
disenrollment from the program.
(e)
(i) (1) The program shall disenroll as a program provider
any individual who, or any entity that, has a license, certificate,
or other approval to provide health care, which is revoked or
suspended by a federal, California, or other state's licensing,
certification, or other approval authority, has otherwise lost that
license, certificate, or approval, or has surrendered that license,
certificate, or approval while a disciplinary hearing on the license,
certificate, or approval was pending. The disenrollment shall be
effective on the date the license, certificate, or approval is
revoked, lost, or surrendered.
(f)
(2) A provider shall be subject to disenrollment if claims for
payment are submitted under any provider number used by the provider
to obtain reimbursement from the program for the services, goods,
supplies, or merchandise provided, directly or indirectly, to a
program beneficiary, by an individual or entity that has been
previously suspended, excluded, or otherwise made ineligible to
receive, directly or indirectly, reimbursement from the program or
from the Medi-Cal program and the individual has previously been
listed on either The Suspended and Ineligible Provider List, which is
published by the department, to identify suspended and otherwise
ineligible providers or any list published by the federal Office of
Inspector General regarding the suspension or exclusion of
individuals or entities from the federal Medicare and medicaid
programs, to identify suspended, excluded, or otherwise ineligible
providers.
(3) The department shall deactivate, immediately and without prior
notice, the provider numbers used by a provider to obtain
reimbursement from the program when warrants or documents mailed to a
provider's mailing address, its pay to address, or its service
address, if any, are returned by the United States Postal Service as
not deliverable or when a provider has not submitted a claim for
reimbursement from the program for one year. If deactivation
pursuant to this section occurs, the provider shall meet the
requirements for reapplication as specified in regulation.
(4) For purposes of this subdivision:
(A) "Mailing address" means the address that the provider has
identified to the department in its application for enrollment as the
address at which it wishes to receive general program
correspondence.
(B) "Pay to address" means the address that the provider has
identified to the department in its application for enrollment as the
address at which it wishes to receive warrants.
(C) "Service address" means the address that the provider has
identified to the department in its application for enrollment as the
address at which the provider will provide services to program
beneficiaries.
(j) Subject to Article 4 (commencing with Section 19130) of
Chapter 5 of Division 5 of Title 2 of the Government Code, the
department may enter into contracts to secure consultant services or
information technology including, but not limited to, software, data,
or analytical techniques or methodologies for the purpose of fraud
or abuse detection and prevention. Contracts under this section
shall be exempt from the Public Contract Code.
(g)
(k) Enrolled providers shall attend specific orientation
approved by the department in comprehensive family planning services.
Enrolled providers who insert IUDs or contraceptive implants shall
have received prior clinical training specific to these procedures.
(h)
(l) Upon receipt of reliable information or
evidence , including evidence that would be inadmissible under
the Evidence Code, of fraud or willful misrepresentation by a
provider under the program or commencement of a suspension under
Section 14123 , the department may do any of the following
:
(1) Collect any State-Only Family Planning program or Family
Planning Access Care and Treatment Waiver program overpayment
identified through an audit or examination, or any portion thereof
from any provider. Notwithstanding Section 100171 of the Health and
Safety Code, a provider may appeal the collection of overpayments
under this section pursuant to procedures established in Article 5.3
(commencing with Section 14170) of Part 3 of Division 9.
Overpayments collected under this section shall not be returned to
the provider during the pendency of any appeal and may be offset to
satisfy audit or appeal findings, if the findings are against the
provider. Overpayments shall be returned to a provider with interest
if findings are in favor of the provider.
(2) Withhold payment for any goods or services, or any portion
thereof, from any State-Only Family Planning program or Family
Planning Access Care and Treatment Waiver program provider. The
department shall notify the provider within five days of any
withholding of payment under this section. The notice shall do all
of the following:
(A) State that payments are being withheld in accordance with this
paragraph and that the withholding is for a temporary period and
will not continue after it is determined that there is insufficient
information or evidence , including evidence that
would be inadmissible under the Evidence Code, of fraud or
willful misrepresentation or when legal proceedings relating to the
alleged fraud or willful misrepresentation are completed.
(B) Cite the circumstances under which the withholding of the
payments will be terminated.
(C) Specify, when appropriate, the type or types of claimed
payments being withheld.
(D) Inform the provider of the right to submit written
information or evidence , including evidence that would be
inadmissible under the Evidence Code, for consideration by the
department.
(3) Notwithstanding Section 100171 of the Health and Safety Code,
a provider may appeal a withholding of payment under this section
pursuant to Section 14043.65. Payments withheld under this section
shall not be returned to the provider during the pendency of any
appeal and may be offset to satisfy audit or appeal findings.
(i)
(m) As used in this section:
(1) "Abuse" means either of the following:
(A) Practices that are inconsistent with sound fiscal or business
practices and result in unnecessary cost to the medicaid
program, the Medicare program, the Medi-Cal program, including
the Family Planning Access Care and Treatment Waiver program,
identified in subdivision (aa) of Section 14132, another state's
medicaid program, or the State-Only Family Planning program, or other
health care programs operated, or financed in whole or in part, by
the federal government or any state or local agency in this state or
any other state.
(B) Practices that are inconsistent with sound medical practices
and result in reimbursement, by any of the programs referred to in
subparagraph (A) or other health care programs operated, or financed
in whole or in part, by the federal government or any state or local
agency in this state or any other state, for services that are
unnecessary or for substandard items or services that fail to meet
professionally recognized standards for health care.
(2) "Fraud" means an intentional deception or misrepresentation
made by a person with the knowledge that the deception could result
in some unauthorized benefit to himself or herself or some other
person. It includes any act that constitutes fraud under applicable
federal or state law.
(3) "Provider" means any individual, partnership, group,
association, corporation, institution, or entity, and the officers,
directors, owners, managing employees, or agents
thereof of any partnership, group, association,
corporation, institution, or entity , that provides services,
goods, supplies, or merchandise, directly or indirectly, to a
beneficiary and that has been enrolled in the program.
(4) "Convicted" means any of the following:
(A) A judgment of conviction has been entered against an
individual or entity by a federal, state, or local court, regardless
of whether there is a post-trial motion or an appeal pending or the
judgment of conviction or other record relating to the criminal
conduct has been expunged or otherwise removed.
(B) A federal, state, or local court has made a finding of guilt
against an individual or entity.
(C) A federal, state, or local court has accepted a plea of guilty
or nolo contendere by an individual or entity.
(D) An individual or entity has entered into participation in a
first offender, deferred adjudication, or other program or
arrangement where judgment of conviction has been withheld.
(5) "Professionally recognized standards of health care" means
statewide or national standards of care, whether in writing or not,
that professional peers of the individual or entity whose provision
of care is an issue, recognize as applying to those peers practicing
or providing care within a state. When the United States Department
of Health and Human Services has declared a treatment modality not to
be safe and effective, practitioners that employ that treatment
modality shall be deemed not to meet professionally recognized
standards of health care. This definition shall not be construed to
mean that all other treatments meet professionally recognized
standards of care.
(6) "Unnecessary or substandard items or services" means those
that are either of the following:
(A) Substantially in excess of the provider's usual charges or
costs for the items or services.
(B) Furnished, or caused to be furnished, to patients, whether or
not covered by Medicare, medicaid, or any of the state health care
programs to which the definitions of applicant and provider apply,
and which are substantially in excess of the patient's needs, or of a
quality that fails to meet professionally recognized standards of
health care. The department's determination that the items or
services furnished were excessive or of unacceptable quality shall be
made on the basis of information, including sanction reports, from
the following sources:
(i) The professional review organization for the area served by
the individual or entity.
(ii) State or local licensing or certification authorities.
(iii) Fiscal agents or contractors, or private insurance
companies.
(iv) State or local professional societies.
(v) Any other sources deemed appropriate by the department.
(7) "Enrolled or enrollment in the program" means authorized under
any and all processes by the department or its agents or contractors
to receive, directly or indirectly, reimbursement for the provision
of services, goods, supplies, or merchandise to a program
beneficiary.
(n) In lieu of, or in addition to, the imposition of any other
sanctions available, including the imposition of a civil penalty
under Sections
14123.2 or 14171.6, the program may impose on providers any or all of
the penalties pursuant to Sections 14107 and 14123.25, in accordance
with the provisions of those sections.
(o) (1) Notwithstanding any other provision of law, every primary
supplier of pharmaceuticals, medical equipment, or supplies shall
maintain accounting records to demonstrate the manufacture, assembly,
purchase, or acquisition and subsequent sale, of any
pharmaceuticals, medical equipment, or supplies, to providers.
Accounting records shall include, but not be limited to, inventory
records, general ledgers, financial statements, purchase and sales
journals, and invoices, prescription records, bills of lading, and
delivery records.
(2) For purposes of this subdivision, the term "primary supplier"
means any manufacturer, principal labeler, assembler, wholesaler, or
retailer.
(3) Accounting records maintained pursuant to paragraph (1) shall
be subject to audit or examination by the department or its agents.
The audit or examination may include, but is not limited to,
verification of the costs claimed by providers. These accounting
records shall be maintained for three years from the date of sale or
the date of service.
(p) Each provider of health care services rendered to any program
beneficiary shall keep and maintain records of each service rendered,
the beneficiary to whom rendered, the date, and such additional
information as the department may by regulation require. Records
required to be kept and maintained pursuant to this subdivision shall
be retained by the provider for a period of three years from the
date the service was rendered.
(q) A program provider applicant or a program provider shall
furnish information or copies of records and documentation requested
by the department. Failure to comply with the department's request
shall be grounds for denial of the application or automatic
disenrollment of the provider.
(r) A program provider may assign signature authority for
transmission of claims to a billing agent subject to Sections 14040,
14040.1, and 14040.5.
(s) (1) Moneys payable or rights existing under this division
shall be subject to any claim, lien, or offset of the State of
California, and any claim of the United States of America made
pursuant to federal statute, but shall not otherwise be subject to
enforcement of a money judgment or other legal process, and no
transfer or assignment, at law or in equity, of any right of a
provider of health care to any payment shall be enforceable against
the state, a fiscal intermediary, or carrier.
(2) If a provider is under any investigation for fraud or abuse by
any state, local, or federal government agency, the director may
withhold reimbursement of funds due and payable to that provider from
any other program under the administration of the department, as
assets pending the outcome of the investigation of fraud and abuse.
The withholding permitted pursuant to this section shall not be taken
pursuant to Section 14107.11 and, notwithstanding Section 100171 of
the Health and Safety Code or any other provision of law, is not
subject to appeal or hearing.
SEC. 34. No reimbursement is required by this act pursuant to
Section 6 of Article XIIIB of the California Constitution because the
only costs that may be incurred by a local agency or school district
will be incurred because this act creates a new crime or infraction,
eliminates a crime or infraction, or changes the penalty for a crime
or infraction, within the meaning of Section 17556 of the Government
Code, or changes the definition of a crime within the meaning of
Section 6 of Article XIIIB of the California Constitution.
Institutions Code is amended to read:
14171.6. (a) (1) Any provider, as defined in paragraph (3), that
obtains reimbursement under this chapter to which it is not entitled
shall be subject to interest charges or penalties as specified in
this section.
(2) When it is established upon audit that the provider has not
received reimbursement to which it is entitled, the department shall
pay the provider interest assessed at the rate, and in the manner,
specified in subdivision (h) of Section 14171.
(3) For purposes of this section, "provider" means any individual,
partnership, group, association, corporation, institution, or entity
and the officers, directors, employees, or agents thereof, that
provides services, goods, supplies, or merchandise, directly or
indirectly, to a Medi-Cal beneficiary and that has been enrolled in
the Medi-Cal program.
(b) When it is established upon audit that the provider has
claimed payments under this chapter to which it is not entitled, the
provider shall pay, in addition to the amount improperly received,
interest at the rate specified by subdivision (h) of Section 14171.
(c) (1) When it is established upon audit that the provider
claimed payments related to services or costs that the department had
previously notified the provider in an audit report that the costs
or services were not reimbursable, the provider shall pay, in
addition to the amount improperly claimed, a penalty of 10 percent of
the amount improperly claimed after receipt of the notice, plus the
cost of the audit.
(2) In addition to the penalty and costs specified by paragraph
(1), interest shall be assessed at the rate specified in subdivision
(h) of Section 14171.
(3) Providers that wish to preserve appeal rights or to challenge
the department's positions regarding appeal issues may claim the
costs or services and not be reimbursed therefor if they are
identified and presented separately on the cost report.
(d) (1) When it is adjudicated that the provider fraudulently
claimed and received payments under this chapter, the provider shall
pay, in addition to that portion of the claim that was improperly
claimed, a penalty of 300 percent of the amount improperly claimed,
plus the cost of the audit.
(2) In addition to the penalty and costs specified by paragraph
(1), interest shall be assessed at the rate specified by subdivision
(h) of Section 14171.
(3) For purposes of this subdivision, a fraudulent claim is a
claim upon which the provider has been convicted of fraud upon the
Medi-Cal program.
(e) Nothing in this section shall prevent the imposition of any
other civil or criminal penalties to which the provider may be
liable.
(f) Any appeal to any action taken pursuant to subdivision (b),
(c), or (d) is subject to the administrative appeals process provided
by Section 14171.
(g) As used in this section, "cost of the audit" includes actual
hourly wages, travel, and incidental expenses at rates allowable by
rules adopted by the State Board of Control and applicable overhead
costs that are incurred by employees of the state in administering
this chapter with respect to the performance of audits.
(h) This section shall not apply to any clinic licensed pursuant
to subdivision (a) of Section 1204 of the Health and Safety Code.