Report 2009-112 All Recommendation Responses

Report 2009-112: Department of Health Care Services: It Needs to Streamline Medi-Cal Treatment Authorizations and Respond to Authorization Requests Within Legal Time Limits (Release Date: May 2010)

Recommendation #1 To: Health Care Services, Department of

To streamline the provision of Medi-Cal services and improve its level of service, Health Care Services should conduct cost-benefit analyses to identify opportunities to remove authorization requirements or to auto-adjudicate those medical services and drugs with low denial rates, low paid claims, or high TAR administrative costs.

Agency Response*

Health Care Services' contractor completed a cost-benefit analysis of the TAR process and found that a small number of medical services did not meet the cost benefit test and recommended that Health Care Services consider auto-adjudicating those services. The contractor also identified certain drugs with low costs and high approval rates that would be the best candidates for auto-adjudication and recommended that Health Care Services use the analysis as the basis for further study to identify any additional opportunities for auto-adjudication. (See 2012-406, p. 79)

  • Response Type†: 1-Year
  • Response Date: May 2011

California State Auditor's Assessment of Status: Fully Implemented


Recommendation #2 To: Health Care Services, Department of

To ensure that Medi-Cal recipients receive timely access to prescribed drugs, Health Care Services should abolish its policy of responding to drug TARs by the end of the next business day and should instead ensure that prior-authorization requests to dispense drugs are processed within the legally mandated 24-hour period. Alternatively, it should seek formal authorization from CMS to deviate from the 24-hour requirement, and should seek a similar modification to state law. In addition, Health Care Services should begin recording the actual time it receives paper TARs so that it can begin to measure accurately its processing times.

Agency Response*

CAASD had previously stated that a change as recommended would not be forthcoming until the new system being developed by CA-MMIS and Xerox was implemented. A change in the paper TAR process will likely implement prior to the implementation of the new system. A DHCS-sponsored bill, AB 1457, was recently signed into law by Governor Brown. This bill mandates the use of e-TAR for all fee-for-service treatment requests and eliminates the use of paper TARs. This mandate takes effect as of July 1, 2016. The implementation of the e-TAR mandate will render this recommendation moot. CAASD will develop a transition plan for providers who use paper TAR and related provider stakeholder groups to aid in the transition to e-TAR.

Next Business Day Adjudication of Drug TARs:

As indicated in 2013 status reports, it is not feasible for Health Care Services to process drug TARs within 24 hours of receipt because its offices are not staffed nor budgeted for 24-hour/seven-day-per-week operations. Emergency drug supplies are available to Medi-Cal beneficiaries as needed. In addition, Health Care Services has received few complaints from providers or beneficiaries regarding the timely processing of TARs. For these reasons, Health Care Services intends to continue its practice of adjudicating drug TARs by the next business day.

Health Care Services has not sought formal authorization from CMS to deviate from the 24-hour requirement because CMS is aware of Health Care Services' "next business day" practice and that emergency drug supplies are available to Medi-Cal beneficiaries as needed.

  • Response Type†: Annual Follow Up
  • Response Date: May 2016

California State Auditor's Assessment of Status: Will Not Implement


Agency Response*

CAASD had previously stated that a change as recommended would not be forthcoming until the new system being developed by CA-MMIS and Xerox was implemented. A change in the paper TAR process will likely implement prior to the implementation of the new system. A DHCS-sponsored bill, AB 1457, was recently signed into law by Governor Brown. This bill mandates the use of e-TAR for all fee-for-service treatment requests and eliminates the use of paper TARs. This mandate takes effect as of July 1, 2016. The implementation of the e-TAR mandate will render this recommendation moot. CAASD will develop a transition plan for providers who use paper TAR and related provider stakeholder groups to aid in the transition to e-TAR.

Next Business Day Adjudication of Drug TARs:

As indicated in 2013 status reports, it is not feasible for Health Care Services to process drug TARs within 24 hours of receipt because its offices are not staffed nor budgeted for 24-hour/seven-day-per-week operations. Emergency drug supplies are available to Medi-Cal beneficiaries as needed. In addition, Health Care Services has received few complaints from providers or beneficiaries regarding the timely processing of TARs. For these reasons, Health Care Services intends to continue its practice of adjudicating drug TARs by the next business day.

Health Care Services has not sought formal authorization from CMS to deviate from the 24-hour requirement because CMS is aware of Health Care Services' "next business day" practice and that emergency drug supplies are available to Medi-Cal beneficiaries as needed.

  • Response Type†: Annual Follow Up
  • Response Date: December 2015

California State Auditor's Assessment of Status: Will Not Implement


Agency Response*

CAASD had previously stated that a change as recommended would not be forthcoming until the new system being developed by CA-MMIS and Xerox was implemented. A change in the paper TAR process will likely implement prior to the implementation of the new system. A DHCS-sponsored bill, AB 1457, was recently signed into law by Governor Brown. This bill mandates the use of e-TAR for all fee-for-service treatment requests and eliminates the use of paper TARs. This mandate takes effect as of July 1, 2016. The implementation of the e-TAR mandate will render this recommendation moot. CAASD will develop a transition plan for providers who use paper TARs and related provider stakeholder groups to aid in the transition to e-TAR.

Next Business Day Adjudication of Drug TARs:

As indicated in the 2013 status update, it is not feasible for Health Care Service to process drug TARs within 24 hours of receipt because its offices are not staffed nor budgeted for 24-hour/seven-day-per-week operations. Emergency drug supplies are available to Medi-Cal beneficiaries as needed. In addition, Health Care Services has received few complaints from providers or beneficiaries regarding the timely processing of drug TARs. For these reasons, Health Care Services intends to continue its practice of adjudicating drug TARs by the next business day. Health Care Services has not sought formal authorization from CMS to deviate from the 24-hour requirement because CMS is aware of Health Care Services' "next business day" practice and that the emergency drug supplies are available to Medi-Cal beneficiaries as needed.

  • Response Type†: Annual Follow Up
  • Response Date: October 2014

California State Auditor's Assessment of Status: Will Not Implement


Agency Response*

Recording time of paper TAR receipt:

The actual time of paper TAR receipt will begin being recorded when Xerox, the CA-MMIS contractor, develops and implements the new TAR submission and adjudication system. The implementation of new TAR system is projected to begin early 2015. As in previous status update, modifying the current system would be costly and time intensive and not a prudent use of limited resources.

Next Business Day Adjudication of Drug TARs:

As indicated in previous status updates, it is not feasible for Health Care Service to process drug TARs within 24 hours of receipt because its offices are not staffed nor budgeted for 24-hour/seven-day-per-week operations. Emergency drug supplies are available to Medi-Cal beneficiaries as needed. In addition, Health Care Services has received few complaints from providers or beneficiaries regarding the timely processing of drug TARs. For these reasons, Health Care Services intends to continue its practice of adjudicating drug TARs by the next business day. Health Care Services has not sought formal authorization from CMS to deviate from the 24-hour requirement because CMS is aware of Health Care Services' "next business day" practice and that the emergency drug supplies are available to Medi-Cal beneficiaries as needed.

  • Response Type†: Annual Follow Up
  • Estimated Completion Date: not available
  • Response Date: October 2013

California State Auditor's Assessment of Status: Not Fully Implemented


Agency Response*

The recommendation has two parts. The first is to abolish the policy of adjudicating drug TARs by the next business day and instead ensure prior authorization requests to dispense drugs are processed within the mandated 24-hour period. As an alternative, Health Care Services should seek formal authorization from the Centers for Medicare and Medicaid Services (CMS) to use the next business day timeframe and should modify existing state law accordingly. The second is to begin recording the time that Health Care Services receives paper TARs. As indicated in the previous update, Health Care Services will implement the second component, but not the first.

Record Time of Paper TAR Receipt

Health Care Services will begin to record the time of paper TAR receipt when Xerox, the new CA-MMIS contractor, develops and implements the new TAR submission and adjudication system. As noted in previous status reports, the current system does not have the capacity to record the time of TAR receipt, and it would be costly and time intensive to make the changes that would enable it to do so.

Next Business Day Adjudication of Drug TARs

As indicated in prior status reports, it is not feasible for Health Care Services to process drug TARs within 24 hours of receipt because its offices are not staffed or budgeted for 24-hour/seven-day-per-week operations. Emergency drug supplies are available to Medi-Cal beneficiaries as needed and do not require prior authorization. Health Care Services has received few complaints from providers and beneficiaries regarding the timely processing of drug TARs.

Health Care Services has not sought formal authorization from CMS to deviate from the 24-hour requirement. CMS is aware of Health Care Services' “next business day” practice and the availability of emergency drug supplies for Medi-Cal beneficiaries.

  • Response Type†: Annual Follow Up
  • Response Date: October 2012

California State Auditor's Assessment of Status: Will Not Implement


Recommendation #3 To: Health Care Services, Department of

To ensure that Medi-Cal recipients are receiving timely medical services from providers, Health Care Services should start tracking prior-authorization medical TARs separately and should ensure that such TARs are processed within an average of five working days. Although state law and regulations specifically require prior authorization for certain medical services, Health Care Services generally does not require prior authorizations in practice. Consequently, Health Care Services should seek legislation to update existing laws and amend its regulations to render them consistent with its TAR practices.

Agency Response*

A process was developed, and has been implemented, to track and adjudicate prior authorization TARs received in paper form. The ability to implement such a process for TARs received electronically is part of a replacement TAR processing system currently under development by Xerox State Healthcare, LLC. Changes to the existing system would be costly and time-intensive and not a prudent use of limited resources. Due to current uncertainties and the likelihood of significant change to the TAR process with the implementation of the Affordable Care Act, Health Care Services is not seeking legislation to update existing laws and/or regulations to make them consistent with the TAR process.

  • Response Type†: Annual Follow Up
  • Response Date: May 2016

California State Auditor's Assessment of Status: Will Not Implement


Agency Response*

A process was developed, and has been implemented, to track and adjudicate prior authorization TARs received in paper form. The ability to implement such a process for TARs received electronically is part of a replacement TAR processing system currently under development by Xerox State Healthcare, LLC. Changes to the existing system would be costly and time-intensive and not a prudent use of limited resources. Due to current uncertainties and the likelihood of significant change to the TAR process with the implementation of the Affordable Care Act, Health Care Services is not seeking legislation to update existing laws and/or regulations to make them consistent with the TAR process.

  • Response Type†: Annual Follow Up
  • Response Date: December 2015

California State Auditor's Assessment of Status: Will Not Implement


Agency Response*

A process was developed, and has been implemented, to track and adjudicate prior authorization TARs received in paper form. The ability to implement such a process for TARs received electronically is part of a replacement TAR processing system currently under development by Xerox State Healthcare, LLC. Changes to the existing system would be costly and time-intensive and not a prudent use of limited resources. Due to current uncertainties and the likelihood of significant change to the TAR process with the implementation of the Affordable Care Act, Health Care Services is not seeking legislation to update existing laws and/or regulations to make them consistent with the TAR process.

  • Response Type†: Annual Follow Up
  • Response Date: October 2013

California State Auditor's Assessment of Status: Will Not Implement


Agency Response*

As indicated in previous status reports, Health Care Services has implemented a process to separately track paper prior-authorization medical TARs. Health Care Services will separately track electronic prior-authorization medical TARs when Xerox, the new CA-MMIS contractor, develops and implements the new TAR submission and adjudication system. The current system does not have the ability to track prior-authorization TARs, and it would be costly and time intensive to make the modifications that would enable it to do so.

As noted in previous status reports, Health Care Services is not currently seeking legislation to update existing laws and regulations to make them consistent with the TAR process. The reason is that the continuing implementation of the Affordable Care Act will lead to considerable changes in the Medi-Cal program and California's entire health care system in the coming months and years, and this will likely lead to significant, as yet unknown, changes to the TAR process. Given current uncertainties and the likelihood of significant change, it would not be advisable to make this kind of modification of existing TAR related laws or regulations at this time.

  • Response Type†: Annual Follow Up
  • Response Date: October 2012

California State Auditor's Assessment of Status: Will Not Implement


All Recommendations in 2009-112

Response Type refers to the interval in which the auditee is providing the State Auditor with their status in implementing recommendations made in an audit report. Auditees must submit a response regarding their progress in implementing recommendations from our reports at three intervals from the release of the report: 60 days, six months, and one year or subsequent to one year.

*Agency responses received after June 2013 are posted verbatim.


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