Report 2013-119 All Recommendation Responses

Report 2013-119: California Department of Health Care Services: Its Failure to Properly Administer the Drug Medi-Cal Treatment Program Created Opportunities for Fraud (Release Date: August 2014)

Recommendation #1 To: Health Care Services, Department of

To ensure that the providers receive reimbursement for only valid services, Health Care Services should immediately coordinate with the appropriate counties to recover inappropriate payments to ineligible providers and for services purportedly rendered to deceased beneficiaries.

Agency Response*

The FY 2013-2014 cost report for Los Angeles County, which included recoupment of this final amount, was settled on March 2, 2017.

Status and Implementation Date: Fully Implemented, 3/2/2017.

  • Response Type†: Annual Follow Up
  • Completion Date: March 2017
  • Response Date: August 2017

California State Auditor's Assessment of Status: Fully Implemented

Health Care Services provided a copy of Los Angeles County's fiscal year 2013-14 cost settlement letter, which included recoupment of the final amount due for inappropriate payments for services to dead beneficiaries.


Agency Response*

All the inappropriate payments have been recouped with the exception of $36.16 from Los Angeles County which will be recovered in their FY 2013-14 cost report, expected to be settled by January 1, 2017

  • Response Type†: Annual Follow Up
  • Estimated Completion Date: January 2017
  • Response Date: October 2016

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


Agency Response*

For the dead beneficiaries identified in the CSA report, FMAB has determined that providers were inappropriately paid for services provided to beneficiaries after their date of death. FMAB has begun to take action to recoup the overpayments through the Fiscal Year 12-13 cost report settlement process or through the established accounts receivable recoupment process (if services were provided prior to FY 12-13). This is expected to be complete by January 2016 (when the FY 12-13 cost reports are settled).

  • Response Type†: 1-Year
  • Estimated Completion Date: January 2016
  • Response Date: August 2015

California State Auditor's Assessment of Status: Pending

Date of implementation is set for January 2016.


Agency Response*

The Department of Health Care Services submitted a Public Records Act request to CSA in order to obtain the claims detail data for the high risk payments identified in the CSA report. DHCS received the data and it is currently being reviewed by the FMAB to determine if recovery of funds is required.

  • Response Type†: 6-Month
  • Estimated Completion Date: June 30, 2015
  • Response Date: February 2015

California State Auditor's Assessment of Status: Pending


Agency Response*

No update.

  • Response Type†: 60-Day
  • Estimated Completion Date: April 2015
  • Response Date: October 2014

California State Auditor's Assessment of Status: No Action Taken

Health Care Services indicated that it has not taken any action and will not do so until April 2015.


Recommendation #2 To: Health Care Services, Department of

To ensure that the providers receive reimbursement for only valid services, Health Care Services should immediately develop and implement new procedures for routinely identifying and initiating recovery efforts for payments that it authorizes between the effective date of a provider's decertification and the date it became aware of the decertification, in addition to the payments it authorizes between a beneficiary's death date and its receipt of the death record.

Agency Response*

Post implementation of the system edit to deny services post date of death as identified on the claim or MEDS, deployed November 2013, EITSD staff created a report from the adjudication system that reflects no incorrect approval from November 2013 - September 2016. This report is ongoing and on request of the program.

  • Response Type†: Annual Follow Up
  • Completion Date: April 2016
  • Response Date: October 2016

California State Auditor's Assessment of Status: Fully Implemented

Health Care Services provided copies of its new procedures and a summary of the payments it recouped.


Agency Response*

FMAB developed and implemented new procedures for identification and recoupment of overpayments to decertified providers. A system edit was included in the Medi-Cal Eligibility Data System (MEDS) to prevent improper payments for dead beneficiaries. However, the Enterprise Innovation Technology Services Division (EITSD) has not yet developed the automated query in the Short Doyle Medi-Cal system that will identify any approved services after a "death date" to ensure that the edit in the system is working as designed. The anticipated completion is in early 2016.

  • Response Type†: 1-Year
  • Estimated Completion Date: Early 2016
  • Response Date: August 2015

California State Auditor's Assessment of Status: Pending

Date of implementation is set for early 2016.


Agency Response*

A. Receipt of Decertification Notice - Ongoing

Update as of 1-15-15: There were 6 providers that were decertified since September 1, 2014. According to SMART, there is not any billing data submitted for services after the decertification date. As a result, there is no recovery of overpayment.

B. Death Record Quarterly Checks

Update as of 1-15-15: FMAB staff has been working with staff from the Information Technology Division on the development of a query to generate the report. The query is expected to be completed by January 30, 2015. Upon completion of the query, a report will be generated to determine if there is any billing data for FY 2013-14 and FY 2014-15 to identify if there is any billing data for beneficiaries after a "death date."

  • Response Type†: 6-Month
  • Estimated Completion Date: September 30, 2015
  • Response Date: February 2015

California State Auditor's Assessment of Status: Pending


Agency Response*

No update.

  • Response Type†: 60-Day
  • Estimated Completion Date: 09/30/2015
  • Response Date: October 2014

California State Auditor's Assessment of Status: No Action Taken

Health Care Services indicated that it has not taken any action and will not do so until September 2015.


Recommendation #3 To: Health Care Services, Department of

To ensure that the providers receive reimbursement for only valid services, Health Care Services should immediately direct its investigations division to determine whether it authorized any improper payments to program providers for deceased beneficiaries outside of our audit period. It should also determine whether it authorized such payments through its other Medi-Cal programs. Health Care Services should initiate efforts to recover such payments as appropriate.

Agency Response*

Program is currently waiting on the Enterprise Information Services Division to complete system enhancements on the Short Doyle Platform.

  • Response Type†: Annual Follow Up
  • Estimated Completion Date: January 2017
  • Response Date: October 2016

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


Agency Response*

For the dead beneficiaries identified in the CSA report, FMAB has determined that providers were inappropriately paid for services provided to beneficiaries after their date of death. A total of $2,566.83 will be recovered in the FY 12-13 cost report settlement. Invoices are being prepared to recoup the remaining $3,257.67 in inappropriate payments (for services provided prior to FY 12-13). Anticipated completion is January 2016 (when the FY 12-13 cost reports are settled).

As stated in the six-month update, MCED developed a six-month work plan to reduce the lag time to improve identification of dead beneficiaries and prevent improper payments going forward via system edits within all Medi-Cal programs. Over the last year, MCED has identified and evaluated numerous federal, state, private, and direct reporting sources that help public assistance programs identify unreported beneficiary deaths. Based on this evaluation, DHCS forecasts that comprehensive improvements will be in place on or before June 30, 2016. This includes the acquisition, testing, and rollout of new death notification sources and the improvement of existing channels. These enhancements will be in place for the entire Medi-Cal population. In addition, FMAB developed queries to manually check for potential dead-beneficiary overpayments. Queries will complement the enhanced system edit capabilities with MCED's six-month work plan. FMAB also reviewed the DMC list of dead beneficiaries identified by CSA to confirm overpayments made. FMAB completed the analysis and will pursue DMC overpayment recoveries.

  • Response Type†: 1-Year
  • Estimated Completion Date: June 2016
  • Response Date: August 2015

California State Auditor's Assessment of Status: Pending

Date of implementation is set for June 2016.


Agency Response*

MCED confirmed improper payments were made due to deceased beneficiaries that were not identified timely. A&I worked with MCED and determined excessive lag time in updating deceased beneficiary information on Medi-Cal Eligibility Data System (MEDS). MCED developed a six month work plan to reduce the lag time to improve identification of dead beneficiaries and prevent improper payments going forward via system edits within all Medi-Cal programs.

In addition, FMAB is developing queries to manually check for potential dead-beneficiary overpayments. Queries will complement the enhanced system edit capabilities with MCED's six month work plan.

FMAB is reviewing the DMC list of dead beneficiaries identified by CSA to confirm overpayments made. Once analysis is completed, FMAB will pursue DMC overpayment recoveries.

DHCS is pursuing two remedies for the identification of dead beneficiary-related overpayments outside of DMC program and CSA's audit period:

1)A&I data analytics system now contains alerts to indicate when claim is paid for dead beneficiaries. A&I staff will continuously review the flags to determine if an investigation should be initiated. Currently, there is limitation to this process because data analytics contract only covers Short-Doyle Medi-Cal data. Therefore, alerts only apply to DMC and Mental Health claims. Once DHCS awards the data analytics contract in Spring 2016, alerts will be available for all Medi-Cal programs.

2)With remedy #1 limitations, DHCS is exploring options for Xerox to run necessary algorithms to identify dead beneficiary-related overpayments for past claims. Once overpayments are identified, recoveries will be pursued.

  • Response Type†: 6-Month
  • Estimated Completion Date: Spring 2016
  • Response Date: February 2015

California State Auditor's Assessment of Status: Pending


Agency Response*

A&I will coordinate with the Substance Use Disorder (SUD) division and develop an audit plan to identify overpayments for deceased beneficiaries outside CSA's audit period. If A&I confirms that improper payments were made, recovery of the overpayments will be pursued. Moreover, if A&I establishes a credible allegation of fraud, it will also refer the matter to the state DOJ as required.

In addition, the A&I received a comprehensive analysis of payment made for deceased beneficiaries from its contractor, and is in the process of analyzing the report for inappropriate payments made to deceased beneficiaries for SUD and other Medi-Cal programs. And, as seen in response to recommendation 15, DHCS has updated its procedures to include a search of the US Social Security Administration Death Master File.

  • Response Type†: 60-Day
  • Estimated Completion Date: January 2015
  • Response Date: October 2014

California State Auditor's Assessment of Status: Pending

Health Care Services indicated that it will not implement this recommendation until January 2015.


Recommendation #4 To: Health Care Services, Department of

To ensure that the providers receive reimbursement for only valid services, Health Care Services should immediately direct its investigations division to determine whether it should recover any overpayments for the high-risk payments we identified in Table 7 on page 28 and Appendix A beginning on page 63. It should also take the appropriate disciplinary action against the affected providers, such as suspension or termination.

Agency Response*

All of the overpayments for services at unauthorized rates have been recovered.

  • Response Type†: Annual Follow Up
  • Completion Date: April 2016
  • Response Date: October 2016

California State Auditor's Assessment of Status: Fully Implemented

Health Care Services provided a county-level summary of the payments it recouped from counties/providers that had been overpaid for DMC services or paid for inappropriate services.


Agency Response*

The FMAB reviewed the claims data to determine if payments were made at unauthorized rates. Based on FMAB's review, it was determined that claims were initially approved at unauthorized rates (or multiple units were billed inappropriately) but payments were subsequently returned as part of the Department's cost report settlement process for most of the claims ($61,385.90). There were some claims identified in which recovery of payments is required ($2,955.00).

  • Response Type†: 1-Year
  • Estimated Completion Date: End of 2015
  • Response Date: August 2015

California State Auditor's Assessment of Status: Pending

Date of implementation is set for the end of 2015.


Agency Response*

The FMAB reviewed the claims data to determine if payments were made at unauthorized rates. Based on FMAB's review, it was determined that claims were initially approved at unauthorized rates (or multiple units were billed inappropriately) but payments were subsequently returned as part of the Department's cost report settlement process for most of the claims ($61,385.90). There were some claims identified in which recovery of payments is required ($2,955.00). The data and documentation will be provided to A&I by February 2015 for review and confirmation.

  • Response Type†: 6-Month
  • Estimated Completion Date: February 28, 2015
  • Response Date: February 2015

California State Auditor's Assessment of Status: Pending


Agency Response*

The Department of Health Care Services submitted a Public Record Act request to the CSA in order to obtain the claims detail data for the high risk payments identified in the CSA audit report. Once the requested information is received, the A&I will coordinate with the Substance Use Disorder Services Division and develop an audit plan to identify overpayments and indicators of fraud. If A&I confirms that improper payments were made, recovery of the overpayments will be pursued. Moreover, if A&I establishes a credible allegation of fraud, it will also refer the matter to the state DOJ as required.

  • Response Type†: 60-Day
  • Estimated Completion Date: February 2015
  • Response Date: October 2014

California State Auditor's Assessment of Status: Pending

Health Care Services indicated that it will not implement this recommendation until February 2015.


Recommendation #5 To: Health Care Services, Department of

To ensure that the providers receive reimbursement for only valid services, Health Care Services should immediately direct its investigations division to further enhance its analysis of program claims data to identify the type of high-risk payments we identified on a monthly basis.

Agency Response*

A&I's data analytics contractor has implemented flags for all criteria stated on the 6 month update, except for the "Provider Services Multiple Beneficiaries at Same Address" but added flags for beneficiaries sharing the same address.

  • Response Type†: 1-Year
  • Completion Date: February 2015
  • Response Date: August 2015

California State Auditor's Assessment of Status: Fully Implemented

DHCS provided documentation demonstrating that it has incorporated flags for high-risk payments into its Pondera system.


Agency Response*

Audits and Investigation (A&I) has worked with its data analytic contractor to implement flags indicating when providers bill Medi-Cal for

-Holiday Dates of Service

-Excessive Drug Medi-Cal Visits Per Week

-A High Percentage of Beneficiaries Who Receive More Than One Visit Per Week

-Provider Excessive Weekly Dates of Service, Provider Services Multiple Beneficiaries at Same Address, and

-Excessive Denied Claims.

The contractor will deploy the flags beginning January 30, 2015. A&I staff will continuously review the flags to determine if A&I should initiate an investigation of any provider identified by the flags.

  • Response Type†: 6-Month
  • Estimated Completion Date: February 2015
  • Response Date: February 2015

California State Auditor's Assessment of Status: Pending


Agency Response*

A&I continues to work closely with its data analytics contractor to expand and improve the algorithms used in its data analytics tool. At the same time, A&I is continually updating its audit programs and field review checklists to better identify areas of greatest risk within the program including those identified by the CSA. For example, Drug Medi-Cal providers will now receive a high risk-score if the claims data indicates concurrent substance use disorder and inpatient hospital billings. Through these efforts, claims data will continue to be monitored each month to ensure that the providers are submitting accurate claims and are not exceeding program allowances.

  • Response Type†: 60-Day
  • Estimated Completion Date: February 2015
  • Response Date: October 2014

California State Auditor's Assessment of Status: Pending

Health Care Services indicated that it will not implement this recommendation until February 2015.


Recommendation #6 To: Health Care Services, Department of

To ensure that the providers receive reimbursement for only valid services, Health Care Services should immediately direct its fiscal management and accountability branch to work with Fresno, Los Angeles, and Sacramento counties to recover the specific overpayments we identified during our visits.

Agency Response*

All the disallowances resulting from PSPP disallowances for these three counties were recovered.

  • Response Type†: Annual Follow Up
  • Completion Date: February 2016
  • Response Date: October 2016

California State Auditor's Assessment of Status: Fully Implemented

Health Care Services provided a county-level summary of the payments it recouped from counties/providers that had been overpaid for Drug Medi-Cal services or paid for inappropriate services.


Agency Response*

Los Angeles, Fresno and Sacramento Counties and one direct provider in Los Angeles were issued notices of recovery for overpayments resulting from the CSA Audit. FMAB received copies of the reports of overpayment and is preparing invoices for the disallowed units identified in the notices.

  • Response Type†: 1-Year
  • Estimated Completion Date: September 2015
  • Response Date: August 2015

California State Auditor's Assessment of Status: Pending

Date of implementation is set for September 2015.


Agency Response*

DHCS received all source documents from a PRA of CSA's audit findings of Los Angeles, Sacramento and Fresno. Los Angeles County and one direct provider in Los Angeles were issued a notice of recovery for overpayments on January 2, 2015. DHCS anticipates both Fresno and Sacramento County notices will be completed by February 16, 2015.

  • Response Type†: 6-Month
  • Estimated Completion Date: February 16, 2015
  • Response Date: February 2015

California State Auditor's Assessment of Status: Pending


Agency Response*

No update.

  • Response Type†: 60-Day
  • Estimated Completion Date: April 2015
  • Response Date: October 2014

California State Auditor's Assessment of Status: No Action Taken

Health Care Services indicated that it has not taken any action and will not do so until April 2015.


Recommendation #7 To: Health Care Services, Department of

To ensure that the providers receive reimbursement for only valid services, Health Care Services should immediately instruct the counties to remind their providers to adhere to the record retention policies stated in their contracts.

Agency Response*

This item was a topic at the August 14, 2014 County Behavioral Health Director's Association monthly meeting. DHCS has included this item as a monitoring element for the 2014-15 monitoring year. (See County Monitoring Instrument attached) The question "How does the County ensure records are retained in accordance with records retention policies identified in the State/County contract?" (pg. 42, question 20) has been added to the 14/15 County Monitoring Instrument. The monitoring instrument revision has been completed and monitoring reviews will begin in September 2014.

  • Response Type†: 60-Day
  • Completion Date: September 2014
  • Response Date: October 2014

California State Auditor's Assessment of Status: Fully Implemented

To the extent that Health Care Services follows the steps of its updated county monitoring instrument, it can help ensure that counties retain records in accordance with the State/County contract.


Recommendation #8 To: Health Care Services, Department of

To ensure that the providers receive reimbursement for only valid services, Health Care Services should immediately ensure that each county has a process in place to follow up on their providers' implementation of corrective action plans aimed at resolving program deficiencies.

Agency Response*

The statement, "Describe the County's process for ensuring that provider's corrective action plans are submitted and implemented as required. Please provide documentation that demonstrates the County's monitoring process for provider corrective action plans." (pg. 40, question 9 & 9a) was added to the 14/15 County Monitoring Instrument. Fifty-seven county reviews to the State-County contract were completed by June 30, 2015. Twenty-five counties had effective CAP monitoring systems in place while all remaining counties were provided technical assistance to strengthen their system or create one. DHCS staff created a form available on the Department's website for county staff to complete and submit to DHCS via email certifying Drug Medi-Cal CAPs have been implemented by their programs.

  • Response Type†: 1-Year
  • Completion Date: June 2015
  • Response Date: August 2015

California State Auditor's Assessment of Status: Fully Implemented

DHCS provided documentation showing that it updated its County Monitoring Instrument with instructions for counties to demonstrate their process for monitoring corrective action plans. In addition, DHCS now requires counties to certify that Drug Medi-Cal providers have fully implemented all corrective actions designed to resolve program deficiencies.


Agency Response*

All counties will be reviewed by June 30, 2015.

See Attachment A

  • Response Type†: 6-Month
  • Estimated Completion Date: June 30, 2015
  • Response Date: February 2015

California State Auditor's Assessment of Status: Pending


Agency Response*

The statement "Describe the County's process for ensuring that provider's corrective action plans are submitted and implemented as required. Please provide documentation that demonstrates the County's monitoring process for provider corrective action plans." (pg. 40, question 9) has been added to the 14/15 County Monitoring Instrument (attached). Reviews of county compliance with ensuring their DMC providers' CAPs are implemented will begin in September 2014

  • Response Type†: 60-Day
  • Estimated Completion Date: September 30, 2015
  • Response Date: October 2014

California State Auditor's Assessment of Status: Pending

We agree that it has adjusted the county monitoring instrument as indicated; however, Health Care Services has not yet implemented this recommendation.


Recommendation #9 To: Health Care Services, Department of

To ensure that the providers receive reimbursement for only valid services, Health Care Services should immediately ensure that Fresno County strengthens its provider contract monitoring process, including revising its report format and conducting follow-up visits to providers.

Agency Response*

The County Monitoring Unit provided technical assistance to the County on consistent reporting formats, Title 22 (DMC) deficiencies, federal block grant fund deficiencies, and provider monitoring tools during this review. Fresno County submitted their first sub-contractor monitoring report on January 13, 2015. Since then Fresno County has submitted to DHCS eight Title 22 reports of DMC sub-contracted providers, four federal block grant funded reports of sub-contracted providers and four Corrective Action Plan on-site review follow-up reports of sub-contracted providers.

  • Response Type†: 1-Year
  • Completion Date: September 2014
  • Response Date: August 2015

California State Auditor's Assessment of Status: Fully Implemented

DHCS provided a copy of the corrective action plans that it issued to Fresno County in response to DHCS' SAPT Block Grant and State-County Contract Compliance review. DHCS provided copies of Fresno County's subsequent status updates that describe the county's implementation of those corrective action plans, which would address deficiencies identified within the county's contract monitoring process.


Agency Response*

A monitoring review of Fresno County was conducted in September, 2014. The County Monitoring Unit provided technical assistance to the County on consistent reporting formats during this review. Fresno County submitted their first sub-contractor monitoring report on January 13, 2015. The report is currently being evaluated for procedural adequacy.

See Attachment A

  • Response Type†: 6-Month
  • Completion Date: September 2014
  • Response Date: February 2015

California State Auditor's Assessment of Status: No Action Taken

Although Health Care Services indicated that it has fully implemented this recommendation, it did not provide us sufficient documentation to support its claim.

  • Auditee did not substantiate its claim of full implementation

Agency Response*

Several questions requiring documentation that demonstrates County provider monitoring procedures including follow up with providers have been added to the 14/15 County Monitoring Instrument (attached and beginning on page 38). The review of Fresno County has been scheduled for September 23 - 26, 2014. The County Monitoring Unit will provide technical assistance to the County on consistent reporting formats during this review. Also the DHCS follow up with Fresno County occurred on August 22, 2014.

  • Response Type†: 60-Day
  • Estimated Completion Date: September 30, 2014
  • Response Date: October 2014

California State Auditor's Assessment of Status: Pending

We agree that it has adjusted the county monitoring instrument as indicated; however, Health Care Services has not yet implemented this recommendation.


Recommendation #10 To: Health Care Services, Department of

To ensure that the providers receive reimbursement for only valid services, Health Care Services should immediately ensure that Los Angeles County strengthens its provider contract monitoring process, including fully implementing its RATE system to track and respond to provider deficiencies, and that it imposes appropriate responses when warranted, such as withholding payment or suspending or terminating a contract.

Agency Response*

Los Angeles County has continued to improve their monitoring processes and expand monitoring activities illustrated within the County's monitoring reports of Drug Medi-Cal (DMC) providers and the results of DHCS's annual onsite review of the County. County reports submitted to the Department include tracking providers' repeat deficiencies and corrective action requirements based on severity of the deficiency. Additionally, the County implemented an "Early Watch" onsite monitoring review for new providers within the first 30 to 90 days of contract execution. This review determines the level of knowledge of a provider on the regulatory and contract requirements for DMC services. Los Angeles County staff then provide technical assistance and training and issue a monitoring report. For State Fiscal Year 2016-17, Los Angeles County terminated contract with five DMC providers as a result of their monitoring efforts and tracking prior unresolved deficiencies.

Status and Implementation Date: Fully Implemented, 6/30/2017.

  • Response Type†: Annual Follow Up
  • Completion Date: June 2017
  • Response Date: August 2017

California State Auditor's Assessment of Status: Fully Implemented

Health Care Services provided a copy of Los Angeles County's guide for contract monitoring, which includes the process changes described in Health Care Services response. In addition, Health Care Services provided examples of three monitoring reports, where the county identified several deficiencies with various Drug Medi-Cal providers.


Agency Response*

DHCS approved Los Angeles County's corrective action plan for FY 2014-15 monitoring review on March 22, 2016 (Attachment 2016-2). To date, Los Angeles County has corrected five of the fifteen contractual deficiencies cited. Los Angeles has strengthened its monitoring protocols and regularly submits compliance monitoring reports on subcontracted providers to DHCS. The county has terminated multiple contracts on non-compliant SUD treatment providers.

  • Response Type†: Annual Follow Up
  • Estimated Completion Date: December 2016
  • Response Date: October 2016

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


Agency Response*

Questions requiring documentation that demonstrates County provider monitoring procedures including follow up with providers were added to the 14/15 County Monitoring Instrument. DHCS' conducted an on-site monitoring review of Los Angeles County in December 2014. The County's RATE system and the policies/sanctions developed for responding to provider deficiencies were reviewed and documented in the revised county monitoring report issued on July 15, 2015. Los Angeles County has 60 days to submit their corrective action plan (CAP) to the Department. DHCS staff will ensure implementation of the CAP with Los Angeles County during the on-site monitoring review, which will occur in November 2015.

  • Response Type†: 1-Year
  • Estimated Completion Date: November 2015
  • Response Date: August 2015

California State Auditor's Assessment of Status: Pending

Date of implementation is set for November 2015.


Agency Response*

Several questions requiring documentation that demonstrates County provider monitoring procedures including follow up with providers have been added to the 14/15 County Monitoring Instrument. The review of Los Angeles County will be conducted in December 2014. The County's RATE system and the policies/sanctions developed for responding to provider deficiencies will be reviewed for consistent implementation and appropriateness.

  • Response Type†: 6-Month
  • Completion Date: December 2014
  • Response Date: February 2015

California State Auditor's Assessment of Status: No Action Taken

Although Health Care Services indicated that it has fully implemented this recommendation, it did not provide us documentation to support its claim.

  • Auditee did not substantiate its claim of full implementation

Agency Response*

Several questions requiring documentation that demonstrates County provider monitoring procedures including follow up with providers have been added to the 14/15 County Monitoring Instrument (attached and beginning on page 38). The review of Los Angeles County will be conducted in December 2014. The County's RATE system and the policies/sanctions developed for responding to provider deficiencies will be reviewed for consistent implementation and appropriateness.

  • Response Type†: 60-Day
  • Estimated Completion Date: December 31, 2014
  • Response Date: October 2014

California State Auditor's Assessment of Status: Pending

Based on its response, the department has not yet implemented this recommendation.


Recommendation #11 To: Health Care Services, Department of

To ensure that the providers receive reimbursement for only valid services, Health Care Services should immediately ensure that Sacramento County strengthens its provider contract monitoring process, including tracking provider deficiencies and conducting follow-up visits to providers.

Agency Response*

DHCS conducted a county monitoring on-site review on October 28-30, 2014 which included a thorough review of Sacramento County's provider monitoring process. The Department's report documented the county's deficiencies and required the county to submit a Corrective Action Plan (CAP). DHCS received the CAP in March 2015 and has been providing on-going technical assistance to county personnel to improve their monitoring tools, monitoring procedures, and sub-contractor CAP process. Sacramento County is scheduled for FY 15-16 on-site monitoring review in October 2015 to ensure implementation of their CAP and adherence to the State County contract.

  • Response Type†: 1-Year
  • Completion Date: April 2015
  • Response Date: August 2015

California State Auditor's Assessment of Status: Fully Implemented

DHCS provided a copy of the corrective action plans that it issued to Sacramento County in response to DHCS' SAPT Block Grant and State-County Contract Compliance review. DHCS provided a copy of Sacramento County's subsequent status update that describes the county's implementation of those corrective action plans, which would address deficiencies identified within the county's contract monitoring process


Agency Response*

DHCS County Monitors conducted their site review October 28-30, 2014 which included a thorough review of Sacramento County's provider monitoring process.

  • Response Type†: 6-Month
  • Completion Date: October 2014
  • Response Date: February 2015

California State Auditor's Assessment of Status: No Action Taken

Although Health Care Services indicated that it has fully implemented this recommendation, it did not provide us documentation to support its claim.

  • Auditee did not substantiate its claim of full implementation

Agency Response*

Several questions requiring documentation that demonstrates County provider monitoring procedures including follow up with providers have been added to the 14/15 County Monitoring Instrument (attached and beginning on page 38). The review of Sacramento County will be conducted in October 2014. As a component of this review, the County's provider contract monitoring process will be reviewed with a focus on their tracking of provider deficiencies and conducting follow up provider visits.

  • Response Type†: 60-Day
  • Estimated Completion Date: October 31, 2014
  • Response Date: October 2014

California State Auditor's Assessment of Status: Pending

We agree that it has adjusted the county monitoring instrument as indicated; however, Health Care Services has not yet implemented this recommendation.


Recommendation #12 To: Health Care Services, Department of

To prevent the certification of ineligible providers, Health Care Services should immediately instruct its staff to compare the names of the managing employees whom applicant providers identify in their program applications to those whom they identify in their disclosure statements.

Agency Response*

DHCS has instructed and will continue to instruct staff to compare the names of managing employees on providers' applications and disclosure statements. This process has been applied to DMC provider recertification applications for over a year.

Since disclosure statements became a requirement, it has always been the PED's standard process to compare all names of managing employees that are identified throughout the application with those listed on the Disclosure Statement in all fee-for-service (FFS) application reviews. These same review standards have been applied to DMC providers targeted for continued certification since July 2013 and for all other DMC providers requesting new certification effective January 2014, including backlog assumed by PED. PED researches any conflict in names or information and addresses the discrepancies via a deficiency letter, an onsite visit, or both.

  • Response Type†: 6-Month
  • Completion Date: January 2014
  • Response Date: February 2015

California State Auditor's Assessment of Status: Fully Implemented

Health Care Services provided a copy of its Analyst Review Guide, in which analysts are instructed to use a list of databases to search for all staff listed in the Disclosure Statement, as well as any other supporting documents. If Health Care Services' analysts review the names of all employees listed on those supporting documents, such as the application form and the disclosure statement, then it would adequately address this recommendation.


Agency Response*

No update.

  • Response Type†: 60-Day
  • Completion Date: January 2014
  • Response Date: October 2014

California State Auditor's Assessment of Status: No Action Taken

Although Health Care Services indicated that it has fully implemented this recommendation, it has not provided any information to indicate that it has taken any action on this recommendation.


Recommendation #13 To: Health Care Services, Department of

To prevent the certification of ineligible providers, Health Care Services should immediately train its staff regularly on the program requirements, including the certification standards and the federal Medicaid provider enrollment requirements.

Agency Response*

DHCS will continue to regularly train staff on program requirements, including certification standards and federal Medicaid provider enrollment requirements. Prior to beginning application review, all new PED staffs are trained on state and federal requirements for program participation. Further, effective July 2013, all staff that process DMC applications for continued certification or certification have been trained on the program requirements. Copies of the DMC certification standards, regulations, and federal requirements are provided to staff to use continually during application review. The PED managers for DMC enrollment meet each morning for a half hour, and the staff and managers meet three time a week to address issues and changes as a group. PED also conducts ongoing trainings as new issues are identified by the Total Quality Management Unit.

  • Response Type†: 6-Month
  • Completion Date: July 2013
  • Response Date: February 2015

California State Auditor's Assessment of Status: Fully Implemented

Health Care Services provided a copy of its training schedule for Drug Medi-Cal and a powerpoint presentation describing the relevant requirements.


Agency Response*

No update.

  • Response Type†: 60-Day
  • Completion Date: July 2013
  • Response Date: October 2014

California State Auditor's Assessment of Status: No Action Taken

Although Health Care Services indicated that it has fully implemented this recommendation, it has not provided any information to indicate that it has taken any action on this recommendation.


Recommendation #14 To: Health Care Services, Department of

To prevent the certification of ineligible providers, Health Care Services should immediately develop a provider agreement for program providers.

Agency Response*

DHCS will implement the new provider agreement via provider bulletin. DHCS conducted a public stakeholder meeting on September 22, 2014 with it becoming effective October 22, 2014.

  • Response Type†: 60-Day
  • Completion Date: November 2014
  • Response Date: October 2014

California State Auditor's Assessment of Status: Fully Implemented

Health Care Services provided a copy of its Drug Medi-Cal provider agreement, which is now available online.


Recommendation #15 To: Health Care Services, Department of

To prevent the certification of ineligible providers, Health Care Services should immediately update its procedures to include searches of the Social Security Death Master File.

Agency Response*

DHCS has already updated its procedures to include a search of the U.S. Social Security Administration Death Master File during review of DMC provider applications for certification and continued certification.

  • Response Type†: 1-Year
  • Completion Date: July 2014
  • Response Date: August 2015

California State Auditor's Assessment of Status: Fully Implemented

DHCS provided documentation showing that its Provider Application and Validation for Enrollment system automatically flags provider applicants who have a possible match to the U.S. Social Security Administration's Death Master File.


Agency Response*

DHCS has already updated its procedures to include a search of the U.S. Social Security Administration Death Master File during review of DMC provider applications for certification and continued certification.

  • Response Type†: 6-Month
  • Completion Date: July 2014
  • Response Date: February 2015

California State Auditor's Assessment of Status: No Action Taken

Although Health Care Services indicated that it has fully implemented this recommendation, it did not provide us documentation to support its claim.

  • Auditee did not substantiate its claim of full implementation

Agency Response*

No update.

  • Response Type†: 60-Day
  • Completion Date: July 2014
  • Response Date: October 2014

California State Auditor's Assessment of Status: No Action Taken

Although Health Care Services indicated that it has fully implemented this recommendation, it has not provided any information to indicate that it has taken any action on this recommendation.


Recommendation #16 To: Health Care Services, Department of

To prevent the certification of ineligible providers, Health Care Services should immediately develop procedures on how to evaluate provider applicant license database searches.

Agency Response*

DHCS has developed and will update, as appropriate, procedures on how to evaluate provider applicant license database searches. All PED staff that process applications are trained on state and federal program requirements and how to evaluate provider applicant license searches. Effective July 2013, trained staff were assigned to process DMC applications for recertification and effective January 2014, trained staff were assigned to process all new and backlogged certification applications. Any questions on licensing status are addressed through further research, a remediation request and onsite inspections to verify all standards of program participation are met by the DMC provider.

  • Response Type†: 6-Month
  • Completion Date: January 2014
  • Response Date: February 2015

California State Auditor's Assessment of Status: Fully Implemented

Health Care Services provided a copy of its Analyst Review Guide, in which analysts are instructed to verify information from the providers' applications. If Health Care Services' analysts review the databases specified in the guide, identify exceptions within those databases, and consult with their management appropriately, then these actions would adequately address the recommendation.


Agency Response*

No update.

  • Response Type†: 60-Day
  • Completion Date: January 2014
  • Response Date: October 2014

California State Auditor's Assessment of Status: No Action Taken

Although Health Care Services indicated that it has fully implemented this recommendation, it has not provided any information to indicate that it has taken any action on this recommendation.


Recommendation #17 To: Health Care Services, Department of

To prevent the certification of ineligible providers, Health Care Services should immediately instruct its enrollment division to conduct all required database searches of individuals that provider applicants identify as their owners or managing employees.

Agency Response*

DHCS has instructed its enrollment division to conduct all required database searches of such individuals. It is PED's standard process to conduct all federally required database searches of all individuals found in the application package at the time of screening, which includes all owners and managing employees. PED has been searching MED/PECOS since April 2013 and the MCSIS since January 2013. Effective July 2013 for DMC recertification applications and effective January 2014, for new DMC certification applications PED staff conduct all required database searches for DMC to the Provider Master File (PMF) providers. DHCS has also begun adding all individuals identified as owners, managers, and controlling interest holders to enable monthly database checks. Currently, DHCS and the Fiscal Intermediary conduct monthly download of the LEIE, SAM/EPLS, and MCSIS in order to check them against the providers in the PMF.

In the near future PED will utilize an automated enrollment system and these database checks will become an automated process.

  • Response Type†: 6-Month
  • Completion Date: January 2014
  • Response Date: February 2015

California State Auditor's Assessment of Status: Fully Implemented

Health Care Services provided a copy of its Drug Medi-Cal program training presentation that describes performing required database searches for the names of listed individuals.


Agency Response*

No update.

  • Response Type†: 60-Day
  • Completion Date: January 2014
  • Response Date: October 2014

California State Auditor's Assessment of Status: No Action Taken

Although Health Care Services indicated that it has fully implemented this recommendation, it has not provided any information to indicate that it has taken any action on this recommendation.


Recommendation #18 To: Health Care Services, Department of

To prevent the certification of ineligible providers, Health Care Services should immediately ensure that its enrollment division conducts LEIE and EPLS database searches of program providers at least monthly.

Agency Response*

The enrollment division currently conducts monthly searches of program providers in the LEIE and EPLS databases. Currently, DHCS and the Fiscal Intermediary conduct monthly downloads of the LEIE and EPLS databases for comparison against all providers in the PMF. As DMC providers are approved through continued certification or certification, they are added to the PMF so the required monthly screening can occur. With respect to pending DMC applications, DHCS compiled all names and conducted a search of the LEIE and EPLS for those names and as staff conduct their full analysis, these database checks occur again. In addition, as soon as the automated enrollment system is implemented, this will become an automated process

  • Response Type†: Annual Follow Up
  • Completion Date: July 2014
  • Response Date: October 2016

California State Auditor's Assessment of Status: Pending

Although Health Care Services asserts that it fully implemented this recommendation, it did not provide any documentation to support its assertion.


Agency Response*

The enrollment division conducts monthly searches of program providers in the LEIE and EPLS databases. Currently, DHCS and the Fiscal Intermediary conduct monthly downloads of the LEIE and EPLS databases for comparison against all providers in the PMF. As DMC providers are approved through continued certification or certification, they are added to the PMF so the required monthly screening can occur. With respect to pending DMC applications, DHCS compiled all names and conducted a search of the LEIE and EPLS for those names and as staff conduct their full analysis, these database checks occur again. In addition, as soon as the automated enrollment system is implemented, this will become an automated process

  • Response Type†: 1-Year
  • Completion Date: October 2014
  • Response Date: August 2015

California State Auditor's Assessment of Status: Partially Implemented

DHCS provided a copy of its procedures for processing monthly matches to its internal Monthly Excluded Providers Report; however, DHCS did not provide evidence that the report was generated using the LEIE and EPLS databases.

  • Auditee did not substantiate its claim of full implementation

Agency Response*

No update, previously reported as fully implemented.

  • Response Type†: 6-Month
  • Completion Date: November 2014
  • Response Date: February 2015

California State Auditor's Assessment of Status: Partially Implemented

Health Care Services provided a copy of its notice to the contractor responsible for maintaining the California Medicaid Management Information System, informing it that the system must be updated to incorporate the required LEIE and EPLS verification.


Agency Response*

No update.

  • Response Type†: 60-Day
  • Completion Date: November 2014
  • Response Date: October 2014

California State Auditor's Assessment of Status: No Action Taken

Although Health Care Services indicated that it has fully implemented this recommendation, it has not provided any information to indicate that it has taken any action on this recommendation.


Recommendation #19 To: Health Care Services, Department of

To prevent the certification of ineligible providers, Health Care Services should immediately designate provider applicants as moderate or high risk in accordance with federal regulations.

Agency Response*

DHCS issued a provider bulletin on August 22, 2014 which designated all newly certifying DMC applicants and providers that submit applications for revalidation with the exception of DMC providers operated by governmental entities as high risk. All other DMC providers have been designated as moderate risk. The provider bulletin will become effective September 22, 2014.

  • Response Type†: 60-Day
  • Completion Date: October 2014
  • Response Date: October 2014

California State Auditor's Assessment of Status: Fully Implemented

Based on the August 22, 2014 bulletin, Health Care Services has implemented this recommendation by designating provider applicants as moderate or high risk.


Recommendation #20 To: Health Care Services, Department of

To prevent the certification of ineligible providers, Health Care Services should immediately establish a mechanism to identify the number of program sites the provider applicants' medical directors work at, and ensure that the physician ratio does not exceed 1-to-3 in accordance with state law and the certification standards.

Agency Response*

The requirement to enroll all medical directors of DMC clinics became effective 8/17/2015. On 11/2/2015, PED solicited a medical director application for all certified DMC providers and any DMC applications pending certification. Of the 926 DMC's solicited, 21 locations were deactivated for failure to comply with the solicitation and an additional 68 were denied, withdrawn, or decertified for other reasons. This will remain an ongoing requirement for any new DMC applicant. DHCS is able to identify the medical director to their specific DMC affiliations through current reporting mechanisms.

  • Response Type†: Annual Follow Up
  • Completion Date: March 2016
  • Response Date: October 2016

California State Auditor's Assessment of Status: Pending

Although Health Care Services asserts that it fully implemented this recommendation, it did not provide any documentation to support its assertion.


Agency Response*

Welfare and Institutions Code section 14043.47 applies to providers doing business as sole proprietorships, partnerships, professional corporations under section 14301 of the Corporations Code, or as rendering providers in a group practice that utilizes nonphysician medical staff. Section 14043.47(c), which establishes the prohibition on providers enrolling at more than three business addresses unless there is at least a ratio of one physician supervisor per three locations, applies to the foregoing types of practices. Upon implementation of the automated enrollment system for all PED approved certified DMC providers, DHCS will be able to automatically identify the medical directors and their specific DMC affiliations. To the extent that any DMC medical director falls within the scope of section 14043.37(c), DHCS will take action to enforce the stated physician ratio.

  • Response Type†: 1-Year
  • Estimated Completion Date: May 2016
  • Response Date: August 2015

California State Auditor's Assessment of Status: Pending

Date of implementation is set for May 2016.


Agency Response*

Welfare and Institutions Code section 14043.47 applies to providers doing business as sole proprietorships, partnerships, professional corporations under section 14301 of the Corporations Code, or as rendering providers in a group practice that utilizes nonphysician medical staff. Section 14043.47(c), which establishes the prohibition on providers enrolling at more than three business addresses unless there is at least a ratio of one physician supervisor per three locations, applies to the foregoing types of practices. Upon implementation of the automated enrollment system for all PED approved certified DMC providers, DHCS will be able to automatically identify the medical directors and their specific DMC affiliations. To the extent that any DMC medical director falls within the scope of section 14043.37(c), DHCS will take action to enforce the stated physician ratio.

  • Response Type†: 6-Month
  • Estimated Completion Date: May 2015
  • Response Date: February 2015

California State Auditor's Assessment of Status: Pending


Agency Response*

No update.

  • Response Type†: 60-Day
  • Estimated Completion Date: May 2015
  • Response Date: October 2014

California State Auditor's Assessment of Status: No Action Taken

Based on its response, the department has not yet implemented this recommendation. In addition, it has not provided any information to indicate that it has taken any action on this recommendation.


Recommendation #21 To: Health Care Services, Department of

To prevent the certification of ineligible providers, Health Care Services should immediately identify and perform an immediate recertification of providers that signed the Compliance Agreement to ensure that these providers are currently meeting all program requirements.

Agency Response*

DHCS is 95.6% completed with the continued certification efforts for all providers that were identified as billing or could bill in the fiscal year 2012-13. DHCS expects to finalize the continued certification efforts in January 2017 or sooner.

  • Response Type†: Annual Follow Up
  • Estimated Completion Date: January 2017
  • Response Date: October 2016

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


Agency Response*

DHCS has already implemented a recertification process that will capture all providers that signed the Compliance Agreement. In July of 2013, DHCS began a recertification process of all DMC providers that billed or could bill for services during fiscal year 2012-13, regardless of their original enrollment method. The continued certification process is required of all DMC providers; therefore, providers that signed the Compliance Agreement are required to submit a current and complete application package, including all attachments and disclosure information. They will also be subject to an onsite inspection.

  • Response Type†: 1-Year
  • Estimated Completion Date: March 2016
  • Response Date: August 2015

California State Auditor's Assessment of Status: Pending

Date of implementation is set for March 2016.


Agency Response*

DHCS has already implemented a recertification process that will capture all providers that signed the Compliance Agreement. In July of 2013, the department began a recertification process of all DMC providers that billed or could bill for services during fiscal year 2012-2013, regardless of their original enrollment method. The current continued certification process is required of all DMC providers therefore providers that signed the Compliance Agreement are required to submit a current and complete application package, including all attachments and disclosure information. They will also be subject to an onsite inspection.

  • Response Type†: 6-Month
  • Estimated Completion Date: November 2015
  • Response Date: February 2015

California State Auditor's Assessment of Status: Pending


Agency Response*

No update.

  • Response Type†: 60-Day
  • Estimated Completion Date: November 2015
  • Response Date: October 2014

California State Auditor's Assessment of Status: No Action Taken

Based on its response, the department has not yet implemented this recommendation. In addition, it has not provided any information to indicate that it has taken any action on this recommendation.


Recommendation #22 To: Health Care Services, Department of

To prevent the certification of ineligible providers, Health Care Services should immediately use a risk-based approach for recertifying program providers.

Agency Response*

DHCS issued a provider bulletin on August 22, 2014 which designated all newly certifying DMC applicants and providers that submit applications for revalidation with the exception of DMC providers operated by governmental entities as high risk. All other DMC providers have been designated as moderate risk. The provider bulleting will become effective September 22, 2014.

  • Response Type†: 60-Day
  • Completion Date: October 2014
  • Response Date: October 2014

California State Auditor's Assessment of Status: Fully Implemented

Health Care Services has implemented a risk-based approach for recertifying program providers.


Recommendation #23 To: Health Care Services, Department of

To prevent the certification of ineligible providers, Health Care Services should immediately develop policies and procedures for its program recertification process.

Agency Response*

DHCS has developed new policies and procedures for the DMC recertification process, and will continue to update these policies and procedures as warranted. DHCS has developed a DMC enrollment and certification section whose sole purpose is to conduct continued certification and certification functions for all DMC provider applicants. PED staff work collaboratively with SUDS' staff and the A&I staff in implementing its policies and procedures.

Additionally, in January 2014, the department began the process of implementing emergency regulations regarding the enrollment of DMC providers with a targeted effective date of July 1, 2015. As part of the emergency regulation package, all DMC providers will be required to adhere to current CCR Title 22 requirements used to enroll and revalidate fee-for-service providers.

  • Response Type†: 6-Month
  • Completion Date: January 2014
  • Response Date: February 2015

California State Auditor's Assessment of Status: Fully Implemented

Health Care Services provided a copy of its procedures for recertifying program providers.


Agency Response*

No update.

  • Response Type†: 60-Day
  • Completion Date: January 2014
  • Response Date: October 2014

California State Auditor's Assessment of Status: No Action Taken

Although Health Care Services indicated that it has fully implemented this recommendation, it has not provided any information to indicate that it has taken any action on this recommendation.


Recommendation #24 To: Health Care Services, Department of

To prevent the certification of ineligible providers, Health Care Services should immediately develop a schedule for recertifying all program providers every five years.

Agency Response*

DMC providers will be able to use PAVE phase/version 3.0 for their enrollment needs. This has been moved up from the original plan to include DMC providers in phase/version 3.5. PAVE phase/version 3.0 is expected to go live on January 23, 2018. The PAVE portal will automatically issue continued enrollment notices for providers when their continued enrollment is due.

  • Response Type†: Annual Follow Up
  • Estimated Completion Date: 1/23/18
  • Response Date: August 2017

California State Auditor's Assessment of Status: Pending

Date of implementation is set for January 23, 2018.


Agency Response*

DHCS will conduct a revalidation of all DMC program providers at least once every five years. For the last two years, DHCS has been engaged in the development of a web-based automated enrollment system to manage the workload more efficiently. The web-based enrollment system Provider Application and Validation for Enrollment (PAVE) system will be rolled out in phases. DMC is in phase 3.5 and expected to go live in Fall of 2017.

  • Response Type†: Annual Follow Up
  • Estimated Completion Date: October 2017
  • Response Date: October 2016

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


Agency Response*

DHCS will conduct a revalidation of all DMC program providers at least once every five years. For the last two years, DHCS has been engaged in the development of a web-based automated enrollment system to manage the workload more efficiently.

DHCS seeks to implement the automated enrollment system in summer 2015. This automated system will identify providers who are due for recertification.

  • Response Type†: 1-Year
  • Estimated Completion Date: December 2015
  • Response Date: August 2015

California State Auditor's Assessment of Status: Pending

Date of implementation is set for December 2015.


Agency Response*

DHCS will conduct a revalidation of all DMC program providers at least once every five years. For the last two years, DHCS has been engaged in the development of a web-based automated enrollment system to manage the workload more efficiently.

DHCS seeks to implement the automated enrollment system in Summer 2015. This automated system will identify providers who are due for recertification.

  • Response Type†: 6-Month
  • Estimated Completion Date: Summer 2015
  • Response Date: February 2015

California State Auditor's Assessment of Status: Pending


Agency Response*

DHCS seeks to implement the automated enrollment system in Spring 2015. This automated system will identify providers who are due for recertification.

  • Response Type†: 60-Day
  • Estimated Completion Date: Spring 2015
  • Response Date: October 2014

California State Auditor's Assessment of Status: Pending

Based on its response, the department has not yet implemented this recommendation.


Recommendation #25 To: Health Care Services, Department of

To prevent the certification of ineligible providers, Health Care Services should immediately continue its implementation of an automated provider enrollment system.

Agency Response*

DMC providers will be able to use PAVE phase/version 3.0 for their enrollment needs. This has been moved up from the original plan to include DMC providers in phase/version 3.5. PAVE phase/version 3.0 is expected to go live on January 23, 2018.

  • Response Type†: Annual Follow Up
  • Estimated Completion Date: 1/23/18
  • Response Date: August 2017

California State Auditor's Assessment of Status: Pending

Date of implementation is set for January 23, 2018.


Agency Response*

DHCS will continue its implementation of the automated provider enrollment system. The web-based enrollment system Provide Application and Validation for Enrollment (PAVE) system will be rolled out in phases. The initial implementation date is October 2016 with DMC providers added in the phase that is expected to go live in Fall of 2017.

  • Response Type†: Annual Follow Up
  • Estimated Completion Date: October 2017
  • Response Date: October 2016

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


Agency Response*

DHCS will continue its implementation of the automated provider enrollment system. The projected final implementation date is December 2015; however, the automated monthly database checks began in the fall of 2014 for all providers enrolled in the PED PMF.

  • Response Type†: 1-Year
  • Estimated Completion Date: December 2015
  • Response Date: August 2015

California State Auditor's Assessment of Status: Pending

Date of implementation is set for December 2015.


Agency Response*

DHCS will continue its implementation of the automated provider enrollment system. The projected final implementation date is Summer 2015; however, the automated monthly database checks will begin in Fall 2014 for all providers enrolled in the PED PMF.

  • Response Type†: 6-Month
  • Estimated Completion Date: Summer 2015
  • Response Date: February 2015

California State Auditor's Assessment of Status: Pending


Agency Response*

No update.

  • Response Type†: 60-Day
  • Estimated Completion Date: Spring 2015
  • Response Date: October 2014

California State Auditor's Assessment of Status: No Action Taken

Based on its response, the department has not yet implemented this recommendation. In addition, it has not provided any information to indicate that it has taken any action on this recommendation.


Recommendation #26 To: Health Care Services, Department of

To prevent the certification of ineligible providers, Health Care Services should immediately complete its program recertification on or before March 24, 2016, as federal regulations require.

Agency Response*

DHCS is 95.6% completed with the continued certification efforts. There are 16 applications that need to be finalized before the project is completed. DHCS is in process of completing the final adjudication of 15 applications and one application was returned for a post onsite review and should be finalized by January 2017.

  • Response Type†: Annual Follow Up
  • Estimated Completion Date: January 2017
  • Response Date: October 2016

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


Agency Response*

DHCS is on track to complete all DMC recertifications on or before the federally required date of March 24, 2016. On July 15, 2013, DHCS initiated the continued certification process by noticing certified Drug Medi-Cal (DMC) providers of the requirement to recertify. The continued certification process is occurring in phases and requires the submission of a complete application package with supporting documentation for review by DHCS. DHCS terminated the certifications of DMC providers that failed to respond timely to the request for continued certification.

  • Response Type†: 1-Year
  • Estimated Completion Date: March 2016
  • Response Date: August 2015

California State Auditor's Assessment of Status: Pending

Date of implementation is set for March 2016.


Agency Response*

DHCS is on track to complete all DMC recertifications on or before the federally required date of March 24, 2016. On July 15, 2013, DHCS initiated the continued certification process by noticing certified Drug Medi-Cal (DMC) providers of the requirement to re certify. The continued certification process is occurring in phases and requires the submission of a complete application package with supporting documentation for review by the Department.

DHCS terminated the certifications of DMC providers that failed to respond timely to the request for continue certification.

  • Response Type†: 6-Month
  • Estimated Completion Date: March 2016
  • Response Date: February 2015

California State Auditor's Assessment of Status: Pending


Agency Response*

No update.

  • Response Type†: 60-Day
  • Estimated Completion Date: March 2016
  • Response Date: October 2014

California State Auditor's Assessment of Status: No Action Taken

Based on its response, the department has not yet implemented this recommendation. In addition, it has not provided any information to indicate that it has taken any action on this recommendation.


Recommendation #27 To: Health Care Services, Department of

To prevent the certification of ineligible providers, Health Care Services should immediately establish a plan for eliminating its backlog of applications for new sites and services and changes to existing certifications.

Agency Response*

Of the 121 backlog applications, 73 were approved and 48 were decertified, denied, or terminated the application review.

  • Response Type†: Annual Follow Up
  • Completion Date: October 2015
  • Response Date: October 2016

California State Auditor's Assessment of Status: Pending

Although Health Care Services asserts that it fully implemented this recommendation, it did not provide any documentation to support its assertion.


Agency Response*

As of July 21, 2015, PED has approved 71 (59%), decertified/denied 15 (12.4%) and terminated the review of 30 (25%) of the 121 backlog applications, for a total of 116 (96%) applications completed. PED has 1 application returned as incomplete, 1 back from the applicant to review, and 3 pending the A&I onsite referral, to complete the backlog inventory.

  • Response Type†: 1-Year
  • Estimated Completion Date: End of 2015
  • Response Date: August 2015

California State Auditor's Assessment of Status: Pending

Date of implementation is set for the end of 2015.


Agency Response*

As of January 6, 2015, PED has approved 37 (30.6%), decertified/denied 7 (6.6%) and terminated the review of 27 (22.3%) of the 121 backlog applications, for a total of 71 (58.7%) applications completed. PED has 37 applications, returned as incomplete, back from the applicants to review, with another 5 pending a response from the applicants, and a balance of 8 either being reviewed or on hold for various reasons, to complete the backlog inventory.

  • Response Type†: 6-Month
  • Completion Date: May 2014
  • Response Date: February 2015

California State Auditor's Assessment of Status: Partially Implemented

Based on its response, Health Care Services has not fully eliminated the preexisting backlog of applications. In addition, it has provided no context about whether or not it is keeping up with new work and thus preventing the backlog from growing.


Agency Response*

As of September 16, 2014, PED staff has completed the initial review of all backlog applications received prior to January 1, 2014. The initial review of the 121 backlog applications resulted in 94% of the applications being returned to the applicants because the applications were incomplete. PED has received 43% of the applications, which were returned incomplete, back from the applicants. PED has approved 22 sites and denied 1 site to date. In addition, for applications received since January 1, 2014, PED has approved 16 sites, and denied 6. In total, PED has approved 38 new Drug Medi-Cal program sites.

  • Response Type†: 60-Day
  • Completion Date: March 2014
  • Response Date: October 2014

California State Auditor's Assessment of Status: No Action Taken

As we explain on page 49 of the report, Health Care Services reported that it received 298 applications as of June 24, 2014. However, its response is primarily focused on only 121 of these applications it received prior to January 1, 2014. Health Care Services' response fails to explain that it received an additional 177 applications between January 1, 2014 and June 24, 2014. In addition, the response fails to provide context for any additional applications it may have received between June 24, 2014 and the date of its 60-day response, October 20, 2014. Moreover, Health Care Services has approved or denied only 45 of the 298, or roughly 15 percent, of the applications it had received as of June 24, 2014. Because Health Care Services processes such a low percentage of its applications, it may continue to encounter a growing backlog of program applications.


Recommendation #28 To: Health Care Services, Department of

To ensure that it appropriately and consistently reviews provider applications and conducts site visits, Health Care Services should update its program checklists to reflect the current federal and state laws and regulations.

Agency Response*

As part of PED's existing process, reviews are conducted with the aid of a set of checklists designed to ensure review is completed in adherence to current federal and state laws and regulations. Effective July 2013 for all DMC providers targeted for continued certification, and effective January 2014 for new and backlogged certification applicants, staff review applications with the aid of checklists that were developed specifically for DMC applicants and, where appropriate, mirror requirements for all other FFS providers. DHCS will continue to update these checklists periodically as necessary to reflect any future changes in law or regulation.

  • Response Type†: 6-Month
  • Completion Date: July 2013
  • Response Date: February 2015

California State Auditor's Assessment of Status: Fully Implemented

Health Care Services provided a copy of its updated analyst review guide that, if followed, would address this recommendation.


Agency Response*

No update.

  • Response Type†: 60-Day
  • Completion Date: July 2013
  • Response Date: October 2014

California State Auditor's Assessment of Status: No Action Taken

Although Health Care Services indicated that it has fully implemented this recommendation, it has not provided any information to indicate that it has taken any action on this recommendation.


Recommendation #29 To: Health Care Services, Department of

To ensure that it appropriately and consistently reviews provider applications and conducts site visits, Health Care Services should retain the documentation, such as checklists, that it uses to support its certification decisions in accordance with its retention policy.

Agency Response*

DHCS currently retains, in accordance with its retention policy, the documentation that it uses to support certification decisions. The PED Document Management System (DMS) is a computer program developed in 2001 and was designed for the purpose of maintaining a complete electronic record of all documents received by PED. All applicant-submitted documents, PED working papers, correspondence to and from providers, Special Claims Review action letters, A&I findings, and other miscellaneous documents are scanned into DMS to maintain a permanent record. Additionally, PETS and PETSII are programs that maintain dates, notes, and all action items made on an application. All application review requires extensive usage of at least two of these programs. Any documents associated with approved applications for DMC continued certification or new certification will also be maintained in DMS.

  • Response Type†: 6-Month
  • Completion Date: July 2013
  • Response Date: February 2015

California State Auditor's Assessment of Status: Fully Implemented

Since the time of our audit, Health Care Services has taken over the certification of Drug Medi-Cal providers and it retains those applications electronically. Previously, these applications were stored in hardcopy and Health Care Services was unable to locate the applications for our audit. If Health Care Services continues to use its Document Management System to store these records electronically, it would address this recommendation.


Agency Response*

No update.

  • Response Type†: 60-Day
  • Completion Date: July 2013
  • Response Date: October 2014

California State Auditor's Assessment of Status: No Action Taken

Although Health Care Services indicated that it has fully implemented this recommendation, it has not provided any information to indicate that it has taken any action on this recommendation.


Recommendation #30 To: Health Care Services, Department of

To ensure that it appropriately and consistently reviews provider applications and conducts site visits, Health Care Services should ensure that supervisors perform detailed reviews of all provider applicants' files, including the application, disclosure statement, and checklists, and that they evidence their reviews by signing off on the appropriate forms.

Agency Response*

DHCS will ensure that the Total Quality Management Unit (TQMU) staffs perform detailed reviews of all provider applicants' files, including the application, disclosure statement, and checklists, and that they evidence their reviews by signing off on appropriate forms. It is PED's process to forward all applications to the TQMU within PED, which is dedicated to re-reviewing all documents, research, and recommendations made by primary research analysts. All applications must be reviewed for accuracy and correctness, and signed by a TQM reviewer before being considered complete. All DMC recertification applications or applications for a new certification undergo the same process for quality control.

  • Response Type†: 6-Month
  • Completion Date: July 2013
  • Response Date: February 2015

California State Auditor's Assessment of Status: Fully Implemented

Health Care Services provided a copy of its analyst review guide, which requires a primary and secondary reviewer's signature to indicate that all required elements have been reviewed and that the application has undergone supervisory review.


Agency Response*

No update.

  • Response Type†: 60-Day
  • Completion Date: July 2013
  • Response Date: October 2014

California State Auditor's Assessment of Status: No Action Taken

Although Health Care Services indicated that it has fully implemented this recommendation, it has not provided any information to indicate that it has taken any action on this recommendation.


Recommendation #31 To: Health Care Services, Department of

To improve the coordination between its divisions, branches, and units and ensure that it addresses allegations of fraud in a timely manner, Health Care Services should continue its efforts to develop its provider risk assessment model for the PSPP unit.

Agency Response*

The DMC provider risk assessment model has been documented and 737 DMC provider sites have been scored with the developed weighted criteria. The scores will be reviewed and updated, where applicable, on a quarterly basis. Any DMC provider receiving a score over 10 points receives a high-risk designation and will be scheduled for a Post-service Post-payment utilization review before lower scoring providers.

  • Response Type†: 1-Year
  • Completion Date: May 2015
  • Response Date: August 2015

California State Auditor's Assessment of Status: Fully Implemented

DHCS provided a copy of its provider risk assessment model, which describes its process for assessing DMC providers as low, medium, or high risk.


Agency Response*

SUD management is leveraging clinical support and expertise from DHCS' Medical Review Branch (MRB) to develop the model based upon MRB's experience and role as the DHCS' primary Medi-Cal anti-fraud unit. The categories of high, medium and low risk providers are based on multiple risk factors. Once provider risk levels are assessed, individuals and/or teams can be assigned responsibility for the reviews depending on the provider risk category. This methodology would mitigate the risk of fraud, waste and abuse within the DMC program, and give the Department some assurance that high risk providers are reviewed with a frequency that would not allow a return to fraudulent practices. Currently, this recommendation is partially implemented as PSPP reviews are occurring based on the data analytics and Strike Team recommendations.

The provider risk assessment model is currently being documented and tested with PSPP reviews commencing in January 2015.

  • Response Type†: 6-Month
  • Estimated Completion Date: January 2015
  • Response Date: February 2015

California State Auditor's Assessment of Status: Pending


Agency Response*

In progress. The target date for completion and approval of the model is October 17, 2014.

  • Response Type†: 60-Day
  • Estimated Completion Date: October 17, 2014
  • Response Date: October 2014

California State Auditor's Assessment of Status: Pending

Based on its response, the department has not yet implemented this recommendation.


Recommendation #32 To: Health Care Services, Department of

To improve the coordination between its divisions, branches, and units and ensure that it addresses allegations of fraud in a timely manner, Health Care Services should continue its efforts to establish a mechanism for its PSPP unit to report the status of fraud referrals to SUD management and its investigations division.

Agency Response*

PSPP has created a Complaint Process, Complaint Log, and a Complaint and Fraud referral form that transmits all complaints to A&I.

  • Response Type†: 60-Day
  • Completion Date: September 2014
  • Response Date: October 2014

California State Auditor's Assessment of Status: Fully Implemented

To the extent that Health Care Services follows the steps of its complaint and fraud referral process, it can help ensure that it is divisions, branches, and units are coordinating effectively.


Recommendation #33 To: Health Care Services, Department of

To improve the coordination between its divisions, branches, and units and ensure that it addresses allegations of fraud in a timely manner, Health Care Services should fully implement the investigations division's recommendations shown in Appendix B. If it chooses not to implement a recommendation, it should document sufficiently the reasons for its decision.

Agency Response*

Of the 32 recommendations issued by the Audits & Investigations Division, DHCS has implemented an additional three recommendations (1, 4, and 6). Emergency regulations giving Provider Enrollment Division authority to certify DMC providers and increasing Medical Director responsibilities including medical oversight was approved by Office of Administrative Law on August 17, 2015 and made permanent on February 11, 2016. Recommendation 20 to explore the use of statistical extrapolation was completed but it was determined to be not be feasible to implement

Substance Use Disorders Program, Policy and Fiscal Division (SUDPPFD) is responsible for one remaining recommendation: #25 Partially implemented. Estimated completion date July 2017

  • Response Type†: Annual Follow Up
  • Estimated Completion Date: July 2017
  • Response Date: October 2016

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


Agency Response*

Of the 32 recommendations issued by the Audits & Investigations Division, DHCS has fully implemented 25 (recommendations 3, 5, 7 - 20, 22, 23, and 26 - 32), and continues to work toward implementing the remaining recommendations. DHCS continues to aim for full implementation by June 2016.

  • Response Type†: 1-Year
  • Estimated Completion Date: June 2016
  • Response Date: August 2015

California State Auditor's Assessment of Status: Pending

Date of implementation was set for June 2016.


Agency Response*

Update for Appendix B's partially implemented recommendations and implementation dates are as follows:

A. On June 25, 2014, Health Care Services used its emergency regulatory authority to amend Title 22 of the California Code of Regulations to clarify the responsibilities of program providers and other provider personnel. Health Care Services is in the process of aligning program certification standards with the enrollment requirements for the Medi-Cal fee-for-service providers and is in the process of drafting regulatory changes to accomplish this alignment. Health Care Services anticipates implementing the new requirements by mid-year 2015.Estimated completion date is July 2015.

B. Health Care Services stated that its enrollment division assumed responsibility of all program certifications as of January 1, 2014. Health Care Services also stated that the enrollment division will complete its alignment of the program certification process with the Medi-Cal fee-for-service provider enrollment process by mid-year 2015. Estimated completion date is July 2015.

C. Health Care Services stated that currently all program providers are in the PRIMe system. The licensing and certification portion of PRIMe was released on June 12, 2014. PRIMe is not capable of accepting applications for the DUI programs. In addition, data from the non-eligible provider list(s) from the enrollment division is not in PRIMe; this information is stored in a different database— Short Doyle Medi-Cal ADP Remediation Technology 6i. Estimated completion date is June 2016.

  • Response Type†: 6-Month
  • Estimated Completion Date: June 2016
  • Response Date: February 2015

California State Auditor's Assessment of Status: Pending


Agency Response*

A. On June 25, 2014, Health Care Services used its emergency regulatory authority to amend Title 22 of the California Code of Regulations to clarify the responsibilities of program providers and other provider personnel. Health Care Services is in the process of aligning program certification standards with the enrollment requirements for the Medi-Cal fee-for-service providers and is in the process of drafting regulatory changes to accomplish this alignment. Health Care Services anticipates implementing the new requirements by mid-year 2015.

B. Health Care Services stated that its enrollment division assumed responsibility of all program certifications as of January 1, 2014. Health Care Services also stated that the enrollment division will complete its alignment of the program certification process with the Medi-Cal fee-for-service provider enrollment process by mid-year 2015.

C. Health Care Services stated that currently all program providers are in the PRIMe system. The licensing and certification portion of PRIMe was released on June 12, 2014. PRIMe is not capable of accepting applications for the DUI programs. In addition, data from the non-eligible provider list(s) from the enrollment division is not in PRIMe; this information is stored in a different database— Short Doyle Medi-Cal ADP Remediation Technology 6i.

  • Response Type†: 60-Day
  • Estimated Completion Date: June 2016
  • Response Date: October 2014

California State Auditor's Assessment of Status: Pending

Based on its response, the department has not yet fully implemented this recommendation.


Recommendation #34 To: Health Care Services, Department of

To strengthen the coordination between the State and the counties, Health Care Services should amend the State-county contract to address any gaps in their collective monitoring efforts.

Agency Response*

The FY 2014-15 county-state contract for Substance Use Disorder services amended to reflect collective monitoring efforts. Attached is Exhibit A, Attachment 1 of the FY 2014-15 county-state contract that outlines such efforts and requirements.

  • Response Type†: 6-Month
  • Completion Date: July 2014
  • Response Date: February 2015

California State Auditor's Assessment of Status: Fully Implemented


Agency Response*

The language has been added to the contract. The contract is currently under Department and Administrative review.

  • Response Type†: 60-Day
  • Estimated Completion Date: November 2014
  • Response Date: October 2014

California State Auditor's Assessment of Status: Pending

Based on its response, the department has not yet fully implemented this recommendation.


Recommendation #35 To: Health Care Services, Department of

To ensure that beneficiaries have safe and reliable access to program services, Health Care Services should amend the State-county contract to allow a process for counties to notify their key partners of the providers that it has suspended.

Agency Response*

The FY 2014-15 county-state contract for Substance Use Disorder services was amended to include such effort. As part of the contract, the county received a Privacy and Information Security Provision document that outlines the counties authority to notify key partners of the providers that DHCS has suspended. Attached is a copy of the Privacy and Information and Security Provision.

  • Response Type†: 6-Month
  • Completion Date: July 2014
  • Response Date: February 2015

California State Auditor's Assessment of Status: Fully Implemented


Agency Response*

The language has been added to the contract. The contract is currently under Department and Administrative review.

  • Response Type†: 60-Day
  • Estimated Completion Date: November 2014
  • Response Date: October 2014

California State Auditor's Assessment of Status: Pending

Based on its response, the department has not yet fully implemented this recommendation.


All Recommendations in 2013-119

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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