Report 2010-108 Recommendations and Responses in 2012-041

Report 2010-108: Department of Public Health: It Reported Inaccurate Financial Information and Can Likely Increase Revenues for the State and Federal Health Facilities Citation Penalties Accounts

Department Number of Years Reported As Not Fully Implemented Total Recommendations to Department Not Implemented After One Year Not Implemented as of Most Recent Response
Department of Public Health 2 17 7 7

Recommendation To: Public Health, Department of

To ensure that citation review conferences are completed expeditiously, Public Health should continue to take steps to eliminate its backlog of appeals awaiting a citation review conference.

Response

CDPH agrees with the recommendation that the Department should continue to take steps to eliminate its backlog of appeals awaiting a citation review conference.

All AA citations that were pending at the time of the BSA report have been heard in a Citation Review Conference (CRC) hearing. All AA citations are being scheduled when requested and are current. However, there remains a backlog of CRCs. At the time of the BSA audit, approximately 450 B, 150 A and seven AA citations were pending review. Currently, 216 (20 added in 2011-12) B, and 72 (13 added in 2011-12) A citations are pending. Retired annuitant (RA) staff who have been deemed mission critical, thoroughly trained, and dedicated solely to this workload, are continuing work to reduce the backlog of appeals awaiting citation review conferences. As a result, CDPH is making progress to address the backlog.

  • California State Auditor's Assessment of Status: Not Fully Implemented
  • Completion Date: Unknown
  • Response Date: September 2012

Recommendation To: Public Health, Department of

To increase revenue for the penalty accounts, Public Health should seek legislation authorizing it to revise periodically the penalty amounts to reflect an inflation indicator, such as the CPI.

Response

A 2011 budget trailer bill (ABX 1-19) increased B citation penalty amounts for skilled nursing facilities and intermediate care facilities at a range not less than $100 and not to exceed $2,000; an increase of the maximum from $1,000 for each citation. All other long-term care facilities were to remain subject to B citation penalty amounts not less than $100 and not to exceed $1,000. Additional statutory changes would be necessary to increase civil money penalty amounts for category AA, A, and B citations for all long-term care facility categories.

In addition, CDPH continues to explore a legislative proposal to adjust citation penalty amounts to reflect inflation using an indicator such as the Consumer Price Index.

  • California State Auditor's Assessment of Status: Not Fully Implemented
  • Completion Date: January 2015
  • Response Date: September 2012

Recommendation To: Public Health, Department of

To increase revenue for the penalty accounts, Public Health should ensure that it conducts all state surveys of facilities every two years, as required by state law.

Response

CDPH agrees with the recommendation that the Department should ensure that it conducts all state surveys of facilities every two years as required by state law. CDPH is making a concerted effort to comply with this requirement. In fiscal year 2012-2013, Licensing and Certification (L&C) will continue to evaluate its workload to allocate staff resources in an effort to meet this requirement. This evaluation may result in reassigning surveyor activity to determine if additional resources are needed to conduct both federal and state mandated surveys as required.

  • California State Auditor's Assessment of Status: Not Fully Implemented
  • Completion Date: Unknown
  • Response Date: September 2012

Recommendation To: Public Health, Department of

To ensure that it complies with current state law and increases transparency, Public Health should adopt regulations for the administration of temporary management companies.

Response

CDPH agrees it should adopt regulations for the administration of temporary management companies.

CDPH has added the administration of temporary management companies to its regulations priority list for CDPH. The Department took into account the multiple packages that need to be promulgated and prioritized each package. Currently, the Department operates under a standardized review process for temporary management companies until a completed regulation package is adopted. The Department anticipates completion of a package addressing temporary management companies in 2016 or 2017.

  • California State Auditor's Assessment of Status: Not Fully Implemented
  • Completion Date: December 2016 or 2017
  • Response Date: September 2012

Recommendation To: Public Health, Department of

To increase revenue for the state account, Public Health should seek legislation authorizing it to require facilities that want to contest the monetary penalty to pay the penalty upon its appeal which could then be deposited into an account within the special deposit fund. The original monetary penalty deposited, plus interest accrued in the account, should then be liquidated in accordance with the terms of the decision.

Response

In January 2011, CDPH met with stakeholders to solicit their input on the BSA report. In March 2011, CDPH released those recommendations, as required, via its report to the Legislature. As a result of the input from those meetings, CDPH does not support the BSA audit recommendation to seek legislation authorizing it to require facilities that want to contest the monetary penalty to pay the penalty upon its appeal, which could then be deposited into an account within the special deposit fund. Changing the collection process to require facilities to pre pay penalties, and placing the penalties in an interest bearing account, would result in a cost to the Department of approximately $65,000 a year. The penalty amount would not be available for use until the appeals were exhausted; therefore, CDPH would need to ensure the proper accounting of funds received, disbursed, and tracked. The administrative cost would need to be paid either by the imposition of a non refundable administrative fee upon filing of an appeal or by an increase in licensing fees. Currently, in lieu of contesting a penalty, facilities may pay 65 percent of the penalty within 15 business days of the issuance of the citation. Full payment is due within 30 calendar days of issuance. CDPH recommends that the penalty collection process remain unchanged and that the time for transmittal of penalties to CDPH be increased from 15 days to 30 days after issuance of the citation. This recommendation offers facilities more flexibility in ensuring they have monies to meet their operational obligations.

  • California State Auditor's Assessment of Status: Will Not Implement
  • Response Date: September 2012

Recommendation To: Public Health, Department of

To ensure consistency with federal guidance related to federal requirements, and that it is not creating incentives for facilities to appeal citations issued for noncompliance with state requirements, Public Health should provide guidance to its staff that discourages settling appealed monetary penalties for a better term than had the facility not contested the citation and paid the penalty within the time frame specified in law to receive a 35 percent reduction. If Public Health believes instances occur when it is appropriate to reduce a monetary penalty by more than 35 percent, it should document which statutory or regulatory factors that formed the basis for concluding that the original class of citation and corresponding monetary penalty amount were no longer considered valid or relevant.

Response

CDPH disagrees with this recommendation to ensure that it is not creating incentives for facilities to appeal citations, and that CDPH should establish a policy that discourages settling appealed monetary penalties for better terms than had the facility not contested the citation and paid the penalty within the timeframe specified in law to receive a 35 percent reduction.

CDPH will not be implementing BSA recommendation. The right to appeal is a part of the due process afforded to all providers. CDPH does not view the outcome of negotiations as providing an incentive for facilities to appeal. CDPH must maintain maximum flexibility to negotiate citations and weigh all factors in a final settlement. Adoption of BSA's recommendation would hinder CDPH's ability to achieve equitable settlements, and force CDPH to adhere to a set policy which may not be appropriate in all circumstances. Moreover, it would put CDPH in an uneven bargaining position if the facility became aware of CDPH's settlement policy.

  • California State Auditor's Assessment of Status: Will Not Implement
  • Response Date: September 2012

Recommendation To: Public Health, Department of

To increase revenue for the penalty accounts, Public Health should seek legislation specifying a time frame within which facilities with nonappealed citations that do not qualify for a 35 percent reduction must pay their monetary penalties and allowing Public Health to collect interest on late payments of monetary penalties.

Response

As stated in the response to the BSA report, CDPH agrees with the recommendation that the Department should seek legislation specifying a timeframe within which non-appealed citations that do not qualify for a 35 percent reduction must be paid. However, CDPH does not agree with the recommendation to collect interest on citations that are not appealed and that do not qualify for the 35 percent reduction.

  • California State Auditor's Assessment of Status: Will Not Implement
  • Response Date: September 2012

Current Status of Recommendations

All Recommendations in 2012-041