Report 2013-119 Recommendations and Responses in 2015-041

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

Department Number of Years Reported As Not Fully Implemented Total Recommendations to Department Not Implemented After One Year Not Implemented as of 2014-041 Response Not Implemented as of Most Recent Response
Department of Health Care Services 1 35 14 N/A 14

Recommendation 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.

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).

  • California State Auditor's Assessment of Status: Pending
  • Estimated Completion Date: January 2016
  • Response Date: August 2015

Recommendation 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.

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.

  • California State Auditor's Assessment of Status: Pending
  • Estimated Completion Date: Early 2016
  • Response Date: August 2015

Recommendation 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.

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.

  • California State Auditor's Assessment of Status: Pending
  • Estimated Completion Date: June 2016
  • Response Date: August 2015

Recommendation 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.

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).

  • California State Auditor's Assessment of Status: Pending
  • Estimated Completion Date: End of 2015
  • Response Date: August 2015

Recommendation 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.

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.

  • California State Auditor's Assessment of Status: Pending
  • Estimated Completion Date: September 2015
  • Response Date: August 2015

Recommendation 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.

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.

  • California State Auditor's Assessment of Status: Pending
  • Estimated Completion Date: November 2015
  • Response Date: August 2015

Recommendation 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.

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.

  • California State Auditor's Assessment of Status: Pending
  • Estimated Completion Date: May 2016
  • Response Date: August 2015

Recommendation 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.

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.

  • California State Auditor's Assessment of Status: Pending
  • Estimated Completion Date: March 2016
  • Response Date: August 2015

Recommendation 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.

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.

  • California State Auditor's Assessment of Status: Pending
  • Estimated Completion Date: December 2015
  • Response Date: August 2015

Recommendation 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.

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.

  • California State Auditor's Assessment of Status: Pending
  • Estimated Completion Date: December 2015
  • Response Date: August 2015

Recommendation 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.

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.

  • California State Auditor's Assessment of Status: Pending
  • Estimated Completion Date: March 2016
  • Response Date: August 2015

Recommendation 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.

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.

  • California State Auditor's Assessment of Status: Pending
  • Estimated Completion Date: End of 2015
  • Response Date: August 2015

Recommendation 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.

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.

  • California State Auditor's Assessment of Status: Pending
  • Estimated Completion Date: June 2016
  • Response Date: August 2015

Recommendation 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.

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

  • California State Auditor's Assessment of Status: Partially Implemented
  • Estimated Completion Date: October 2014
  • Response Date: August 2015

Current Status of Recommendations

All Recommendations in 2015-041