Recurring Findings

Health Care: Recurring Material Internal Control Deficiencies
Federal Program Issue First Year Reported
Department's Assertion Page Number
Medical Assistance Program Findings cited in the annual Medi-Cal Payment Error Study (2007) revealed that 6.56 percent of the total dollars paid for claims had some indication that they contained a provider payment error, 2.53 percent of paid claims were submitted by providers that disclose characteristics of potential fraud, and 46 percent of the payments for claims with errors did not have sufficient documentation to support the services claimed. Based on the error percentage related to Medi-Cal payments, the risk of noncompliance with allowable costs and activities is considered material. 2005-06
Partially corrected. Health Care Services will continue to implement the corrective action steps outlined in the2007 Medi-Cal Payment Error Study (MPES). Health Care Services has made a commitment to routine systematic measurement as part of a comprehensive anti-fraud strategy through the MPES process. The bi-annual MPES provides opportunities for identifying new patterns of payment errors and areas of potential fraud, waste, and abuse in the Medi-Cal program. Health Care Services has initiated corrective actions for all providers identified in the 2007 MPES against which actions were warranted. In addition, Health Care Services took additional actions to focus anti-fraud efforts on those areas identified by the study as most vulnerable to fraud and abuse. These additional actions included: additional on site reviews of pharmacies, Adult Day Health Centers (ADHC) and Non-Emergency Medical Transportation (NEMT); expanded use of new technology to better identify potential fraud schemes; reform of the ADHC program; an increase in the number of investigational and routine field compliance audits; and development of a joint action plan with provider regulatory boards and provider associations to address provider claiming errors identified as potential fraud and abuse. MPES 2007 also identified the need to increased outreach and education to improve provider documentation of medical necessity. Health Care Services has subsequently worked with the California Association for Adult Day Services, American Russian Medical Association, California Medical Association, Medical Board of Pharmacy, and the Centers for Medicare and Medicaid Services to develop outreach, education, and training for improved compliance with documentation requirements. The 2009 MPES is complete and under review by management. 85
Medical Assistance Program Health Care Services and Public Health did not retain the federally required provider agreements for four of the 50 providers sampled. 2006-07
Partially corrected. Provider Enrollment Division (PED) updated its provider enrollment process to require provider agreements and continues its plan to re-enroll all Medi-Cal providers as a continuous process as resources are available. In addition, PED continues to work in conjunction with Audits and Investigations to re-enroll providers identified as high risk, including the re- enrollment of identified pre-1999 providers. Re-enrolled providers are required to submit a re-enrollment application package updated to current federal standards to retain Medi-Cal eligibility. PED has also updated its requirements so that all providers must submit a new application package to report a new, additional, or change of service location. In addition, State law requires that a new application be submitted when there is a change in business entity. Health Care Services continually verifies provider information to ensure compliance with State and federal requirements in its ongoing re-enrollment efforts. Public Health's Licensing and Certification Division is responsible for determining the eligibility of facility providers. Per Interagency Agreement 07-65492 executed in fiscal year 2007-08, Public Health collects, maintains, and stores enrolled facility provider records, including provider agreements. In 2008, a new provider agreement was jointly developed for facility providers by Health Care Services and Public Health. Public Health continues to collect new provider agreements from facility providers and forwards copies of the provider agreements to PED for Health Care Services records. Since June 2010, provider agreements have been obtained from the three facility providers noted in bullet two of the audit finding; an agreement was requested from the fourth facility but they have not responded. 103
Medical Assistance Program Health Care Services lacks sufficient internal controls to ensure only medically necessary claims and eligible providers are paid and the providers are observing record retention rules. Of the 50 fee-for-service claims reviewed, ten included exceptions: claims were not deemed medically necessary and the services were not properly documented. 2006-07
Partially corrected. Health Care Services continues to perform pre and post-payment reviews including Random Claims Review, Self-Audits, Desk Audits, Field Audit Reviews, and Audits for Recovery. Health Care Services conducts focused reviews on provider types identified as high risk. Health Care Services also provides provider education to prevent common problems and potential issues. Health Care Services continues to conduct a biannual Medi-Cal Payment Error Rate Study (MPES) to identify potential problem trends. MPES has identified documentation and medical necessity issues with pharmacies, adult day health centers (ADHC), local educational agencies (LEA) and non-emergency medical transportation (NEMT) providers. As a result, projects such as the Pharmacy Outreach Project which reviewed over 2,000 pharmacies and the NEMT Project which reviewed approximately 200 NEMT providers were developed. Health Care Services has completed several ADHC projects, reviewing over 100 ADHCs. Also, an independent extended review of LEAs was conducted by the State Controllerís Office and was part of the MPES 2007 report. The measured error rate has steadily declined since the inception of MPES. 86
Medical Assistance Program Health Care Services lacks adequate internal controls over its redetermination requirements for Medi-Cal beneficiaries to ensure benefits are discontinued when redeterminations are not received within 12 months of the most recent redetermination date and when proper citizenship is not obtained. 2008-09
Partially corrected. Redeterminations: Pursuant to State statute and federal requirements, counties must complete redeterminations within specified timeframes. Health Care Services reinforces this policy through written guidance in the form of All County Welfare Directors Letters. Additionally, Health Care Services conducts semi-annual Medi-Cal Eligibility Quality Control (MEQC) reviews and operates a County Performance Standards (CPS) program. Under CPS, counties self certify performance standards relative to the timeliness of county processing of applications and redeterminations. Counties that do not demonstrate adequate performance through either self-certifications or independent State reviews are required to document written corrective action plans (CAP) to demonstrate remedial efforts with required quarterly reports to demonstrate progress on remedial actions. Health Care Services will continue in its efforts to reinforce the expectations that counties complete redeterminations on a timely basis and assure that documentation is available for review in county case files consistent with State policies. This reinforcement will be in the form of both verbal and written communication to the counties when findings present that are not consistent with State policy. Citizenship Documentation: Effective July 1, 2006, State Medicaid programs have been required to have citizenship and identity documentation on individuals seeking program services. Since January 2010, Health Care Services had relied on an automated system match of social security numbers (SSNs) with the federal Social Security Administration as its primary means to verify citizenship and identity. This verification matching process has increased accuracy and improved the documentation of citizenship and identity for individuals seeking or enrolled in Medi-Cal. To date, California has experienced an approximate success rate of 94 percent of SSNs being validated by this means. To the extent the electronic SSN match process does not yield a successful result and the beneficiary or the county is unable to correct issues relative to achieving a successful SSN match, the State requires counties to rely on existing procedures whereby appropriate paper documents such as passports, drivers licenses and birth records can be used to validate citizenship and identity status. Health Care Services has reinforced this requirement through the release of All County Welfare Directorís Letters and evaluates such documentation when conducting MEQC reviews. As deficiencies are noted with citizenship documentation, this information is communicated both verbally and in writing to the counties. Health Care Services will continue to reinforce to the counties the requirements to have citizenship documentation in case records. Health Care Services will discuss the audit findings and corrective action with the affected counties. On April 22, 2011, Health Care Services issued All County Welfare Directors Letter 11-19 which informs counties that if the county MEQC case error rate is 10 percent or higher, Health Care Services may impose a CAP requirement. If Health Care Services finds that a county is having significant problems with either redeterminations or citizenship documentation, it can require that county to develop and implement a CAP on one or both of these program areas. Health Care Services will monitor the countyís progress on each CAP and will also conduct a follow-up review to evaluate the efficacy of the county's corrective action measures. 94
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