Report 2014-130 Recommendation 8 Responses

Report 2014-130: California Department of Health Care Services: It Should Improve Its Administration and Oversight of School‑Based Medi-Cal Programs (Release Date: August 2015)

Recommendation #8 To: Health Care Services, Department of

To minimize the risk that claiming units could include unallowable costs when calculating their reimbursement claims, Health Care Services should remind all local educational consortia and local governmental agencies that contracts with their claiming units should prohibit claiming units from seeking federal reimbursement of Health Care Services' participation fee.

Annual Follow-Up Agency Response From August 2019

Full Implementation Date: February 29, 2016

DHCS disagrees with the CSA's assertion regarding PPL 16 007 dated April 2016. DHCS does not contract directly with LEAs for the SMAA program, therefore, LEAs do not pay a participation fee to DHCS, and are not eligible to seek reimbursement for costs associated with those fees. The LEA participation fee is incurred through their LEC or their LGA and those fees are governed by the contract between those two entities. As per the DHCS contract with the LECs/LGAs, all subrecipient contracts must include similar language to the Terms and Conditions of the master contract. As previously stated, DHCS verified that all subrecipient contracts did not allow federal reimbursement for the portion of the LEC/LGA participation fee that may include costs associated with the DHCS participation fee.

  • Completion Date: February 2017

California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken

Despite its assertion, we remain unconvinced that DHCS has fully implemented our recommendation that it remind its local educational consortia (LEC) and local governmental agencies (LGA) that contracts with their claiming units should prohibit federal reimbursement of DHCS's participation fee.

We made this recommendation because we observed that the Los Angeles Unified School District submitted at least one reimbursement claim to the Los Angeles County Office of Education that inappropriately included DHCS's participation fee, and because other LECs or LGAs could similarly allow their claiming units to inappropriately claim DHCS's participation fee. Inappropriately claiming DHCS's participation fee can result in the federal government paying more than its 50 percent share of DHCS's costs.

Although DHCS mentioned guidance at PPL 16 007 to support its implementation, this PPL contains no such prohibition. Furthermore, DHCS's assertion that it verified that the subrecipient contracts did not allow federal reimbursement is not the same as actually prohibiting it. Our position is that, as California's designated single state agency for Medicaid and the administrative activities program administrator, DHCS should take steps to ensure that all interagency agreements related to Medi-Cal are consistent with federal requirements and that reimbursement claims are allowable.

  • Auditee did not address all aspects of the recommendation

Annual Follow-Up Agency Response From November 2018

No update - All contracts were reviewed to ensure they did not allow federal reimbursement for DHCS' participation fee. This was implemented on February 29, 2016

  • Completion Date: February 2016

California State Auditor's Assessment of Annual Follow-Up Status: Partially Implemented

In this and in previous annual responses, Health Care Services stated that it fully implemented this recommendation. We continue to disagree with Health Care Services' assessment.

Health Care Services previously provided us a copy of its policy and procedure letter (PPL) dated April 2016 as support that it implemented this recommendation. Health Care Services addressed this PPL to local educational consortia and local governmental agencies. However, although the PPL states that local educational consortia and local governmental agencies cannot claim the participation fee, it does not specifically prohibit claiming units (e.g., local education agencies such as school districts) from seeking federal reimbursement of Health Care Services' participation fee, nor does it remind local educational consortia and local governmental agencies that contracts with their claiming units should prohibit claiming units from seeking federal reimbursement of Health Care Services' participation fee as we recommended.

  • Auditee did not address all aspects of the recommendation

Annual Follow-Up Agency Response From September 2017

No update - All contracts were reviewed to ensure they did not allow federal reimbursement for DHCS' participation fee. This was implemented on February 29, 2016

  • Completion Date: February 2016

California State Auditor's Assessment of Annual Follow-Up Status: Partially Implemented

We cannot confirm that Health Care Services fully implemented this recommendation. Health Care Services provided us a copy of a policy and procedure letter (PPL) dated April 2016 as support that it implemented this recommendation. Health Care Services addressed this PPL to local educational consortia and local governmental agencies. Although the PPL states that local educational consortia and local governmental agencies cannot claim the participation fee, it does not specifically prohibit claiming units from seeking federal reimbursement of Health Care Services' participation fee, nor does it remind local educational consortia and local governmental agencies that contracts with their claiming units should prohibit claiming units from seeking federal reimbursement of Health Care Services' participation fee as we recommended.

  • Auditee did not address all aspects of the recommendation

1-Year Agency Response

As noted in the six-month update, this was implemented in February 2016.

  • Completion Date: February 2016
  • Response Date: September 2016

California State Auditor's Assessment of 1-Year Status: Partially Implemented

In its posted response, Health Care Services stated that it implemented this recommendation in February 2016. We disagree with Health Care Services' assessment.

In July 2016, Health Care Services provided us a copy of its new policy and procedure letter (PPL) dated April 2016 as support that it implemented this recommendation. Health Care Services addressed this PPL to local educational consortia and local governmental agencies. However, although the PPL states that local educational consortia and local governmental agencies cannot claim the participation fee, it does not specifically prohibit claiming units from seeking federal reimbursement of Health Care Services' participation fee, nor does it remind local educational consortia and local governmental agencies that contracts with their claiming units should prohibit claiming units from seeking federal reimbursement of Health Care Services' participation fee as we recommended.


6-Month Agency Response

A Policy and Procedure Letter (PPL) was drafted to address the prohibition of claiming participation fees. The focus of the PPL was expanded to address the claiming of participation fees for all programs within the Medi-Cal Administrative Claiming Section.

  • Completion Date: February 2016
  • Response Date: March 2016

California State Auditor's Assessment of 6-Month Status: Partially Implemented

In its posted response, Health Care Services stated that it implemented this recommendation in February 2016 and that it drafted a policy and procedure letter that addressed the prohibition of claiming participation fees.

In July 2016, Health Care Services provided us a copy of this policy and procedure letteródated April 8, 2016, and addressed to local educational consortia and local governmental agenciesóas support that it implemented this recommendation. Although this letter states that local educational consortia and local governmental agencies cannot claim the participation fee, it does not specifically prohibit claiming units from seeking federal reimbursement of Health Care Services' participation fee as we recommended.

  • Auditee did not address all aspects of the recommendation

60-Day Agency Response

DHCS is currently drafting an SMAA specific PPL on prohibition of claiming participation fees. The anticipated release date of the PPL is September 30, 2015.

  • Estimated Completion Date: September 2015
  • Response Date: November 2015

California State Auditor's Assessment of 60-Day Status: Pending

Health Care Services has not yet provided us a copy of the policy and procedure letter it mentioned in its response.


All Recommendations in 2014-130

Agency responses received are posted verbatim.