Report 2017-109 All Recommendation Responses

Report 2017-109: Skilled Nursing Facilities: Absent Effective State Oversight, Substandard Quality of Care Has Continued (Release Date: May 2018)

Recommendation for Legislative Action

To ensure that the State supports and encourages nursing facilities' efforts to improve their quality of care, the Legislature should modify the quality assurance fee by requiring nursing facilities to demonstrate quality-of-care improvements to receive all or some of their quality assurance fee payments. If nursing facilities do not demonstrate adequate quality-of-care improvements, Health Care Services should redistribute their quality assurance fee payments to those nursing facilities that have improved. In modifying this program, the Legislature should consider the best practices we identified and the feedback that Health Care Services receives from stakeholders.

Description of Legislative Action

The Legislature did not take action in the 2021-2022 legislative session to address this specific recommendation.

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

Description of Legislative Action

As of May 1, 2021, the Legislature has not taken action to address this specific recommendation.

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

Description of Legislative Action

As of May 1, 2020, the Legislature has not taken action to address this specific recommendation.

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

Description of Legislative Action

The Legislature has not taken any action to address this specific recommendation.

California State Auditor's Assessment of 1-Year Status: No Action Taken

Description of Legislative Action

The Legislature has not taken action to address this specific recommendation.

California State Auditor's Assessment of 6-Month Status: No Action Taken

Description of Legislative Action

The Legislature has not taken action to address this specific recommendation.

California State Auditor's Assessment of 60-Day Status: No Action Taken

Recommendation for Legislative Action

To ensure that Public Health's oversight results in nursing facilities improving their quality of care, the Legislature should require Public Health to develop by November 2018 a proposal for legislative consideration that outlines the factors it will consider when approving or denying applications from nursing facilities of the same class based on each applicant's ability to provide quality patient care. This proposal should outline the specific criteria—including relevant quality-of-care metrics—that Public Health will consider and the specific thresholds at which higher-level management must approve decisions. Public Health should review its proposal with its stakeholders before forwarding it to the Legislature. The Legislature should codify Public Health's proposal as appropriate.

Description of Legislative Action

The Legislature did not take action in the 2021-2022 legislative session to address this specific recommendation.

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

Description of Legislative Action

As of May 1, 2021, the Legislature has not taken action to address this specific recommendation.

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

Description of Legislative Action

As of May 1, 2020, the Legislature has not taken action to address this specific recommendation.

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

Description of Legislative Action

The Legislature has not taken any action to address this specific recommendation.

California State Auditor's Assessment of 1-Year Status: No Action Taken

Description of Legislative Action

The Legislature has not taken action to address this specific recommendation.

California State Auditor's Assessment of 6-Month Status: No Action Taken

Description of Legislative Action

The Legislature has not taken action to address this specific recommendation.

California State Auditor's Assessment of 60-Day Status: No Action Taken

Recommendation for Legislative Action

To ensure that Public Health's oversight results in nursing facilities improving their quality of care, the Legislature should require Public Health to conduct state and federal inspections concurrently by aligning federal and state timelines. Specifically, because federal inspections must occur no later than 15 months since the last federal inspection, the Legislature should require that state inspections occur every 30 months.

Description of Legislative Action

AB 1907 (Chapter 277, Statutes of 2022) would, among other things, extend the maximum period between inspections of skilled nursing facilities from 2 years to 30 months.

California State Auditor's Assessment of Annual Follow-Up Status: Legislation Enacted

Description of Legislative Action

As of May 1, 2021, the Legislature has not taken action to address this specific recommendation.

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

Description of Legislative Action

As of May 1, 2020, the Legislature has not taken action to address this specific recommendation.

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

Description of Legislative Action

The Legislature has not taken any action to address this specific recommendation.

California State Auditor's Assessment of 1-Year Status: No Action Taken

Description of Legislative Action

The Legislature has not taken action to address this specific recommendation.

California State Auditor's Assessment of 6-Month Status: No Action Taken

Description of Legislative Action

The Legislature has not taken action to address this specific recommendation.

California State Auditor's Assessment of 60-Day Status: No Action Taken

Recommendation for Legislative Action

To ensure that Public Health's oversight results in nursing facilities improving their quality of care, the Legislature should require that Public Health increase citation penalty amounts annually by—at a minimum—the cost of inflation.

Description of Legislative Action

AB 323 (Chapter 458, Statutes of 2021) redefines a class "AA" violation as a class "A" violation that the department determines to have been a substantial factor, as described, in the death of a resident of a long-term health care facility. The bill increases the civil penalties for a class "A," "AA," or "B" violation by a skilled nursing facility or intermediate care facility, as specified. The bill deletes numerous references to the "patients" of a long-term health care facility.

California State Auditor's Assessment of Annual Follow-Up Status: Legislation Enacted

Description of Legislative Action

As of May 1, 2021, the Legislature has not taken action to address this specific recommendation.

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

Description of Legislative Action

AB 506 (Kalra) would have redefined class "AA" violations as class "A" violations when the Department of Public Health (Public Health) determines that the violation was a "substantial factor" in the death of a resident of a long-term care facility. The bill also would have increased the civil penalties for class A, AA, or B violations by certain long-term care facilities, and required Public Health to annually adjust the penalties based on the California Consumer Price Index. This bill was vetoed by the Governor.

AB 2245 (Kalra) was introduced on February 13, 2020, and would redefine a class "AA" violation as a class "A" violation that Public Health determines to have been a substantial factor in the death of a resident of a long-term health care facility. The bill would increase the civil penalties for a class "A," "AA," or "B" violation by a skilled nursing facility or intermediate care facility.

California State Auditor's Assessment of Annual Follow-Up Status: Legislation Introduced

Description of Legislative Action

AB 506 (Kalra) would redefine class "AA" violations as class "A" violations when the Department of Public Health (Public Health) determines that the violation was a "substantial factor" in the death of a resident of a long-term care facility. The bill would also increase the civil penalties for class A, AA, or B violations by certain long-term care facilities, and require Public Health to annually adjust the penalties based on the California Consumer Price Index.

California State Auditor's Assessment of 1-Year Status: Legislation Introduced

Description of Legislative Action

The Legislature has not taken action to address this specific recommendation.

California State Auditor's Assessment of 6-Month Status: No Action Taken

Description of Legislative Action

The Legislature has not taken action to address this specific recommendation.

California State Auditor's Assessment of 60-Day Status: No Action Taken

Recommendation for Legislative Action

The Legislature should require nursing facilities to submit annually their related-parties' profit and loss statements to Health Care Services when total transactions exceed a specified monetary threshold. The purpose of these statements would be to assist Health Care Services in its audits.

Description of Legislative Action

Assembly Bill 1953 (Chapter 383, Statutes of 2018), effective January 1, 2020, requires an organization that operates, conducts, owns, or maintains a skilled nursing facility (SNF) to report to the Office of Statewide Health Planning and Development (OSHPD) about whether the licensee, or a general partner, director, or officer of the licensee, has an ownership or controls interest of 5 percent or more in a related party that provides any service to the SNF. Specifically, the licensee is required to disclose all services provided to the SNF, the number of individuals who provide that service at the SNF, and any other information requested by OSHPD. If goods, fees, and services collectively worth $10,000 or more per year are to be delivered to the SNF, the disclosure must include the related party's profit and loss statement and the Payroll-Based Journal public use data for the previous quarter for the SNF's caregivers.

California State Auditor's Assessment of 6-Month Status: Legislation Enacted

Description of Legislative Action

Assembly Bill 1953 (Wood) would require an organization that operates, conducts, owns or maintains a skilled nursing facility to report to the Office of Statewide Health Planning and Development about whether the licensee, or a general partner, director, or officer of the licensee, has an ownership or controls interest of 5 percent or more in a related party that provides any service to the skilled nursing facility. The bill would specifically require the licensee to disclose all services provided to the skilled nursing facility, the number of individuals who provide that service at the skilled nursing facility, and any other information requested by the office. If goods, fees, and services collectively worth $10,000 or more per year are to be delivered to the skilled nursing facility, the bill would require the disclosure to include the related party's profit and loss statement and the Payroll-Based Journal public use data for the previous quarter for the skilled nursing facility's direct caregivers. This information would be included on an existing annual report as of January 1, 2020.

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

Recommendation for Legislative Action

To improve coordination and efficiency among the state agencies that oversee nursing facilities, the Legislature should require that Health Planning, Public Health, and Health Care Services collaborate to assess the information that each collects from nursing facilities and to develop a proposal by May 2019 for any legislative changes that would be necessary to increase the efficiency of their collection and use of the information. The agencies' goals should include the collection of information by only one agency and the development of a method to share that information with each other. By May 2020, the three agencies should report to the Legislature on the results of implementing their proposal, such as the efficiencies gained through their increased coordination.

Description of Legislative Action

The Legislature did not take action in the 2021-2022 legislative session to address this specific recommendation.

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

Description of Legislative Action

As of May 1, 2021, the Legislature has not taken action to address this specific recommendation.

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

Description of Legislative Action

As of May 1, 2020, the Legislature has not taken action to address this specific recommendation.

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

Description of Legislative Action

The Legislature has not taken any action to address this specific recommendation.

California State Auditor's Assessment of 1-Year Status: No Action Taken

Description of Legislative Action

The Legislature has not taken action to address this specific recommendation.

California State Auditor's Assessment of 6-Month Status: No Action Taken

Description of Legislative Action

The Legislature has not taken action to address this specific recommendation.

California State Auditor's Assessment of 60-Day Status: No Action Taken

Recommendation for Legislative Action

To more effectively communicate with consumers about nursing facilities' financial conditions and quality of care, the Legislature should require a state entity—such as Health Planning, Public Health, or Health Care Services—to develop, implement, and maintain for consumers by May 2020 an online dashboard that includes at a minimum information about nursing facilities' net income and quality of care.

Description of Legislative Action

The Legislature did not take action in the 2021-2022 legislative session to address this specific recommendation.

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

Description of Legislative Action

As of May 1, 2021, the Legislature has not taken action to address this specific recommendation.

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

Description of Legislative Action

As of May 1, 2020, the Legislature has not taken action to address this specific recommendation.

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

Description of Legislative Action

The Legislature has not taken any action to address this specific recommendation.

California State Auditor's Assessment of 1-Year Status: No Action Taken

Description of Legislative Action

The Legislature has not taken action to address this specific recommendation.

California State Auditor's Assessment of 6-Month Status: No Action Taken

Description of Legislative Action

The Legislature has not taken action to address this specific recommendation.

California State Auditor's Assessment of 60-Day Status: No Action Taken

Recommendation #8 To: Public Health, Department of

As the Legislature considers changes to state law, Public Health should take the steps necessary to ensure that its oversight results in nursing facilities improving their quality of care by amending its application licensing reviews by developing a defined process that specifies how an analyst will determine whether an applicant has demonstrated its ability to comply with state and federal requirements. This process also needs to ensure that analysts conduct complete and standardized reviews of each nursing facility application within each class of facility. Specifically, these processes should clearly outline what factors analysts will consider when determining whether an applicant is in compliance, how analysts will weigh those factors for each class of facility, and what objective thresholds will prompt analysts to elevate applications for review and approval by higher-level management. Additionally, Public Health should document the additional factors higher-level management will consider if applications are elevated for their review to ensure that Public Health conducts standardized reviews of nursing facility applications of the same class. Finally, Public Health should develop processes ensuring that it documents its decisions adequately.

Annual Follow-Up Agency Response From October 2023

The Centralized Applications Branch (CAB) took steps to standardize its skilled nursing facility licensing application reviews. CAB enhanced its Compliance History Recommendation Summary (CHRS) to ensure the information presented by staff to management is consistent, complete, and accurate. The enhanced templates provide staff clear directions on the information required to be reviewed to determine if there is evidence satisfactory to the department that the applicant is reputable and responsible for licensure. It includes instructions on researching and summarizing all, but not limited to, the information listed on the Guideline for Weighing Factors of Compliance History, which was given in CAB's last response to CSA on 09/22/2022. Additionally, the templates provide guidance to effectively present findings and recommendations to management. On 05/02/2023, CAB provided training to staff on the updated templates to teach individuals how to consistently and thoroughly summarize their findings from the application and compliance history report. The guidelines and templates assists analysts and management in making a recommendation or determination on whether to approve or deny the applications based on the compliance history of entities with 5% or more ownership interest. Two CHRS templates were created, one for applications received prior to 07/01/2023 and one for applications received after 07/01/2023 when Assembly Bill 1502 - Skilled Nursing Facility Ownership and Management Reform Act of 2022 went into effect, which amended Health and Safety Code (HSC) sections 1265 and 1267.5 and added sections 1253.2 and 1253.3. (See CHRS Template (Received after 07-01-2023).docx and CHRS Template (Received before 07-01-2023).docx)

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

Annual Follow-Up Agency Response From September 2022

On 9/15/2021, the Centralized Applications Branch (CAB), Long Term Care Section, provided training to staff on the Guideline for Weighted Factors of a Compliance History. The purpose of the training is to teach individuals how to weigh the factors contained in the 3-year Compliance History of facilities associated with an application for licensure. The Compliance History recommendations are based on the pattern of citations, deficiencies, and substantiated complaints. The guideline places a range from Least Weight, More Weight, and Most Weight on the level of federal deficiencies, category of state citations, substantiated complaints, and other factors of non-compliance. The guideline is utilized with the Compliance History, Compliance History Grid, and Compliance History Recommendation Summary. The guideline assists analysts in making a recommendation to management whether to approve or deny the application based on compliance. Included is a copy of (1) Guideline for Weighted Factors Training Agenda, (2) Training Attendance Sheet, (3) Guideline for Weighing Factors of Compliance History.

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

This recommendation is partially implemented pending Public Health taking additional steps to standardize its skilled nursing facility licensing application reviews. Public Health has developed policies and processes that clarify which factors will receive the most weight in its decision-making process and has developed thresholds for elevating applications for review by higher-level management. However, based on our review of five recent application files, we have concerns regarding the sufficiency and consistency of the documentation in Public Health's application files. For example, we identified one application in which the final reviewer provided no reasoning for approving the application. This was concerning given that the file included references to patient deaths and citations that raised concerns. When we shared this example with Public Health, staff involved in reviewing the applications informed us that the decision was made after they had conversations about the application. However, the file does not include any information about those conversations or what factors the final reviewer used to justify approving the application. Additionally, although Public Health has outlined which factors it will consider and what weight they have in the final decision, Public Health did not clearly document that it reviewed or considered all factors in the application files we reviewed. We also identified two examples in which Public Health's reviews appear incomplete or inaccurate. As a result, to fully implement this recommendation, we believe that Public Health needs to ensure that it thoroughly and consistently documents the factors it considers and the justification for its final licensing decisions.

The Governor also signed the Skilled Nursing Facility Ownership and Management Reform Act of 2022 which goes into effect July 1, 2023. This law will significantly change Public Health's licensing review process and may lead to additional policy or procedural changes that will affect Public Health's approach to fully implementing this recommendation.

Annual Follow-Up Agency Response From September 2021

The CAB, Long-Term Care Section, has created a Guideline for Weighing Factors contained in the Compliance History (8/17/2021). The Guideline is a job aid to assist analyst and management staff when reviewing and weighing the factors gathered and compiled in the Compliance History. The guideline places a range from Least Weight, More Weight, and Most Weight on the level of federal deficiencies, category of state citations, substantiated complaints, and other factors of non-compliance. The guideline is utilized with the Compliance History, Compliance History Grid, and Compliance History Recommendation Summary. The guideline assists analysts in making a recommendation to management whether to approve or deny the application based on compliance.

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

This recommendation remains partially implemented. Public Health has implemented some processes to address our recommendation and improve its nursing facility licensing process. However, it only recently developed and implemented guidance to weigh the factors that it considers when making licensing decisions. Public Health trained analysts to begin using the new guidance September 15, 2021. Thus, we will be unable to evaluate the efficacy of this guidance in improving Public Health's licensing process until at least six months after its been implemented.

Annual Follow-Up Agency Response From May 2021

CDPH, CHCQ, Centralized Applications Branch (CAB) provided the following documentation: Compliance History P&P 4/12/2019; SNF P&P 4/22/2019; SNF Training 7/22/2019; Compliance History Grid (management elevation) 4/27/2020, SNF Internal Checklist 10/16/2020, Compliance History Recommendation Summary Template. CAB staff have received P&Ps and the necessary training to review, analyze, and complete the application review process.

The CAB, Long-Term Care Section, has created a SNF internal checklist which includes conducting several database checks as well as conducting a three year compliance history on any individual with 5% or more ownership interest to ensure applicants meet state licensure and federal certification requirements. After compiling the compliance report, the analyst creates a summary document adding total of citations and deficiencies incurred by applicants in all health care facilities owned in California. The data is aggregated by year and level of deficiency and citation. The data summary is put in a table which highlights scope and severity of deficiencies incurred by applicants. The analyst summarizes the compliance history report and flags pattern and widespread deficiencies along with any A and AA citations. Furthermore, the Compliance History Grid is used to guide the process of elevating the review of the compliance history through the chain of command. All reviewers follow the standardized process as documented on the Compliance History Grid. CDPH has developed a process and each decision taken on a SNF application is documented adequately with its supporting materials, documents and maintained in the application file.

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

This recommendation is partially implemented because, although Public Health has implemented some processes to address our recommendation and improve its nursing facility licensing process, it has not addressed one of the crucial components of the recommendation—outlining how analysts weigh the factors that it considers when making their decisions. Public Health has implemented processes to standardize how it collects and documents the information that it uses when considering license applications and it has created objective thresholds that prompt analysts to elevate applications for review and approval by higher-level management. However, it has not implemented a process for analysts to weigh important factors that it documents, such as prior deficiencies and citations noted in compliance histories, when making decisions to approve or deny an application. According to Public Health's compliance history guidelines, it determines whether deficiencies or citations may be cause for denial on a case-by-case basis. In our report, we noted that Public Health's licensing decisions appear inconsistent and that some applicants had relatively similar compliance histories, but received different licensing decisions from Public Health. It is important that Public Health implement this portion of the recommendation to ensure that its decision-making is consistent and that similar compliance histories for similar organizations will lead it to make similar licensing decisions.

Annual Follow-Up Agency Response From October 2020

Our previous response submitted on 6/29/20 is still current.

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

Annual Follow-Up Agency Response From June 2020

The desk procedures for processing skilled nursing facilities (SNF) applications and reviewing compliance history was approved in April 2019. Staff training was provided and completed in July 2019. The Performance Improvement Management (PIM) office is process mapping the future life cycle to develop standardized processes, policies, and procedures to license and certify all facility types and is developing IT systems to improve how analysts review applications and know when to elevate issues to higher-level management.

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

This recommendation is pending Public Health completing changes to improve its application licensing review process.

1-Year Agency Response

CDPH hosted a stakeholder meeting on October 30, 2018, to solicit input as the Center for Health Care Quality develops the regulation package for change of ownership. CHCQ is incorporating the input from the stakeholder meeting and the written comments submitted as a result of the meeting. We anticipate the regulations will be in effect in 2020. CDPH completed drafts of the desk procedure for processing skilled nursing facilities (SNF) applications for licensure, certification and for preparing and reviewing compliance history. Both drafts are under management review. The projected date to finalize both drafts is May 2019. CDPH will complete staff training after the desk procedures are approved. In addition, CHCQ's Performance Improvement Management (PIM) office is currently lean process mapping the future state of the Licensing and Certification life cycle to ensure we develop standardized processes, policies, and procedures to efficiently and accurately license and/or certify all facility types. The PIM office has also focused efforts to define the architecture and IT system strategy to incorporate modern technology within the business processes. The IT system strategy will improve the way CHCQ conducts business, as it will clearly outline and standardize the business process of how analysts conduct review of an application and when to elevate issues to higher-level management. This technology solution also will allow for better customer service to providers since all interactions between the provider and CDPH will go through a central portal.

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

This recommendation is pending Public Health's approval and implementation of desk procedures and regulations related to application licensing and change of ownership.

6-Month Agency Response

California Department of Public Health (CDPH) completed drafts of the desk procedures for processing skilled nursing facilities' (SNF) applications for licensure/certification and for preparing/reviewing compliance history. Both drafts are under management review. CDPH will complete staff training after the desk procedures are approved. CDPH is continuing to solicit input on change of ownership regulations. We anticipate the regulations will be in effect in 2020. CDPH hosted a stakeholder meeting on October 30, 2018, to solicit input as the Center for Health Care Quality develops the regulation package for change of ownership.

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

This recommendation is pending Public Health's approval and implementation of desk procedures and regulations related to application licensing and change of ownership.

60-Day Agency Response

California Department of Public Health is continuing efforts to develop desk procedures for processing skilled nursing facility applications for licensure/certification, as well as procedures for preparing and reviewing compliance histories. California Department of Public Health anticipates completion of the desk procedures by September 2018, followed immediately by staff training in October 2018. Implementation of the new procedures will occur following completion of staff training. California Department of Public Health is working on regulations to clarify the change of ownership application review process and we anticipate the regulations will be in effect by July 2020.

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

Recommendation #9 To: Public Health, Department of

As the Legislature considers changes to state law, Public Health should take the steps necessary to ensure that its oversight results in nursing facilities improving their quality of care by ensuring that it issues citations in a timely manner, especially for immediate jeopardy deficiencies.

Annual Follow-Up Agency Response From October 2023

Fiscal Year 2022-23 Q3 data shows that CHCQ issued 92% of state citations on time. This percentage been at least 86% for every quarter in the last year, which is a significant improvement from the past few years. Timely issuance of citations is a continuing priority for CHCQ. As part of our ongoing effort to improve complaint investigation timelines for long term care facilities, we are making a concerted effort to issue citations on time.

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

Annual Follow-Up Agency Response From September 2022

Fiscal Year 2020-21 Q2 data shows that CHCQ issued 84% of state citations on time. In Fiscal Year 2021-22 Q2 data shows that 76% of citations we released timely. This increased to 97% in Fiscal Year 2021-22 Q3. The timeliness percentage reduction was due to a decrease of utilized resources and competing priorities. CHCQ is committed to eliminating its backlog of open complaints and has reprioritized its complaint reduction project, with direction given to staff in the District Offices to focus on these goals and expectations including timeliness of issuing citations. CHCQ is actively tracking and monitoring citation issuance as part of this initiative, and will continue to prioritize the timely release of citations.

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

We are rating this recommendation as partially implemented. As we noted in our May 2021 assessment, Public Health has taken steps to improve its processes for issuing citations. However, Public Health's response indicates that additional steps are necessary to reduce its complaint backlog and issue citations in a timely manner.

Annual Follow-Up Agency Response From September 2021

Fiscal Year 2020-21 Q2 data shows that CHCQ issued 84% of state citations on time. Even during the COVID-19 pandemic response, CHCQ maintained a high level of on-time compliance for issuing citations. Since Q2 in FY 2018-19 when CSA 2017-109 findings were released, CHCQ improved its on-time issuance by 24%. CHCQ is committed to reducing its backlog of open complaints and has publicly announced and initiated a complaint reduction project and given direction to staff to district offices on goals and expectations. CHCQ is actively tracking and monitoring citation issuance as part of this initiative.

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

We are rating this recommendation as partially implemented because, as we noted in our May 2021 assessment, Public Health has taken steps to improve its processes for issuing citations. However, as Public Health noted in its prior response, it deferred some oversight activities due to COVID-19 and issued fewer citations during the past year. Overall, it is unclear to what extent a reduction in the number of citations—as opposed to improvements in Public Health's processes—affected its ability to issue citations in a timely manner.

Annual Follow-Up Agency Response From May 2021

This past year, 2020, was an unprecedented year as it relates to surveys, investigations, and performance due to the COVID-19 pandemic. To mitigate the spread of the virus and to reduce unnecessary exposure for our examiners, health care facility staff, and patients, lower risk priority workload was deferred. However, during this period, high-risk complaints and outbreaks remained a priority, and staff continued to be redirected for these events. As a result, fewer citations were written due to these risk mitigation factors since regular inspections and lower priority investigations were deferred, thus the associated enforcement activities did not continue through the end of 2020. On April 1, 2021, state surveys reconvened and survey activity and investigations will increase accordingly. Annual training of District Office Supervisors was given in February and March 2021 in a special academy focused on survey activity, updates to the citation procedure and policy, and use of the citation template to enhance and improve citation processes. A new process using an RSS application to streamline complaint investigations is planned to launch May 17, 2021. Determining efficacy of this process will follow 6 months post-implementation.

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

We are rating this recommendation as partially implemented because, as we noted in our June 2020 assessment, Public Health has taken steps to improve its processes for issuing citations; however, as Public Health noted in its response, it deferred some oversight activities due to COVID-19 and issued fewer citations during the past year. Overall, it is unclear to what extent a reduction in the number of citations—as opposed to improvements in Public Health's processes—affected its ability to issue citations in a timely manner. Further, Public Health planned to add a new process for streamlining complaint investigations. Thus, we will be unable to determine the efficacy of this process until at least six months after the new process has been implemented.

Annual Follow-Up Agency Response From October 2020

Our previous response submitted on 6/29/20 is still current.

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

Annual Follow-Up Agency Response From June 2020

The new Policy and Procedure for Citations was completed in October of 2019 and was used in the New Surveyor Academy curriculum for the training academy in early in 2020. The training is based on the updated policy and procedure including the citation template. As of March 31, 2020 93% percent of IJ citations are issued in a timely manner.

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

We are rating this recommendation as partially implemented because while Public Health has taken steps to improve its processes for issuing citations, we identified concerns when we assessed its data. Although Public Health's publicly available data shows improvements to the timeliness of citation issuance, in fiscal year 2019-20 about 15 percent of citations were not issued timely. Public Health's data also shows it issued 93 percent of immediate jeopardy citations in a timely manner in the second quarter of fiscal year 2019-20. However, the data from fiscal years 2016-17 through 2019-20 causes us to question whether Public Health will sustain this level of performance. Finally, according to Public Health's data, it will likely issue significantly fewer citations in fiscal year 2019-20 as compared to fiscal years 2016-17 through 2018-19. Overall, it is unclear to what extent a reduction in the number of citations— as opposed to improvements in Public Health's processes— affected its ability to issue citations in a timely manner.

1-Year Agency Response

CDPH has completed a draft citation template and accompanying policy and procedure for issuing citations. The template, the policy and procedures are under management review. Once CDPH approves these documents, the CDPH training team will train staff on the new process. CDPH anticipates approving the documents in May of 2019. In addition, CHCQ's Performance Improvement Management (PIM) office has a current work stream for ELMS and Dashboard Enhancements. This work stream is to enhance the way CHCQ is currently collecting and reporting data from the ELMS database in the effort to timely process applications, surveys, citations, etc. CHCQ continues to work towards improving our data for workflow efficiencies and timeliness.

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

This recommendation is pending Public Health's implementation of its draft citation template, policies, and procedures as well as related training.

6-Month Agency Response

California Department of Public Health (CDPH) continues to improve compliance with the citation issuance timeline requirement and reached 87% compliance in the most recent quarter of 2018, up from 65% and 51% year over year in FY 17 and 16, respectively. The data is refreshed quarterly and the most current metrics are displayed on the public site at https://www.cdph.ca.gov/Programs/CHCQ/LCP/Pages/FieldOperationsComplaints_ERIs.aspx. The citation issuance metric is the top chart of the Disposition Dashboard tab, titled "Citations: Percent Completed Timely."

The draft of the citation template is under management review. Once CDPH approves this template, the CDPH training team will produce a webinar to train staff on using the template. The webinar will be followed by in-person, in-service training in each district to further clarify usage of the template. This training will begin November 2018.

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

This recommendation is pending Public Health's implementation of its draft citation template and related training.

60-Day Agency Response

California Department of Public Health trains new surveyors during new surveyor academy presentations that include writing skills needed for defensible citations. Supervisors receive training from the Office of Legal Services on writing citations and deficiencies. California Department of Public Health is developing a webinar for an all-state rollout of a new citation template. After the webinar, training specialists will visit each District Office to provide in-service training to further clarify usage of the template. This training will begin September 2018. California Department of Public Health revised its internal policy and procedure on citation development and issued the guidance on June 11, 2018. These steps create the foundation for efficiently processing documents so that citations and immediate jeopardy citations are issued in a timely manner.

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

This recommendation is pending further actions by Public Health to ensure that it issues citations in a timely manner.

Recommendation #10 To: Health Planning and Development, Office of Statewide

To ensure that it provides the public with nursing facility information that is accurate and comprehensible, Health Planning should update its regulations to do the following:

- Append additional schedules to the template for the annual cost report to enable nursing facilities to fully disclose related-party transactions.

- Provide a single location in the annual cost report template for nursing facilities to enter related-party transaction amounts next to the amounts they are claiming for Medi-Cal reimbursement.

- Create an additional schedule in the cost report template that depicts how a company is investing in quality-of-care improvements.

Annual Follow-Up Agency Response From October 2023

This recommendation is partially implemented because although the Department of Health Care Access and Information implemented the first two parts of this recommendation by updating its regulations and annual cost report, statutory changes are needed for implementation of the third part of the recommendation.

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

Annual Follow-Up Agency Response From October 2022

Statutory changes made in June 2022 abolish the current Skilled Nursing Facility Quality and Accountability Supplemental Payment System and instead require the Department of Health Care Services (DHCS) to develop the Workforce and Quality Incentive Program. Under this new program a network provider furnishing skilled nursing facility services to a Medi-Cal managed care enrollee may earn performance-based directed payments from the Medi-Cal managed care plan they contract with based on meeting milestones and metrics to be developed by DHCS. The statute requires Medi-Cal managed care plans and network providers of skilled nursing facility services to submit information DHCS deems necessary to implement the program, at the times and in the form and manner specified by DHCS. While the legislature did not directly include payments linked to quality-of-care improvements as recommended in the audit report, should the measures developed by DHCS include a quality-of-care improvements component, the Department of Health Care Access and Information, formally known as OSHPD, would create a schedule within the Long-Term Care Integrated Disclosure and Medi-Cal Cost Report allowing skilled nursing facilities to disclose the amount that is reinvested into quality-of-care improvements if so specified by DHCS.

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

This recommendation is partially implemented because Health Care Access and Information implemented the first two parts of this recommendation by updating its regulations and annual cost report, but it states that implementation of the third part of the recommendation is contingent upon the development and implementation of the Workforce and Quality Incentive Program.

Annual Follow-Up Agency Response From October 2021

Contingent upon statutory changes made to the Medi-Cal reimbursement program to include quality-of-care improvements as recommended to the legislature, the Department of Health Care Access and Information, formally known as OSHPD, would create a schedule within the Long-Term Care Integrated Disclosure and Medi-Cal Cost Report allowing nursing facilities to disclose the amount that is reinvested into quality-of-care improvements.

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

This recommendation is partially implemented because although Health Care Access and Information implemented the first two parts of this recommendation by updating its regulations and annual cost report, it states implementation of the third part of the recommendation is contingent upon statutory changes.

Annual Follow-Up Agency Response From October 2020

OSHPD, in consultation with the Department of Health Care Services, promulgated regulations with an effective date of April 1, 2020. The regulations require full disclosure of related parties and their transactions with skilled nursing facilities and require related-party transactions to be reported next to the amount claimed for Medi-Cal reimbursement.

In conjunction with statutory changes made to the Medi-Cal reimbursement program to include quality-of-care improvements as recommended to the legislature, OSHPD would create a schedule within the Long-Term Care Integrated Disclosure and Medi-Cal Cost Report allowing nursing facilities to disclose the amount that is reinvested into quality-of-care improvements.

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

This recommendation is partially implemented because although OSHPD implemented the first two parts of this recommendation by updating its regulations and annual cost report, it states it cannot implement the third part without legislative changes and approval from the Center for Medicare and Medicaid Services.

The annual cost report now includes additional schedules that enable nursing facilities to fully disclose related-party transactions. It also provides a single location for nursing facilities to enter related-party transaction amounts next to the amounts they are claiming for Medi-Cal reimbursement.

OSHPD started in a prior response to our recommendation that it cannot implement the third part of this recommendation without legislative changes to the Medi-Cal reimbursement program. OSHPD also stated that Health Care Service confirmed that California's State Plan Amendment for Medi-Cal would need to be updated which would require approval from the Center for Medicare and Medicaid Services.

Annual Follow-Up Agency Response From October 2019

OSHPD, in consultation with the Department of Health Care Services, has finalized and submitted a rulemaking package to the Office of Administrative Law (OAL) on October 7, 2019, for review and approval with an effective date of April 1, 2020. The regulations would allow for full disclosure of related parties and their transactions with skilled nursing facilities and allow for related-party transactions to be reported next to the amount claimed for Medi-Cal reimbursement.

To the extent that statutory changes are made to the Medi-Cal reimbursement program, OSHPD would create a schedule within the

Long-Term Care Integrated Disclosure and Medi-Cal Cost Report allowing nursing facilities to disclose the amount that is reinvested into quality-of-care improvements.

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

Implementation of this recommendation is pending updates to Health Planning's regulations.

1-Year Agency Response

OSHPD and the Department of Health Care Services (DHCS) are finalizing changes to the Long-Term Care Integrated Disclosure and Medi-Cal Cost Report forms and instructions to enable nursing facilities to fully disclose related-party transactions. OSHPD has initiated the rulemaking process to adopt regulations to update these forms and instructions. It is estimated that these regulations will be adopted by January 2020.

The OSHPD/DHCS/CDPH implementation team has identified data-sharing opportunities and is working towards implementation. OSHPD has initiated the rulemaking process to adopt regulations that would increase the transparency of related-party transactions and allow nursing facilities to report these transactions next to the amount claimed for Medi-Cal reimbursement. It is estimated that these regulations will be adopted by January 2020.

There are no changes to the prior 6-month update. To the extent that statutory changes are made to the Medi-Cal reimbursement program, OSHPD would create a schedule within the Long-Term Care Integrated Disclosure and Medi-Cal Cost Report allowing nursing facilities to disclose the amount that is reinvested into quality-of-care improvements.

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

This recommendation is pending updates to Health Planning's regulations.

6-Month Agency Response

OSHPD has completed a work plan and timeline to adopt regulations by January 2020. Recently enacted legislation, Assembly Bill (AB) 1953 (Chapter 383, Statutes of 2018) requires disclosure of additional related party data, which necessitates additional changes to the annual cost report. Audit recommendations 1 and 2 will be combined into a single regulations package that includes AB 1953 requirements.

The OSHPD/DHCS implementation team is assessing data collection efforts, mapping duplicative tasks, and determining appropriate responsibilities for OSHPD, DHCS, and CDPH to eliminate redundant functions, streamline processes, and increase efficiencies. The team is evaluating required changes to the annual cost report that will provide transparency of related-party transactions. As stated in the 6-month response to Recommendation #1, regulations to update the reporting forms and accompanying instructions are estimated to be adopted by January 2020.

OSHPD and the California Department of Public Health's Quality Assurance Division determined that a modification to the Medi-Cal reimbursement program would require legislative changes. DHCS has confirmed that California's State Plan Amendment for Medi-Cal would need to be updated, which would require approval from the Center for Medicare and Medicaid Services.

To the extent that statutory changes are made to the Medi-Cal reimbursement program, OSHPD would create a schedule for nursing facilities to disclose the amount that is reinvested into quality-of-care improvements.

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

This recommendation is pending updates to Health Planning's regulations.

60-Day Agency Response

OSHPD established an internal workgroup and identified a lead project manager to evaluate the potential impact of changes to the annual cost report. The workgroup is developing a work plan and timeline to implement the audit recommendations.

OSHPD and the Department of Health Care Services have formed an implementation team to identify proposed revisions to the cost report that will increase the transparency of related-party transactions and report this information next to the amounts claimed for Medi-Cal reimbursement. Any modifications to the report format will require a rulemaking process. The implementation team is scheduled to meet in July 2018 to develop a plan for stakeholder outreach and a schedule for the regulatory process.

OSHPD and the California Department of Public Health's Quality Assurance division are working together to evaluate potential changes to the annual cost report that would depict how a company is investing in quality-of-care improvements, and to determine any necessary legislative or regulatory changes needed to implement this recommendation.

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

Recommendation #11 To: Public Health, Department of

To improve the availability and transparency of information, Public Health should upload all inspection findings to Cal Health Find and review ownership data by May 2019.

Annual Follow-Up Agency Response From October 2023

The status update has not changed from the prior response (09/22/2022) except the number of remaining reports to be manually scanned and uploaded to Public Health's website. Out of the 840 surveys pending manual scanning and upload as indicated in the previous report, 796 (95%) surveys have not been uploaded as of 8/24/2023. The Department plans to release these reports in 2023. This is still a work in progress as several reports are being uploaded. Expected date of completion is by the end of the year.

Note: Specifically, CHCQ has created an internal tracker/dashboard showing SNF Survey with violations upload report that is shared with the District Offices for follow up. District Office and Field Operations Branch Chiefs have been reminded previously to review the dashboard and to track monthly progress until all remaining surveys are uploaded. Additionally, a SharePoint folder was also created to make available the event IDs of the 840 pending upload surveys by District Office for an easier and quicker response.

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

Annual Follow-Up Agency Response From September 2022

The status update has not changed from the prior response except the number of remaining reports to be manually scanned and uploaded to Public Health's website. Out of the 840 surveys pending manual scanning and upload as indicated in the previous report, 801 (95%) surveys have not been uploaded as of 8/31/2022. The Department plans to release these reports in 2022. This is still a work in progress as several reports are being uploaded. Expected date of completion is by the end of the year.

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

This recommendation is pending Public Health uploading all inspection findings to Cal Health Find and completing its review of ownership data.

Annual Follow-Up Agency Response From September 2021

The status update has not changed from the prior response except the number of remaining reports to be manually scanned and uploaded to Public Health's website. Currently, 840 reports remain to be manually scanned and uploaded from the universe of 14,845 identified that required manual scanning and uploading to the Department's website. The Department plans to release these reports in 2022.

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

This recommendation is pending Public Health uploading all inspection findings to Cal Health Find and completing its review of ownership data.

Annual Follow-Up Agency Response From May 2021

The work to upload the remaining inspection reports is delayed due to COVID as the staff are working remotely to reduce the occupancy rate in District Offices to mitigate exposure and reduce viral transmission. However, CHCQ is working to have the remaining inspections uploaded by December 31, 2021. Specifically, CHCQ has created an internal dashboard showing SNF Survey with violations upload report that is updated weekly and shared with the District Offices for follow up. Currently, 1,288 reports remain to be manually scanned and uploaded from the universe of 14,845 identified that required manual scanning and uploading to the Department's website. District Office and Field Operations Branch Chiefs have been reminded to review the dashboard and to track monthly progress until all remaining surveys are uploaded.

The license renewal application (LRA) was updated and put into production in the Electronic Licensing Management System (ELMS) database in May 2020. The LRA displays the ownership/licensee/facility profile information on file in ELMS. The licensee is required to review, validate, and sign/date that all profile data on the LRA is correct. If the information is not correct and there are changes to the information, then the licensee is required to submit a report of change (ROC) application to the Centralized Applications Branch (CAB). If a ROC application is needed, the CAB analyst will follow-up with the licensee and monitor that the ROC application is submitted to CAB before processing the license renewal.

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

This recommendation is pending Public Health uploading all inspection findings to Cal Health Find and completing its review of ownership data.

Annual Follow-Up Agency Response From October 2020

Our previous response submitted on 6/29/20 is still current.

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

Annual Follow-Up Agency Response From June 2020

In October 2018, CDPH completed a reporting dashboard for monitoring compliance with uploading PDF versions of skilled nursing facility inspection reports with violations. As of March 2020, this dashboard shows that CDPH has uploaded 82% of the PDF versions of the inspection reports; 2,665 of 14,845 reports still need to be uploaded.

CDPH has finalized business requirements for adding a section on the license renewal application for owners to validate their information and began user testing. CDPH completed the application development in May 2020. CDPH will implement the license renewal application on July 1, 2020, or soon thereafter, when the FFY 2021 budget is signed. Once implemented, CDPH will validate facility ownership information when licenses are submitted for renewal throughout the year.

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

This recommendation is pending Public Health uploading all inspection findings to Cal Health Find and completing its review of ownership data.

1-Year Agency Response

CDPH set up a reporting dashboard in October 2018 to help district offices monitor compliance with uploading inspection reports. As of April 2019, only 1,819 inspection reports still need to be uploaded. CDPH has drafted a revision of its licensing renewal form, adding a section for owners to validate their information. The form is under management review, and is now projected to be implemented by June 2019. The ownership information will be validated as licenses are renewed throughout the year. We anticipate completion of the licensing renewal and owner validation project by May 2020.

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

This recommendation is pending Public Health uploading all inspection findings to Cal Health Find and completing its review of ownership data. Public Health did not meet our implementation deadline for this recommendation and projects this recommendation will be fully implemented in May 2020.

6-Month Agency Response

California Department of Public Health's (CDPH) plan to reduce the outstanding inspection and Plan of Corrections upload is to offer overtime to district office staff to complete the work, or to hire staff for a limited-term Upload Unit, which would be assigned to help district offices reduce the outstanding volume by April 2019. On September 1, 2018, CDPH set up a web portal (i.e., Upload Report) with summary upload metrics, a detail file with which district offices can manage their work, and guidance related to upload requirements. The outstanding volume of inspection reports that CDPH needs to upload continues to decrease; as of September 19, 2018, 3,739 inspection reports needed to be uploaded, down from 6,421 reports in June 2018.

CDPH has drafted a revision of its licensing renewal form, adding a section for owners to validate their information. The form is under management review, and is now projected to be implemented by November 2018. The ownership information will be validated as licenses are renewed throughout the year. We anticipate completion of the licensing renewal and owner validation project by May 2020.

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

This recommendation is pending Public Health uploading all inspection findings to Cal Health Find. Public Health projects it will not meet our implementation deadline for this recommendation. It states this recommendation will be fully implemented in May 2020 as opposed to May 2019.

60-Day Agency Response

California Department of Public Health announced the document upload expectations to district offices on May 16, 2018, during a statewide teleconference and provided on May 25, 2018 the project requirements to each district office for redacting and uploading inspection findings to Cal Health Find. On May 31, 2018, California Department of Public Health presented this information at a statewide district office analyst meeting. We have established a reporting web-portal with summary upload metrics and guidance documentation requirements. If necessary and due to workload priorities, California Department of Public Health will use a vendor to assist with uploading needs to ensure we meet the due date. The licensing renewal form is under revision and will be implemented by September 2018. To perform a complete review of ownership data requires the confirmation of facilities' ownership structure. After confirmation, staff will update the database, and we anticipate completion of these tasks by May 2020.

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

This recommendation is pending Public Health's planned actions to upload all inspection findings and review ownership data.

Recommendation #12 To: Health Care Services, Department of

Health Care Services should use current data to revise and update the peer groups it uses to set Medi-Cal rates. In doing so, it should take into consideration the consolidation of the nursing facility industry.

Annual Follow-Up Agency Response From December 2023

The CSA Final Audit Report recommended DHCS revise the peer groups and in doing so, DHCS take into consideration the consolidation of the nursing facility industry. Refer to Attachments 1 through 4, also provided in the 2022 update. The attachments were provided to demonstrate, following CSA's recommendation, DHCS engaged with nursing facility industry and labor representatives on revising the peer groups effective 2020. During these discussions, the nursing facility industry and labor representatives had the opportunity to provide input regarding consolidation in the nursing home industry for DHCS's consideration. Following discussions with the nursing facility industry and labor representatives, the peer groups were revised and implemented in August 2020.

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

Annual Follow-Up Agency Response From October 2021

DHCS received federal approval for SPA 20-0023, effective August 1, 2020, which included the revised peer grouping required by Assembly Bill 81. The approved peer groups are based on common facility characteristics. DHCS will continue to periodically review and revise the number and assignment of peer groups and the peer group placement of an individual facility.

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

We requested evidence that DHCS considered the consolidation of the nursing home industry in its development of its peer groups. However, DHCS did not respond by the deadline we set for it to provide this information.

Annual Follow-Up Agency Response From November 2020

DHCS is currently in the process of obtaining federal approval for SPA 20-0023 to renew and modify the reimbursement methodology for Skilled Nursing Facility Level-B and Freestanding Subacute facilities in accordance with AB 81 (Chapter 13, Statutes of 2020). The modifications include the revision of the peer grouping, as required by AB 81. DHCS established specific geographic peer groups based on common facility characteristics in consultation with stakeholders. DHCS also has the ability to periodically review and revise the number and assignment of peer groups and the peer group placement of an individual facility. Upon federal approval, the renewal and modification of the reimbursement methodology, including updated peer groupings, for Skilled Nursing Facility Level-B and Freestanding Subacute facilities, will be effective retroactively to August 1, 2020.

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

Implementation of this recommendation is pending Health Care Services updating its peer groups.

Annual Follow-Up Agency Response From October 2019

DHCS has begun negotiations with the nursing facility industry and interested stakeholders to reauthorize the Assembly Bill 1629 Program, currently mandated to sunset on July 31, 2020, including the possible revision of the peer grouping methodology. DHCS believes that a holistic approach, to include any revisions to the peer grouping methodology as part of the reauthorization, is the most effective approach.

Given that negotiations are ongoing, DHCS will continue to coordinate our oversight efforts with CDPH and OSHPD, through our monthly workgroup meetings.

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

Implementation of this recommendation is pending Health Care Services updating its peer groups.

1-Year Agency Response

Currently DHCS is in the beginning stages of stakeholder engagement process for the reauthorization of the Assembly Bill 1629 Program, currently mandated to sunset on July 31, 2020, in its entirety. DHCS believes that a holistic approach, to include any revisions to the peer grouping methodology as part of the reauthorization, is the most effective approach.

DHCS will continue to coordinate our oversight efforts with CDPH and OSHPD, through our monthly workgroup meetings.

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

This recommendation is pending Health Care Services updating its peer groups.

6-Month Agency Response

DHCS is currently developing draft models to potentially replace the current peer group designation utilized for the Freestanding Nursing Facility Level-B reimbursements. DHCS recently obtained 2016 audit data, which allows the department the opportunity to replicate the Navigant cluster analysis utilized for the development of the peer group designation. Additionally, DHCS has begun initial conversations with stakeholders regarding recommendations.

DHCS has also identified existing authorities and policy provisions that may require an update (California Code of Regulation, Title 22, section 52508 and Medi-Cal Provider Bulletins) in order to implement a new peer group designation.

Upon final determination of an alternate peer group methodology, DHCS will conduct the required stakeholder engagement process.

DHCS, CDPH, and OSHPD have formed a workgroup and are meeting monthly to coordinate our oversight efforts regarding collection of ownership and financial information. The goal of the work group is to reduce duplicate efforts and improve the sharing of information between the agencies.

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

60-Day Agency Response

DHCS continues to explore alternate methods to revise and

update the current peer group designation utilized for the

Freestanding Nursing Facility Level-B and Freestanding Subacute Nursing Facility Level-B facility types. Following a determination of an appropriate approach, to update the peer groups using the current method or use an alternate method altogether, DHCS will comply with the stakeholder engagement requirement. Additionally, DHCS proceeds to identify the relevant authorities that would require updating, should a new method of peer grouping be utilized.

DHCS is committed to coordinating our oversight efforts with CDPH and OSHPD. The first workgroup meeting to discuss cost reporting information and audit processes is scheduled for July 12, 2018.

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

This recommendation is pending Health Care Services' determining the method for revising and updating its current peer groups.

All Recommendations in 2017-109

Agency responses received are posted verbatim.