Report 2006-110 Summary - April 2007
Department of Health Services:
It Needs to Improve Its Application and Referral Processes When Enrolling Medi-Cal Providers
Our review of the Department of Health Services' (department) provider application and referral processes for California's Medical Assistance Program (Medi-Cal) found that:
- Because of recent policy and administrative changes, the department's Provider Enrollment Branch (branch) has seen a decrease in the number of applications it receives; however, the branch does not process some applications within the time periods specified in statute.
- Branch staff continue to enter data incorrectly into the Provider Enrollment Tracking System (PETS), decreasing the branch's ability to track the status of applications effectively.
- Some applicants resubmit information to remedy their deficient applications soon after the required time period lapses, and state law requires the branch to deny these applications and treat them as new, preventing some eligible providers from offering services as soon as they otherwise could.
- Given that few applicants request preferred provider status and the branch's current low average time to process an application, the status offers applicants few benefits.
- The branch does not adequately track which of the department's review units it refers applications to or the reasons for these referrals.
- State law does not prescribe a required number of days in which the branch must approve or deny referred applications, and we noted that the department takes an inordinate length of time to process referred applications.
- Because physicians applying to become providers in Medi-Cal and Medicare are asked to provide much of the same information, and the federal government is beginning two initiatives to ensure that more accurate and updated information is available about Medicare providers, the department may be able to streamline its application process by relying on some of Medicare's data in the near future.
RESULTS IN BRIEF
The Department of Health Services (department) administers the State's Medicaid program, known as the California Medical Assistance Program (Medi-Cal). Medi Cal is a federal program, funded and administered through a state and federal partnership, to benefit low-income people who lack health insurance. In July 1999 the department undertook several steps to stop individuals intent on defrauding Medi-Cal from obtaining provider numbers. One step was to organize the Provider Enrollment Task Force (task force), which developed and filed emergency regulations requiring applicants to complete a more in-depth application package, including a 10-page financial disclosure statement. In July 2000 the department replaced the task force with the Provider Enrollment Branch (branch), whose primary function has been to review applications and prevent providers with fraudulent intent from participating in Medi-Cal.
The number of applications the branch receives and processes has decreased because of recent policy and administrative changes. For instance, based on information in its Provider Enrollment Tracking System (PETS), the number of applications the branch received decreased from 2,200 in October 2005 to 1,480 in September 2006. This decrease appears to have shortened the average time the branch needs to process applications. However, although required by law to process applications and to notify applicants of its final determination within specific time periods, the branch continues to review some after the end of the required processing period and is forced to enroll other applicants into Medi-Cal automatically, on provisional status, because it cannot make a timely determination on the application. In fact, for the period October 1, 2005, through September 30, 2006 (federal fiscal year 2006), the branch did not process 108 applications within the required time periods. Of these, it automatically enrolled eight applicants into the program on provisional status as required but did not automatically enroll or appropriately notify the remaining 100. When the branch does not automatically enroll applicants when required, or promptly process applications and notify applicants of its final determination, it may prevent or delay some eligible providers from delivering services to Medi-Cal beneficiaries.
Further, the applications of seven of the eight automatically enrolled applicants had been recommended for denial and sent to the branch's policy and administrative section (policy section), which generally reviews all denied applications. However, their applications remained in the policy section after their due dates for completing processing had passed. The branch does not track the length of time applications recommended for denial remain in its policy section, so it automatically enrolled these ineligible providers. Although these applicants can be removed from Medi-Cal while on provisional status, they may submit claims for services provided from the date the branch received their application to the date of their termination from the program. The department may recover payments made to ineligible providers, but it incurs additional costs when it must do so for providers whose applications should have been denied during the enrollment process.
Despite concerns we raised in a May 2002 audit regarding whether branch staff were entering data accurately and consistently into PETS, we noted that branch staff continue to enter data incorrectly, decreasing the branch's ability to track the status of applications effectively. For instance, branch management does not perform secondary reviews of the dates branch staff enter into PETS, such as the dates applications were received, returned to the applicant, or processed. Inaccuracies in these dates prevent the branch from tracking the status of applications effectively.
Additionally, although the branch generally notifies applicants in a timely manner that their applications are deficient, applicants often fail to correct deficiencies within the required 35-day time period, or do not resubmit their corrected applications at all. This failure is the leading reason for denied applications. In comparison, the federal Medicare program allows applicants to remedy their deficient applications by submitting additional information within a 60-day time frame—25 days longer than Medi-Cal's time frame. To determine whether applicants who missed the 35-day deadline would have met the 60-day deadline, we calculated the number of applications that were resubmitted to the branch between 11 and 25 days after the 35-day time period during federal fiscal year 2006 (we allotted an additional 10 days for mail delays). According to PETS data, 258 applications were resubmitted within this time frame and, therefore, treated as new applications subject to the 180-day processing period—of which the branch ultimately approved 126. Had state law authorized the branch to process these resubmitted applications within a 60-day time frame rather than a new 180-day time frame, a greater number of eligible providers could have provided services to beneficiaries sooner than they otherwise did.
Moreover, the branch could do a better job of informing applicants that a leading reason for denial is submitting an outdated or inappropriate application form. More than 20 percent of applicants were denied during federal fiscal year 2006 for this reason. When the branch does not adequately notify applicants that using outdated or inappropriate application forms will result in denial of application packages, it increases the number of applications it must process and ultimately deny and increases the length of time before some eligible providers can be enrolled in Medi-Cal. In turn, this may limit some beneficiaries' access to Medi Cal providers.
State law allows certain applicants to apply for preferred provider status. However, the only benefit to an applicant of qualifying for this status is that the branch must process the application within 90 days instead of 180 days. According to PETS, only 4 percent of the applications the branch received in federal fiscal year 2006 requested preferred provider status and, given that the branch's average time to process an application in September 2006 was just 30 days, the 90-day processing period appears to be irrelevant. The benefits to applicants appear to be marginal, so we question the value of the status. However, the processing delays that led to the state law that created preferred provider status could arise in the future. Thus, to the extent that the department chooses to keep this status, the branch should increase its efforts to convey to prospective applicants that their application packages for preferred provider status will be denied if they are lacking certain elements. Consequently, the branch could see an increase in the number of applicants that could benefit from the shorter processing period that preferred provider status offers.
Although the branch is authorized to conduct additional reviews by referring application packages to other units within the department, as well as to staff within the branch itself, it does not track referral information adequately. For example, some of the reasons that branch staff may select in PETS for referring applications are vague or problematic. In fact, nearly one-half of the applications that the branch referred in federal fiscal year 2006 lack a specific reason for the referral. This prevents the branch from contributing to the department's Medi-Cal fraud prevention efforts on an ongoing basis because it is unable to accurately detect and track potential trends in fraud during the enrollment process. Further, branch staff failed to enter the units to which 10 percent of the applications it referred were sent in federal fiscal year 2006, which could prevent the branch from tracking the status of applications referred for secondary review.
Further, state law does not prescribe a required number of days within which the branch must approve or deny an application it has referred for further review, and we noted that referred applications take an inordinate length of time to process. For instance, PETS indicates the average number of days to process applications that the branch referred in federal fiscal years 2004 and 2005, was 322 and 255 days, respectively. Moreover, in federal fiscal year 2006, the branch approved the majority of applications it referred on which it made a final decision. Referring applications that it later approves indicates that the branch may need to reevaluate and update the high-risk indicators it uses when processing applications. Additionally, in the past six months, the branch and the Medical Review Branch within the department's Audits and Investigations division have not held their regular meetings that served to foster information sharing between the two branches—which, if they do not resume, may limit their effectiveness in contributing to the department's anti-fraud efforts because less emphasis is placed on tracking trends in fraud during the enrollment process.
Finally, the department may have the opportunity to streamline some of its enrollment processes for Medi-Cal applicants who are already Medicare providers by relying more on Medicare provider information in the future. Specifically, the federal government is beginning two initiatives intended to ensure that more accurate and updated information is available about Medicare providers. Physicians seeking to become providers in Medi-Cal and the federal Medicare program are asked to provide much of the same information in their application packages. Consequently, for those physician applicants it identifies as being in good standing with Medicare, the department may be able to rely on some of Medicare's data instead of performing redundant procedures to verify the same information. Although it is too early to determine the effectiveness of these initiatives, it could be worthwhile for the department to periodically assess Medicare's progress and the benefits the department could derive from this centralized source of information.
To improve its application and referral processes when enrolling Medi-Cal providers, the branch should:
- Notify applicants that it has automatically enrolled them as provisional Medi-Cal providers when the branch has not processed the applications within the required time periods.
- Modify PETS to track the length of time applications it recommends for denial remain in its policy section for review to ensure that it does not automatically enroll or pay the claims of ineligible providers when the review does not occur in a timely manner.
- Include in management's secondary reviews of applications periodic reviews to ensure that staff are accurately and consistently entering into PETS the correct dates the branch received, processed, or returned the application.
- Increase its efforts to notify applicants that they must use current and appropriate application forms to avoid being denied enrollment into Medi-Cal.
- Coordinate with the department to update PETS to reflect the specific reasons that it refers applications for further review, so that they are aligned with its fraud indicators and high-risk review checklist. This will allow the branch to better identify trends in fraud during the enrollment process.
The department should seek legislation to revise state law to extend the 35-day time period applicants have to remedy deficiencies in their applications.
The department should seek legislation to revise state law to eliminate preferred provider status. If it chooses to keep this status and to increase the number of applicants that could benefit from the shorter processing period that preferred provider status offers, the department should increase its efforts to notify applicants of the reasons it denies applications during the prescreening for preferred provider status.
To ensure that it is referring those applicants at greatest risk of committing fraud and not preventing eligible Medi-Cal providers from providing services to beneficiaries, with direction from the department, the branch and the Medical Review Branch should:
- Reevaluate the appropriateness of the branch's high-risk fraud indicators periodically by consistently communicating and collaborating with one another.
- Place increased emphasis on processing those applications referred for further review within a reasonable time period.
In addition, the branch should monitor the implementation of Medicare's revalidation process, in which it verifies the enrollment information for all its providers. If it identifies opportunities for streamlining its application and verification procedures, the branch should make modifications as appropriate for Medicare providers seeking enrollment in Medi Cal.
The department agrees with the recommendations in our report and states that while it is proud of the significant improvements it has made with regards to the enrollment of providers into Medi-Cal, the report highlights areas that can still be improved upon and provides valuable feedback to that effect. The department stated that it intends to incorporate the recommendations accordingly.