Report 2014-130 All Recommendation 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 #1 To: Health Care Services, Department of

To ensure that it provides claiming units with reasonable opportunities to address concerns with its decisions or actions, Health Care Services should, within three months, begin preparing regulations to establish and implement a formal appeals process that allows claiming units to directly appeal Health Care Services' decisions.

Annual Follow-Up Agency Response From August 2019

There is no change to DHCS' previous response. DHCS issued PPL #14-006 on April 4, 2014 outlining the current appeal process which is applicable to all program stakeholders. The PPL is also posted on the DHCS/SMAA website. DHCS will not implement.

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

Annual Follow-Up Agency Response From November 2018

There is no change to DHCS' previous response. DHCS issued the Policy and Procedures Letter (PPL) #14-006 on April 4, 2014 outlining the current appeal process. The PPL is also posted on the DHCS/SMAA website.

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

Annual Follow-Up Agency Response From September 2017

There is no change to DHCS' previous response. DHCS issued the Policy and Procedures Letter (PPL) #14-006 on April 4, 2014 outlining the current appeal process. The PPL is also posted on the DHCS/SMAA website.

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

1-Year Agency Response

DHCS currently has an appeals process in place and it has been distributed to all program stakeholders and posted to the School-Based Medi-Cal Administrative Activities (SMAA) web page that specifically addresses appeals.

California State Auditor's Assessment of 1-Year Status: Will Not Implement

As we mention on pages 27 and 28 of our audit report, Health Care Services has offered claiming units, including local educational agencies, no formal opportunity to appeal its decisions to deny reimbursement claims.

6-Month Agency Response

DHCS does not contract with the Local Educational Agency (LEAs) directly. LEAs contract with their local Local Educational Consortia (LEC) or Local Governmental Agency (LGA) and DHCS contracts with the LEC/LGAs. Therefore, any disputes with DHCS directives must first be addressed at the LEC/LGA level before the issue can be elevated to DHCS. If there is no resolution between the LEA and LEC/LGA, the appeal can be directed to DHCS to work with both the LEA and the LEC/LGA to resolve.

DHCS currently has a formal appeals process that has been distributed to all program stakeholders and posted to the School-Based Medi-Cal Administrative Activities (SMAA) web page that specifically addresses appeals.

California State Auditor's Assessment of 6-Month Status: Will Not Implement

As we mention on pages 27 and 28 of our audit report, Health Care Services has offered claiming units, including local educational agencies, no formal opportunity to appeal its decisions to deny reimbursement claims.

60-Day Agency Response

DHCS disagrees with the recommendation.

DHCS does not contract with the LEAs directly. LEAs contract with their local LEC or LGA and DHCS contracts with the LEC/LGAs. Therefore, any disputes with DHCS directives must first be addressed at the LEC/LGA level before the issue can be elevated to DHCS. If there is no resolution between the LEA and LEC/LGA, the appeal can be directed to DHCS to work with both the LEA and the LEC/LGA to resolve.

DHCS currently has a formal appeals process that has been distributed to all program stakeholders and posted to the SMAA web page that specifically addresses appeals.

California State Auditor's Assessment of 60-Day Status: Will Not Implement

As we mention on pages 27 and 28 of our audit report, Health Care Services has offered claiming units, including local educational agencies (LEAs) no formal opportunity to appeal its decisions to deny reimbursement claims. Furthermore, no claiming units have ever used Health Care Services' current process, whereby they can appeal decisions made by local educational consortia and local governmental agencies.

Recommendation #2 To: Health Care Services, Department of

To ensure that it provides claiming units with reasonable opportunities to address concerns with its decisions or actions, Health Care Services should, within three months, inform all stakeholders, including claiming units, of the existence of this appeals process.

Annual Follow-Up Agency Response From August 2019

DHCS issued PPL 14-006 on April 4, 2014, that outlines the current appeal process which is applicable to all program stakeholders. The PPL was sent to all stakeholders and posted to the DHCS/SMAA website. DHCS will not implement.

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

Annual Follow-Up Agency Response From November 2018

There is no change to DHCS' previous response. DHCS issued PPL 14-006 on April 4, 2014, that outlines the current appeal process. The PPL was sent to all stakeholders and posted to the DHCS/SMAA website.

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

Annual Follow-Up Agency Response From September 2017

There is no change to DHCS' previous response. DHCS issued PPL 14-006 on April 4, 2014, that outlines the current appeal process. The PPL was sent to all stakeholders and posted to the DHCS/SMAA website.

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

1-Year Agency Response

DHCS will not implement this recommendation as an appeal process already exists.

DHCS issued Policy and Procedure Letter (PPL) 14-006 on April 4, 2014 that outlines the appeal process and posted it on the SMAA website.

California State Auditor's Assessment of 1-Year Status: Will Not Implement

As we mention on pages 27 and 28 of our audit report, Health Care Services has offered claiming units, including local educational agencies, no formal opportunity to appeal its decisions to deny reimbursement claims.

6-Month Agency Response

DHCS does not contract with the LEAs directly and all disputes must first be addressed at the LEC/LGA level before the issue can be elevated to DHCS. Policy and Procedure Letter (PPL) 14-006 was issued on April 4, 2014 that outlines the appeal process (this is posted on the SMAA website).

California State Auditor's Assessment of 6-Month Status: Will Not Implement

As we mention on pages 27 and 28 of our audit report, Health Care Services has offered claiming units, including local educational agencies, no formal opportunity to appeal its decisions to deny reimbursement claims.

60-Day Agency Response

As stated in the previous response, DHCS does not contract with the LEAs directly and all disputes must first be addressed at the LEC/LGA level before the issue can be elevated to DHCS. Policy and Procedure Letter (PPL) 14-006 was issued on April 4, 2014 that outlines the appeal process (this is posted on the SMAA website).

California State Auditor's Assessment of 60-Day Status: Will Not Implement

As we mention on pages 27 and 28 of our audit report, Health Care Services has offered claiming units, including local educational agencies (LEAs), no formal opportunity to appeal its decisions to deny reimbursement claims. Furthermore, no claiming units have used Health Care Services' current process, whereby they can appeal decisions made by local educational consortia and local governmental agencies.

Recommendation #3 To: Health Care Services, Department of

Until the Legislature implements our recommendation in Chapter 2, Health Care Services should immediately resolve weaknesses in its oversight of local educational consortia and local governmental agencies to ensure that these entities sufficiently meet their responsibilities under the administrative activities program and meet the terms of their contracts with Health Care Services. Health Care Services should update its site review and desk review procedures to include the following steps:
* A risk-based approach to selecting entities for review.
* Verification that local educational consortia and local governmental agencies are adequately meeting the oversight and administrative responsibilities described in their contracts with Health Care Services.
* Verification that contracts between local educational consortia or local governmental agencies and their claiming units do not include provisions that could result in disallowed costs, such as allowing Health Care Services' participation fee to be included in the claim calculations.
* Examination of local educational consortia and local governmental agencies' records to ensure that:
-- Costs they claim for federal reimbursement are necessary and reasonable.
-- The entities are not inappropriately earning a profit based on the fees they collect from claiming units.
-- The coding performed by local educational consortia that charge claiming units a percentage of their federal reimbursement is reasonably accurate.

Annual Follow-Up Agency Response From November 2020

DHCS developed and finalized new desk review/site visit procedures based on the RMTS methodology as of December 2019. The desk reviews/site visits utilizing the new procedures were set to begin in April 2020. However, due to the COVID-19 pandemic desk review/site visits have been delayed. Desk reviews will begin in December 2020 and site visits will begin upon the termination of the pandemic.

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

Annual Follow-Up Agency Response From October 2019

SMAA is currently developing a new desk review/site visit procedure based on the random moment time survey (RMTS) methodology. Desk reviews will begin in early 2020, and these desk reviews will inform the site visit procedure which will begin in mid 2020.

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

Annual Follow-Up Agency Response From August 2019

A. DHCS did develop a risk-based approach for selecting entities for review. This criteria for determining high-risk claiming units was added to section 6-23 of the SMAA Manual at: http://www.dhcs.ca.gov/provgovpart/Documents/ACLSS/Manuals/SMAA-Manual/SMAA_Manual.pdf

B. Site visits will resume once back-casting has been completed. DHCS anticipates resuming site visits in September 2019, the quarter following the completion of back-casting.

C. DHCS has reviewed all LEC/LGA contracts with Local Educational Agencies (LEA). These contracts do not contain provisions that could result in disallowed costs.

D. Although site visits have not yet resumed;

a. DHCS reviews all costs contained on LEC/LGA invoices submitted for reimbursement.

b. All fees charged to LEAs are based on the LEC/LGAs actual cost for administering the program.

c. DHCS conducts a 10 percent random sample review of all coded moments each quarter.

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

Annual Follow-Up Agency Response From November 2018

(A)DHCS did develop a risk-based approach for selecting entities for review. This criteria for determining high-risk claiming units was added to section 6-23 of the School-Based Medi-Cal Administrative Activities (SMAA) Manual at: http://www.dhcs.ca.gov/provgovpart/Documents/ACLSS/Manuals/SMAA-Manual/SMAA_Manual.pdf

(B)Site visits will resume once backcasting has been completed. DHCS anticipates resuming site visits in September 2019, the quarter following the completion of backcasting.

(C)DHCS has reviewed all LEC/LGA contracts with Local Educational Agencies (LEA). These contracts do not contain provisions that could result in disallowed costs.

(D)Although site visits have not yet resumed;

a.DHCS reviews all costs contained on LEC/LGA invoices submitted for reimbursement.

b.All fees charged to LEAs are based on the LEC/LGAs actual cost for administering the program.

c.DHCS conducts a 10 percent random sample review of all coded moments each quarter.

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

Annual Follow-Up Agency Response From September 2017

DHCS anticipates beginning site visits in January 2018. The delay from previous updates is due to unanticipated workload for Fiscal Year (FY) 2017-18 Quarter (Q) 2, which includes processing FY 2015-16 Q2 invoice payments, FY 2009-10 and FY 2010-11 backcasting invoice payments. All of these claims must be processed before December 1, 2017; therefore, staffing resources are currently fully directed to processing these claims.

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

1-Year Agency Response

DHCS developed criteria that will identify high-risk entities and provided it to the CSA on June 29, 2016. New site visit protocols will be implemented once coding has been finalized and invoices begin to be submitted. It would not be practical for the Department to begin site visits until we are able to review invoices that have been submitted via the new RMTS methodology. DHCS issued PPL 16-007 on April 8, 2016, informing LECs and LGAs about the participation fee and added this step to the site visit protocols. DHCS anticipates beginning sites visits in October of 2017.

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

6-Month Agency Response

DHCS reviews LEC/LGA oversight responsibilities during regularly scheduled site visits. As site visits have recently resumed, a new site visit protocol is being developed to include: a risk-based approach for identifying high-risk claiming units; a thorough review of sub-recipient contracts to verify the lack of provisions for claiming participation fees; and a detailed review of all assigned codes for moment responses. DHCS will develop a set of criteria that can be used to identify high-risk claiming units and help facilitate a revised site visit protocol based on the new Random Moment Time Survey (RMTS) methodology.

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

60-Day Agency Response

DHCS will work with audit staff in Audits and Investigation to review current risk-based practices to develop an approach for selecting entities for review. DHCS has requested copies of all contracts with the LEC/LGAs and LEAs and will review to determine the oversight and administrative responsibilities and verify these activities are being accomplished.

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

Recommendation #4 To: Health Care Services, Department of

Until the Legislature implements our recommendation in Chapter 2, Health Care Services should immediately resolve weaknesses in its oversight of local educational consortia and local governmental agencies to ensure that these entities sufficiently meet their responsibilities under the administrative activities program and meet the terms of their contracts with Health Care Services. Health Care Services should complete the oversight reviews for at least three high-risk local educational consortia or local governmental agencies by December 31, 2015, and post the results to its website.

Annual Follow-Up Agency Response From August 2019

Although the site visits of the high risk claiming units were completed, DHCS does not post results of the SMAA site visits to the website, in order to maintain stakeholder integrity at all levels.

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

Annual Follow-Up Agency Response From November 2018

No update - DHCS completed the three high-risk LEC/LGA site visits on December 31, 2015

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

Health Care Services provided evidence that it completed its reviews of the local educational consortia or local governmental agencies by January 2016. However, it provided no evidence that it posted the results of its reviews online. In previous annual responses, Health Care Services had mentioned that although it shared the site visit results with the entities it reviewed, it would not post the results on its website. It further stated that it, if requested, would make this information available through the Public Records Act process.

Annual Follow-Up Agency Response From September 2017

No update - DHCS completed the three high-risk LEC/LGA site visits on December 31, 2015.

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

We cannot confirm that Health Care Services fully implemented this recommendation; it did not provide us with copies of the results of its site visits. Furthermore, Health Care Services previously told us that although it shared the site visit results with the entities it reviewed, it would not post the results on its website but would share that information through the Public Records Act process if requested.

1-Year Agency Response

As noted in the six-month update, site visits for the three high-risk LEC/LGAs were completed by December 31, 2015.

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

In its response, Health Care Services indicated that it had fully implemented this recommendation and that it had completed its reviews of three local educational consortia or local governmental agencies by December 2015. However, we are unable to verify that these reviews occurred because Health Care Services has not provided us with copies of the results of its reviews as we requested in June 2016 and again in July 2016.

Health Care Services also told us that although it shared the site visit results with the entities it reviewed, it would not post the results on its website but would share that information through the Public Records Act process if requested.

6-Month Agency Response

Adhering to the findings contained in the 2013 Centers for Medicare and Medicaid Services Financial Management Report, the School Based Medi-Cal Administrative Activities Unit performed site visits for school districts within the LACOE on September 30, 2015, the Tulare LGA on October 21, 2015, and the Stanislaus LEC on October 28, 2015. All three site visits revealed minor infractions that would only require administrative corrections and there were no findings that would require a financial correction. This task was completed by December 31, 2015, as projected.

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

In its posted response, Health Care Services indicated that it completed its reviews of three local educational consortia or local governmental agencies by December 2015. However, in response to our follow-up questions, Health Care Services told us that although it shared the site visit results with the entities it reviewed, it would not post the results on its website but would share that information through the Public Records Act process if requested. Health Care Services also did not provide us with copies of the results of its reviews as we requested.

60-Day Agency Response

Based on the 2013 Centers for Medicare and Medicaid Services Financial Management Report, the SMAA Unit's experience in reviewing claims during the Reasonable Test Criteria process, and comments from the California State Auditor's August 2015 audit report, we have chosen three LEC/LGAs for site visits. The three site visits are scheduled as follows: Los Angeles County Office of Education on September 30, 2015; Tulare LGA on October 8, 2015; and Stanislaus LEC on October 22, 2015. These site visits will be completed by December 31, 2015.

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

Recommendation #5 To: Health Care Services, Department of

Until the Legislature implements our recommendation in Chapter 2, Health Care Services should immediately resolve weaknesses in its oversight of local educational consortia and local governmental agencies to ensure that these entities sufficiently meet their responsibilities under the administrative activities program and meet the terms of their contracts with Health Care Services. Health Care Services should complete the oversight reviews for any remaining high-risk local educational consortia or local governmental agencies by June 30, 2016, and post the results to its website.

Annual Follow-Up Agency Response From August 2019

Additional delays in the back-casting process have delayed the resumption of site visits until September 2019, the quarter following the completion of back-casting. Although the site visits of the high risk claiming units will resume, DHCS does not post results of the SMAA site visits to the website, in order to maintain stakeholder integrity at all levels.

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

Annual Follow-Up Agency Response From November 2018

Additional delays in the backcasting process have delayed the resumption of site visits until September 2019, the quarter following the completion of backcasting.

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

Annual Follow-Up Agency Response From September 2017

DHCS did not receive approval for the revised coding structure until October 31, 2016. This created a delay in the completion and submission of the FY 2014-15 Q3 and Q4 invoices. Consequently, this altered the timeline for the submission of backcasting invoices, which will delay DHCS' ability to implement site visits until January 2018

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

1-Year Agency Response

Changes to the coding structure were submitted to CMS in August 2016 for their consideration. These changes were made in collaboration with the LECs and LGAs. Therefore, the coding has not been finalized for the invoices from the RMTS methodology. Once CMS approves the revised structure, coding will be finalized and invoices will be submitted, DHCS will then apply the risk-based criteria and begin to implement site visits. DHCS expects to begin site visits by October 2017.

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

6-Month Agency Response

The RMTS sample for SFY 2014/15 Q4 was completed on June 30, 2015. LECs and LGAs are in the process of finalizing the coding of the moment responses. Once the coding is complete, the SMAA Unit will compile the time survey data and use this information to work with A&I staff to determine a comprehensive set of risk-based audit criteria. In March 2016, DHCS determined the criteria to use to identify high risk claiming units under the RMTS methodology.

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

In July 2016, Health Care Services identified to us the specific criteria it will use to identify high risk claiming units. However, it did not identify the status of its reviews for the remaining local educational consortia or local governmental agencies not reviewed as part of its implementation of Recommendation #4 (for example, the number of reviews planned, started or in progress, completed, etc.). Health Care Services also stated that it would not post the results of its reviews on its website.

60-Day Agency Response

On January 1, 2015, the DHCS/SMAA Unit implemented the Random Moment Time Survey (RMTS) to capture the amount of time the LEAs were spending on Medi-Cal administrative activities. DHCS is currently working with the LEC/LGAs to finalize the coding for SFY 2014/15 Q3 and Q4 time surveys. Once the coding has been finalized, the Unit will compile the time survey data to review and use as a component to begin the discussions with the A&I staff to determine risk-based audit criteria. After this process is in place, DHCS will revise its site visit protocols and schedule site visits. The estimated completion date to establish a risk-based process and prepare a site visit schedule is April 2016.

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

Recommendation #6 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 encourage the Los Angeles County Office of Education (Los Angeles County) to revise its contracts with its claiming units to make it clear that claiming units cannot include Health Care Services' participation fee as part of their claims.

1-Year Agency Response

DHCS conducted a site visit in September of 2015 for LACOE. On April 29, 2016, DHCS confirmed that LACOE amended their contracts to ensure LEAs cannot claim the participation fee. In addition, DHCS issued PPL 16-007 on April 8, 2016, that detailed the prohibition of claiming reimbursement fees.

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

6-Month Agency Response

DHCS reviewed all LEC and LGA boilerplate contract language to ensure language regarding reimbursement for participation fees is accurate. Outside of LACOE LEC, DHCS did not find issues with the current contract language between all other LECs/LGAs and their LEAs. DHCS is currently working with LACOE to amend their contract and eliminate provisions that allow claiming of participation fees. DHCS will post a Policy and Procedure Letter (PPL) detailing the prohibition of claiming reimbursement for the fees that DHCS charges LECs and LGAs for participating in the program and specifying that those fees cannot be passed on to LEAs.

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

60-Day Agency Response

DHCS has requested copies of boiler plate contract language from all LEC/LGAs to ensure language regarding participation fees is accurate. DHCS received and reviewed LACOE's contract and confirmed it does include language that allows the claiming units to include DHCS' participation fee. Staff will be meeting with the LACOE LEC coordinator at the September 30, 2015 scheduled site visit, and require that the contract be amended to remove this language and be replaced with language reflecting that this is an unallowable fee.

Estimated completion date to ensure all executed LEC/LGA contracts are correct is June 30, 2016.

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

Recommendation #7 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 do the following immediately for all claims that Los Angeles County received and reviewed under its current contracts with its claiming units:
* Determine whether claiming units included Health Care Services' participation fee as part of the claim.
* For those paid claims that included the participation fee, identify the inappropriate amount paid and take appropriate action to resolve the improper payment including, if necessary, obtaining a refund from the claiming unit.
* For those submitted claims that have not yet been paid, instruct Los Angeles County to reject the claims and direct claiming units to revise the claims to omit Health Care Services' participation fee.

6-Month Agency Response

DHCS conducted a site visit of LACOE on September 30, 2015. During the site visit, DHCS identified language within LACOE's contract that allows LEAs within LACOE's jurisdiction to claim participation fees. DHCS has subsequently documented this issue under the Summary of Findings document pertaining to the LACOE site visit. Additionally, DHCS has advised LACOE to remove specific language from their contract that allows LEAs to claim participation fees within Los Angeles County. DHCS is reviewing all past claims to identify unallowable costs. For any paid claims that include a participation fee, DHCS will take appropriate action to recoup those funds. For those submitted claims that have not yet been paid, DHCS will instruct Los Angeles County to reject the claims and direct claiming units to revise the claims to omit DHCS' participation fee. In February 2016, DHCS sent LACOE an official site visit response letter including the Summary of Findings from the site visit DHCS conducted on September 30, 2015 and the results of the subsequent invoice review.

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

Health Care Services subsequently told us that its review did did not reveal any evidence of participation fees being claimed by local educational agencies and that LACOE has since removed the language from its contracts that previously allowed local educational agencies to claim participation fees.

60-Day Agency Response

DHCS performed a site visit for LACOE on September 30, 2015. A Summary of Findings of the site visit will be issued by October 30, 2015. As part of the audit file, a schedule details all "other costs" claimed on the LEA invoice. DHCS will ensure that any participation fees will not be listed as part of the invoice. DHCS will review all past claims to identify unallowable costs. For any paid claims that include a participation fee, DHCS will take appropriate action to recoup those funds. For those submitted claims that have not yet been paid, DHCS will instruct Los Angeles County to reject the claims and direct claiming units to revise the claims to omit DHCS' participation fee. DHCS has reviewed the LACOE contract with their LEAs and identified specific language that allows the LEAs to claim the participation fees. DHCS will include the recommendation to amend the contract to remove this language when the Summary of Findings from the site visit is issued. Additional site visits are scheduled with Stanislaus on October 18, 2015; and for Tulare LGA on October 27, 2015.

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

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 October 2021

Policy and Procedure Letter 21-001 was released and posted on the DHCS website on January 15, 2021. In addition, DHCS staff communicated this policy to the LECs and LGAs.

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

Based on our review of the policy letter described in its response, Health Care Services fully implemented this recommendation.

Annual Follow-Up Agency Response From November 2020

DHCS will revise and release an updated version of PPL 16-007 to include guidance prohibiting LEAs from seeking reimbursement for DHCS' participation fee. Additionally, DHCS will clearly communicate with all of the LECs and LGAs to include in contracts with claiming units the prohibition of claiming units from seeking federal reimbursement of DHCS' participation fees.

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

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.

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.

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

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.

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

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.

1-Year Agency Response

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

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 letter—dated April 8, 2016, and addressed to local educational consortia and local governmental agencies—as 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.

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.

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.

Recommendation for Legislative Action

To streamline the organizational structure of Health Care Services' administrative activities program and to improve the program's cost-effectiveness, the Legislature should amend state law to allow claiming units to submit reimbursement claims directly to Health Care Services.

Description of Legislative Action

As of August 20, 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 Annual Follow-Up 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 Annual Follow-Up Status: No Action Taken

Description of Legislative Action

Legislation has not been introduced to address this specific recommendation.

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

Recommendation #10 To: Health Care Services, Department of

To streamline the organizational structure of its administrative activities program and to improve the program's cost-effectiveness, Heath Care Services should implement a single statewide quarterly random moment time survey and develop and implement a plan to take over responsibility for conducting quarterly time surveys and performing related activities as soon as reasonably possible.

Annual Follow-Up Agency Response From October 2021

An analysis was conducted of the RMTS data from Regions 8 and 9 both separately (pre-merger) and after becoming a consortium (post-merger). Generally speaking, the numbers appear very similar pre- and post-merger for all codes except for code 1, which had a decrease of 10 percent, and code 16, which had a commensurate increase of 10 percent. Additionally, DHCS notes, although all four quarters have closed for 2019-20, only actual data is available for two of the four quarters because during the public health emergency Quarters 2 and 3 were used to create an average for Quarter 4.

We will complete again when actual data is available for three quarters in a year, which should be available in two years, when the data from all of 21/22 is available.

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

Annual Follow-Up Agency Response From November 2020

Once the FY 2019-20 sample is complete for all four quarters, DHCS will review the results of the Region 8 and Region 9 merger to determine the overall impact on the RMTS results, and then compare the results to the results from prior FYs. The data will provide additional documentation to help DHCS determine the feasibility of implementing a single statewide time survey.

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

Annual Follow-Up Agency Response From October 2019

Although DHCS continues to review the feasibility of implementing a statewide RMTS process, in January 2018, San Diego LGA discontinued their participation in the SMAA program and the administration of their LEAs was assumed by the Orange County Region 9 LEC. This reduced the total number of RMTS Sample Universes in the state to eight. Beginning in FY 2019-20, Kern County Region 8 LEC and Orange County Region 9 LEC will merge into a single administrative unit for the purposes of conducting a single RMTS Sample Universe. This will reduce the total number of RMTS Sample Universes in the state to seven. This will streamline the organizational structure and improve cost effectiveness of the overall RMTS process by approximately 20 percent. Once the FY 2019-20 sample is complete for all four quarters, DHCS will review the results of the Region 8 and Region 9 merger to determine the overall impact on the RMTS results, and then compare those results to the results from prior fiscal years. This will provide additional documentation to help DHCS determine the feasibility of implementing a single statewide time survey.

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

Annual Follow-Up Agency Response From August 2019

Although DHCS continues to review the feasibility of implementing a statewide RMTS process, in January 2018, San Diego LGA discontinued their participation in the SMAA program and the administration of their LEAs was assumed by the Orange County Region 9 LEC. This reduced the total number of RMTS Sample Universes in the state to eight. Beginning in Fiscal Year (FY) 2019-20, Kern County Region 8 LEC and Orange County Region 9 LEC will merge into a single administrative unit for the purposes of conducting a single RMTS Sample Universe. This will reduce the total number of RMTS Sample Universes in the state to seven. This will streamline the organizational structure and improve cost effectiveness of the overall RMTS process by approximately 20%. Once the FY 2019-20 sample is complete for all four quarters, DHCS will review the results of the Region 8 and Region 9 merger to determine the overall impact on the RMTS results, and then compare those results to the results from prior fiscal years. This will provide additional documentation to help DHCS determine the feasibility of implementing a single statewide time survey.

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

Annual Follow-Up Agency Response From November 2018

DHCS continues to assert that implementing a single, statewide RMTS is premature at this time. RMTS has been in place for 2.5 years and DHCS currently has the first two quarters (six months) of RMTS invoices processed and believe it is not a sufficient and complete data set to determine if moving to a statewide platform would be warranted.

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

Annual Follow-Up Agency Response From September 2017

DHCS continues to assert that implementing a single, statewide RMTS is premature at this time. RMTS has been in place for 2.5 years and DHCS currently has the first two quarters (six months) of RMTS invoices processed and believe it is not a sufficient and complete data set to determine if moving to a statewide platform would be warranted.

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

1-Year Agency Response

DHCS reached out to other states and considered the advantages and disadvantages of implementing a statewide process which would include assuming responsibility for the time surveys. While the state may continue to research this and other options in efforts to continue improving the SMAA program, DHCS continues to believe that assuming the responsibility for conducting a statewide process is premature at this time since our current process has only been in place for 1.5 years and has shown that it successfully captures the activities of the participants.

California State Auditor's Assessment of 1-Year Status: Will Not Implement

We continue to believe that if Health Care Services completed its research, it would agree that implementing a single statewide quarterly time survey would result in significant savings for claiming units and would simplify the oversight of the administrative activities program. As we mention on page 42 of our audit report, by conducting nine separate time surveys each quarter rather than a single statewide quarterly time survey, participants in the administrative activities program expend nine times the effort and incur corresponding additional costs to complete, code, and assure the quality of the time survey responses.

6-Month Agency Response

DHCS is reaching out to other states to better understand how the state could transition the administration of the SMAA program from a regional, county-based approach to a comprehensive statewide approach. DHCS is reviewing scope of service, cost effectiveness, and the number and type of resources needed to implement an effective statewide program.

DHCS will complete their review by December 2016.

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

We believe that when Health Care Services completes its analysis, it will agree that implementing a single statewide quarterly time survey will result in significant savings for claiming units and will simplify the oversight of the administrative activities program.

60-Day Agency Response

At this time, DHCS will not implement this recommendation. However, DHCS has begun to review the implications and cost effectiveness of taking over the responsibility of conducting quarterly time surveys, and related activities. DHCS has Begun reaching out to other states that utilize a single statewide time survey to determine the scope of services involved in this methodology and identify a set of best practices for possible implementation in California. This research is in the very early stages and does not yet support any conclusions.

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

We believe that when Health Care Services completes its analysis, it will agree that implementing a single statewide quarterly time survey will result in significant savings for claiming units and will simplify the oversight of the administrative activities program.

Recommendation #11 To: Health Care Services, Department of

To streamline the organizational structure of its administrative activities program and to improve the program's cost-effectiveness, Heath Care Services should implement a single statewide quarterly random moment time survey and develop and issue a request for proposals to identify a responsible vendor to assist in implementing a statewide quarterly random moment time survey.

Annual Follow-Up Agency Response From October 2021

CMS approved SPA 15-021 on April 27, 2020, with an implementation date of July 1, 2020. Once the new integrated RMTS process has been implemented for eight quarters, DHCS will review all available RMTS data and determine if a statewide quarterly RMTS option is feasible. Since SPA 15-021 was implemented on July 1, 2020, DHCS will need at least two years (through FY 2022-23) of data to determine the feasibility for statewide RMTS, and an additional two years (through FY 2024-25) to implement statewide RMTS.

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

Annual Follow-Up Agency Response From November 2020

The Centers for Medicare and Medicaid Services (CMS) approved SPA 15-021 on April 27, 2020, with an implementation date of July 1, 2020. Once the new integrated RMTS process has been implemented for eight quarters, DHCS will review all available RMTS data and determine if a statewide quarterly RMTS option is feasible. Since SPA 15-021 was implemented on July 1, 2020, DHCS will need at least two years (through FY 2022-23) of data to determine the feasibility for statewide RMTS, and an additional two years (through FY 2024-25) to implement statewide RMTS.

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

Annual Follow-Up Agency Response From October 2019

Back-casting completed in June 30, 2019, and SPA 15-021 is anticipated to be implemented July 1, 2020. Once the new integrated RMTS process has been implemented for eight quarters, DHCS will review all available RMTS data and determine if a statewide quarterly RMTS option is feasible. If SPA 15-021 is implemented beginning July 1, 2020, then DHCS will need at least two years (through FY 2022-23) of data to determine the feasibility for statewide RMTS, and an additional two years (through FY 2024-25) to implement statewide RMTS.

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

Annual Follow-Up Agency Response From August 2019

Back-casting completed in June 30, 2019, and SPA 15 021 is anticipated to be implemented July 1, 2020. Once the new integrated RMTS process has been implemented for eight quarters, DHCS will review all available RMTS data and determine if a statewide quarterly RMTS option is feasible. If SPA 15-021 is implemented beginning July 1, 2020, then DHCS will need at least two years of data to determine the feasibility for statewide RMTS, and an additional two years to implement statewide RMTS.

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

Annual Follow-Up Agency Response From November 2018

Back-casting will be completed June 30, 2019, and SPA 15-021 does not have an implementation date to onboard LEA Medi-Cal Billing Option Program (BOP) to RMTS. At that time, DHCS will review all available RMTS data and determine if a statewide quarterly RMTS option is feasible. If SPA 15-021 is implemented beginning July 1, 2019, then DHCS will need at least two years of data to determine the feasibility for statewide RMTS, and an additional two years to implement statewide RMTS, therefore, estimated statewide RMTS implementation is July 1, 2024.

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

Annual Follow-Up Agency Response From September 2017

An RFP to implement a statewide RMTS continues to be premature. The current structure was established in collaboration with stakeholders, and at their request. Since invoices have only been submitted for the first two quarters of RMTS, DHCS does not have sufficient data to determine if moving to a statewide structure would be more efficient, given that the current structure is capturing all activities of the participants.

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

1-Year Agency Response

DHCS has determined it would not implement a statewide RMTS and therefore will not develop and issue a request for proposal. DHCS currently has an RMTS system in place that was established in collaboration with stakeholders. DHCS may continue to review the option of issuing a request for proposal for a statewide quarterly random moment survey in the future, however DHCS will not implement at this time.

California State Auditor's Assessment of 1-Year Status: Will Not Implement

We continue to believe that implementing a single statewide quarterly time survey would result in significant savings for claiming units and would simplify the oversight of the administrative activities program. As we mention on page 42 of our audit report, by conducting nine separate time surveys each quarter rather than a single statewide quarterly time survey, participants in the administrative activities program expend nine times the effort and incur corresponding additional costs to complete, code, and assure the quality of the time survey responses.

6-Month Agency Response

DHCS disagrees with this recommendation.

DHCS continues to contact other states to determine the number and type of resources necessary to administer Random Moment Time Survey (RMTS) at a statewide level. DHCS has received responses from Texas and Indiana to its initial inquiries and continues to seek input from additional states. Because of the depth and scope of this research, no conclusions about the practicality of a statewide RMTS system can be determined at this time.

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

We believe that when Health Care Services completes its analysis, it will agree that implementing a single statewide quarterly time survey will result in significant savings for claiming units and will simplify the oversight of the administrative activities program.

60-Day Agency Response

At this time, DHCS will not implement this recommendation. However, DHCS has begun to reach out to other states that administer a statewide Random Moment Time Study (RMTS) methodology in order to identify a set of best practices for the development and implementation of a statewide RMTS in California, and determine the number and type of resources necessary to administer the program at a statewide level. This research is in the very early stages and does not support any conclusions. Once that review is complete, DHCS will make a determination of the practicality of a statewide RMTS implementation.

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

We believe that when Health Care Services completes its analysis, it will agree that implementing a single statewide quarterly time survey will result in significant savings for claiming units and will simplify the oversight of the administrative activities program.

Recommendation #12 To: Health Care Services, Department of

To streamline the organizational structure of its administrative activities program and to improve the program's cost-effectiveness, Heath Care Services should implement a single statewide quarterly random moment time survey and draft revisions to regulations as appropriate and to applicable documents, including the manual, oversight strategies and plans, and policy and procedure letters.

Annual Follow-Up Agency Response From October 2021

DHCS submitted the SMAA Manual to CMS for approval on 9/29/2020 and CMS has not responded with guidance or an approval. Additionally, DHCS submitted the RMTS Manual to CMS 10/13/2020 and CMS has not responded with guidance or an approval.

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

Annual Follow-Up Agency Response From November 2020

A revised SMAA Manual was approved by CMS in 2019; however, additional revisions were made and approved by CMS in April 2020 to include guidance regarding RMTS statistically invalid quarters. Furthermore, the SMAA 2020 Administrative Manual and the California School-Based RMTS Manual, incorporating the LEA Billing Option Program, are being revised and will be sent to CMS for approval.

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

Annual Follow-Up Agency Response From October 2019

SMAA regulation development will begin now that back casting is completed. DHCS submitted a revised SMAA Manual to CMS for approval in November 2017, with additional revisions submitted in June 2019, and approval of the manual is pending approval of SPA 15-021. The revision incorporates provisions of SPA 15-021 to incorporate the LEA BOP into the SMAA RMTS. The revision also includes oversight strategies and plans, and all current policy and procedure letters.

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

Annual Follow-Up Agency Response From August 2019

SMAA regulation development will begin now that back casting is completed. DHCS submitted a revised SMAA Manual to CMS for approval in November 2017 and approval is pending approval of SPA 15-021. The revision incorporates provisions of SPA 15-021 to incorporate the LEA BOP into the SMAA RMTS. The revision also includes oversight strategies and plans, and all current policy and procedure letters.

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

Annual Follow-Up Agency Response From November 2018

SMAA regulation development will begin once backcasting is completed by June 2019. DHCS submitted a revised SMAA Manual to CMS for approval in November 2017. The revision incorporates provisions of SPA 15-021 to incorporate the LEA BOP into the SMAA RMTS. The revision also includes

oversight strategies and plans, and all current policy and procedure letters.

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

Annual Follow-Up Agency Response From September 2017

Legislation that was proposed in 2016 would have significantly amended SMAA's Welfare and Institutions (W&I) Code and current pending legislation may also significantly amend SMAA's W&I Code; therefore, SMAA has delayed the development of regulations. In addition, the SMAA Manual was approved by CMS on October 31, 2016, and includes revisions to programmatic oversight methodologies, policies and procedure documents, and enhanced reporting requirements and accountability measures. DHCS continues to draft revisions to the proposed SMAA regulations to support programmatic authority. DHCS anticipates submission of regulations by January 2018.

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

1-Year Agency Response

DHCS submitted the SMAA manual to CMS on August 15, 2016. Once the manual is approved by CMS, DHCS will incorporate specific items into regulations. DHCS anticipates submission of regulations by June 30, 2017.

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

6-Month Agency Response

DHCS staff continues to review Policy and Procedure Letters, CMS guidance letters, RMTS manual language, Welfare and Institutions Code, and oversight requirements to determine which elements should be included as regulations. DHCS is currently revising the School Based Medi-Cal Administrative Activities Manual, which is the claiming guide for the SMAA program.

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

60-Day Agency Response

DHCS staff have attended regulation training and are compiling and reviewing all issued Policy and Procedure Letters, CMS guidance letters, RMTS manual language, Welfare and Institutions Code, and oversight requirements to determine which elements should be included as regulations.

Estimated submission date is June 30, 2017.

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

Recommendation #13 To: Health Care Services, Department of

To the extent that local educational consortia and local governmental agencies are no longer involved in the administrative activities program, Health Care Services should develop and issue a standard contract for claiming units to sign to participate in the program.

Annual Follow-Up Agency Response From August 2019

DHCS has a standard contract process for all contracts within the department. DHCS will continue to use the current contract agreements with all LEC/LGAs that contract with the LEAs. DHCS will not implement.

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

Annual Follow-Up Agency Response From November 2018

DHCS has a standard contract process for all contracts within the Department. DHCS will continue to use the current contract agreements with all LEC/LGAs that contract with the LEAs

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

Annual Follow-Up Agency Response From September 2017

DHCS has a standard contract process for all contracts within the Department. DHCS will continue to use the current contract agreements with all LEC/LGAs that contract with the LEAs

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

1-Year Agency Response

DHCS will maintain its current contract agreements with the LEC/LGAs who contract with the LEAs.

California State Auditor's Assessment of 1-Year Status: Will Not Implement

As we state on page 44 of our report, implementing a single statewide quarterly time survey would render local educational consortia and local governmental agencies unnecessary for the administrative activities program. Health Care Services would therefore need to contract directly with claiming units. As we point out on page 34 of our report, having a standardized contract, like the one Health Care Services uses for the billing option program, would help ensure that contracts with claiming units are appropriate and consistent with applicable federal and state requirements.

6-Month Agency Response

DHCS currently has contracts with LECs and LGAs, but not with LEAs. LECs and LGAs have contract agreements with LEAs who voluntarily participate in the SMAA program. The SMAA program currently has the authority to only allow LEAs to participate in the program if they have contract agreements with either their regional LEC or LGA. LEAs do not currently have an option of contracting directly with DHCS to participate in the SMAA program.

California State Auditor's Assessment of 6-Month Status: Will Not Implement

Although Health Care Services states that it will not implement this recommendation, its additional statements indicate otherwise. Health Care Services acknowledges that it uses standard contracts for all local educational consortia and local governmental agencies with which it contracts. Further, in its 60-day response, Health Care Services stated that contracting directly with local educational agencies is dependent upon elimination of local educational consortia and local governmental agencies and the time frame needed to transition duties to claiming units. These statements are in line with our recommendation.

60-Day Agency Response

DHCS disagrees with the recommendation.

DHCS currently has standard contracts with the LEC/LGAs. Should DHCS determine the necessity of eliminating the LEC/LGAs from the SMAA program, DHCS will continue to use standard contracts for all claiming units contracting with DHCS. Contracting directly with the LEAs would be dependent upon elimination of LEC/LGAs and the timeframe needed to transition duties to the claiming units.

California State Auditor's Assessment of 60-Day Status: Will Not Implement

Although Health Care Services states that it will not implement this recommendation, its additional statements indicate otherwise. Health Care Services acknowledges that it uses standard contracts for all local educational consortia and local governmental agencies with which it contracts. Further, Health Care Services states that contracting directly with local educational agencies is dependent upon elimination of local educational consortia and local governmental agencies and the time frame needed to transition duties to claiming units. These statements are in line with our recommendation.

Recommendation #14 To: Health Care Services, Department of

To improve the clarity and effectiveness of program communication, Health Care Services should develop and implement feedback mechanisms, such as organized, up-to-date FAQs, through which it can communicate results of relevant inquiries to other stakeholders, including claiming units.

6-Month Agency Response

DHCS has established summary notes from SMAA stakeholder workgroup meetings that are distributed to LEAs, LGAs, and LECs. Currently DHCS is composing a FAQ link that will be posted on the DHCS website by March 31, 2016.

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

Health Care Services subsequently created a FAQ page (http://www.dhcs.ca.gov/provgovpart/Pages/SMAAFrequentlyAskedQuestions.aspx) on its website, and stated that it will update this page on a regular basis.

60-Day Agency Response

DHCS has begun to review emails, notes, meeting comments/agendas to update current FAQs. Once FAQs are drafted, they will be submitted to the stakeholders for comments and edits prior to posting to the SMAA web page. DHCS will create a separate FAQ link to the SMAA web page.

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

Recommendation #15 To: Health Care Services, Department of

To better ensure that some claiming units do not unfairly disadvantage other claiming units in the receipt of interim payments, Health Care Services should explore opportunities to expedite consistent, timely, and fair interim payments to those claiming units with no overpayments. Health Care Services should involve representatives of local educational consortia, local governmental agencies, and claiming units in these efforts and communicate the results to interested stakeholders.

1-Year Agency Response

DHCS issued PPL 16-011 that gives guidance to the LECs and LGAs on the disbursement and recoupment of deferral settlement funds for the School-Based Medi-Cal Administrative Activities (SMAA) program

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

60-Day Agency Response

DHCS is drafting a guidance letter to assist the LEC/LGAs with finalizing the settlement payment process. This letter is anticipated to be issued October 30, 2015.

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

Health Care Services has not yet provided us with a copy of the guidance letter mentioned in its response.

Recommendation for Legislative Action

To help improve and maximize the benefits of the administrative activities program, as well as to provide enhanced transparency to stakeholders, the Legislature should enact legislation as soon as possible that requires Health Care Services to prepare a report annually for the administrative activities program similar to the annual report state law requires for the billing option program.

Description of Legislative Action

As of August 20, 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 Annual Follow-Up 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 Annual Follow-Up Status: No Action Taken

Description of Legislative Action

Legislation has not been introduced to address this specific recommendation.

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

Recommendation #17 To: Health Care Services, Department of

To better maximize federal reimbursements for the administrative activities program, Health Care Services should, within six months, develop and implement a method to oversee and track the outreach efforts that local educational consortia and local governmental agencies use for ensuring that nonparticipating claiming units understand the benefits and consider participating in the administrative activities program.

Annual Follow-Up Agency Response From August 2019

Participation in the administrative activities program is voluntary on the part of the LEA. Outreach efforts provide information to the LEAs on the potential benefits of their participation in the program. Tracking the number of LEAs that have received the information has no correlation to the number of new claims submitted annually. Therefore, DHCS will continue to encourage LECs/LGAs to engage in outreach efforts but will not track the results of the outreach process, with the exception of noting the number of LEAs that actively participate in the program.

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

Annual Follow-Up Agency Response From November 2018

DHCS developed and issued a brochure for the LEC/LGAs to send to non-participating LEAs on February 23, 2016

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

As we have noted in previous annual responses, the brochure that Health Care Services mentions in its response describes the administrative activities program and how entities can participate in the program. However, Health Care Services' response does not address its oversight of outreach efforts.

Annual Follow-Up Agency Response From September 2017

DHCS developed and issued a brochure for the LEC/LGAs to send to non-participating LEAs on February 23, 2016

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

We cannot confirm that Health Care Services fully implemented this recommendation. The brochure Health Care Services mentions in its response describes the administrative activities program and how entities can participate in the program. However, Health Care Services' response does not address its oversight of outreach efforts.

1-Year Agency Response

On February 23, 2016, DHCS developed and issued a brochure for the LECs and LGAs to distribute to potential and past LEAs. In addition, each LEC or LGA may submit for approval to DHCS, brochures or other material they want to distribute.

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

The brochure Health Care Services mentions in its response describes the administrative activities program and how entities can participate in the program. However, Health Care Services' response does not address its oversight of outreach efforts.

6-Month Agency Response

DHCS has developed a trifold brochure that was approved in December 2015. DHCS' implementation plan involves the distribution of the brochures to the LEAs through the LECs and LGAs beginning in February 2016.

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

60-Day Agency Response

DHCS has developed an SMAA marketing tool which will be distributed, once approved.

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

Recommendation #18 To: Health Care Services, Department of

To better maximize federal reimbursements for the administrative activities program, Health Care Services should, within six months, revise reimbursement rates to authorize claiming units to claim the 75 percent reimbursement rate for translation activities as federal law allows.

Annual Follow-Up Agency Response From September 2017

The new SMAA invoice that reflects 75% reimbursement for translation activities was approved by CMS on October 31, 2016 and was posted to the SMAA website on November 14, 2016

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

1-Year Agency Response

DHCS updated the SMAA invoice to include a 75% reimbursement rate for translation services. DHCS submitted the SMAA invoice with the SMAA manual to CMS on August 15, 2016, for their consideration. Upon CMS's approval, DHCS will implement the enhanced reimbursement.

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

6-Month Agency Response

DHCS is working to implement the enhanced 75 percent reimbursement for translation services. DHCS has reached out to the Centers for Medicare and Medicaid Services (CMS) for further clarification and guidance on eligible time study participants and activities and is still awaiting a response. DHCS is also working on updating the SMAA invoice to allow claiming for the enhanced translation rate.

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

In July 2016, Health Care Services told us that it will implement the enhanced 75 percent reimbursement rate for translation services with the revised random moment time survey invoice, and that the revised invoice is under final review. Health Care Services also stated that, once complete, the revised invoice will be sent to the federal Centers for Medicare and Medicaid Services for review and approval.

60-Day Agency Response

DHCS has reached out to stakeholders and received some feedback that the workload would not justify the additional time involved in tracking this activity and would outweigh the return on investment. However, DHCS is reviewing how other states are implementing to determine best practices to develop a process to claim translation services at the enhanced rate of 75 percent should stakeholders choose to claim this activity.

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

Recommendation #19 To: Health Care Services, Department of

To better maximize federal reimbursements for the administrative activities program, Health Care Services should, within six months, determine the extent to which claiming units can claim the unreimbursed difference between the 50 percent and 75 percent reimbursement rates for translation activities for past years and inform claiming units of the findings.

Annual Follow-Up Agency Response From November 2018

CMS approved retroactive claiming for all claims within the 2-year claiming limit. CMS approval allows retroactive claiming to begin with invoices submitted for the FY 2014-15 Q3 period of service. The invoices for the FY 2014-15 Q3 were submitted to DHCS on December 2016, and 2014-15 Q4 were submitted on February 28, 2017 for payment

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

Annual Follow-Up Agency Response From September 2017

CMS approved retroactive claiming for all claims within the 2-year claiming limit. CMS approval allows retroactive claiming to begin with invoices submitted for the FY 2014-15 Q3 period of service. The invoices for the FY 2014-15 Q3 were submitted to DHCS on December 2016, and 2014-15 Q4 were submitted on February 28, 2017 for payment

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

We cannot confirm that Health Care Services fully implemented this recommendation. It did not submit for our review a copy of CMS' approval of retroactive claiming nor copies of documents informing claimants of their ability to claim the unreimbursed difference for translation activities.

1-Year Agency Response

CMS will provide a response to our request for retroactive claiming once the SMAA manual and new invoice have been approved. The SMAA manual and invoice were submitted on August 15, 2016.

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

6-Month Agency Response

DHCS is revising the current SMAA invoice to allow LEAs to claim the enhanced 75% reimbursement rate for translation related Medi-Cal activities. DHCS has reached out to CMS to determine the period of service for which retroactive claiming can be applied and will develop a mechanism to collect and distribute the additional funding to LEAs as a result of the increased reimbursement rate. DHCS is still awaiting a response from CMS.

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

60-Day Agency Response

DHCS is currently working to incorporate the increased reimbursement for translation services into the current invoice. Once the invoice has been updated and a process is in place to track this activity, DHCS will ask CMS if retroactive claiming will be allowed. Once DHCS develops a process, with the collaboration of stakeholders, we will submit to CMS for approval.

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

Recommendation #20 To: Health Care Services, Department of

Should the Legislature implement our recommendation in Chapter 2 to allow claiming units to submit reimbursement claims directly to it, Health Care Services should develop and implement its own outreach functions to ensure that claiming units that do not currently participate understand the benefits and consider participating in the administrative activities program.

Annual Follow-Up Agency Response From September 2017

On February 23, 2016, SMAA program created an Outreach Brochure to inform LEAs of the features and benefits of the SMAA program. The goal of the SMAA Outreach Brochure is to encourage increased LEA participation in the SMAA program. DHCS will seek to reach out again to non-participating LEAs once the LEA Billing Option Program is integrated into the RMTS. As noted earlier, DHCS is also working with California Department of Education (CDE) and several stakeholders to determine ways to expand program participation. Outreach efforts will be discussed.

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

1-Year Agency Response

The Department is already working on outreach efforts to expand the number of schools participating in SMAA. If the Legislature implements the CSA's recommendation, the Department would tailor outreach efforts in accordance with the new direction.

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

60-Day Agency Response

The Department is already working on outreach efforts to expand the number of schools participating in SMAA. If the Legislature implements the CSA's recommendation, the Department would tailor outreach efforts in accordance with the new direction.

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

Recommendation #21 To: Health Care Services, Department of

To provide the public with the ability to participate fully in developing the rules governing the administrative activities program, Health Care Services should, in accordance with California's Administrative Procedure Act (APA), immediately develop and adopt the regulations cited in the four subdivisions of Section 14132.47 of the California Welfare and Institutions Code.

Annual Follow-Up Agency Response From October 2021

DHCS began regulation development in December 2019; however, due to the COVID-19 pandemic, development has slowed because of competing priorities. The regulation package is currently in the departmental review process and we anticipate the development of the regulations will be completed by December 2022.

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

Annual Follow-Up Agency Response From November 2020

DHCS began regulation development in December 2019; however, due to the COVID-19 pandemic, development has slowed because of competing priorities. The regulation package is currently in the departmental review process and we expect the development of the regulations will be completed by December 2021.

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

Annual Follow-Up Agency Response From October 2019

SMAA will begin working with the Office of Regulations (OOR) to begin the regulation development process now that backcasting is completed. A draft regulation package will be developed and submitted to OOR no later than August 2020.

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

Annual Follow-Up Agency Response From August 2019

SMAA regulation development will begin now that back-casting is completed.

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

Annual Follow-Up Agency Response From November 2018

SMAA regulation development will begin once back casting is completed.

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

Annual Follow-Up Agency Response From September 2017

Proposed legislation in 2016 that would have significantly amended W&I Code Section 14132.47, delayed the development and completion of SMAA regulations. Subsequent related pending legislation added to delays in completing the regulations, in addition to DHCS securing CMS approval of the revised SMAA Manual in October 2016. DHCS continues to research regulatory language for the SMAA program and expects submission by January 31, 2018

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

1-Year Agency Response

DHCS has researched regulatory language for the SMAA program and has begun to collect information for developing and implementing regulations. DHCS anticipates submitting proposed regulatory language by June 30, 2017.

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

6-Month Agency Response

DHCS is in the process of researching regulatory language for the SMAA program. DHCS continues to work closely with stakeholders during this initial phase. DHCS plans to submit a proposal regarding regulatory language by June 30, 2017.

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

60-Day Agency Response

DHCS agrees with the recommendation.

DHCS staff is currently working on drafting regulations for the SMAA program. DHCS meets regularly with our stakeholders and will engage them in the regulatory development process. The public will have time to comment during the public comment period required by the APA.

Estimated time to submit regulations for the SMAA program is June 30, 2017.

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

Recommendation #22 To: Health Care Services, Department of

To ensure that it provides stakeholders with timely access to information regarding the billing option program, Health Care Services should issue the required annual report covering April 2012 to May 2013 immediately.

6-Month Agency Response

The May 2013 Legislative Report is currently going through the approval process.

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

Health Care Services subsequently posted this report on its website.

60-Day Agency Response

DHCS agrees with the recommendation.

DHCS is working to issue the April 2013 to May 2015 annual report by December 31, 2015.

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

Recommendation #23 To: Health Care Services, Department of

To ensure that it provides stakeholders with timely access to information regarding the billing option program, Health Care Services should issue the required annual report covering April 2013 to May 2015 by December 2015 as promised.

Annual Follow-Up Agency Response From September 2017

DHCS combined the June 2013 through May 2015 report for simplicity; the report was posted to the DHCS website in March 2016.

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

1-Year Agency Response

The April 2014 to May 2015 report is being finalized. DHCS anticipates posting in December 2016.

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

6-Month Agency Response

DHCS is working collaboratively with its contractor to complete a combined report for FY 13-14 and FY 14-15, and to issue it in a timely manner. During the process of developing the report, DHCS reached out to 49 states to gather statistical data on Medicaid reimbursements to meet the requirement stated in Welfare and Institution Code 14115.8. This process proved to be time consuming due to the lack of timely responses from multiple states, thus missing the recommended deadline of December 31, 2015. Currently, DHCS is finalizing the Legislative Report and expects to release by March 31, 2016.

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

In July 2016, Health Care Services told us that the combined legislative report for fiscal years 2013-14 and 2014-15 was going through final departmental review.

60-Day Agency Response

The report is going through the approval process.

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

Recommendation #24 To: Health Care Services, Department of

To ensure that it provides stakeholders with timely access to information regarding the billing option program, Health Care Services should issue all future annual reports in a timely manner.

Annual Follow-Up Agency Response From November 2018

DHCS received data from other states required in regulations to complete the FY 2015-16 report which was posted on the web site on January 8, 2018. The FY 2016-17 report is being finalized. Estimated date for completion is December 2018.

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

Health Care Services' fiscal year 2015-16 report is online at https://www.dhcs.ca.gov/formsandpubs/Documents/Legislative%20Reports/LEA_LegRpt_FY_2015-16.pdf.

Annual Follow-Up Agency Response From September 2017

Due to the lack of responses from other states to provide the data required in regulation for the report, the FY 2015 report (July 2015 through June 2016) is delayed. DHCS is currently finalizing the FY 2016 (July 2016 through June 2017) report and will post to the website once approved

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

1-Year Agency Response

DHCS is working collaboratively to issue future reports in a timely manner.

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

6-Month Agency Response

DHCS will work to issue reports timely.

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

60-Day Agency Response

DHCS will work to issue reports timely.

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

All Recommendations in 2014-130

Agency responses received are posted verbatim.