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AB-521 Medi-Cal: unrecovered payments: interest rate.(2021-2022)

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Date Published: 03/30/2021 09:00 PM
AB521:v98#DOCUMENT

Amended  IN  Assembly  March 30, 2021

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Assembly Bill
No. 521


Introduced by Assembly Member Mathis

February 10, 2021


An act to amend Section 14171 of, and to add Section 14171.1 to, of the Welfare and Institutions Code, relating to Medi-Cal.


LEGISLATIVE COUNSEL'S DIGEST


AB 521, as amended, Mathis. Medi-Cal: unrecovered payments: interest rate.
Existing law provides for the Medi-Cal program, which is administered by the State Department of Health Care Services, under which qualified low-income individuals receive health care services. The Medi-Cal program is, in part, governed and funded by federal Medicaid program provisions.
Existing law requires the Director of Health Care Services to establish administrative appeal processes to review grievances or complaints arising from the findings of an audit or examination. Under existing law, if recovery of a disallowed payment has been made by the department, a provider who prevails in an appeal of that payment is entitled to interest at the rate equal to the monthly average received on investments in the Surplus Money Investment Fund, or simple interest at the rate of 7% per annum, whichever is higher. Under existing law, with exceptions, interest at that same rate is assessed against any unrecovered overpayment due to the department.
In the case of an assessment against any unrecovered overpayment due to the department, this bill would authorize the director to waive any or all of the interest or penalties owed as part of a repayment agreement entered into with the provider for up to 12 months, or 24 months for a large clinic, as defined, if the director determines that specified factors apply, including a demonstration that imposing the interest or penalties would have a high likelihood of creating a financial hardship for the provider or a significant danger of reducing the provision of needed health care services, a finding that the overpayment is due to a change in rate for a particular service that is not the fault of the provider, or for any situation in which the department recoups an overpayment pursuant to an audit or examination for specified reasons, and the first statement of account status or demand for repayment is issued on or after July, 1, 2020. The bill would also make technical and conforming changes. by a provider, after taking into account specified factors, including the importance of the provider to the health care safety net in the community and the impact of the repayment amounts on the fiscal solvency of the provider.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 Section 14171 of the Welfare and Institutions Code is amended to read:

14171.
 (a) The director shall establish administrative appeal processes to review grievances or complaints arising from the findings of an audit or examination made pursuant to Sections 10722 and 14170 and for final settlements, including, in the case of hospitals, the application of Sections 51536, 51537, and 51539 of Title 22 of the California Code of Regulations. All these processes shall be established by regulation, pursuant to, and consistent with, Section 100171 of the Health and Safety Code.
(b) Different administrative appeal processes may be established by the director for grievances or complaints arising from the determinations of a tentative or final settlement based on audit or examination findings made by or on behalf of the department pursuant to Sections 10722 and 14170. However, consistent with existing practice, no administrative appeal shall be available for tentative settlement of cost reports.
(c) The administrative appeal process established by the director for tentative settlements, including, in the case of hospitals, the application of Sections 51536, 51537, and 51539 of Title 22 of the California Code of Regulations Regulations, shall be an informal process which, that, however, guarantees a provider the right to present any grievance or complaint to the department in writing. Any subsequent hearings shall be conducted in an informal manner and shall be held at the discretion of the department.
(d) The time limitations in subdivisions (e) and (f) for the impartial hearing and the final decisions are mandatory. If the department fails to conduct the hearing or to adopt a final decision thereon within the time limitations provided in subdivisions (e) and (f), the amount of any overpayment which that is ultimately determined by the department to be due shall be reduced by 10 percent for each 30-day period, or portion thereof, that the hearing or the decision, or both, are delayed beyond the time limitations provided in subdivisions (e) and (f). However, the time period shall be extended by either of the following:
(1) Delay caused by a provider.
(2) Extensions of time granted a provider at its sole request or at the joint request of the provider and the department.
(e) (1) The administrative appeal process established by the director shall commence with an informal conference with the provider, a representative of the department, and the administrative law judge. The informal conference shall be conducted no later than 90 days after the filing of a timely and specific statement of disputed issues by the provider. The administrative law judge, when appropriate, may assign the administrative appeal to an informal level of review where efforts could be made to resolve facts and issues in dispute in a fair and equitable manner, subject to the requirements of state and federal law. The review conducted at this informal level shall be completed no later than 180 days after the filing of a timely and specific statement of disputed issues by the provider.
(2) Nothing in this subdivision shall prohibit the provider from presenting any unresolved grievances or complaints at an impartial hearing pursuant to subdivision (a). The impartial hearing shall be conducted no later than 300 days after the filing of a timely and specific statement of disputed issues by the provider.
(3) (A) Subject to subdivision (f), a final decision in a noninstitutional provider appeal shall be adopted within 180 days after the closure of the record of the impartial hearing, and a final decision in an institutional provider appeal shall be adopted within 300 days after the closure of the record of the impartial hearing.
(B) The department shall mail a copy of the adopted decision to all parties within 30 days of the date of adoption of the decision.
(f) In the event If the director intends to modify a proposed decision, on or before the 180th day following the closure of the record of the hearing for noninstitutional providers or the 300th day following the closure of the record of the hearing for institutional providers, the director shall provide written notice of his or her the director’s intention to the parties and shall afford the parties an opportunity to present written argument. Following this notice, on or before the 240th day following the closure of the record of the hearing for noninstitutional providers or the 420th day following closure of the record of the hearing for institutional providers, or within that additional time period as is granted pursuant to the sole request of a provider or at the joint request of the provider and the department, the director shall issue a final decision.
(g) In the event If recovery of a disallowed payment has been made by the department, a provider who prevails in an appeal of a disallowed payment shall be entitled to interest at the rate equal to the monthly average received on investments in the Surplus Money Investment Fund, or simple interest at the rate of 7 percent per annum, whichever is higher, commencing on the date the appeal is formally accepted by the department or the date payment is received by the department, whichever is later.
(h) (1) Except as provided in subdivision (i), (i) and paragraph (2), commencing 60 days after issuance of the first statement of account status or demand for repayment repayment, whichever is earlier, resulting from an audit or examination made pursuant to Sections 10722 and 14170, interest at the rate equal to the monthly average received on investments in the Surplus Money Investment Fund during the month the first statement of account status or demand for repayment was issued, or simple interest at the rate of 7 percent per annum, whichever is higher, shall be assessed against any unrecovered overpayment due to the department.
(2) The director may waive any or all interest and penalties assessed under paragraph (1) for overpayments for up to 12 months when, in the director’s sole discretion, the director determines that all of the following apply:
(A) The provider has demonstrated that imposing interest or penalties on the overpayment has a high likelihood of creating a financial hardship for the provider, or there is a significant danger of reducing the provision of needed health care services.
(B) The overpayment is due to a change in rate for a particular service, consistent with program rules and the approved Medi-Cal State Plan, that is not the fault of the provider, or for any situation in which the department recoups an overpayment pursuant to an audit or examination for reasons other than those provided in Section 51458.1 of Title 22 of the California Code of Regulations.
(C) The first statement of account status or demand for repayment, whichever is earlier, is issued on or after July 1, 2020.
(3) The department shall implement this subdivision only to the extent that federal financial participation is available and not otherwise jeopardized.
(i) (1) Commencing on the day following the last day of the period covered by an audit or examination made pursuant to Sections 10722 and 14170, interest at the rate established under Section 19269 19521 of the Revenue and Taxation Code which that is in effect on the date of the commencement of that interest shall be assessed against any unrecovered overpayment due to the department by providers of durable medical equipment or incontinence supplies.
(2) Interest which that accrues under this subdivision for recoupment of an overpayment based on the lack of medical necessity for a previously approved claim shall commence to accrue on the date of written demand by the department.
(j) The final decision of the director shall be reviewable in accordance with Section 1094.5 of the Code of Civil Procedure within six months of the issuance of the director’s final decision.

SECTION 1.Section 14171 of the Welfare and Institutions Code is amended to read:
14171.

(a)The director shall establish administrative appeal processes to review grievances or complaints arising from the findings of an audit or examination made pursuant to Sections 10722 and 14170 and for final settlements, including, in the case of hospitals, the application of Sections 51536 and 51539 of Title 22 of the California Code of Regulations. All these processes shall be established by regulation, pursuant to, and consistent with, Section 100171 of the Health and Safety Code.

(b)Different administrative appeal processes may be established by the director for grievances or complaints arising from the determinations of a tentative or final settlement based on audit or examination findings made by or on behalf of the department pursuant to Sections 10722 and 14170. However, consistent with existing practice, no administrative appeal shall be available for tentative settlement of cost reports.

(c)The administrative appeal process established by the director for tentative settlements, including, in the case of hospitals, the application of Sections 51536 and 51539 of Title 22 of the California Code of Regulations, shall be an informal process that, however, guarantees a provider the right to present any grievance or complaint to the department in writing. Any subsequent hearings shall be conducted in an informal manner and shall be held at the discretion of the department.

(d)The time limitations in subdivisions (e) and (f) for the impartial hearing and the final decisions are mandatory. If the department fails to conduct the hearing or to adopt a final decision thereon within the time limitations provided in subdivisions (e) and (f), the amount of any overpayment that is ultimately determined by the department to be due shall be reduced by 10 percent for each 30-day period, or portion thereof, that the hearing or the decision, or both, are delayed beyond the time limitations provided in subdivisions (e) and (f). However, the time period shall be extended by either of the following:

(1)Delay caused by a provider.

(2)Extensions of time granted a provider at its sole request or at the joint request of the provider and the department.

(e)(1)The administrative appeal process established by the director shall commence with an informal conference with the provider, a representative of the department, and the administrative law judge. The informal conference shall be conducted no later than 90 days after the filing of a timely and specific statement of disputed issues by the provider. The administrative law judge, when appropriate, may assign the administrative appeal to an informal level of review where efforts could be made to resolve facts and issues in dispute in a fair and equitable manner, subject to the requirements of state and federal law. The review conducted at this informal level shall be completed no later than 180 days after the filing of a timely and specific statement of disputed issues by the provider.

(2)Nothing in this subdivision shall prohibit the provider from presenting any unresolved grievances or complaints at an impartial hearing pursuant to subdivision (a). The impartial hearing shall be conducted no later than 300 days after the filing of a timely and specific statement of disputed issues by the provider.

(3)(A)Subject to subdivision (f), a final decision in a noninstitutional provider appeal shall be adopted within 180 days after the closure of the record of the impartial hearing, and a final decision in an institutional provider appeal shall be adopted within 300 days after the closure of the record of the impartial hearing.

(B)The department shall mail a copy of the adopted decision to all parties within 30 days of the date of adoption of the decision.

(f)If the director intends to modify a proposed decision, on or before the 180th day following the closure of the record of the hearing for noninstitutional providers or the 300th day following the closure of the record of the hearing for institutional providers, the director shall provide written notice of the director’s intention to the parties and shall afford the parties an opportunity to present written argument. Following this notice, on or before the 240th day following the closure of the record of the hearing for noninstitutional providers or the 420th day following closure of the record of the hearing for institutional providers, or within that additional time period as is granted pursuant to the sole request of a provider or at the joint request of the provider and the department, the director shall issue a final decision.

(g)If recovery of a disallowed payment has been made by the department, a provider who prevails in an appeal of a disallowed payment shall be entitled to interest at the rate equal to the monthly average received on investments in the Surplus Money Investment Fund, or simple interest at the rate of 7 percent per annum, whichever is higher, commencing on the date the appeal is formally accepted by the department or the date payment is received by the department, whichever is later.

(h)(1)Except as provided in subdivision (i) and paragraph (2), commencing 60 days after issuance of the first statement of account status or demand for repayment, whichever is earlier, resulting from an audit or examination made pursuant to Sections 10722 and 14170, interest at the rate equal to the monthly average received on investments in the Surplus Money Investment Fund during the month the first statement of account status or demand for repayment was issued, or simple interest at the rate of 7 percent per annum, whichever is higher, shall be assessed against any unrecovered overpayment due to the department.

(2)The director may waive any or all interest and penalties assessed under paragraph (1) for overpayments for up to 12 months when, in the director’s sole discretion, the director determines that all of the following apply:

(A)The provider has demonstrated that imposing interest or penalties on the overpayment has a high likelihood of creating a financial hardship for the provider, or there is a significant danger of reducing the provision of needed health care services.

(B)The overpayment is due to a change in rate for a particular service, consistent with program rules and the approved Medi-Cal State Plan, that is not the fault of the provider, or for a situation in which the department recoups an overpayment pursuant to an audit or examination for reasons other than those provided in Section 51458.1 of Title 22 of the California Code of Regulations.

(C)The first statement of account status or demand for repayment, whichever is earlier, is issued on or after July 1, 2020.

(D)The clinic surpasses the specified threshold to be categorized as a large clinic.

(3)The director may waive any or all interest and penalties assessed under paragraph (1) for overpayments for up to 24 months when, in the director’s sole discretion, the director determines that all of the following apply:

(A)The provider has demonstrated that imposing interest or penalties on the overpayment has a high likelihood of creating a financial hardship for the provider, or there is a significant danger of reducing the provision of needed health care services.

(B)The overpayment is due to a change in rate for a particular service, consistent with program rules and the approved Medi-Cal State Plan, that is not the fault of the provider, or for a situation in which the department recoups an overpayment pursuant to an audit or examination for reasons other than those provided in Section 51458.1 of Title 22 of the California Code of Regulations.

(C)The first statement of account status or demand for repayment, whichever is earlier, is issued on or after July 1, 2020.

(D)The clinic meets the specified threshold to be categorized as a large clinic.

(i)(1)Commencing on the day following the last day of the period covered by an audit or examination made pursuant to Sections 10722 and 14170, interest at the rate established under Section 19521 of the Revenue and Taxation Code that is in effect on the date of the commencement of that interest shall be assessed against any unrecovered overpayment due to the department by providers of durable medical equipment or incontinence supplies.

(2)Interest that accrues under this subdivision for recoupment of an overpayment based on the lack of medical necessity for a previously approved claim shall commence to accrue on the date of written demand by the department.

(j)The final decision of the director shall be reviewable in accordance with Section 1094.5 of the Code of Civil Procedure within six months of the issuance of the director’s final decision.

SEC. 2.Section 14171.1 is added to the Welfare and Institutions Code, to read:
14171.1.

As used in this article, the following definitions apply:

(a)“Provider” has the same meaning as defined in subdivision (o) of Section 14043.1.

(b)“Institutional provider” means any of the following:

(1)An individual, entity, or organization of a type required to be licensed pursuant to either Chapter 1 (commencing with Section 1200) or Chapter 2 (commencing with Section 1250) of Division 2 of the Health and Safety Code, or exempt from licensure pursuant to subdivisions (b) through (l) of Section 1206 or Section 1254 of the Health and Safety Code, that provides services or supplies under the Medi-Cal program, and is subject to audit by the department.

(2)An individual, entity, or organization of a type required to file a cost report or cost information with the department.

(c)“Noninstitutional provider” means an individual, entity, or organization other than those defined in subdivision (b) that provides services or supplies under the Medi-Cal program and is subject to audit by the department.

(d)“Large clinic” means _____.