Audit calls for overhaul of school Medi-Cal claims

Audit calls for overhaul of school Medi-Cal claims

(Calif.) A complex and bureaucratic program used to reimburse schools for medical services to low-income students should be streamlined as part of a broader restructuring of the system, the state auditor has recommended.

The services, which include a wide variety of activities performed by school nurses, speech pathologists, counselors and psychologists – are paid for through Medi-Cal, California’s version of the federal Medicaid program.

Because of a compliance dispute with the U.S. Department of Health and Human Services, school districts throughout the state are owed close to $500 million for past services – some of which may have been put into dispute because of the state’s byzantine system for managing claims.

The magnitude of the funding conflict led state Sen. Carol Liu, D-La Canada-Flintridge, last year to call for the audit. Liu said she is looking to bring a bill back in January incorporating several of the report’s key recommendations.

“After a detailed examination, state auditors found significant issues with the structure, oversight, management, transparency, and cost effectiveness of the programs,” said Liu, chair of the Senate’s education committee.

“School districts across California have been struggling with the lack of responsiveness from (Department of Health Care Services) and the inability of the department to effectively restore reimbursements owed to school districts from this vital federal funding source for school-based health care,” she said. “These payments have now been delayed for several years.”

Medi-Cal provides healthcare to more than 12 million California low-income families, seniors and persons with disabilities at a total cost of $91 billion.

School districts, charters and county offices not only serve as a source for healthcare – they often also serve as the setting where families are introduced to the state benefit and enrolled. Thus, local educational agencies often incur significant expenses related to Medi-Cal and, under a complex system, can seek reimbursement from the state Department of Health Care Services or DHCS.

Under the existing system, DHCS contracts with local government consortia and local government agencies to help oversee school Medi-Cal claims. State law also  compels schoolsto contract with the intermediaries in order to get their reimbursements.

A federal review of some $190 million in claims submitted in 2010-11 by California schools found a number of problems, including a high number of billings ruled improper. As a result payments to California for the program were deferred.

The California audit, released late last week, blamed DHCS for playing a significant role in the claiming problems.

For one, auditors concluded that the entities the state used as middle men in managing the claim pipeline – the local educational consortia and local governmental agencies – “added little value during this review process.” They noted that the intermediaries approved and forwarded claims that did not meet federal criteria.

They also found that DHCS had fallen behind in “its required reviews of local educational consortia and local governmental agencies, which increases the risk that these entities are not performing the administrative tasks for which they are responsible.”

Finally the auditors said DHCS “does not effectively oversee the contracts between the local educational consortia or local governmental agencies and the claiming units.”

To remedy the problems, the audit team suggested lawmakers immediately consider legislation that would allow schools to submit claims directly to the state.

They also suggested DHCS:

  • Begin crafting regulations to establish a formal appeals process that allows claiming units to appeal its decisions.
  • Improve its oversight of local educational consortia and local governmental agencies to ensure it meets its responsibilities and adheres to contract terms, and ensures claiming units use only allowable costs in calculating claims.
  • Implement and perform a single statewide quarterly time survey and related activities.
  • Revise reimbursement rates to reflect what federal law allows.
  • Develop and implement an outreach program to maximize participation in the administrative activities program.

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