Report 2021-046 Recommendation 2 Responses

Report 2021-046: Proposition 56 Tobacco Tax: The Department of Health Care Services Is Not Adequately Monitoring Provider Payments Funded by Tobacco Taxes (Release Date: November 2022)

Recommendation #2 To: Health Care Services, Department of

To ensure that managed care plans pay Proposition 56 supplemental payments to the appropriate providers, DHCS should require managed care plans to submit Medi-Cal beneficiary identification information with their quarterly reports by June 2023. Once DHCS obtains this information, it should reconcile those reports to medical encounter data and then recover any overpayments it identifies.

Annual Follow-Up Agency Response From October 2024

DHCS has implemented the recommendation. MCPs are required to submit semi-annual reports with detailed data according to technical guidance published online, which includes the client index number (CIN). DHCS receives and compares the data in the MCP reports with managed care encounters (the equivalent of claims data) MCPs submit separately. Validations include verifying a matching encounter for each reported payment; the payment is not for an ineligible provider (for example, FQHC does not qualify for Proposition 56 (Prop 56) Physician Services payments), the payment is for a qualifying procedure code, and other factors. We note the term "overpayment" has a specific meaning under federal Medicaid regulations and does not apply to the situation. However, within applicable risk corridor calculations, which include recovery of "excess" MCP revenue (or providing additional revenue, as appropriate), DHCS only considers validated payments to eligible providers for qualifying services. Please see the supplemental files for evidence of implementation in the Substantiation - Part 3 folder.

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

DHCS has fully implemented our recommendation by requiring managed care plans to submit Medi-Cal beneficiary identification information with their reports, and DHCS now reconciles those reports to medical encounter data.

1-Year Agency Response

DHCS released technical guidance to Medi-Cal managed care plans (MCPs) 03/01/23 requiring submission of beneficiary level information in their Proposition 56 (Prop 56) expenditure reporting on a semi-annual basis (see Attachment 3 in Substantiation folder). All MCPs submitted the data leveraging the new dataset beginning on 05/15/23. Furthermore, all Prop 56 APLs have been updated to incorporate the adherence to the technical guidance requirement, the first APL was issued on 04/28/23 and the last was issued on 07/25/23 (see Attachments 4 through 9 in Substantiation folder).

DHCS will continue to identify and address material discrepancies and, where appropriate, to require MCPs to pay remittances under the terms of the applicable Prop 56 directed payment arrangements for future data submissions based on each program year after accounting for appropriate data reporting lag.

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

DHCS issued an all-plan letter directing managed care plans to submit a client index number with their required reports for directed payment programs. However, DHCS did not provide evidence to substantiate that it has received that information, reconciled those reports to medical encounter data, and recovered any overpayments. Thus, this recommendation is partially implemented.

6-Month Agency Response

Health Care Services did not submit a response to this recommendation.

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

60-Day Agency Response

Health Care Services did not submit a response to this recommendation.

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

All Recommendations in 2021-046

Agency responses received are posted verbatim.