SECTIONS 14100-14124.11 - California Statutes

WELFARE AND INSTITUTIONS CODE

SECTION 14100-14124.11

14100. The administration of this chapter shall be carried out by
the same agents as are authorized by the several boards of
supervisors to administer the public assistance programs.

14100.1. For purposes of administering this chapter and Chapter 8
(commencing with Section 14200) of this part, the director shall have
those powers and duties necessary to conform to requirements for
securing approval of a state plan under the provisions of the
applicable federal law, and the department shall be the single state
agency for purposes of Title XIX of the federal Social Security Act.

14100.2. (a) Except as provided in subdivision (i), all types of
information, whether written or oral, concerning a person, made or
kept by any public officer or agency in connection with the
administration of any provision of this chapter, Chapter 8
(commencing with Section 14200), or Chapter 8.7 (commencing with
Section 14520) and for which a grant-in-aid is received by this state
from the United States government pursuant to Title XIX of the
Social Security Act shall be confidential, and shall not be open to
examination other than for purposes directly connected with the
administration of the Medi-Cal program. However, in the context of a
petition for the appointment of a conservator for a person with
respect to whom this information is made or kept, and in the context
of a criminal prosecution for a violation of Section 368 of Penal
Code with respect to such a person, all of the following shall apply:
A public officer or employee of any such agency may answer
truthfully, at any proceeding related to the petition or prosecution,
when asked if he or she is aware of information that he or she
believes is related to the legal mental capacity of that aid
recipient or the need for a conservatorship for that aid recipient.
If the officer or employee states that he or she is aware of this
information, the court may order the officer or employee to testify
about his or her observations and to disclose any relevant agency
records if the court has an other independent reason to believe that
the officer or employee has information that would facilitate the
resolution of the matter.
(b) Except as provided in this section, and to the extent
permitted by federal law or regulation, all information about
applicants and recipients as provided for in subdivision (a) to be
safeguarded includes, but is not limited to, names and addresses,
medical services provided, social and economic conditions or
circumstances, agency evaluation of personal information, and medical
data, including diagnosis and past history of disease or disability.
(c) Purposes directly connected with the administration of the
Medi-Cal program, Chapter 8 (commencing with Section 14200), or
Chapter 8.7 (commencing with Section 14520) encompass those
administrative activities and responsibilities in which the
department and its agents are required to engage to insure effective
program operations. These activities include, but are not limited to:
establishing eligibility and methods of reimbursement; determining
the amount of medical assistance; providing services for recipients;
conducting or assisting an investigation, prosecution, or civil or
criminal proceeding related to the administration of the Medi-Cal
program; and conducting or assisting a legislative investigation or
audit related to the administration of the Medi-Cal program.
(d) Any officer, agent, or employee of the department or of any
public agency shall provide the Joint Legislative Audit Committee and
the State Auditor with any and all the information described in
subdivision (b) within a reasonable period of time as determined by
the committee in consultation with the department, after receipt of a
request from the committee approved by a majority of the members of
the committee. The Joint Legislative Audit Committee and the State
Auditor may use that information only for the purpose of
investigating or auditing the administration of the Medi-Cal program,
Chapter 8 (commencing with Section 14200), or Chapter 8.7
(commencing with Section 14520), and shall not use that information
for commercial or political purposes. In any case where disclosure of
information is authorized by this section, the Joint Legislative
Audit Committee or the State Auditor shall not disclose the identity
of any applicant or recipient, except in the case of a criminal or
civil proceeding conducted in connection with the administration of
the Medi-Cal program.
(e) The access to information provided in subdivision (d) shall be
permitted only to the extent and under the conditions provided by
federal law and regulations governing the release of such
information.
(f) The department may make rules and regulations governing the
custody, use, and preservation of all records, papers, files, and
communications pertaining to the administration of the laws relating
to the Medi-Cal program, Chapter 8 (commencing with Section 14200),
or Chapter 8.7 (commencing with Section 14520). The rules and
regulations shall be binding on all departments, officials, and
employees of the state, or of any political subdivision of the state
and may provide for giving information to or exchanging information
with agencies, public, or political subdivisions of the state, and
may provide for giving information to or exchanging information with
agencies, public or private, which are engaged in planning,
providing, or securing such services for or in behalf of recipients
or applicants; and for making case records available for research
purposes, provided that that research will not result in the
disclosure of the identity of applicants for or recipients of those
services.
(g) Upon request, the department shall release to the negotiator
established pursuant to Article 2.6 (commencing with Section 14081)
all computer tapes and any modifications thereto, including paid
claims, connected with the administration of the Medi-Cal program
which are in the possession or under the control of the department,
including tapes prepared prior to the effective date of this section.
To ensure compliance with federal law and regulations, the
department shall make the minimum necessary modifications to its
computer tapes prior to releasing the tapes to the negotiator in
order to assure the confidentiality of the identity of all applicants
for, or recipients of, those services. The department shall not make
any modifications to paid claims tapes that affect information
regarding beneficiaries' aid categories or counties of origin.
(h) Any person who knowingly releases or possesses confidential
information concerning persons who have applied for or who have been
granted any form of Medi-Cal benefits or benefits under Chapter 8
(commencing with Section 14200) or Chapter 8.7 (commencing with
Section 14520) for which state or federal funds are made available in
violation of this section is guilty of a misdemeanor.
(i) (1) To the extent federal funds are made available from the
United States Department of Agriculture, the department may do both
of the following:
(A) To the extent permitted by federal law, exercise its option
under Section 1396a(a)(7)(B) of Title 42 of the United States Code,
in coordination with the State Department of Education, to exchange
the information necessary to perform direct verification of the
eligibility of children for free or reduced price meals.
(B) To the extent permitted by federal law, in coordination with
the State Department of Education, exchange the information necessary
to perform direct certification for enrolling children to receive
free or reduced price meals.
(2) To the extent permitted by state and federal law, the
department and the State Department of Education may review the data
only for the purposes of improving the effectiveness of the data
matches made pursuant to Sections 49561 and 49562 of the Education
Code.

14100.5. The department shall prepare and submit Medi-Cal program
assumptions and estimates to the Department of Finance. The purpose
of the assumptions and estimates shall be to clearly identify changes
within the Medi-Cal program which have policy or fiscal
implications, and to produce reliable forecasts of Medi-Cal
expenditures.
Medi-Cal program assumptions and estimates shall be organized by
and correspond to Budget Act or Budget Bill item numbers, separately
identifying expenditures for all of the following:
(a) Purchase of medical care and services.
(b) Rate increases.
(c) County administration.
(d) Fiscal intermediary services.
Estimates and assumptions shall indicate state and federal, as
well as total, funds expended.
The department shall submit, by September 10 and March 1 of each
year, to the Department of Finance for its approval, all assumptions
underlying all Medi-Cal program estimates. The Department of Finance
shall approve or modify, in writing, the assumptions underlying all
estimates within 15 working days of their receipt. If the Department
of Finance does not so approve or modify the assumptions by that
date, the assumptions, as presented by the department, shall be
deemed to be approved by the Department of Finance as of that date.
The department shall submit an estimate of Medi-Cal program
expenditures to the Department of Finance by November 1 of each year,
and April 20 of each year. All approved estimates and supporting
data provided by the department or developed independently by the
Department of Finance, shall be made available to the legislative
fiscal committees following approval by the Department of Finance.
However, departmental estimates with supporting data shall be
forwarded to the legislative fiscal committees on or about January 10
and May 15 of each year in the event this information has not been
released earlier.
Each Medi-Cal assumption shall contain a clear narrative
description of the statutory, regulatory, or policy change, or other
change, that has occurred or will occur which affects Medi-Cal
program expenditures or which is of policy importance. Each
assumption shall include a cost estimate which contains relevant
workload, caseload, unit cost and other data or information needed to
support the estimate.
The assumptions related to purchase of medical care and services
shall include a section with a nontechnical description of the major
variables used to produce a base projection. This section shall
further contain an estimate of the fiscal impact of the use of these
variables. The estimates related to purchase of medical care and
services shall include current and budget year base projections of
eligibles, users, expenditures and cost per user by quarter with
sufficient past actual data to permit evaluation of the projections.
The projections shall be prepared by service category and aid
category. The Department of Finance shall identify a high, mid, and
low range of Medi-Cal service expenditures, which shall be
accompanied by assumptions, when the estimates are released to the
Legislature.
The assumptions or estimates related to fiscal intermediary
services shall contain a narrative description of how the forecasts
are prepared. Sufficient historical workload by claim type and
expenditure data shall accompany the forecasts to permit evaluation.
Change orders to the fiscal intermediary contract shall be fully
described and costs estimated. In addition, important modifications
to the Medi-Cal claims processing system not associated with change
orders shall be described and, if appropriate, costs or savings,
estimated.
Assumptions or estimates related to Medi-Cal county administration
costs shall contain a narrative description of how the forecast was
prepared. Current and budget year estimates by county shall be
prepared. The estimates shall compare past actual and projected
workload and expenditures in a format which will permit evaluation of
forecasts. Changes in expenditure estimates for individual counties
resulting from allocation of funds or other factors shall be
identified in subsequent estimates. Unallocated funds and funds for
special projects or special problems shall be separately identified.
The department shall compare budgeted and actual expenditures by
county as soon as the information from county quarterly costs reports
becomes available.
The estimates shall compare budgeted to implemented rate increases
for the current year. The comparisons shall be by provider category
and shall compare budgeted to implemented increases in terms of
percentage increases, date of implementation, and revised estimated
cost.

14100.6. The department, in cooperation with the Controller, shall
establish a method of providing to the Controller, periodically,
updated information regarding changes in the roster of Medi-Cal
providers.

14100.7. (a) Any Medi-Cal provider of incontinence supplies or
medical supplies, or both, shall provide, to the department, a bond,
or other security satisfactory to the department, of not less than
twenty-five thousand dollars ($25,000), pursuant to regulations
adopted by the department.
(b) (1) After three years of continuous operation as a provider of
incontinence supplies or medical supplies, or both, a Medi-Cal
provider may apply to the department for an exemption from the
requirements of subdivision (a).
(2) The department shall adopt regulations establishing conditions
for the approval or denial of applications for exemption pursuant to
paragraph (1).
(c) For purposes of this section, "incontinence supplies" and
"medical supplies" mean items prescribed by a licensed practitioner
to meet medical needs of the patient, and which are eligible for
reimbursement pursuant to this chapter.
(d) Subdivisions (a), (b), and (c) do not apply to individuals who
are licensed pursuant to Division 2 (commencing with Section 500) of
the Business and Professions Code.

14100.75. (a) (1) Each provider and each applicant, as defined in
Section 14043.1, when applying for enrollment and continued
enrollment, shall provide, to the department, a bond, or other
security satisfactory to the department, of an amount determined by
the department, pursuant to regulations adopted by the department.
(2) The department, in determining the amount of bond or security
required by paragraph (1), shall base the determination on the level
of estimated billings, and shall not be less than twenty-five
thousand dollars ($25,000).
(3) This subdivision shall become operative only if the director
executes a declaration, that shall be retained by the director,
stating that the surety bonds described in this paragraph are
commercially offered throughout the state and by more than one
vendor.
(b) (1) After three years of continuous operation as a provider, a
Medi-Cal provider may apply to the department for an exemption from
the requirements of subdivision (a).
(2) The department shall adopt regulations establishing conditions
for the approval or denial of applications for exemption pursuant to
paragraph (1).
(c) The department shall establish a mechanism to track rates of
participation among providers who are subject to the requirement of
subdivision (a) to determine if the requirement is a deterrent to
Medi-Cal program participation among provider applicants.
(d) Subdivisions (a) and (b) shall not apply to natural persons
licensed or certified pursuant to Division 2 (commencing with Section
500) of the Business and Professions Code, the Osteopathic
Initiative Act, or the Chiropractic Initiative Act, or to any clinic
licensed pursuant to subdivision (a) of Section 1204 of the Health
and Safety Code, or exempt from licensure under subdivision (c) of
Section 1206 of the Health and Safety Code, to any health facility
licensed under Chapter 2 (commencing with Section 1250) of Division 2
of the Health and Safety Code, or to any provider that is operated
by a city, county, school district, county office of education, or
state special school, or any professional corporation practicing
pursuant to the Moscone-Knox Professional Corporation Act provided
for pursuant to Part 4 (commencing with Section 13400) of Division 3
of Title 1 of the Corporations Code.
(e) Nothing in this section shall relieve an applicant or provider
of durable medical equipment or home health agency services from
complying with subdivisions (a) and (b) of Sections 14100.8 and
14100.9, as applicable.

14100.8. (a) For purposes of this section, "provider of home health
agency services" means a home health agency that is licensed by the
department under Section 1726 of the Health and Safety Code that
meets the requirements for the medicaid program under Subpart A
(commencing with Sec. 441.10) of Part 441 of Title 42 of the Code of
Federal Regulations, as amended, that meets the requirements for the
Medicare program under Part 484 (commencing with Sec. 481.1) and Part
489 (commencing with Sec. 489.1) of Title 42 of the Code of Federal
Regulations, as amended, and that is enrolled as a provider in the
Medi-Cal program. In the event of inconsistent requirements between
the medicaid and Medicare programs, medicaid requirements shall take
precedence.
(b) Within 90 days after the effective date of a final federal
regulation requiring that a provider of home health agency services
must acquire a surety bond in order to participate in the medicaid or
Medicare program, each provider of home health agency services shall
obtain, and thereafter maintain, a surety bond meeting the
requirements of the final federal regulation, as amended, as a
condition of participation in the Medi-Cal program.
(c) Any entity that has applied to become a provider of home
health agency services less than 90 days prior to the date that the
final federal regulation described in subdivision (b) becomes
effective shall submit a surety bond within 90 days of the effective
date of the regulation.
(d) Failure of a provider of home health agency services to obtain
and maintain a surety bond as required in this section shall result
in denial or recoupment of Medi-Cal reimbursement for services
provided during the period for which a surety bond should have been
in effect.
(e) Failure of a provider of home health agency services to obtain
and maintain a surety bond as required in this section shall result
in automatic termination of the provider's participation in the
Medi-Cal program.

14100.9. (a) For purposes of this section, "provider of durable
medical equipment" means any person or entity that furnishes medical
equipment and medical supplies, meets state and local laws applicable
to the furnishing of medical equipment and medical supplies, and
that is enrolled as a provider in the Medi-Cal program.
(b) Within 90 days after the effective date of a final federal
regulation requiring that a provider of durable medical equipment
must acquire a surety bond in order to participate in the medicaid or
Medicare program, each provider of durable medical equipment shall
obtain, and thereafter maintain, a surety bond meeting the
requirements of the final federal regulation, as amended, as a
condition of participation in the Medi-Cal program.
(c) Any person or entity that has applied to become a provider of
durable medical equipment less than 90 days prior to the date that
the final federal regulation described in subdivision (b) becomes
effective shall submit a surety bond within 90 days of the effective
date of the regulation.
(d) Failure of a provider of durable medical equipment to obtain
and maintain a surety bond as required in this section shall result
in denial or recoupment of Medi-Cal reimbursement for services
provided during the period for which a surety bond should have been
in effect.
(e) Failure of a provider of durable medical equipment to obtain
and maintain a surety bond as required in this section shall result
in automatic termination of the provider's participation in the
Medi-Cal program.
(f) Subdivisions (a), (b), (c), (d), and (e) do not apply to
individuals who are licensed pursuant to Division 2 (commencing with
Section 500) of the Business and Professions Code.

14100.95. (a) The department shall enter into demonstration
contracts with manufacturers of medical supplies for four items of
its own selection of medical supplies existing on the pharmacy claims
processing system, for the purpose of establishing rebates or other
cost-saving mechanisms and demonstrating cost savings in the purchase
of these medical supplies. The department shall maintain a list of
the supplies for which contracts have been executed.
(b) Nothing in this section shall prevent a small retail business
from continuing to supply medical supplies for use by Medi-Cal
beneficiaries.
(c) In establishing these demonstration contracts, the department
shall preserve reasonable access to these supplies by beneficiaries.
To ensure that the health needs of Medi-Cal beneficiaries are met,
the department shall evaluate products and execute contracts pursuant
to subdivision (c) of Section 14105.47.
(d) The department shall report the outcomes of these
demonstration contracts to the Legislature no later than January 1,
2009.

14101. The director may contract with other state agencies for
services in connection with the administration of this chapter,
Chapter 8 (commencing with Section 14200), Chapter 8.5 (commencing
with Section 14500), and Chapter 8.7 (commencing with Section 14520)
of this part.

14101.1. The department shall enter into an agreement with the
Secretary of Health, Education and Welfare under which such secretary
will determine eligibility for Medi-Cal in the case of aged, blind
or disabled persons under this state's medical assistance plan
approved under Title XIX of the Social Security Act. The state shall
pay the Secretary of Health, Education and Welfare an amount equal to
one-half of the cost of carrying out the agreement, but in computing
such cost with respect to individuals eligible for benefits under
Title XVI of the Social Security Act, such payment shall include only
those costs which are additional to the costs incurred in carrying
out such title.

14101.5. The department and the State Department of Social Services
shall provide to the other any information necessary for the
performance of such department's duties under this chapter.

14101.7. The Workers' Compensation Appeals Board and the department
shall exchange information and cooperate to assure that health
services provided by Medi-Cal which are reimbursable by Workers'
Compensation are identified, and that Workers' Compensation
reimburses the department for those services.

14103.2. Whenever the director determines that the services or
products of a provider cost the program in excess of reasonable value
received, the provider shall thereafter be disqualified from
participation in the program. The disqualification shall not become
effective until an opportunity for a public hearing has been granted.
The department shall conduct a continuing review of reimbursements
to all hospitals participating in the program in order to determine
if any reimbursements are in excess of reasonable value received.

14103.4. The director, with the advice of the Medicaid Advisory
Committee required by federal law or regulation, shall determine
which of the health care and related remedial or preventive services
are elective. The director and the committee shall consult with
representatives of providers of such services before making a
determination.

14103.5. (a) A noncontract hospital that is in a closed health
facility planning area is not eligible to receive reimbursement for
services provided to a Medi-Cal beneficiary, unless either of the
following apply:
(1) The noncontract hospital provides necessary emergency services
to a Medi-Cal beneficiary who is in a life threatening or emergency
situation, but cannot be sufficiently stabilized in order to
facilitate transport to a contracting hospital.
(2) The noncontract hospital is a facility location of a nonprofit
hospital that is an affiliate of a nonprofit health care service
plan, the facility location is approved in accordance with the
standards of the California Children's Services (CCS) program, and
the hospital is providing medically necessary services for treatment
of the CCS-eligible condition of a patient when all of the following
apply:
(A) The patient is eligible for services under the California
Children's Services Act (Article 5 (commencing with Section 123800)
of Chapter 3 of Part 2 of Division 106 of the Health and Safety Code)
as well as the Medi-Cal program.
(B) The patient is a member of the health care services plan for
other health care services not related to the CCS condition.
(C) The services for treatment of the CCS-eligible patient are
authorized by the CCS program.
(b) A noncontract hospital in a closed health facility planning
area that provides necessary emergency services to a Medi-Cal
beneficiary who is in a life threatening or emergency situation, but
cannot be sufficiently stabilized in order to facilitate transport to
a contracting hospital, may only be reimbursed for those necessary
emergency services when it obtains an approved treatment
authorization request.
(c) Any treatment authorization request submitted for any service
classified as a necessary emergency service, which would have been
subject to prior authorization had it not been so classified, shall
be supported by the attending physician's statement that does all of
the following:
(1) Describes in detail the nature of the emergency or life
threatening situation, including relevant clinical information about
the patient's condition.
(2) States why the patient could not be sufficiently stabilized
for transport to a contracting hospital and why the necessary
emergency services rendered were considered to be immediately
required. A mere statement that an emergency existed is not
sufficient. The treatment authorization request shall be
comprehensive enough to support a finding that an emergency or a life
threatening situation existed.
(3) Contains the signature of the attending physician who had
direct knowledge of the emergency described in the statement.
(d) For the purposes of this section, "necessary emergency
services" are limited to those health services medically necessary
for alleviation of severe pain or immediate diagnosis and treatment
of unforeseen medical conditions which, if not immediately diagnosed
and treated, could lead to significant disability or death.
(e) For the purposes of this section, a "noncontract hospital"
means a hospital that has not contracted with the department pursuant
to Article 2.6 (commencing with Section 14081) for the provision of
inpatient services to Medi-Cal beneficiaries.
(f) Nothing in this section shall be construed as limiting
reimbursement for medically necessary care following stabilization,
in the event that a contract hospital does not accept transfer of the
patient or pending the transfer to a contract hospital.

14103.6. The director, or a carrier acting under regulations
adopted by the director, may require that any individual provider
shall receive prior authorization before providing services when the
director or carrier determines that the provider has been rendering
unnecessary services.
At any time the director determines that it is necessary to
postpone elective services pursuant to Section 14120, he or she shall
require prior authorization for those services determined to be
generally elective under the provisions of Section 14103.4, except a
service which costs less than one hundred dollars ($100) or a lower
amount determined by the director. This lower amount may be applied
generally or for specific services. The director may terminate the
requirement for prior authorization when he or she determines that it
is no longer necessary to postpone elective services.
Prior authorization for services provided by persons licensed
under the provisions of Chapter 4 (commencing with Section 1600) and
Chapter 7 (commencing with Section 3000) of Division 2 of the
Business and Professions Code shall be determined by consultants
licensed under Chapter 4 or Chapter 7 respectively. Prior
authorization for all other elective services shall be determined by
consultants licensed under the provisions of Chapter 5 (commencing
with Section 2000) of Division 2 of the Business and Professions
Code, provided, however, that prior authorization for pharmaceutical
services may be determined by persons licensed under the provisions
of Chapter 9 (commencing with Section 4000) of Division 2 of the
Business and Professions Code, and prior authorization for services
provided in an inpatient setting may be reviewed and approved, but
not denied, by a person licensed under the provisions of Chapter 6
(commencing with Section 2700) of Division 2 of the Business and
Professions Code, working under the supervision of a consultant
licensed under the provisions of Chapter 5 (commencing with Section
2000) of Division 2 of the Business and Professions Code.
In no event shall prior authorization be required when there is a
bona fide emergency requiring immediate treatment.
In carrying out this section, notwithstanding Section 19130 of the
Government Code, the department may contract, either directly or
through the fiscal intermediary, for staff to accomplish the
treatment authorization request reviews and medical case management,
including appeals. The fiscal intermediary contract, including any
contract amendment, system change pursuant to a change order, and
project or systems development notice shall be exempt from Part 2
(commencing with Section 10100) of Division 2 of the Public Contract
Code, Chapter 7 (commencing with Section 11700) of Part 1 of Division
3 of Title 2 of the Government Code, and any policies, procedures,
or regulations authorized by those laws.

14103.6. The director, or a carrier acting under regulations
adopted by the director, may require that any individual provider
shall receive prior authorization before providing services when the
director or carrier determines that the provider has been rendering
unnecessary services.
At any time the director determines that it is necessary to
postpone elective services pursuant to Section 14120, he or she shall
require prior authorization for those services determined to be
generally elective under the provisions of Section 14103.4, except a
service which costs less than one hundred dollars ($100) or a lower
amount determined by the director. This lower amount may be applied
generally or for specific services. The director may terminate the
requirement for prior authorization when he or she determines that it
is no longer necessary to postpone elective services.
Prior authorization for services provided by persons licensed
under the provisions of Chapter 4 (commencing with Section 1600) and
Chapter 7 (commencing with Section 3000) of Division 2 of the
Business and Professions Code shall be determined by consultants
licensed under Chapter 4 or Chapter 7 respectively. Prior
authorization for all other elective services shall be determined by
consultants licensed under the provisions of Chapter 5 (commencing
with Section 2000) of Division 2 of the Business and Professions
Code, provided, however, that prior authorization for pharmaceutical
services may be determined by persons licensed under the provisions
of Chapter 9 (commencing with Section 4000) of Division 2 of the
Business and Professions Code, and prior authorization for services
provided in an inpatient setting may be reviewed and approved, but
not denied, by a person licensed under the provisions of Chapter 6
(commencing with Section 2700) of Division 2 of the Business and
Professions Code, working under the supervision of a consultant
licensed under the provisions of Chapter 5 (commencing with Section
2000) of Division 2 of the Business and Professions Code.
The consultants shall render decisions on prior authorization
requests in a timely manner. A timely manner shall be deemed to be an
average of five working days after the prior authorization request
is received by the department. A decision shall be an approval,
denial, modification, or request for additional information. A
supplemental authorization request submitted with additional
information requested by a consultant shall be processed in a timely
manner as if it were an original authorization request. If no
decision on a prior authorization request is rendered by the
consultant within 30 days of receipt by the department, the request
shall be deemed to be approved. Final decisions of the department on
all requests for prior authorization shall be reviewable under the
department's provider appeal and fair hearing procedures. If the
request is denied, the department shall send notice to the provider
and beneficiary of the right to appeal the decision.
In no event shall prior authorization be required when there is a
bona fide emergency requiring immediate treatment.
In carrying out this section, notwithstanding Section 19130 of the
Government Code, the department may contract, either directly or
through the fiscal intermediary, for staff to accomplish the
treatment authorization request reviews and medical case management,
including appeals. The fiscal intermediary contract, including any
contract amendment, system change pursuant to a change order, and
project or systems development notice shall be exempt from Part 2
(commencing with Section 10100) of Division 2 of the Public Contract
Code, Chapter 7 (commencing with Section 11700) of Part 1 of Division
3 of Title 2 of the Government Code, and any policies, procedures,
or regulations authorized by those laws.

14103.7. The department shall develop procedure codes for durable
medical equipment and orthotic and prosthetic equipment and services,
to enable the fiscal intermediary to efficiently and expeditiously
process claims for the equipment or services.
For the purposes of this section, durable medical equipment,
orthotics, and prosthetics shall include such equipment and
accessories as the director may provide by regulation, as authorized
by this chapter.

14103.75. Prior authorization may be required by the director for
services or items prescribed or ordered by a practitioner who has
been determined by the director to have been prescribing or ordering
medically unnecessary or excessive services or items for Medi-Cal
beneficiaries. When this requirement has been imposed upon a
practitioner, the department shall give written notice to the
practitioner, and shall also give written notice identifying the
practitioner to all Medi-Cal providers who may be requested by that
practitioner to furnish ordered or prescribed services or items.
Payment may not be denied for services or items provided pursuant to
an order or prescription issued by these practitioners prior to
written notification by the department that these services or items
must have prior authorization. After this notice has been received,
it shall be the duty of the practitioner to seek prior authorization
for all ordered or prescribed services or items within the scope of
the director's requirement. Where a practitioner fails to obtain
prior authorization for a service or item within the scope of the
director's requirement and the service or item is provided or
dispensed to a beneficiary by another provider, the prescribing
practitioner shall be financially responsible for payment. The
department shall not deny payment to the provider for the prescribing
practitioner's failure to obtain prior authorization, but shall
reimburse the provider as otherwise provided by law and recover the
payment from the prescribing practitioner.

14103.8. (a) Medi-Cal services for beneficiaries who are eligible
for services under the California Children's Services Act (Article 5
(commencing with Section 123800) of Chapter 3 of Part 2 of Division
106 of the Health and Safety Code) as well as the Medi-Cal program
shall be subject to prior authorization by the director.
(b) Claims for payment of prior authorized services shall be
reviewed by postpayment audit conducted by the department, and shall
not be subject to prepayment review under the California Children's
Services Act prior to submission to the Medi-Cal fiscal intermediary.
(c) The California Children's Services program may require all
applicants who are potentially eligible for cash grant public
assistance to apply for Medi-Cal eligibility prior to becoming
eligible for funded services.

14104. (a) The department may, to the extent feasible, and to the
extent permitted or required by applicable provisions of federal law,
enter into agreements with organizations of licensed professional
persons known as Professional Standards Review Organizations, as the
same are defined in, and authorized by, federal law, for the review
of inpatient and other health services provided to beneficiaries in
accordance with the provisions of this part, to determine whether
such services may be approved for payment.
(b) Where such agreements are entered, the department may also
enter into agreements for review of services provided to
beneficiaries whose health care is funded solely from state or local
sources without federal participation under Title XIX of the Social
Security Act.
(c) Agreements entered into under this section shall be awarded on
a nonbid basis.

14104.3. (a) The department may, to the extent feasible, enter into
nonexclusive contracts providing arrangements under which funds
available for health care under this chapter shall be administered
and disbursed to providers of health care or to their designated
agents in consideration for services rendered and supplies furnished
by them in accordance with the provisions of the applicable contract
and any schedule of charges or formula for determining payments
established pursuant to the contract. The contract shall provide that
the contractor:
(1) Will take any action as may be necessary to assure that
payment for services to hospitals and other facilities and
professional services shall be based on standards determined by the
director. The formula for the payments shall be determined in
accordance with regulations establishing the methods to be used and
the items to be included.
(2) Will take any action which may be necessary to assure that
charges by providers will be reasonable and not higher than the
charge for a comparable service and under comparable circumstances
made to other payors.
(3) Bills for service under this chapter shall be reviewed and
rejected or processed for payment within an average of 18 days from
receipt of evidence establishing validity of the bill for payment in
the office of the contractor. Ninety percent of all bills submitted
to the contractor and under the contractor's control, as set forth in
the request for proposal, shall be processed and paid in 30 days and
99 percent of all claims submitted to the contractor and under the
contractor's control, as set forth in the request for proposal, shall
be processed and paid in 90 days. If it is determined by the
contractor that additional evidence of validity is required, the
evidence shall be requested within 18 days from the date the bill is
received by the contractor. In any event, notice shall be given
within 30 days from the date the bill is received concerning the
status of the bill submitted if the bill is held for peer review by
the contractor beyond 18 days. In no event, shall the number of bills
not processed for payment within 30 days of receipt exceed 9 percent
of the total bills inventory.
(b) Contracts awarded under this section shall be awarded on a bid
basis, and before entering into any contract, the director shall
publish notice soliciting bids.
(c) Contracts awarded under this section may provide all of the
following:
(1) Payments to the contractor may be on a capitation or
prepayment basis, or on a combination of both methods of payment.
(2) Providers may assume all or part of the risk of utilization of
services, or costs of services, or both, and that providers who
agree to assume that risk may be separately classified for purposes
of applicable rates of payment or administrative requirements.
(3) Any other provisions which have previously been incorporated
into pilot programs established pursuant to Chapter 8 (commencing
with Section 14200) and determined by the director to be desirable
and feasible.

14104.5. Notwithstanding any other provision of law, the director
shall by regulation adopt such procedures as are necessary for the
review of a grievance or complaint concerning the processing or
payment of money alleged by a provider of services to be payable by
reason of any of the provisions of this chapter. After complying with
these procedures, if the provider is not satisfied with the director'
s decision on his or her claim, he or she may not later than one year
after receiving notice of the decision, file a petition for writ of
mandate pursuant to Section 1085 of the Code of Civil Procedure in
the superior court. This section shall be the exclusive remedy
available to the provider of services for moneys alleged to be
payable by reason of this chapter.
This section shall not apply to those grievances or complaints
arising from the findings of an audit or examination made by or on
behalf of the director pursuant to Sections 10722 and 14170. Article
5.3 (commencing with Section 14170) shall govern the grievances or
complaints.

14104.6. No Medi-Cal fiscal intermediary contract shall be
approved, renewed or continued if a state employee is employed in a
management, consultant or technical position by the contractor or a
subcontractor to the contractor within one year after the state
employee terminated state employment.
For purposes of this section, "state employee" means any
appointive or civil service employee of the Governor's office, the
Health and Welfare Agency, the State Department of Health Services,
the Controller's office, the Attorney General, or the Legislature
who, within two years prior to leaving state employment, had
responsibilities related to development, negotiation, contract
management, supervision, technical assistance or audit of a Medi-Cal
fiscal intermediary.
The requirements of this section shall not apply to any state
employee who terminated state employment prior to the operative date
of this section.

14104.7. The Director of the Department of Health Services shall
negotiate a modification of the contract with Computer Sciences
Corporation for the provision of fiscal intermediary services for the
Medi-Cal program in effect on the effective date of this section to
establish providers of durable medical equipment, prosthetic and
orthotic devices, and emergency and nonemergency medical
transportation as a distinct and separate provider classification for
claim processing purposes. The director shall determine which
providers qualify as providers for the purposes of this section. The
contract shall be further amended to provide that claims of this type
shall be processed for payment within an average of 25 days from the
date of receipt. If the contractor fails to process such claims
within the 25-day standard, the department shall assess maximum
liquidated damages against the contractor, per day, until the
performance standard is met.

14104.8. (a) The Secretary of the Health and Welfare Agency shall
be responsible for oversight of the contract for fiscal intermediary
services awarded by the State Department of Health Services to
Computer Sciences Corporation. The director of the department shall
confer with the secretary of the agency regarding the progress made
in implementing the contract.
(b) Within four months of enactment of this section, the State
Director of Health Services shall contract for an 18-month period
with a qualified systems engineering firm that has the ability to
work at the software level to acquire the system produced by Computer
Sciences Corporation for the purposes of monitoring the contract
awarded by the department to Computer Sciences Corporation and
ascertaining if the system meets contract requirements.
(c) The systems engineering firm shall monitor compliance with all
provisions contained within the above-mentioned contract between the
department and Computer Sciences Corporation.
(d) The contract shall:
(1) Require the firm to conduct an evaluation of Computer Sciences
Corporation contract compliance, including design or operational
deficiencies, and, within four months of the award of the monitoring
contract, to report on this evaluation to the Secretary of the Health
and Welfare Agency and the State Director of Health Services, who
shall forward this report to the Legislature.
(2) Include provisions to permit the firm to develop specific
remedies for design and operation deficiencies in the state owned
Medi-Cal fiscal intermediary system.
(3) Require the firm to develop, install and operate the type of
monitoring and control system required by the contract.
(4) Require production by the firm within one year of a detailed
work plan and budget for managing the contract with Computer Sciences
Corporation, including job descriptions, staffing levels and
organizational controls in order to continue operation of the
monitoring and control system at a high level of efficiency and
expertise.
(5) Preclude the firm from bidding (or from being a major
subcontractor to a prime bidder) on any subsequent contract for
fiscal intermediary services for a period of five years from the date
of the contract.
(e) If all requested documentation records and deliverables
required in the contract between the department and Computer Sciences
Corporation are not made available, as specified in that contract,
to the designated systems engineering firm, the Secretary of the
Health and Welfare Agency, the State Department of Health Services or
the Joint Legislative Audit Committee, whichever has so requested,
all applicable penalties and fines available under the contract shall
be evoked by the State Department of Health Services.
(f) Subject to the approval of the Secretary of Health and
Welfare, the State Director of Health Services shall have the
authority to enter into a subsequent fiscal intermediary monitoring
contract to be in effect upon the expiration of the one-year contract
called for in subdivision (b) and to be based upon findings and
recommendations produced under subdivision (d).

14104.9. Any Medi-Cal contract for fiscal intermediary services
entered into on or after January 1, 1992, shall permit the submission
of all paper claims for hospital services using billing forms that
are as similar as possible to the UB-82, also known as the HCFA-1450.
These billing forms shall be designed to be both optically scanned
and automatically microfilmed.

14104.93. (a) The department may distribute provider bulletins and
other provider communications for the Medi-Cal program by either
print or electronic medium, including posting on the department's
Medi-Cal program Web site. The posting may include information
relating to the California Children's Services (CCS) Program, the
Genetically Handicapped Persons Program (GHPP), the Family PACT
program, and the Every Woman Counts program. Communications on the
department's Internet Web site shall be posted in a timely manner and
maintained on the Web site for one year from the date of posting.
(b) The department's Web site for the Medi-Cal program shall be
appropriately maintained to ensure factual clarity regarding the
program, to facilitate ease of use for providers, and to sustain the
integrity of the Medi-Cal program.
(c) This section shall be implemented on the first day of the
month following 30 days after the operative date of this section.

14105. (a) The director shall prescribe the policies to be followed
in the administration of this chapter, may limit the rates of
payment for health care services, and shall adopt any rules and
regulations as are necessary for carrying out, but are not
inconsistent with, the provisions thereof.
The policies and regulations shall include rates for payment for
services not rendered under a contract pursuant to Chapter 8
(commencing with Section 14200). In order to implement expeditiously
the budgeting decisions of the Legislature, the director shall, to
the extent permitted by federal law, adopt regulations setting rates
that reflect these budgeting decisions within one month after the
enactment of the Budget Act and of any other appropriation that
changes the level of funding for Medi-Cal services. The proposed
regulations shall be submitted to the Department of Finance no later
than five days prior to the date of adoption. With the written
approval of the Department of Finance, the director shall adopt the
regulations as emergency regulations in accordance with the
Administrative Procedure Act (Chapter 3.5 (commencing with Section
11340), Part 1, Division 3, Title 2 of the Government Code). For
purposes of that act, the adoption of these regulations shall be
deemed an emergency and necessary for the immediate preservation of
the public peace, health, and safety or general welfare.
(b) (1) Insofar as practical, consistent with the efficient and
economical administration of this part, the department shall afford
recipients of public assistance a choice of managed care arrangements
under which they shall receive health care benefits and a choice of
primary care providers under each managed care arrangement.
(2) Notwithstanding any other provision of law, Medi-Cal
beneficiaries shall be entitled to affirmatively select, or to be
assigned by default to, any primary care provider as defined in
paragraph (1) of subdivision (b) of Section 14088.
(3) Notwithstanding any other provision of law, when a Medi-Cal
beneficiary is assigned, from any source, to a primary care
physician, as defined in Section 14254, and that primary care
physician is an employee of a primary care provider, as defined in
paragraph (1) of subdivision (b) of Section 14088, the assignment
shall constitute an assignment to the primary care provider.
(c) If, in the judgment of the director, the actions taken by the
director under subdivision (c) of Section 14120 will not be
sufficient to operate the Medi-Cal program within the limits of
appropriated funds, he or she may limit the scope and kinds of health
care services, except for minimum coverage as defined in Section
14056, available to persons who are not eligible under Section
14005.1. When and if necessary, that action shall be taken by the
director in ways consistent with the requirements of the federal
Social Security Act.
(d) The director shall adopt regulations implementing regulatory
changes required to initially implement, and annually update, the
United States Health Care Financing Administration's common procedure
coding system as emergency regulations in accordance with Chapter
3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title
2 of the Government Code. For the purposes of the Administrative
Procedure Act, the adoption of the regulations shall be deemed to be
an emergency and necessary for the immediate preservation of the
public peace, health and safety, or general welfare. These
regulations shall become effective immediately upon filing with the
Secretary of State.
(e) Notwithstanding any other provision of law, prospective
reimbursement for any services provided to a Medi-Cal beneficiary in
a nursing facility that is a distinct part of an acute care hospital
shall not exceed the audited costs of the facility providing the
services.
(f) Notwithstanding any other provision of law, reimbursement for
anesthesiology, surgical services, and the professional component of
radiology procedures except for comprehensive perinatal and
obstetrical services shall be reduced by 9.5 percent of the amount of
reimbursement provided for any of those services prior to the
operative date of this subdivision. The director may exclude
emergency surgical services performed in the emergency department of
a general acute care hospital. To be excluded, emergency surgical
services must be performed by an emergency room physician or a
physician on the emergency department's on-call list.
(g) (1) It is the intent of the Legislature in enacting this
subdivision to enable the department to obtain Medicare cost reports
for the purpose of evaluating its Medi-Cal reimbursement rate
methodology for nursing facilities.
(2) Skilled nursing facilities licensed pursuant to Chapter 2
(commencing with Section 1250) of Division 2 of the Health and Safety
Code shall submit copies of all Medicare cost reports to the
department by October 1, 1995, for reporting periods that ended
between July 1, 1993, and June 30, 1995.
On or after July 1, 1995, those facilities shall submit the copies
to the department on the date that the Medicare cost reports are
submitted to the Medicare fiscal intermediary.
(3) Hospitals providing skilled nursing care licensed pursuant to
Chapter 2 (commencing with Section 1250) of Division 2 of the Health
and Safety Code shall submit a copy of all Medicare cost reports for
reporting periods ended:
(A) January 1, 1993, through June 30, 1995, to the department by
October 1, 1995.
(B) On or after July 1, 1995, to the department when the Medicare
cost reports are submitted to the Medicare fiscal intermediary.

14105.05. (a) Notwithstanding Section 14105, and any other
provision of law, the director may, without taking regulatory action
pursuant to Chapter 3.5 (commencing with Section 11340) of Part 1 of
Division 3 of Title 2 of the Government Code, take one or both of the
following actions:
(1) Establish the reimbursement rates necessitated by the
establishment of updated coding systems required for compliance by
the federal Health Insurance Portability and Accountability Act
(HIPAA).
(2) Adopt and annually update the federal Healthcare Common
Procedure Coding System codes (formerly known as the United States
Healthcare Common Procedure Coding System HCPCS) or any other coding
system required for compliance with this chapter, federal medicaid
requirements, or the federal Health Insurance Portability and
Accountability Act (HIPAA).
(b) The director may take the actions described in subdivision (a)
by means of publication in the California Regulatory Notice
Register, the Medi-Cal Provider Manual, or similar publications.
(c) The publication of reimbursement rates or coding systems
pursuant to subdivision (a) shall include an effective date for the
published rates or coding systems.
(d) Nothing in this section shall be construed to affect the
department's compliance with federal medicaid law or regulations
relating to the adoption of Medi-Cal reimbursement rates.

14105.06. (a) Notwithstanding Section 14105 and any other provision
of law, the Medi-Cal reimbursement rates in effect on August 1,
2003, shall remain in effect through July 31, 2005, for the following
providers:
(1) Freestanding nursing facilities licensed as either of the
following:
(A) An intermediate care facility pursuant to subdivision (d) of
Section 1250 of the Health and Safety Code.
(B) An intermediate care facility for the developmentally disabled
pursuant to subdivision (e), (g), or (h) of Section 1250 of the
Health and Safety Code.
(2) A skilled nursing facility that is a distinct part of a
general acute care hospital. For purposes of this paragraph,
"distinct part" shall have the same meaning as defined in Section
72041 of Title 22 of the California Code of Regulations.
(3) A subacute care program, as described in Section 14132.25 or
subacute care unit, as described in Sections 51215.5 and 51215.8 of
Title 22 of the California Code of Regulations.
(4) An adult day health care center.
(b) (1) The director may adopt regulations as are necessary to
implement subdivision (a). These regulations shall be adopted as
emergency regulations in accordance with the rulemaking provisions of
the Administrative Procedure Act, Chapter 3.5 (commencing with
Section 11340) of Part 1 of Division 3 of Title 2 of the Government
Code. For purposes of this section, the adoption of regulations shall
be deemed an emergency and necessary for the immediate preservation
of the public peace, health, and safety or general welfare.
(2) As an alternative to paragraph (1), and Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title 2 of
the Government Code, the director may implement this article by
means of a provider bulletin, or similar instructions, without taking
regulatory action.
(c) The director shall implement subdivision (a) in a manner that
is consistent with federal medicaid law and regulations. The director
shall seek any necessary federal approvals for the implementation of
this section. This section shall be implemented only to the extent
that federal approval is obtained.
(d) The provisions of subdivision (a) shall apply to a skilled
nursing facility, as defined in subdivision (c) of Section 1250 of
the Health and Safety Code, only until the first day of the month
following federal approval to implement both the skilled nursing
quality assurance fee imposed by Article 7.6 (commencing with Section
1324.20) of Chapter 2 of Division 2 of the Health and Safety Code
and the rate methodology developed pursuant to Article 3.8
(commencing with Section 14126) of Chapter 7 of Part 3 of Division 9.

14105.08. (a) Notwithstanding any other provision of law, in order
to implement changes in the level of funding for radiology services,
as defined in Section 51139 of Title 22 of the California Code of
Regulations, the director shall reduce reimbursement rates applicable
to radiology services, as specified in this section.
(b) Except as otherwise provided in this section, reimbursement
rates applicable to radiology services shall not exceed 80 percent of
the lowest maximum allowance established under the federal Medicare
Program for the same or similar services with dates of service on or
after October 1, 2010.
(c) Notwithstanding the rulemaking provisions of Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title 2 of
the Government Code, the department may take the actions specified
in this section by means of a provider bulletin or notice, policy
letter, or other similar instruction, without taking regulatory
action.
(d) (1) The reimbursement rates provided for in this section shall
be implemented only if the director determines that the rates, as
established by this section, will comply with applicable federal
Medicaid requirements and that federal financial participation will
be available.
(2) In assessing whether federal financial participation is
available, the director shall determine whether the rates comply with
applicable federal Medicaid requirements, including those set forth
in Section 1396a(a)(30)(A) of Title 42 of the United States Code.
(3) To the extent that the director determines that the rates do
not comply with applicable federal Medicaid requirements, the
director shall retain the discretion not to implement that rate and
may revise the rate as necessary to comply with the federal Medicaid
requirements.
(e) The director shall seek any necessary federal approval for the
implementation of this section. To the extent that federal financial
participation is not available with respect to any rate of
reimbursement described by this section, the director shall retain
the discretion not to implement that rate and may revise the rate as
necessary to comply with the federal Medicaid requirements.

14105.1. (a) Notwithstanding any other provision of law, to the
extent permitted by federal law, reimbursement to hospitals for
inpatient services rendered to Medi-Cal program beneficiaries between
July 1, 1981 and June 30, 1982, shall be adjusted to provide that
the average payment per discharge upon final settlement shall not
exceed a rate of increase of 6 percent over the average payment per
discharge at final settlement for services rendered during the period
of July 1, 1980 to June 30, 1981.
(b) Interim payment rates to hospitals shall be adjusted on
October 1, 1981, or as shortly thereafter as reasonably possible and
consistent with federal law, to accomplish a rate of payment increase
to hospitals for inpatient services for the period of July 1, 1981
to June 30, 1982, which is consistent with the provisions of this
section.
(c) It is the intent of the Legislature that the reimbursement
principles employed by the department in final settlement pursuant to
this section will be the methods in effect prior to October 1, 1981,
for any services rendered prior to that time, and for services
rendered between October 1, 1981, and June 30, 1982, that
reimbursement principles be in accordance with the alternative
methods adopted for use subsequent to October 1, 1981.
(d) Nothing in this section shall be construed to limit
adjustments to hospital reimbursement based upon volume or case mix
changes.

14105.11. (a) The department may negotiate settlements with acute
care hospitals with psychiatric units that unintentionally violate
Medi-Cal cost reimbursement policies or procedures governing the
operation of acute psychiatric hospitals and that had, prior to the
violations, been changed by the department.
(b) In any case to which this section applies, the department may
waive all or part of the overpayments made under this chapter that
would otherwise be reimbursable to the department by an acute care
hospital.
(c) This section shall only apply to hospitals in counties of the
20th and 42nd classes.

14105.115. (a) The department may negotiate or renegotiate
settlements with any acute care hospital in San Diego County that has
a distinct part pediatric convalescent facility and that has
violated any Medi-Cal reimbursement policy or procedure governing the
operation of acute care hospitals.
(b) In any settlement negotiated or renegotiated pursuant to this
section, the department may waive all or part of any overpayment made
under this chapter to any acute care hospital described in
subdivision (a) that would otherwise be reimbursable to the
department by that acute care hospital.

14105.12. (a) The department shall specify circumstances under
which requests shall be granted for authorization for services
provided by a health facility licensed under subdivisions (c) and (d)
of Section 1250 of the Health and Safety Code for periods of up to
two years. This subdivision shall be implemented not later than July
1, 1994. The department shall consult with nursing facility providers
and appropriate health care professionals in the development of the
criteria and process for granting two-year authorizations pursuant to
this subdivision.
(b) (1) As of July 1, 1997, the department shall specify
circumstances under which requests shall be granted for authorization
for services provided by a health facility licensed under
subdivisions (e), (g), and (h) of Section 1250 of the Health and
Safety Code for periods up to two years. The department shall consult
with facility providers cited in this subdivision and appropriate
health care professionals in the development of the criteria and
process for granting two-year authorizations pursuant to this
subdivision.
(2) The department shall not implement paragraph (1) unless and
until federal approval of a change in existing utilization control
methods as provided in this section is obtained.

14105.13. (a) Private duty nursing agencies shall be a provider of
skilled nursing services provided on a shift basis covered under the
early and periodic screening, diagnosis, and treatment supplemental
and home- and community-based waiver programs, subject to federal
approval and availability of federal financial participation. In
addition to satisfying any other requirements as a condition to
participating in the Medi-Cal program under this chapter, a private
duty nursing agency licensed under Chapter 8.3 (commencing with
Section 1743) of Division 2 of the Health and Safety Code shall
satisfy all of the following requirements:
(1) The agency shall be in compliance with the requirements of
Chapter 8.3 (commencing with Section 1743) of Division 2 of the
Health and Safety Code, and any regulations adopted under that
chapter.
(2) The agency shall provide services as specified in Section
1743.2 of the Health and Safety Code.
(3) The agency shall provide skilled nursing services on a shift
basis in a patient's home or other community-based site appropriate
for patient care.
(b) The department shall request federal approval of an amendment
to the existing nursing