2009 California Welfare and Institutions Code - Section 14030-14042 :: Article 1.1. Medi-cal Conflict Of Interest Law

14030.  (a) This article shall be known as the "Medi-Cal Conflict of
Interest Law".
   It is the intent of the Legislature that provisions be made for
disclosure of the interests of providers of service in the services,
facilities, and organizations to which they refer Medi-Cal recipients
so that it is possible to determine the extent to which conflicts of
interests may exist because of such referrals.
   It is the further intent of the Legislature that provision be made
for the regulation of employment of present and former employees of
state and local agencies responsible for the expenditure of funds
under Medi-Cal so as to avoid the risk of conflicts of interests.
   (b) As used in this article, the term "referral" means (1) the
referral of a recipient by a provider of service to any other
provider of service; (2) the placement of a recipient by a provider
of service in any facility; or (3) the obtaining, requesting,
ordering, or prescribing of services or supplies by a provider of
service on behalf of a recipient from any other provider of service.
   As used in this article, the term "immediate family" includes the
spouse and children of the provider of service, the parents of the
provider of service and his spouse, and the spouses of the children
of the provider of service.
   As used in this article, the term "state or local officer or
employee who is responsible for the expenditure of substantial
amounts of funds under Medi-Cal" means (1) the Director of the State
Department of Health Services, and (2) those other state officers or
employees, and those local officers or employees, who are determined
by the director by regulation to be responsible for the expenditure
of substantial amounts of funds under the California Medical
Assistance Act and California's State Plan under Title XIX of the
federal Social Security Act.
   As used in this article the term "substantial amounts of funds"
shall have the meaning defined by the director by regulation. As used
in this article, "judicial, quasi-judicial or other proceeding"
shall have the meaning defined in Article 4 (commencing with Section
87400) of Chapter 7 of Title 9 of the Government Code.

14031.  No payment under this chapter shall be made to a provider of
services or to any facility or organization in which a provider of
service or his immediate family has a significant beneficial
interest, for services rendered in connection with any referral of a
recipient, unless there is on file with the director and the Advisory
Health Council a statement of the nature and extent of such
interest.

14032.  (a) No state or local officer or employee who is responsible
for the expenditure of substantial amounts of funds under Medi-Cal,
no individual who formerly was such an officer or employee, and no
partner of such an officer or employee shall commit any act, in
connection with any activity concerning Medi-Cal, if the commission
of such act by an officer or employee of the United States
Government, an individual who was such an officer or employee, or a
partner of such an officer or employee, in connection with any
activity concerning the United States Government, would be prohibited
by Section 207 or 208 of Title 18 of the United States Code.
   (b) Upon the petition of any interested person or party, a court
or state administrative agency or any officer thereof in any
judicial, quasi-judicial or other proceeding may, after notice and an
opportunity for hearing, exclude any person found to be in violation
of this section from further participation in any judicial,
quasi-judicial or other proceeding then pending before such court,
agency or officer.
   (c) The prohibitions of this section shall not apply to any person
who left government service prior to the effective date of this
section except that any such person who returned to government
service on or after the effective date of this section shall be
covered thereby.

14033.  This article shall remain in effect only until Section 1902
(a)(4)(C) of the federal Social Security Act, as added by Public Law
95-559 is repealed, held invalid by a court of appeal, or otherwise
made inoperative, and as of such date is repealed.

14040.  (a) Each contract for fiscal intermediary services shall
allow, to the extent practicable, providers to utilize electronic
means for transmitting claims to the fiscal intermediary contractor.
Means of transmission, and the manner and format used, shall be
approved by the director. In determining which electronic means are
acceptable, the director shall consider magnetic tape,
computer-to-computer via telephone, diskettes, and any other methods
which may become available through technological advancements.
   (b) A provider, as defined in Section 14043.1, may assign
signature authority for transmission of claims to the provider's
authorized representative or the registered billing agent of the
provider identified to the department pursuant to subdivision (c) of
Section 14040.5.
   (c) The department shall develop reasonable standards for
participation and continued participation by providers and billing
agents in the use of claims transmission methods utilized pursuant to
this section. These standards shall be designed to ensure that
providers and billing agents submit technically complete claims and
to reduce the potential for fraud and abuse. The department shall
notify providers and billing agents of any planned changes to the
claims transmission standards prior to the implementation of the
changes. A "technically complete claim" means any billing request for
payment from a provider or the billing agent of the provider,
including an original claim, claim inquiry, or appeal, that is
submitted on the correct Medi-Cal claim form or electronic billing
format, is fully and accurately completed, and includes all
information and documentation required to be submitted on or with the
claim pursuant to Medi-Cal billing and documentation requirements.
   (d) To the extent required by federal and state law, the fiscal
intermediary shall retain claim data submitted by providers or the
billing agent of the provider pursuant to this section. The
department shall, however, return to a provider or the billing agent
of the provider original tapes, diskettes, and any other similar
devices that are used by the provider or the billing agent of the
provider pursuant to this section.
   (e) In order to reduce the amount of paperwork or attachments
which are required to be completed by a provider or the billing agent
of the provider submitting a claim for reimbursement under this
chapter to the fiscal intermediary, the department shall direct the
fiscal intermediary to investigate and develop the means to
incorporate as much information as possible on the electronic format.
   (f) Each provider and billing agent submitting claims shall be
responsible for ensuring that each claim submitted for reimbursement
for services, goods, supplies, or merchandise rendered or supplied by
the provider to a Medi-Cal beneficiary or under the Medi-Cal program
meets the standards established by the department pursuant to this
section.

14040.1.  (a) "Billing agent" or "billing agent of the provider"
means any individual, partnership, group, association, corporation,
institution, or entity, and the officers, directors, owners, managing
employees, or agents of any partnership, group, association,
corporation, institution, or entity, that submits claims on behalf of
the provider, as defined in Section 14043.1, for reimbursement for
services, goods, supplies, or merchandise rendered or provided
directly or indirectly to a Medi-Cal beneficiary or under the
Medi-Cal program. As used in this section a billing agent shall not
include an authorized representative of a provider billing solely for
that provider, a provider wholly owned entity billing solely for the
provider, or a clinic licensed pursuant to subdivision (a) of
Section 1204 of the Health and Safety Code or exempt from licensure
pursuant to subdivision (c) of Section 1206 of the Health and Safety
Code when preparing and submitting claims for services provided on
behalf of the clinic. For purposes of this subdivision, an authorized
representative shall be either an individual who is an employee of
the provider or an individual with a familial relationship to the
provider. For purposes of this section and Section 14040.5, an
authorized representative, a provider wholly owned entity billing
solely for the provider, or a clinic that is licensed pursuant to
subdivision (a) of Section 1204 of the Health and Safety Code or
exempt from licensure pursuant to subdivision (c) of Section 1206 of
the Health and Safety Code, when preparing and submitting claims for
services provided on behalf of the clinic, shall be considered a
provider.
   (b) The department shall establish standards for the registration
or continued registration of each billing agent. The standards shall
establish time periods, no longer than a year from the date the
standards become effective, after which, no billing agent shall
submit a claim on behalf of a provider, as defined in Section
14043.1, for reimbursement for services, goods, supplies, or
merchandise rendered or provided directly or indirectly by the
provider to a Medi-Cal beneficiary or under the Medi-Cal program,
unless that billing agent has been registered with the department.
The department shall establish the standards for the registration or
continued registration of billing agents pursuant to this
subdivision, in consultation with interested parties, by the adoption
of emergency regulations in accordance with the Administrative
Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1
of Division 3 of Title 2 of the Government Code). The adoption of
these emergency regulations or readoption of the regulations shall be
deemed to be an emergency necessary for the immediate preservation
of the public peace, health and safety, or general welfare.
Notwithstanding Chapter 3.5 (commencing with Section 11340 of Part 1
of Division 3 of Title 2 of the Government Code, emergency
regulations adopted or readopted pursuant to this subdivision shall
be exempt from review by the Office of Administrative Law. The
emergency regulations authorized by this subdivision shall be
submitted to the Office of Administrative Law for filing with the
Secretary of State and publication in the California Code of
Regulations.
   (c) The department may complete a background check on applicants
for registration or continued registration as a billing agent, for
the purpose of verifying the accuracy of information provided by an
applicant for registration or continued registration as a billing
agent or in order to prevent fraud and abuse. The background check
may include, but not be limited to, onsite inspection, review of
business records, and data searches.
   (d) As a condition of registration, or continued registration, as
a billing agent, an applicant for registration as a billing agent
shall provide to the department a surety bond of not less than fifty
thousand dollars ($50,000). 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.

14040.5.  (a) A provider may, by written contract, do either of the
following:
   (1) Authorize a billing agent to submit claims, including
electronic claims, on behalf of the provider for reimbursement for
services, goods, supplies, or merchandise provided by the provider to
the Medi-Cal program or a Medi-Cal beneficiary.
   (2) Assign signature authority for transmission of the claims by
the authorized billing agent.
   (b) If a contract as described in subdivision (a) is entered into,
the contract shall meet the requirements of Section 447.10 of Title
42 of the Code of Federal Regulations or shall have been approved by
the federal Health Care Financing Administration for purposes of the
Medicare program.
   (c) Any provider intending to use a billing agent to submit claims
for reimbursements to the Medi-Cal program shall provide, at least
30 days prior to the submission of any claims for reimbursement by
the billing agent, written notification to the director of the name,
including known legal and any known fictitious or "doing business as"
names used by the billing agent, the address, and the telephone
number of the billing agent.
   (d) Billing agents shall register with the director and shall
obtain a unique identifier prior to submitting any claims for
reimbursement. This unique identifier shall be part of each claim for
reimbursement submitted by the billing agent.
   (e) (1) Any Medi-Cal claim submitted by a billing agent or
provider failing to comply with the requirements of this section or
Section 14040 or 14040.1, or the regulations adopted pursuant to
these sections, shall be subject to denial by the director.
   (2) The director may deny, suspend, or revoke the registration or
continued registration of a billing agent based upon any of the
following grounds:
   (A) Failure of the billing agent to comply with this section or
Section 14040.1 or the regulations adopted under these sections.
   (B) Involvement of a billing agent in illegal submission of
claims.
   (C) The billing agent is under investigation for fraud or abuse,
as defined in Section 14043.1, by the department or any federal,
state, or local law enforcement agency.
   (3) The director may immediately revoke or suspend the
registration or continued registration of a billing agent upon the
involvement of that billing agent in the filing of false or
misleading information on claims submitted for services allegedly
rendered, or when a billing agent has demonstrated a pattern of
filing claims that are not technically complete claims as defined in
subdivision (c) of Section 14040. The director shall not take action
to revoke or suspend a billing agent's registration or continued
registration when the falsity or misleading nature of the information
was the result of the provider's actions and not the billing agent'
s.
   (4) Proceedings for suspension or revocation of the registration
or continued registration of a billing agent pursuant to this section
shall be conducted in accordance with Chapter 5 (commencing with
Section 11500) of Part 1 of Division 3 of Title 2 of the Government
Code, except that hearings may be conducted by departmental hearing
officers appointed by the director. The director may periodically
contract with the Office of Administrative Hearings to conduct these
hearings.
   (5) The director shall provide written notification outlining the
reasons for the proposed action to the billing agent 30 days in
advance of a proposed suspension or revocation and shall allow the
billing agent to demonstrate within those 30 days by comment why the
suspension or revocation notice should not be issued.
   (6) If after consideration of the billing agent's comment, the
director determines that the suspension or revocation is nonetheless
warranted, the director shall notify the billing agent of the
suspension or revocation and the effective date thereof and at the
same time shall serve the billing agent with an accusation. In
addition, the director shall send each provider utilizing the
services of the billing agent written notice of the suspension or
revocation of the billing agent. The suspension or revocation of the
billing agent shall take effect 15 days from the date of the
notification of the billing agent and service of the accusation. To
the extent allowed by federal law, the director may waive any claims
submission requirement to assist a provider in submitting or
resubmitting claims to the Medi-Cal program when they are delayed
because of a billing agent's suspension or revocation. Upon receipt
of a notice of defense by the billing agent, the director shall set
the matter for hearing within 30 days of the receipt of the notice.
The suspension or revocation shall remain in effect until the hearing
is completed and the director has made a final determination on the
merits. The suspension or revocation shall, however, be deemed
vacated if the director fails to make a final determination on the
merits within 60 days of the completion of the original hearing.
   (7) Paragraph (4) of this subdivision shall not apply where the
suspension or revocation of a billing agent is based upon the
conviction for any crime involving fraud, abuse of the Medi-Cal
program, or suspension from the federal Medicare or medicaid
programs, or where the billing agent has entered into a settlement in
lieu of conviction for fraud or abuse in any government program,
within the previous 10 years. In those instances, suspension or
revocation shall be automatic and not subject to administrative
appeal or hearing. In those instances, the director shall send each
provider utilizing the services of the billing agent written notice
of the automatic suspension or revocation of the billing agent. To
the extent allowed by federal law, the director may waive any claims
submission requirement to assist a provider in submitting or
resubmitting claims to the Medi-Cal program when they are delayed
because of a billing agent's automatic suspension or revocation.
   (8) Notwithstanding Section 100171 of the Health and Safety Code,
proceedings for the denial of the registration of a billing agent
pursuant to this section shall be conducted in accordance with
Section 14043.65. This subdivision shall not apply where the denial
is based upon conviction of any crime involving fraud or abuse of the
Medi-Cal program or the federal medicaid or Medicare programs, or
exclusion by the federal government from the medicaid or Medicare
programs. In this case, the denial shall be automatic and not subject
to administrative appeal or hearing.
   (f) For purposes of this section, "billing agent" has the same
meaning as defined in Section 14040.1.
   (g) As used in this section "provider" has the same meaning as
defined in Section 14043.1.

14041.  (a) The director shall develop and implement standards for
the timely processing and payment of each claim type. The standards
shall be sufficient to meet minimal federal requirements for the
timely processing of claims.
   (b) It is the intent of the Legislature that claim forms for use
by physicians and hospitals be the same as claim forms in general use
by other payors, including Medicare, to the extent compatible with
the following:
   (1) Requirements for maximum federal matching funds.
   (2) The reasonable needs of the mechanized claims processing
system.
   (3) Maximum billing efficiency.
   (4) The convenience of providers.

14041.1.  (a) Notwithstanding any other provision of law, and to the
extent not otherwise conflicting with federal law, the department
may hold for a period of one month, or direct the medical fiscal
intermediary for the Medi-Cal program to hold for a period of one
month, payments to providers or their designated agents for health
care services that are provided pursuant to this chapter, and
payments to entities that contract with the department pursuant to
this chapter, Chapter 8 (commencing with Section 14200) and Chapter
8.75 (commencing with Section 14590) for the delivery of health care
services.
   (b) The authority described in subdivision (a) shall be limited to
payments for one month only, and only for a month ending prior to
June 30, 2009.

14041.5.  (a) The department shall develop, disseminate, and update,
on a periodic basis, claims preparation and processing software
programs that may be used on computers at individual provider or
billing service sites. The software shall be made available, to the
extent feasible, for the most common computers used in the provider
community for use, on an optional basis, by clerical or billing
personnel to facilitate the preparation and submission of Medi-Cal
claims for services rendered.
   (b) The software programs specified in subdivision (a) shall, to
the extent possible:
   (1) Contain all necessary validity edits utilized by the fiscal
intermediary.
   (2) Be designed to reasonably reduce common submission and billing
errors.
   (3) Contain features that provide options for the provider to use
provider-developed files to reduce data entry requirements and
improve reporting accuracy.
   (4) Provide, at the provider's discretion, for the electronic or
paper transmission of claims to the Medi-Cal fiscal intermediary.
   (c) The department shall consult with affected provider groups
prior to developing, disseminating, and updating claims preparation
and processing software pursuant to this section.
   (d) The department shall report to the Chairpersons of the Senate
Health and Human Services Committee and Assembly Health Committee by
April 1, 1990, on a plan and timetable for implementing this section.
The plan and timetable shall identify provider groups for which the
department plans to develop, disseminate, and update claims
preparation and processing software.
   (e) Notwithstanding the plan and timetable required by subdivision
(d), the department shall develop and begin disseminating claims
processing software programs to physician providers no later than
January 1, 1991.
   (f) The department shall, as part of implementing this section,
provide technical assistance to providers, including, but not limited
to, a user hotline and appropriate training materials. These
materials shall cover the installation of the programs, use of the
software to enter Medi-Cal claims data, and submission procedures.
   (g) The software programs for the submission of Medi-Cal claims
shall be made available to all interested parties for a reasonable
initial fee, plus an annual subscription fee for updates,
maintenance, and support provided to users. Fees shall be set so as
to recover, as nearly as possible, the development, distribution, and
ongoing support costs of software programs, instructional materials,
or subsequent updates.
   (h) Third-party vendors may obtain and enhance these programs for
resale and provisions of value-added services to Medi-Cal providers.
However, the state or any of its officials, employees, or agents
shall bear no liability for software provided through any third party
that has been altered or misused by any third party.
   (i) Neither the state nor any of its officials, employees, or
agents shall be responsible for any of the following:
   (1) A provider's failure to meet Medi-Cal documentation and
billing requirements, including timely billing pursuant to Section
14115.
   (2) Alteration or misuse of the software in the submission of
claims to the Medi-Cal program.
   (3) Use of the software for any purpose other than the submission
of claims to the Medi-Cal program.
   (4) This subdivision shall not apply to any failure to meet
Medi-Cal documentation and billing requirements that is substantiated
as resulting from the use of software that is directly provided by
the department and that contains proven flaws or defects that
significantly contribute to the failure to meet those requirements.
   (j) A provider or third party's eligibility to bill claims
electronically by using software programs made available pursuant to
this section shall be governed by Section 14040 and Section 14040.5,
and any rules and regulations adopted by the director pursuant to
these sections.

14042.  Each contract for fiscal intermediary services shall provide
for an automated system for verifying the eligibility of Medi-Cal
recipients. The automated eligibility verification system shall
provide the health care provider with a unique method of identifying
the eligibility of the beneficiary. The provider shall include the
eligibility identifier on the claim for payment. Where a recipient's
eligibility has been verified by the automated system and the
provider provides a unique identifier on the claim form, the director
may not require any label, card impression, or any other evidence to
establish the recipient's eligibility. The automated system for
eligibility verification shall provide for the continuous updating of
recipient eligibility determination.
   The department shall periodically test the automated system for
verifying recipient eligibility for completeness and accuracy, and
report the findings of such testing to the Legislature. Unless and
until the automated system for verifying recipient eligibility is
accurate in at least 97 percent of the cases tested, the director
shall provide for the issuance of proof-of-eligibility labels, or
identity cards from which an identifying impression may be taken, or
other evidence of eligibility to be used as a secondary recipient
eligibility verification system. Notwithstanding the inability to
provide verification of a recipient's eligibility through use of the
automated system for eligibility verification, presentation of a
claim for service with evidence of recipient eligibility as is
provided for by the secondary system shall conclusively establish the
recipient's eligibility.
   On-line access shall be available to providers, at their
discretion, upon the payment of a reasonable fee. The department
shall establish the amount of the fees charged to providers for
on-line access, which shall be based upon the costs of providing
on-line access to providers.