Section 14718.

(a) This section shall be limited to specialty mental health services reimbursed to a mental health plan that certifies public expenditures subject to cost settlement or specialty mental health services reimbursed through the department's fiscal intermediary.

(b) The following provisions shall apply to matters related to specialty mental health services provided under the approved Medi-Cal state plan and the Specialty Mental Health Services Waiver, including, but not limited to, reimbursement and claiming procedures, reviews and oversight, and appeal processes for mental health plans (MHPs) and MHP subcontractors.

(1) As determined by the department, the MHP shall submit claims for reimbursement to the Medi-Cal program for eligible services.

(2) The department may offset the amount of any federal disallowance, audit exception, or overpayment against subsequent claims from the MHP. The department may offset the amount of any state disallowance, or audit exception or overpayment against subsequent claims from the mental health plan, through the 2010–11 fiscal year. This offset may be done at any time, after the department has invoiced or otherwise notified the mental health plan about the audit exception, disallowance, or overpayment. The department shall determine the amount that may be withheld from each payment to the mental health plan. The maximum withheld amount shall be 25 percent of each payment as long as the department is able to comply with the federal requirements for repayment of federal financial participation pursuant to Section 1903(d)(2) of the federal Social Security Act (42 U.S.C. Sec. 1396b(d)(2)). The department may increase the maximum amount when necessary for compliance with federal laws and regulations.

(3) (A) Oversight by the department of the MHPs may include client record reviews of Early Periodic Screening Diagnosis and Treatment (EPSDT) specialty mental health services rendered by MHPs and MHP subcontractors under the Medi-Cal specialty mental health services waiver in addition to other audits or reviews that are conducted.

(B) The department may contract with an independent, nongovernmental entity to conduct client record reviews. The contract awarded in connection with this section shall be on a competitive bid basis, pursuant to the Department of General Services contracting requirements, and shall meet both of the following additional requirements:

(i) Require the entity awarded the contract to comply with all federal and state privacy laws, including, but not limited to, the federal Health Insurance Portability and Accountability Act (HIPAA; 42 U.S.C. Sec. 1320d et seq.) and its implementing regulations, the Confidentiality of Medical Information Act (Part 2.6 (commencing with Section 56) of Division 1 of the Civil Code), and Section 1798.81.5 of the Civil Code. The entity shall be subject to existing penalties for violation of these laws.

(ii) Prohibit the entity awarded the contract from using or disclosing client records or client information for a purpose other than the one for which the record was given.

(iii) Prohibit the entity awarded the contract from selling client records or client information.

(C) For purposes of this paragraph, the following terms shall have the following meanings:

(i) "Client record" means a medical record, chart, or similar file, as well as other documents containing information regarding an individual recipient of services, including, but not limited to, clinical information, dates and times of services, and other information relevant to the individual and services provided and that evidences compliance with legal requirements for Medi-Cal reimbursement.

(ii) "Client record review" means examination of the client record for a selected individual recipient for the purpose of confirming the existence of documents that verify compliance with legal requirements for claims submitted for Medi-Cal reimbursement.

(D) The department shall recover overpayments of federal financial participation from MHPs within the timeframes required by federal law and regulation for repayment to the federal Centers for Medicare and Medicaid Services.

(4) (A) The department, in consultation with mental health stakeholders, the California Mental Health Directors Association, and MHP subcontractor representatives, shall provide an appeals process that specifies a progressive process for resolution of disputes about claims or recoupments relating to specialty mental health services under the Medi-Cal specialty mental health services waiver.

(B) The department shall provide MHPs and MHP subcontractors the opportunity to directly appeal findings in accordance with procedures that are similar to those described in Article 1.5 (commencing with Section 51016) of Chapter 3 of Subdivision 1 of Division 3 of Title 22 of the California Code of Regulations, until new regulations for a progressive appeals process are promulgated. When an MHP subcontractor initiates an appeal, it shall give notice to the MHP. The department shall propose a rulemaking package consistent with the department's appeals process that is in effect on July 1, 2012 by no later than the end of the 2013–14 fiscal year. The reference in this subparagraph to the procedures described in Article 1.5 (commencing with Section 51016) of Chapter 3 of Subdivision 1 of Division 3 of Title 22 of the California Code of Regulations, shall only apply to those appeals addressed in this subparagraph.

(C) The department shall develop regulations as necessary to implement this paragraph.

(5) The department shall conduct oversight of utilization controls as specified in Section 14133. The MHP shall include a requirement in any subcontracts that all inpatient subcontractors maintain necessary licensing and certification. MHPs shall require that services delivered by licensed staff are within their scope of practice. Nothing in this chapter shall prohibit the MHPs from establishing standards that are in addition to the federal and state requirements, provided that these standards do not violate federal and state requirements and guidelines.

(6) (A)  Subject to federal approval and consistent with state requirements, the MHP may negotiate rates with providers of specialty mental health services.

(B) Any excess in the distribution of funds over the expenditures for services by the mental health plan shall be spent for the provision of specialty mental health services and related administrative costs.

(7) Nothing in this chapter shall limit the MHP from being reimbursed appropriate federal financial participation for any qualified services. To receive federal financial participation, the mental health plan shall certify its public expenditures for specialty mental health services to the department.

(8) Notwithstanding Section 14115, claims for federal reimbursement for service pursuant to this chapter shall be submitted by MHPs within the timeframes required by federal Medicaid requirements and the approved Medicaid state plan and waivers.

(9) The MHP shall use the fiscal intermediary of the Medi-Cal program of the State Department of Health Care Services for the processing of claims for inpatient psychiatric hospital services rendered in fee-for-service Medi-Cal hospitals. The department shall request the Controller to offset the distribution of funds to the counties from the Mental Health Subaccount, the Mental Health Equity Subaccount, or the Vehicle License Collection Account of the Local Revenue Fund, or funds from the Mental Health Account or the Behavioral Health Subaccount of the Local Revenue Fund 2011 for the nonfederal financial participation share for these claims.

(c) Counties may set aside funds for self-insurance, audit settlement, and statewide program risk pools. The counties shall assume all responsibility and liability for appropriate administration of the funds. Special consideration may be given to small counties with a population of less than 200,000. Nothing in the paragraph shall in any way make the state or department liable for mismanagement or loss of funds by the entity designated by counties under this subdivision.

(d) The department shall consult with the California Mental Health Directors Association in February and September of each year to obtain data and methodology necessary to forecast future fiscal trends in the provision of specialty mental health services provided under the Medi-Cal specialty mental health services waiver, to estimate yearly specialty mental health services related costs, and to estimate the annual amount of federal funding participation to reimburse costs of specialty mental health services provided under the Medi-Cal specialty mental health services waiver. This shall include a separate presentation of the data and methodology necessary to forecast future fiscal trends in the provision of Early Periodic Screening, Diagnosis, and Treatment specialty mental health services provided under the Medi-Cal specialty mental health services waiver, to estimate annual EPSDT specialty mental health services related costs, and to estimate the annual amount of EPSDT specialty mental health services provided under the state Medi-Cal specialty mental health services waiver, including federal funding participation to reimburse costs of EPSDT.

(e) When seeking federal approval for any federal Medicaid state plan amendment or waiver associated with Medi-Cal specialty mental health services, the department shall consult with staff of the Legislature, counties, providers, and other stakeholders in the development of the state plan amendment or waiver.

(f) This section shall become operative on July 1, 2012.

(Added by renumbering Section 5778 (as added by Stats. 2011, Ch. 651, Sec. 8) by Stats. 2012, Ch. 34, Sec. 179. Effective June 27, 2012. Section operative July 1, 2012, by its own provisions. Conditionally inoperative as provided in Section 14721.)