Report 2006-035 Recommendations

To provide more complete information to the Legislature on the reimbursement rate and fee systems, Health Services should include information on any savings to the General Fund in the reports its licensing division is required to prepare.

To reduce the risk of using flawed data to calculate reimbursement rates, Health Services should conduct all the audits of skilled nursing facilities called for in the Reimbursement Act.

To reduce the risk of using flawed data to calculate reimbursement rates, Health Services should Identify which audits conducted in fiscal years 2004-05 and 2005-06 were field audits to determine whether it met the field audit requirement of the Reimbursement Act.

To ensure that it collects the Quality Assurance Fees (fees) it is entitled to, Health Services should promptly initiate collection efforts for facilities that are delinquent in making their fee payments by either offsetting amounts owed against Medi-Cal reimbursements or levying a penalty against facilities that do not participate in Medi-Cal.

To ensure that it collects the Quality Assurance Fees (fees) it is entitled to, Health Services should reconcile the fee payments made by facilities to the estimated payments due and follow-up on all significant variances.

To hold the consultant contracted by Health Services to the intended terms and conditions of the contract to develop and administer the reimbursement rate system, Health Services should amend the contract to clearly describe the scope of work and to include a statement that Health Services will obtain the logic and business rules of the reimbursement rate system and a specific date that Health Services will take over developing reimbursement rates for facilities.

To hold the consultant contracted by Health Services to the intended terms and conditions of the contract to develop and administer the reimbursement rate system, Health Services should Include in its 60-day response to this audit report or sooner, formal and detailed documentation that includes all of the complexities of the reimbursement rate development methodology and evidence that the methodology, when used, produces the reimbursement rates Health Services published for fiscal year 2005-06.

To hold the consultant contracted by Health Services to the intended terms and conditions of the contract to develop and administer the reimbursement rate system, Health Services should follow best practices for contracting in the future by including clear language to describe the products or services it expects from the agreement.

To reduce its costs and maximize savings to the General Fund, Health Services should continue to learn how to use the database and then train its staff to calculate the rates for fiscal year 2007-08.

To reduce its costs and maximize savings to the General Fund, Health Services should amend the contract with Navigant to include training Health Services staff in using the rate calculation database and facilitate staff takeover of managing the annual calculations.

To develop a mechanism to formally document changes, Health Services should formalize a rate change process that documents the reason for a rate change and provides a notification of the rate change to EDS.

To develop a mechanism to formally document changes, Health Services should formalize a change process that documents and records any changes either it or Navigant makes to the reimbursement rate systems programming language.

To ensure that its contract consultant authorizes disbursements of Medi-Cal funds only to facilities entitled to them, Health Services should further investigate the possibility that duplicate payments were authorized by the contractor beyond those we noted to ensure that the magnitude of the problem is identified and corrected. This would include researching all payment types authorized by the contractor since at least October 2005.

To ensure that its contract consultant authorizes disbursements of Medi-Cal funds only to facilities entitled to them, Health Services should research and identify all the duplicate payments authorized by its contractor and recoup those payments.