Bill Text: CA SB1529 | 2011-2012 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Medi-Cal: providers: fraud.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Passed) 2012-09-29 - Chaptered by Secretary of State. Chapter 797, Statutes of 2012. [SB1529 Detail]

Download: California-2011-SB1529-Amended.html

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BILL NUMBER: SB 1529	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  AUGUST 7, 2012
	AMENDED IN ASSEMBLY  JUNE 27, 2012
	AMENDED IN ASSEMBLY  JUNE 6, 2012
	AMENDED IN SENATE  APRIL 24, 2012
	AMENDED IN SENATE  MARCH 29, 2012

INTRODUCED BY   Senator Alquist

                        FEBRUARY 24, 2012

   An act to amend Section 100185.5 of the Health and Safety Code,
and to amend Sections 14043.2, 14043.65, 14043.75, 14107.11,
14123.05, and 14409 of, to amend, repeal, and add Sections 14043.1,
14043.15, 14043.25, 14043.26, 14043.28, 14043.36, 14043.4, 14043.55,
and 14043.7 of, and to add Sections 14043.38 and 14170.12 to, the
Welfare and Institutions Code, relating to Medi-Cal.



	LEGISLATIVE COUNSEL'S DIGEST


   SB 1529, as amended, Alquist. Medi-Cal: providers: fraud.
   Existing law provides for the Medi-Cal program, which is
administered by the State Department of Health Care Services, under
which qualified low-income individuals receive health care services.
The Medi-Cal program is, in part, governed and funded by federal
Medicaid Program provisions. Existing law requires an applicant or
provider, as defined, to submit a complete application package for
enrollment, continuing enrollment, or enrollment at a new location or
a change in location, and requires the application form for
enrollment, the provider agreement, and all attachments or changes to
be signed under penalty of perjury. Existing law authorizes the
department, upon receipt of reliable evidence, as described, of fraud
or willful misrepresentation by a provider, or upon the commencement
of a specified suspension of a provider, to, among other things,
withhold payment for any goods, services, supplies, or merchandise,
or any portion thereof. Existing law prohibits the department from
enrolling any applicant that has been convicted of any felony or
misdemeanor involving fraud or abuse in any government program.
   This bill would revise these provisions to require, upon receipt
of a credible allegation of fraud for which an investigation is
pending under the Medi-Cal program against a provider, or upon the
commencement of the specified suspension of a provider, that the
provider be temporarily placed under payment suspension, unless it is
determined there is good cause, as defined, not to suspend the
payments or to suspend them only in part. This bill would prohibit
the department from enrolling a provider in, or would require the
department to terminate the provider from, the Medi-Cal program, if
it is discovered that the provider has been terminated under Medicare
or under the Medicaid Program or Children's Health Insurance Program
in any other state, and would provide that a temporary suspension
may be lifted if a resolution of an investigation for fraud or abuse
occurs, as defined. This bill would require, commencing as specified,
the department to conduct a criminal background check and require
submission of a set of fingerprints when the department designates a
provider as a "high" categorical risk, as specified.
   This bill would require the department, commencing as specified
and with some exceptions, to collect an application fee for
enrollment,  revalidation of enrollment, or  
including  enrollment at a new location or a change in location
in the amount calculated by the federal Centers for Medicare and
Medicaid Services. This bill would authorize the department to
establish a temporary moratorium on enrollment of providers under
specified circumstances. This bill would make other related and
conforming changes.
    This bill would require, on a quarterly basis, that the
Department of Justice, and any other law enforcement agency that has
accepted referrals for investigation from the department, report to
the department a listing of each referral, stating whether the
referral continues to be under investigation and whether it involves
a credible allegation of fraud. To the extent that this bill
increases the duties of local law enforcement agencies, this bill
would create a state-mandated local program.
   This bill would authorize the department, effective January 1,
2012, to enter into contracts with one or more eligible Medicaid
Recovery Audit Contractors pursuant to specified federal law.
   The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that, if the Commission on State Mandates
determines that the bill contains costs mandated by the state,
reimbursement for those costs shall be made pursuant to these
statutory provisions.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 100185.5 of the Health and Safety Code is
amended to read:
   100185.5.  (a) When a letter or order of denial of continued
enrollment or suspension of any type or duration, based upon fraud or
abuse, or a suspension of payments pursuant to Section 14107.11 of
the Welfare and Institutions Code, is issued by the department to a
provider, the director shall review the evidence supporting the
denial of continued enrollment, suspension, or suspension of
payments. If, in the opinion of the director, the evidence shows a
pattern or practice of fraud, abuse, or willful misrepresentation
that, if replicated in any other health care program administered by
the department, could cause either fiscal loss to the state or harm
to any participant, the director may deny continued enrollment,
suspend, or suspend payments to, the provider with respect to those
other health care programs. Any denial of continued enrollment,
suspension, or suspension of payments may be for an indefinite or
definite period of time, may be stayed for a period of time, and may
be with or without conditions or probation.
   (b) The director may deny the application of an applicant or
provider to participate in any health care program administered by
the department, when, based upon fraud or abuse, the applicant or
provider has been denied continued enrollment in, or suspended from,
any health care program administered by the department, or has had
payments suspended in connection with the Medi-Cal program pursuant
to Section 14107.11 of the Welfare and Institutions Code by the
department, and remains ineligible to participate in the health care
program from which the applicant or provider was denied continued
enrollment, suspended, or had payments suspended.
   (c) The director may deny any new or additional application of a
provider to participate in any health care program administered by
the department if utilization controls including, but not limited to,
prior authorization or special claims review pursuant to Sections
51159, 51455, and 51460 of Title 22 of the California Code of
Regulations have been imposed upon that provider by any health care
program administered by the department. Applications shall not be
denied based solely upon utilization controls imposed upon an entire
class or category of providers to which that provider belongs.
   (d) Notwithstanding any other law, any provider or applicant who
has been denied continued enrollment in, or suspended from, or that
has had payments suspended in connection with, any health care
program administered by the department, or whose application to
participate in a health care program administered by the department
is denied, pursuant to this section, may appeal that action in
accordance with Section 14043.65 of the Welfare and Institutions
Code.
   (e) For purposes of this section, the following definitions apply:

   (1) "Abuse" has the same meaning as that term is defined in
Section 14043.1 of the Welfare and Institutions Code.
   (2) "Administered by the department" means administered by the
State Department of Health Care Services or by its agents or
contractors on behalf of the State Department of Health Care
Services.
   (3) "Applicant" means any person, individual, partnership, group,
association, corporation, institution, or entity, and the officers,
directors, owners, managing employees, or agents thereof, that
applies to the department for enrollment as a provider or
participation as a provider in a health care program administered by
the department.
   (4) "Fraud" has the same meaning as that term is defined in
Section 14043.1 of the Welfare and Institutions Code.
   (5) "Provider" means any person, individual, partnership, group,
association, corporation, institution, or entity, and the officers,
directors, owners, managing employees, or agents thereof, that
provides services, goods, supplies, or merchandise, directly or
indirectly, to a person enrolled in a health care program
administered by the department.
   (6) "Payment suspension" means the suspension of payments in
accordance with Section 14107.11 of the Welfare and Institutions
Code.
   (f) For purposes of this section, "suspension" includes, but is
not limited to, suspensions authorized under Article 1.3 (commencing
with Section 14043) or Article 3 (commencing with Section 14123) of
Chapter 7 of Part 3 of Division 9 of the Welfare and Institutions
Code.
   (g) For purposes of this section, "health care program
administered by the department" includes, but is not limited to, the
Medi-Cal program.
  SEC. 2.  Section 14043.1 of the Welfare and Institutions Code is
amended to read:
   14043.1.  As used in this article:
   (a) "Abuse" means either of the following:
   (1) Practices that are inconsistent with sound fiscal or business
practices and result in unnecessary cost to the federal Medicaid and
Medicare programs, the Medi-Cal program, another state's Medicaid
program, or other health care programs operated, or financed in whole
or in part, by the federal government or a state or local agency in
this state or another state.
   (2) Practices that are inconsistent with sound medical practices
and result in reimbursement by the federal Medicaid and Medicare
programs, the Medi-Cal program or other health care programs
operated, or financed in whole or in part, by the federal government
or a state or local agency in this state or another state, for
services that are unnecessary or for substandard items or services
that fail to meet professionally recognized standards for health
care.
   (b) "Applicant" means an individual, partnership, group,
association, corporation, institution, or entity, and the officers,
directors, owners, managing employees, or agents thereof, that apply
to the department for enrollment as a provider in the Medi-Cal
program.
   (c) "Application or application package" means a completed and
signed application form, signed under penalty of perjury or notarized
pursuant to Section 14043.25, a disclosure statement, a provider
agreement, and all attachments or changes in the form, statement, or
agreement.
   (d) "Appropriate volume of business" means a volume that is
consistent with the information provided in the application and any
supplemental information provided by the applicant or provider, and
is of a quality and type that would reasonably be expected based upon
the size and type of business operated by the applicant or provider.

   (e) "Business address" means the location where an applicant or
provider provides services, goods, supplies, or merchandise, directly
or indirectly, to a Medi-Cal beneficiary. A post office box or
commercial box is not a business address. The business address for
the location of a vehicle or vessel owned and operated by an
applicant or provider enrolled in the Medi-Cal program and used to
provide services, goods, supplies, or merchandise, directly or
indirectly, to a Medi-Cal beneficiary shall either be the business
address location listed on the provider's application as the location
where similar services, goods, supplies, or merchandise would be
provided or the applicant's or provider's pay to address.
   (f) "Convicted" means any of the following:
   (1) A judgment of conviction has been entered against an
individual or entity by a federal, state, or local court, regardless
of whether there is a posttrial motion, an appeal pending, or the
judgment of conviction or other record relating to the criminal
conduct has been expunged or otherwise removed.
   (2) A federal, state, or local court has made a finding of guilt
against an individual or entity.
   (3) A federal, state, or local court has accepted a plea of guilty
or nolo contendere by an individual or entity.
   (4) An individual or entity has entered into participation in a
first offender, deferred adjudication, or other program or
arrangement where judgment of conviction has been withheld.
   (g) "Debt due and owing" means 60 days have passed since a notice
or demand for repayment of an overpayment or another amount resulting
from an audit or examination, for a penalty assessment, or for
another amount due to the department was sent to the provider,
regardless of whether the provider is an institutional provider or a
noninstitutional provider and regardless of whether an appeal is
pending.
   (h) "Enrolled or enrollment in the Medi-Cal program" means
authorized under any processes by the department or its agents or
contractors to receive, directly or indirectly, reimbursement for the
provision of services, goods, supplies, or merchandise to a Medi-Cal
beneficiary.
   (i) "Fraud" means an intentional deception or misrepresentation
made by a person with the knowledge that the deception could result
in some unauthorized benefit to himself or herself or some other
person. It includes any act that constitutes fraud under applicable
federal or state law.
   (j) "Location" means a street, city, or rural route address or a
site or place within a street, city, or rural route address, and the
city, county, state, and nine-digit ZIP Code.
   (k) "Not currently enrolled at the location for which the
application is submitted" means either of the following:
   (1) The provider is changing location and moving to a different
location than that for which the provider was issued a provider
number.
   (2) The provider is adding a business address.
   (l) (1) "Individual dentist practice" means a dentist licensed by
the Dental Board of California enrolled or enrolling in Medi-Cal as
an individual provider who is a sole proprietor of his or her
practice or is a corporation owned solely by the individual dentist
and the only dentist practitioner is the owner. An individual dentist
practice may include nondentist allied dental health professionals
employed and supervised by the dentist.
   (2) "Individual physician practice" means a physician and surgeon
licensed by the Medical Board of California or the Osteopathic
Medical Board of California enrolled or enrolling in Medi-Cal as an
individual provider who is sole proprietor of his or her practice or
is a corporation owned solely by the individual physician and the
only physician practitioner is the owner. An individual physician
practice may include nonphysician medical practitioners employed and
supervised by the physician.
   (m) "Preenrollment period" or "preenrollment" includes the period
of time during which an application package for enrollment, continued
enrollment, or for the addition of or change in a location is
pending.
   (n) "Professionally recognized standards of health care" means
statewide or national standards of care, whether in writing or not,
that professional peers of the individual or entity whose provision
of care is an issue recognize as applying to those peers practicing
or providing care within a state. When the United States Department
of Health and Human Services has declared a treatment modality not to
be safe and effective, practitioners that employ that treatment
modality shall be deemed not to meet professionally recognized
standards of health care. This subdivision shall not be construed to
mean that all other treatments meet professionally recognized
standards of care.
   (o) "Provider" means an individual, partnership, group,
association, corporation, institution, or entity, and the officers,
directors, owners, managing employees, or agents of a partnership,
group association, corporation, institution, or entity, that provides
services, goods, supplies, or merchandise, directly or indirectly,
to a Medi-Cal beneficiary and that has been enrolled in the Medi-Cal
program.
   (p) "Resolution of an investigation for fraud or abuse" means
there is no documentation to indicate either that a charge or
accusation has been filed against the provider and either (1) the
investigation has not been active at any time during the previous 12
months or (2) the department has made a documented good faith effort
and has been unable, for a period of 12 months, to contact an
investigator or responsible representative of any agency
investigating the provider.
   (q) "Unnecessary or substandard items or services" means those
that are either of the following:
   (1) Substantially in excess of the provider's usual charges or
costs for the items or services.
   (2) Furnished, or caused to be furnished, to patients, whether or
not covered by Medicare, Medicaid, or any of the state health care
programs to which the definitions of applicant and provider apply,
and which are substantially in excess of the patient's needs, or of a
quality that fails to meet professionally recognized standards of
health care. The department's determination that the items or
services furnished were excessive or of unacceptable quality shall be
made on the basis of information, including sanction reports, from
the following sources:
   (A) The professional review organization for the area served by
the individual or entity.
   (B) State or local licensing or certification authorities.
   (C) Fiscal agents or contractors or private insurance companies.
   (D) State or local professional societies.
   (E) Any other sources deemed appropriate by the department.
   (r) This section shall become inoperative on the effective date of
the necessary state plan amendment, as stated in the declaration
executed by the director pursuant to Section 14043.1 as added by
Section 3 of the act that added this subdivision, and is repealed on
the January 1 of the following year. The department shall post the
declaration on its Internet Web site and transmit a copy of the
declaration to the Legislature.
  SEC. 3.  Section 14043.1 is added to the Welfare and Institutions
Code, to read:
   14043.1.  As used in this article:
   (a) "Abuse" means either of the following:
   (1) Practices that are inconsistent with sound fiscal or business
practices and result in unnecessary cost to the federal Medicaid and
Medicare programs, the Medi-Cal program, another state's Medicaid
program, or other health care programs operated, or financed in whole
or in part, by the federal government or a state or local agency in
this state or another state.
   (2) Practices that are inconsistent with sound medical practices
and result in reimbursement by the federal Medicaid and Medicare
programs, the Medi-Cal program or other health care programs
operated, or financed in whole or in part, by the federal government
or a state or local agency in this state or another state, for
services that are unnecessary or for substandard items or services
that fail to meet professionally recognized standards for health
care.
   (b) "Applicant" means an individual, including an ordering,
referring, or prescribing individual, partnership, group,
association, corporation, institution, or entity, and the officers,
directors, owners, managing employees, or agents thereof, that apply
to the department for enrollment as a provider in the Medi-Cal
program.
   (c) "Application or application package" means a completed and
signed application form, signed under penalty of perjury or notarized
pursuant to Section 14043.25, a disclosure statement, a provider
agreement, and all attachments or changes in the form, statement, or
agreement.
   (d) "Appropriate volume of business" means a volume that is
consistent with the information provided in the application and any
supplemental information provided by the applicant or provider, and
is of a quality and type that would reasonably be expected based upon
the size and type of business operated by the applicant or provider.

   (e) "Business address" means the location where an applicant or
provider provides services, goods, supplies, or merchandise, directly
or indirectly, to a Medi-Cal beneficiary. A post office box or
commercial box is not a business address. The business address for
the location of a vehicle or vessel owned and operated by an
applicant or provider enrolled in the Medi-Cal program and used to
provide services, goods, supplies, or merchandise, directly or
indirectly, to a Medi-Cal beneficiary shall either be the business
address location listed on the provider's application as the location
where similar services, goods, supplies, or merchandise would be
provided or the applicant's or provider's pay to address.
   (f) "Convicted" means any of the following:
   (1) A judgment of conviction has been entered against an
individual or entity by a federal, state, or local court, regardless
of whether there is a posttrial motion, an appeal pending, or the
judgment of conviction or other record relating to the criminal
conduct has been expunged or otherwise removed.
   (2) A federal, state, or local court has made a finding of guilt
against an individual or entity.
   (3) A federal, state, or local court has accepted a plea of guilty
or nolo contendere by an individual or entity.
   (4) An individual or entity has entered into participation in a
first offender, deferred adjudication, or other program or
arrangement where judgment of conviction has been withheld.
   (g) "Debt due and owing" means 60 days have passed since a notice
or demand for repayment of an overpayment or another amount resulting
from an audit or examination, for a penalty assessment, or for
another amount due to the department was sent to the provider,
regardless of whether the provider is an institutional provider or a
noninstitutional provider and regardless of whether an appeal is
pending.
   (h) "Enrolled or enrollment in the Medi-Cal program" means
authorized under any processes by the department or its agents or
contractors to receive, directly or indirectly, reimbursement for the
provision of services, goods, supplies, or merchandise to a Medi-Cal
beneficiary.
   (i) "Fraud" means an intentional deception or misrepresentation
made by a person with the knowledge that the deception could result
in some unauthorized benefit to himself or herself or some other
person. It includes any act that constitutes fraud under applicable
federal or state law.
   (j) "Location" means a street, city, or rural route address or a
site or place within a street, city, or rural route address, and the
city, county, state, and nine-digit ZIP Code.
   (k) "Not currently enrolled at the location for which the
application is submitted" means either of the following:
   (1) The provider is changing location and moving to a different
location than that for which the provider was issued a provider
number.
   (2) The provider is adding a business address.
   (l) (1) "Individual dentist practice" means a dentist licensed by
the Dental Board of California enrolled or enrolling in Medi-Cal as
an individual provider who is a sole proprietor of his or her
practice or is a corporation owned solely by the individual dentist
and the only dentist practitioner is the owner. An individual dentist
practice may include nondentist allied dental health professionals
employed and supervised by the dentist.
   (2) "Individual physician practice" means a physician and surgeon
licensed by the Medical Board of California or the Osteopathic
Medical Board of California enrolled or enrolling in Medi-Cal as an
individual provider who is sole proprietor of his or her practice or
is a corporation owned solely by the individual physician and the
only physician practitioner is the owner. An individual physician
practice may include nonphysician medical practitioners employed and
supervised by the physician.
   (m) "Preenrollment period" or "preenrollment" includes the period
of time during which an application package for enrollment, continued
enrollment, or for the addition of or change in a location is
pending.
   (n) "Professionally recognized standards of health care" means
statewide or national standards of care, whether in writing or not,
that professional peers of the individual or entity whose provision
of care is an issue recognize as applying to those peers practicing
or providing care within a state. When the United States Department
of Health and Human Services has declared a treatment modality not to
be safe and effective, practitioners that employ that treatment
modality shall be deemed not to meet professionally recognized
standards of health care. This subdivision shall not be construed to
mean that all other treatments meet professionally recognized
standards of care.
   (o) "Provider" means an individual, partnership, group,
association, corporation, institution, or entity, and the officers,
directors, owners, managing employees, or agents of a partnership,
group association, corporation, institution, or entity, that provides
services, goods, supplies, or merchandise, directly or indirectly,
including all ordering, referring, and prescribing, to a Medi-Cal
beneficiary and that has been enrolled in the Medi-Cal program.
   (p) "Resolution of an investigation for fraud or abuse" means
there is no documentation to indicate either that a charge or
accusation has been filed against the provider and either (1) the
investigation has not been active at any time during the previous 12
months or (2) the department has made a documented good faith effort
and has been unable, for a period of 12 months, to contact an
investigator or responsible representative of any agency
investigating the provider.
   (q) "Unnecessary or substandard items or services" means those
that are either of the following:
   (1) Substantially in excess of the provider's usual charges or
costs for the items or services.
   (2) Furnished, or caused to be furnished, to patients, whether or
not covered by Medicare, Medicaid, or any of the state health care
programs to which the definitions of applicant and provider apply,
and which are substantially in excess of the patient's needs, or of a
quality that fails to meet professionally recognized standards of
health care. The department's determination that the items or
services furnished were excessive or of unacceptable quality shall be
made on the basis of information, including sanction reports, from
the following sources:
   (A) The professional review organization for the area served by
the individual or entity.
   (B) State or local licensing or certification authorities.
   (C) Fiscal agents or contractors or private insurance companies.
   (D) State or local professional societies.
   (E) Any other sources deemed appropriate by the department.
   (r) (1) This section shall become operative on the effective date
of the state plan amendment necessary to implement this section, as
stated in the declaration executed by the director pursuant to
paragraph (2).
   (2) Upon approval of the state plan amendment necessary to
implement this section under Sections 455.410 and 455.440 of Title 42
of the Code of Federal Regulations, the director shall execute a
declaration, to be retained by the director, that states that this
approval has been obtained and the effective date of the state plan
amendment. The department shall post the declaration on its Internet
Web site and transmit a copy of the declaration to the Legislature.
  SEC. 4.  Section 14043.15 of the Welfare and Institutions Code is
amended to read:
   14043.15.  (a) The department may adopt regulations for
certification of each applicant and each provider in the Medi-Cal
program. No certification shall be required for natural persons
licensed or certificated under Division 2 (commencing with Section
500) of the Business and Professions Code, the Osteopathic Initiative
Act, or the Chiropractic Initiative Act.
   (b) (1) An applicant or provider who is a natural person, and is
licensed or certificated pursuant to Division 2 (commencing with
Section 500) of the Business and Professions Code, the Osteopathic
Initiative Act, or the Chiropractic Initiative Act, or is a
professional corporation, as defined in subdivision (b) of Section
13401 of the Corporations Code, shall comply with Section 14043.26
and shall be enrolled in the Medi-Cal program as either an individual
provider or as a rendering provider in a provider group for each
application package submitted and approved pursuant to Section
14043.26, notwithstanding that the applicant or provider meets the
requirements to qualify as exempt from clinic licensure under
subdivision (a) or (m) of Section 1206 of the Health and Safety Code.

   (2) A provider enrolled in the Medi-Cal program pursuant to
paragraph (1), who has disclosed in the application package for
enrollment that the provider's practice includes the rendering of
services, goods, supplies, or merchandise solely at one, or at more
than one, health facility, as defined in Section 1250 of the Health
and Safety Code, or clinic, as defined in Section 1204 of the Health
and Safety Code, or medical therapy unit, for purposes of Section
123950 of the Health and Safety Code, or residence of the provider's
patient, or office of a physician and surgeon involved in the care
and treatment of the provider's patients, shall not be required to
enroll at each such health facility, clinic, medical therapy unit,
patient's residence, or physician and surgeon's office location and
may utilize the business addresses listed on the application for
enrollment pursuant to paragraph (1) to claim reimbursement from the
Medi-Cal program for services rendered by the provider to Medi-Cal
beneficiaries at all of those health facilities, clinics, medical
therapy units, residences, or physician offices.
   (3) This subdivision shall not be interpreted to allow the
violation of any state or federal law governing fiscal intermediaries
or Division 2 (commencing with Section 500) of the Business and
Professions Code, the Osteopathic Initiative Act, or the Chiropractic
Initiative Act. This subdivision does not remove the requirement
that each claim for reimbursement from the Medi-Cal program identify
the place of service and the rendering provider.
   (c) An applicant or provider licensed as a clinic pursuant to
Chapter 1 (commencing with Section 1200) of, or a health facility
licensed pursuant to Chapter 2 (commencing with Section 1250) of,
Division 2 of the Health and Safety Code may be enrolled in the
Medi-Cal program as a clinic or a health facility and need not comply
with Section 14043.26 if the clinic or health facility is certified
by the department to participate in the Medi-Cal program.
   (d) An applicant or provider that meets the requirements to
qualify as exempt from clinic licensure under subdivisions (b) to
(l), inclusive, or subdivisions (n) to (p), inclusive, of Section
1206 of the Health and Safety Code shall comply with Section 14043.26
and may be enrolled in the Medi-Cal program as either a clinic or
within any other provider category for which the applicant or
provider qualifies. An applicant or provider to which any of the
clinic licensure exemptions specified in this subdivision
                              apply shall identify the licensure
exemption category and document in its application package the legal
and factual basis for the clinic license exemption claimed.
   (e) Notwithstanding subdivisions (a), (b), (c), and (d), an
applicant or provider that meets the requirements to qualify as
exempt from clinic licensure pursuant to subdivision (h) of Section
1206 of the Health and Safety Code, including an intermittent site
that is operated by a licensed primary care clinic or an affiliated
mobile health care unit licensed or approved under Chapter 9
(commencing with Section 1765.101) of Division 2 of the Health and
Safety Code, and that is operated by a licensed primary care clinic,
and for which intermittent site or mobile health unit the licensed
primary care clinic directly or indirectly provides all staffing,
protocols, equipment, supplies, and billing services, need not enroll
in the Medi-Cal program as a separate provider and need not comply
with Section 14043.26 if the licensed primary care clinic operating
the applicant, provider clinic, or mobile health care unit has
notified the department of its separate locations, premises,
intermittent sites, or mobile health care units.
   (f) This section shall become inoperative on the effective date of
the necessary state plan amendment, as stated in the declaration
executed by the director pursuant to Section 14043.15 as added by
Section 5 of the act that added this subdivision, and is repealed on
the January 1 of the following year. The department shall post the
declaration on its Internet Web site and transmit a copy of the
declaration to the Legislature.
  SEC. 5.  Section 14043.15 is added to the Welfare and Institutions
Code, to read:
   14043.15.  (a) The department may adopt regulations for
certification of each applicant and each provider in the Medi-Cal
program. No certification shall be required for natural persons
licensed or certificated under Division 2 (commencing with Section
500) of the Business and Professions Code, the Osteopathic Initiative
Act, or the Chiropractic Initiative Act.
   (b) (1) An applicant or provider who is a natural person, and is
licensed or certificated pursuant to Division 2 (commencing with
Section 500) of the Business and Professions Code, the Osteopathic
Initiative Act, or the Chiropractic Initiative Act, or is a
professional corporation, as defined in subdivision (b) of Section
13401 of the Corporations Code, shall comply with Section 14043.26
and shall be enrolled in the Medi-Cal program as either an individual
provider or as a rendering provider in a provider group for each
application package submitted and approved pursuant to Section
14043.26, notwithstanding that the applicant or provider meets the
requirements to qualify as exempt from clinic licensure under
subdivision (a) or (m) of Section 1206 of the Health and Safety Code.

   (2) A provider enrolled in the Medi-Cal program pursuant to
paragraph (1), who has disclosed in the application package for
enrollment that the provider's practice includes the rendering of
services, goods, supplies, or merchandise solely at one, or at more
than one, health facility, as defined in Section 1250 of the Health
and Safety Code, or clinic, as defined in Section 1204 of the Health
and Safety Code, or medical therapy unit, for purposes of Section
123950 of the Health and Safety Code, or residence of the provider's
patient, or office of a physician and surgeon involved in the care
and treatment of the provider's patients, shall not be required to
enroll at each such health facility, clinic, medical therapy unit,
patient's residence, or physician and surgeon's office location and
may utilize the business addresses listed on the application for
enrollment pursuant to paragraph (1) to claim reimbursement from the
Medi-Cal program for services rendered by the provider to Medi-Cal
beneficiaries at all of those health facilities, clinics, medical
therapy units, residences, or physician offices.
   (3) This subdivision shall not be interpreted to allow the
violation of any state or federal law governing fiscal intermediaries
or Division 2 (commencing with Section 500) of the Business and
Professions Code, the Osteopathic Initiative Act, or the Chiropractic
Initiative Act. This subdivision does not remove the requirement
that each claim for reimbursement from the Medi-Cal program identify
the place of service and the rendering, ordering, referring, and
prescribing provider, where applicable.
   (c) An applicant or provider licensed as a clinic pursuant to
Chapter 1 (commencing with Section 1200) of, or a health facility
licensed pursuant to Chapter 2 (commencing with Section 1250) of,
Division 2 of the Health and Safety Code may be enrolled in the
Medi-Cal program as a clinic or a health facility and need not comply
with Section 14043.26 if the clinic or health facility is certified
by the department to participate in the Medi-Cal program.
   (d) An applicant or provider that meets the requirements to
qualify as exempt from clinic licensure under subdivisions (b) to
(l), inclusive, or subdivisions (n) to (p), inclusive, of Section
1206 of the Health and Safety Code shall comply with Section 14043.26
and may be enrolled in the Medi-Cal program as either a clinic or
within any other provider category for which the applicant or
provider qualifies. An applicant or provider to which any of the
clinic licensure exemptions specified in this subdivision apply shall
identify the licensure exemption category and document in its
application package the legal and factual basis for the clinic
license exemption claimed.
   (e) Notwithstanding subdivisions (a), (b), (c), and (d), an
applicant or provider that meets the requirements to qualify as
exempt from clinic licensure pursuant to subdivision (h) of Section
1206 of the Health and Safety Code, including an intermittent site
that is operated by a licensed primary care clinic or an affiliated
mobile health care unit licensed or approved under Chapter 9
(commencing with Section 1765.101) of Division 2 of the Health and
Safety Code, and that is operated by a licensed primary care clinic,
and for which intermittent site or mobile health unit the licensed
primary care clinic directly or indirectly provides all staffing,
protocols, equipment, supplies, and billing services, need not enroll
in the Medi-Cal program as a separate provider and need not comply
with Section 14043.26 if the licensed primary care clinic operating
the applicant, provider clinic, or mobile health care unit has
notified the department of its separate locations, premises,
intermittent sites, or mobile health care units.
   (f) (1) This section shall become operative on the effective date
of the state plan amendment necessary to implement this section, as
stated in the declaration executed by the director pursuant to
paragraph (2).
   (2) Upon approval of the state plan amendment necessary to
implement this section under Sections 455.410 and 455.440 of Title 42
of the Code of Federal Regulations, the director shall execute a
declaration, to be retained by the director and posted on the
department's Internet Web site, that states that this approval has
been obtained and the effective date of the state plan amendment. The
department shall transmit a copy of the declaration to the
Legislature.
  SEC. 6.  Section 14043.2 of the Welfare and Institutions Code is
amended to read:
   14043.2.  (a) Whether or not regulations for certification are
adopted under Section 14043.15, in order to be enrolled as a
provider, or for enrollment as a provider to continue, an applicant
or provider may be required to sign a provider agreement and shall
disclose all information as required in federal Medicaid regulations
and any other information required by the department. Applicants,
providers, and persons with an ownership or control interest, as
defined in federal Medicaid regulations, shall submit their date of
birth and their social security number or numbers to the department,
to the full extent allowed under federal law. Corporations with an
ownership or control interest, as defined in federal Medicaid
regulations, shall submit their taxpayer identification number and
all business address locations and post office box addresses. The
director may designate the form of a provider agreement by provider
type. Failure to disclose the required information, or the disclosure
of false information, shall result in denial of the application for
enrollment or shall make the provider subject to temporary suspension
from the Medi-Cal program, which shall include temporary
deactivation of the provider's number or numbers, including all
business addresses used by the provider to obtain reimbursement from
the Medi-Cal program.
   (b) The director shall notify the provider of the temporary
suspension and deactivation of the provider's number or numbers,
including all business addresses used by the provider, and the
effective date thereof. Notwithstanding Section 100171 of the Health
and Safety Code and Section 14123, proceedings after the imposition
of sanctions provided for in subdivision (a) shall be in accordance
with Section 14043.65.
  SEC. 7.  Section 14043.25 of the Welfare and Institutions Code is
amended to read:
   14043.25.  (a) The application form for enrollment, the provider
agreement, and all attachments or changes to either, shall be signed
under penalty of perjury.
   (b) The department may require that the application form for
enrollment, the provider agreement, and all attachments or changes to
either, submitted by an applicant or provider licensed pursuant to
Division 2 (commencing with Section 500) of the Business and
Professions Code, the Osteopathic Initiative Act, or the Chiropractic
Initiative Act, be notarized.
   (c) Application forms for enrollment, provider agreements, and all
attachments or changes to either, submitted by an applicant or
provider not subject to subdivision (b) shall be notarized. This
subdivision shall not apply with respect to providers under the
In-Home Supportive Services program.
   (d) This section shall become inoperative on the effective date of
the state plan amendment, as stated in the declaration executed by
the director pursuant to Section 14043.25 as added by Section 8 of
the act that added this subdivision, and is repealed on the January 1
of the following year. The department shall post the declaration on
its Internet Web site and transmit a copy of the declaration to the
Legislature.
  SEC. 8.  Section 14043.25 is added to the Welfare and Institutions
Code, to read:
   14043.25.  (a) The application form for enrollment, the provider
agreement, and all attachments or changes to either, shall be signed
under penalty of perjury.
   (b) The department may require that the application form for
enrollment, the provider agreement, and all attachments or changes to
either, submitted by an applicant or provider licensed pursuant to
Division 2 (commencing with Section 500) of the Business and
Professions Code, the Osteopathic Initiative Act, or the Chiropractic
Initiative Act, be notarized.
   (c) Application forms for enrollment, provider agreements, and all
attachments or changes to either, submitted by an applicant or
provider not subject to subdivision (b) shall be notarized. This
subdivision shall not apply with respect to providers under the
In-Home Supportive Services program.
   (d) The department shall collect an application fee for
enrollment,  revalidation of enrollment, or  
including  enrollment at a new location or a change in location.
The application fee shall not be collected from individual
physicians or nonphysician practitioners, from providers that are
enrolled in Medicare or another state's Medicaid or Children's Health
Insurance Program, from providers that submit proof that they have
paid the applicable fee to a Medicare contractor or to another state'
s Medicaid program, or pursuant to an exemption or waiver pursuant to
federal law. The application fee collected shall be in the amount
calculated by the federal Centers for Medicare and Medicaid Services
in effect for the calendar year during which the application for
enrollment is received by the department.
   (e) (1) This section shall become operative on the effective date
of the state plan amendment necessary to implement this section, as
stated in the declaration executed by the director pursuant to
paragraph (2).
   (2) Upon approval of the state plan amendment necessary to
implement this section, the director shall execute a declaration, to
be retained by the director and posted on the department's Internet
Web site, that states this approval has been obtained and the
effective date of the state plan amendment. The department shall
transmit a copy of the declaration to the Legislature.
  SEC. 9.  Section 14043.26 of the Welfare and Institutions Code is
amended to read:
   14043.26.  (a) (1) On and after January 1, 2004, an applicant that
currently is not enrolled in the Medi-Cal program, or a provider
applying for continued enrollment, upon written notification from the
department that enrollment for continued participation of all
providers in a specific provider of service category or subgroup of
that category to which the provider belongs will occur, or, except as
provided in subdivisions (b) and (e), a provider not currently
enrolled at a location where the provider intends to provide
services, goods, supplies, or merchandise to a Medi-Cal beneficiary,
shall submit a complete application package for enrollment,
continuing enrollment, or enrollment at a new location or a change in
location.
   (2) Clinics licensed by the department pursuant to Chapter 1
(commencing with Section 1200) of Division 2 of the Health and Safety
Code and certified by the department to participate in the Medi-Cal
program shall not be subject to this section.
   (3) Health facilities licensed by the department pursuant to
Chapter 2 (commencing with Section 1250) of Division 2 of the Health
and Safety Code and certified by the department to participate in the
Medi-Cal program shall not be subject to this section.
   (4) Adult day health care providers licensed pursuant to Chapter
3.3 (commencing with Section 1570) of Division 2 of the Health and
Safety Code and certified by the department to participate in the
Medi-Cal program shall not be subject to this section.
   (5) Home health agencies licensed pursuant to Chapter 8
(commencing with Section 1725) of Division 2 of the Health and Safety
Code and certified by the department to participate in the Medi-Cal
program shall not be subject to this section.
   (6) Hospices licensed pursuant to Chapter 8.5 (commencing with
Section 1745) of Division 2 of the Health and Safety Code and
certified by the department to participate in the Medi-Cal program
shall not be subject to this section.
   (b) A physician and surgeon licensed by the Medical Board of
California or the Osteopathic Medical Board of California, or a
dentist licensed by the Dental Board of California, practicing as an
individual physician practice or as an individual dentist practice,
as defined in Section 14043.1, who is enrolled and in good standing
in the Medi-Cal program, and who is changing locations of that
individual physician practice or individual dentist practice within
the same county, shall be eligible to continue enrollment at the new
location by filing a change of location form to be developed by the
department. The form shall comply with all minimum federal
requirements related to Medicaid provider enrollment. Filing this
form shall be in lieu of submitting a complete application package
pursuant to subdivision (a).
   (c) (1) Except as provided in paragraph (2), within 30 days after
receiving an application package submitted pursuant to subdivision
(a), the department shall provide written notice that the application
package has been received and, if applicable, that there is a
moratorium on the enrollment of providers in the specific provider of
service category or subgroup of the category to which the applicant
or provider belongs. This moratorium shall bar further processing of
the application package.
   (2) Within 15 days after receiving an application package from a
physician, or a group of physicians, licensed by the Medical Board of
California or the Osteopathic Medical Board of California, or a
change of location form pursuant to subdivision (b), the department
shall provide written notice that the application package or the
change of location form has been received.
   (d) (1) If the application package submitted pursuant to
subdivision (a) is from an applicant or provider who meets the
criteria listed in paragraph (2), the applicant or provider shall be
considered a preferred provider and shall be granted preferred
provisional provider status pursuant to this section and for a period
of no longer than 18 months, effective from the date on the notice
from the department. The ability to request consideration as a
preferred provider and the criteria necessary for the consideration
shall be publicized to all applicants and providers. An applicant or
provider who desires consideration as a preferred provider pursuant
to this subdivision shall request consideration from the department
by making a notation to that effect on the application package, by
cover letter, or by other means identified by the department in a
provider bulletin. Request for consideration as a preferred provider
shall be made with each application package submitted in order for
the department to grant the consideration. An applicant or provider
who requests consideration as a preferred provider shall be notified
within 60 days whether the applicant or provider meets or does not
meet the criteria listed in paragraph (2). If an applicant or
provider is notified that the applicant or provider does not meet the
criteria for a preferred provider, the application package submitted
shall be processed in accordance with the remainder of this section.

   (2) To be considered a preferred provider, the applicant or
provider shall meet all of the following criteria:
   (A) Hold a current license as a physician and surgeon issued by
the Medical Board of California or the Osteopathic Medical Board of
California, which license shall not have been revoked, whether stayed
or not, suspended, placed on probation, or subject to other
limitation.
   (B) Be a current faculty member of a teaching hospital or a
children's hospital, as defined in Section 10727, accredited by the
Joint Commission or the American Osteopathic Association, or be
credentialed by a health care service plan that is licensed under the
Knox-Keene Health Care Service Plan Act of 1975 (Chapter 2.2
(commencing with Section 1340) of Division 2 of the Health and Safety
Code) or county organized health system, or be a current member in
good standing of a group that is credentialed by a health care
service plan that is licensed under the Knox-Keene Act.
   (C) Have full, current, unrevoked, and unsuspended privileges at a
Joint Commission or American Osteopathic Association accredited
general acute care hospital.
   (D) Not have any adverse entries in the federal Healthcare
Integrity and Protection Data Bank.
   (3) The department may recognize other providers as qualifying as
preferred providers if criteria similar to those set forth in
paragraph (2) are identified for the other providers. The department
shall consult with interested parties and appropriate stakeholders to
identify similar criteria for other providers so that they may be
considered as preferred providers.
   (e) (1) If a Medi-Cal applicant meets the criteria listed in
paragraph (2), the applicant shall be enrolled in the Medi-Cal
program after submission and review of a short form application to be
developed by the department. The form shall comply with all minimum
federal requirements related to Medicaid provider enrollment. The
department shall notify the applicant that the department has
received the application within 15 days of receipt of the
application. The department shall enroll the applicant or notify the
applicant that the applicant does not meet the criteria listed in
paragraph (2) within 90 days of receipt of the application.
   (2) Notwithstanding any other provision of law, an applicant or
provider who meets all of the following criteria shall be eligible
for enrollment in the Medi-Cal program pursuant to this subdivision,
after submission and review of a short form application:
   (A) The applicant's or provider's practice is based in one or more
of the following: a general acute care hospital, a rural general
acute care hospital, or an acute psychiatric hospital, as defined in
subdivisions (a) and (b) of Section 1250 of the Health and Safety
Code.
   (B) The applicant or provider holds a current, unrevoked, or
unsuspended license as a physician and surgeon issued by the Medical
Board of California or the Osteopathic Medical Board of California.
An applicant or provider shall not be in compliance with this
subparagraph if a license revocation has been stayed, the licensee
has been placed on probation, or the license is subject to any other
limitation.
   (C) The applicant or provider does not have an adverse entry in
the federal Healthcare Integrity and Protection Data Bank.
   (3) An applicant shall be granted provisional provider status
under this subdivision for a period of 12 months.
   (f) Except as provided in subdivision (g), within 180 days after
receiving an application package submitted pursuant to subdivision
(a), or from the date of the notice to an applicant or provider that
the applicant or provider does not qualify as a preferred provider
under subdivision (d), the department shall give written notice to
the applicant or provider that any of the following applies, or shall
on the 181st day grant the applicant or provider provisional
provider status pursuant to this section for a period no longer than
12 months, effective from the 181st day:
   (1) The applicant or provider is being granted provisional
provider status for a period of 12 months, effective from the date on
the notice.
   (2) The application package is incomplete. The notice shall
identify additional information or documentation that is needed to
complete the application package.
   (3) The department is exercising its authority under Section
14043.37, 14043.4, or 14043.7, and is conducting background checks,
preenrollment inspections, or unannounced visits.
   (4) The application package is denied for any of the following
reasons:
   (A) Pursuant to Section 14043.2 or 14043.36.
   (B) For lack of a license necessary to perform the health care
services or to provide the goods, supplies, or merchandise directly
or indirectly to a Medi-Cal beneficiary, within the applicable
provider of service category or subgroup of that category.
   (C) The period of time during which an applicant or provider has
been barred from reapplying has not passed.
   (D) For other stated reasons authorized by law.
   (g) Notwithstanding subdivision (f), within 90 days after
receiving an application package submitted pursuant to subdivision
(a) from a physician or physician group licensed by the Medical Board
of California or the Osteopathic Medical Board of California, or
from the date of the notice to that physician or physician group that
does not qualify as a preferred provider under subdivision (d), or
within 90 days after receiving a change of location form submitted
pursuant to subdivision (b), the department shall give written notice
to the applicant or provider that either paragraph (1), (2), (3), or
(4) of subdivision (f) applies, or shall on the 91st day grant the
applicant or provider provisional provider status pursuant to this
section for a period no longer than 12 months, effective from the
91st day.
   (h) (1) If the application package that was noticed as incomplete
under paragraph (2) of subdivision (f) is resubmitted with all
requested information and documentation, and received by the
department within 60 days of the date on the notice, the department
shall, within 60 days of the resubmission, send a notice that any of
the following applies:
   (A) The applicant or provider is being granted provisional
provider status for a period of 12 months, effective from the date on
the notice.
   (B) The application package is denied for any other reasons
provided for in paragraph (4) of subdivision (f).
   (C) The department is exercising its authority under Section
14043.37, 14043.4, or 14043.7 to conduct background checks,
preenrollment inspections, or unannounced visits.
   (2) (A) If the application package that was noticed as incomplete
under paragraph (2) of subdivision (f) is not resubmitted with all
requested information and documentation and received by the
department within 60 days of the date on the notice, the application
package shall be denied by operation of law. The applicant or
provider may reapply by submitting a new application package that
shall be reviewed de novo.
   (B) If the failure to resubmit is by a provider applying for
continued enrollment, the failure shall make the provider also
subject to deactivation of the provider's number and all of the
business addresses used by the provider to provide services, goods,
supplies, or merchandise to Medi-Cal beneficiaries.
   (C) Notwithstanding subparagraph (A), if the notice of an
incomplete application package included a request for information or
documentation related to grounds for denial under Section 14043.2 or
14043.36, the applicant or provider shall not reapply for enrollment
or continued enrollment in the Medi-Cal program or for participation
in any health care program administered by the department or its
agents or contractors for a period of three years.
   (i) (1) If the department exercises its authority under Section
14043.37, 14043.4, or 14043.7 to conduct background checks,
preenrollment inspections, or unannounced visits, the applicant or
provider shall receive notice, from the department, after the
conclusion of the background check, preenrollment inspection, or
unannounced visit of either of the following:
   (A) The applicant or provider is granted provisional provider
status for a period of 12 months, effective from the date on the
notice.
   (B) Discrepancies or failure to meet program requirements, as
prescribed by the department, have been found to exist during the
preenrollment period.
   (2) (A) The notice shall identify the discrepancies or failures,
and whether remediation can be made or not, and if so, the time
period within which remediation must be accomplished. Failure to
remediate discrepancies and failures as prescribed by the department,
or notification that remediation is not available, shall result
                                              in denial of the
application by operation of law. The applicant or provider may
reapply by submitting a new application package that shall be
reviewed de novo.
   (B) If the failure to remediate is by a provider applying for
continued enrollment, the failure shall make the provider also
subject to deactivation of the provider's number and all of the
business addresses used by the provider to provide services, goods,
supplies, or merchandise to Medi-Cal beneficiaries.
   (C) Notwithstanding subparagraph (A), if the discrepancies or
failure to meet program requirements, as prescribed by the director,
included in the notice were related to grounds for denial under
Section 14043.2 or 14043.36, the applicant or provider shall not
reapply for three years.
   (j) If provisional provider status or preferred provisional
provider status is granted pursuant to this section, a provider
number shall be used by the provider for each business address for
which an application package has been approved. This provider number
shall be used exclusively for the locations for which it was
approved, unless the practice of the provider's profession or
delivery of services, goods, supplies, or merchandise is such that
services, goods, supplies, or merchandise are rendered or delivered
at locations other than the provider's business address and this
practice or delivery of services, goods, supplies, or merchandise has
been disclosed in the application package approved by the department
when the provisional provider status or preferred provisional
provider status was granted.
   (k) Except for providers subject to subdivision (c) of Section
14043.47, a provider currently enrolled in the Medi-Cal program at
one or more locations who has submitted an application package for
enrollment at a new location or a change in location pursuant to
subdivision (a), or filed a change of location form pursuant to
subdivision (b), may submit claims for services, goods, supplies, or
merchandise rendered at the new location until the application
package or change of location form is approved or denied under this
section, and shall not be subject, during that period, to
deactivation, or be subject to any delay or nonpayment of claims as a
result of billing for services rendered at the new location as
herein authorized. However, the provider shall be considered during
that period to have been granted provisional provider status or
preferred provisional provider status and be subject to termination
of that status pursuant to Section 14043.27. A provider that is
subject to subdivision (c) of Section 14043.47 may come within the
scope of this subdivision upon submitting documentation in the
application package that identifies the physician providing
supervision for every three locations. If a provider submits claims
for services rendered at a new location before the application for
that location is received by the department, the department may deny
the claim.
   (l) An applicant or a provider whose application for enrollment,
continued enrollment, or a new location or change in location has
been denied pursuant to this section, may appeal the denial in
accordance with Section 14043.65.
   (m) (1) Upon receipt of a complete and accurate claim for an
individual nurse provider, the department shall adjudicate the claim
within an average of 30 days.
   (2) During the budget proceedings of the 2006-07 fiscal year, and
each fiscal year thereafter, the department shall provide data to the
Legislature specifying the timeframe under which it has processed
and approved the provider applications submitted by individual nurse
providers.
   (3) For purposes of this subdivision, "individual nurse providers"
are providers authorized under certain home- and community-based
waivers and under the state plan to provide nursing services to
Medi-Cal recipients in the recipients' own homes rather than in
institutional settings.
   (n)  The amendments to subdivision (b), which implement a change
of location form, and the addition of paragraph (2) to subdivision
(c), the amendments to subdivision (e), and the addition of
subdivision (g), which prescribe different processing timeframes for
physicians and physician groups, as contained in Chapter 693 of the
Statutes of 2007, shall become operative on July 1, 2008.
   (o) This section shall become inoperative on the effective date of
the necessary state plan amendment, as stated in the declaration
executed by the director pursuant to Section 14043.26 as added by
Section 10 of the act that added this subdivision, and is repealed on
the January 1 of the following year. The department shall post the
declaration on its Internet Web site and transmit a copy of the
declaration to the Legislature.
  SEC. 10.  Section 14043.26 is added to the Welfare and Institutions
Code, to read:
   14043.26.  (a) (1) On and after January 1, 2004, an applicant that
currently is not enrolled in the Medi-Cal program, or a provider
applying for continued enrollment, upon written notification from the
department that enrollment for continued participation of all
providers in a specific provider of service category or subgroup of
that category to which the provider belongs will occur, or, except as
provided in subdivisions (b) and (e), a provider not currently
enrolled at a location where the provider intends to provide
services, goods, supplies, or merchandise to a Medi-Cal beneficiary,
shall submit a complete application package for enrollment,
continuing enrollment, or enrollment at a new location or a change in
location.
   (2) Clinics licensed by the department pursuant to Chapter 1
(commencing with Section 1200) of Division 2 of the Health and Safety
Code and certified by the department to participate in the Medi-Cal
program shall not be subject to this section.
   (3) Health facilities licensed by the department pursuant to
Chapter 2 (commencing with Section 1250) of Division 2 of the Health
and Safety Code and certified by the department to participate in the
Medi-Cal program shall not be subject to this section.
   (4) Adult day health care providers licensed pursuant to Chapter
3.3 (commencing with Section 1570) of Division 2 of the Health and
Safety Code and certified by the department to participate in the
Medi-Cal program shall not be subject to this section.
   (5) Home health agencies licensed pursuant to Chapter 8
(commencing with Section 1725) of Division 2 of the Health and Safety
Code and certified by the department to participate in the Medi-Cal
program shall not be subject to this section.
   (6) Hospices licensed pursuant to Chapter 8.5 (commencing with
Section 1745) of Division 2 of the Health and Safety Code and
certified by the department to participate in the Medi-Cal program
shall not be subject to this section.
   (b) A physician and surgeon licensed by the Medical Board of
California or the Osteopathic Medical Board of California, or a
dentist licensed by the Dental Board of California, practicing as an
individual physician practice or as an individual dentist practice,
as defined in Section 14043.1, who is enrolled and in good standing
in the Medi-Cal program, and who is changing locations of that
individual physician practice or individual dentist practice within
the same county, shall be eligible to continue enrollment at the new
location by filing a change of location form to be developed by the
department. The form shall comply with all minimum federal
requirements related to Medicaid provider enrollment. Filing this
form shall be in lieu of submitting a complete application package
pursuant to subdivision (a).
   (c) (1) Except as provided in paragraph (2), within 30 days after
receiving an application package submitted pursuant to subdivision
(a), the department shall provide written notice that the application
package has been received and, if applicable, that there is a
moratorium on the enrollment of providers in the specific provider of
service category or subgroup of the category to which the applicant
or provider belongs. This moratorium shall bar further processing of
the application package.
   (2) Within 15 days after receiving an application package from a
physician, or a group of physicians, licensed by the Medical Board of
California or the Osteopathic Medical Board of California, or a
change of location form pursuant to subdivision (b), the department
shall provide written notice that the application package or the
change of location form has been received.
   (d) (1) If the application package submitted pursuant to
subdivision (a) is from an applicant or provider who meets the
criteria listed in paragraph (2), the applicant or provider shall be
considered a preferred provider and shall be granted preferred
provisional provider status pursuant to this section and for a period
of no longer than 18 months, effective from the date on the notice
from the department. The ability to request consideration as a
preferred provider and the criteria necessary for the consideration
shall be publicized to all applicants and providers. An applicant or
provider who desires consideration as a preferred provider pursuant
to this subdivision shall request consideration from the department
by making a notation to that effect on the application package, by
cover letter, or by other means identified by the department in a
provider bulletin. Request for consideration as a preferred provider
shall be made with each application package submitted in order for
the department to grant the consideration. An applicant or provider
who requests consideration as a preferred provider shall be notified
within 60 days whether the applicant or provider meets or does not
meet the criteria listed in paragraph (2). If an applicant or
provider is notified that the applicant or provider does not meet the
criteria for a preferred provider, the application package submitted
shall be processed in accordance with the remainder of this section.

   (2) To be considered a preferred provider, the applicant or
provider shall meet all of the following criteria:
   (A) Hold a current license as a physician and surgeon issued by
the Medical Board of California or the Osteopathic Medical Board of
California, which license shall not have been revoked, whether stayed
or not, suspended, placed on probation, or subject to other
limitation.
   (B) Be a current faculty member of a teaching hospital or a
children's hospital, as defined in Section 10727, accredited by the
Joint Commission or the American Osteopathic Association, or be
credentialed by a health care service plan that is licensed under the
Knox-Keene Health Care Service Plan Act of 1975 (Chapter 2.2
(commencing with Section 1340) of Division 2 of the Health and Safety
Code) or county organized health system, or be a current member in
good standing of a group that is credentialed by a health care
service plan that is licensed under the Knox-Keene Act.
   (C) Have full, current, unrevoked, and unsuspended privileges at a
Joint Commission or American Osteopathic Association accredited
general acute care hospital.
   (D) Not have any adverse entries in the federal Healthcare
Integrity and Protection Data Bank.
   (3) The department may recognize other providers as qualifying as
preferred providers if criteria similar to those set forth in
paragraph (2) are identified for the other providers. The department
shall consult with interested parties and appropriate stakeholders to
identify similar criteria for other providers so that they may be
considered as preferred providers.
   (e) (1) If a Medi-Cal applicant meets the criteria listed in
paragraph (2), the applicant shall be enrolled in the Medi-Cal
program after submission and review of a short form application to be
developed by the department. The form shall comply with all minimum
federal requirements related to Medicaid provider enrollment. The
department shall notify the applicant that the department has
received the application within 15 days of receipt of the
application. The department shall enroll the applicant or notify the
applicant that the applicant does not meet the criteria listed in
paragraph (2) within 90 days of receipt of the application.
   (2) Notwithstanding any other provision of law, an applicant or
provider who meets all of the following criteria shall be eligible
for enrollment in the Medi-Cal program pursuant to this subdivision,
after submission and review of a short form application:
   (A) The applicant's or provider's practice is based in one or more
of the following: a general acute care hospital, a rural general
acute care hospital, or an acute psychiatric hospital, as defined in
subdivisions (a) and (b) of Section 1250 of the Health and Safety
Code.
   (B) The applicant or provider holds a current, unrevoked, or
unsuspended license as a physician and surgeon issued by the Medical
Board of California or the Osteopathic Medical Board of California.
An applicant or provider shall not be in compliance with this
subparagraph if a license revocation has been stayed, the licensee
has been placed on probation, or the license is subject to any other
limitation.
   (C) The applicant or provider does not have an adverse entry in
the federal Healthcare Integrity and Protection Data Bank.
   (3) An applicant shall be granted provisional provider status
under this subdivision for a period of 12 months.
   (f) Except as provided in subdivision (g), within 180 days after
receiving an application package submitted pursuant to subdivision
(a), or from the date of the notice to an applicant or provider that
the applicant or provider does not qualify as a preferred provider
under subdivision (d), the department shall give written notice to
the applicant or provider that any of the following applies, or shall
on the 181st day grant the applicant or provider provisional
provider status pursuant to this section for a period no longer than
12 months, effective from the 181st day:
   (1) The applicant or provider is being granted provisional
provider status for a period of 12 months, effective from the date on
the notice.
   (2) The application package is incomplete. The notice shall
identify additional information or documentation that is needed to
complete the application package.
   (3) The department is exercising its authority under Section
14043.37, 14043.4, or 14043.7, and is conducting background checks,
preenrollment inspections, or unannounced visits.
   (4) The application package is denied for any of the following
reasons:
   (A) Pursuant to Section 14043.2 or 14043.36.
   (B) For lack of a license necessary to perform the health care
services or to provide the goods, supplies, or merchandise directly
or indirectly to a Medi-Cal beneficiary, within the applicable
provider of service category or subgroup of that category.
   (C) The period of time during which an applicant or provider has
been barred from reapplying has not passed.
   (D) For other stated reasons authorized by law.
   (E) For failing to submit fingerprints as required by federal
Medicaid regulations.
   (g) Notwithstanding subdivision (f), within 90 days after
receiving an application package submitted pursuant to subdivision
(a) from a physician or physician group licensed by the Medical Board
of California or the Osteopathic Medical Board of California, or
from the date of the notice to that physician or physician group that
does not qualify as a preferred provider under subdivision (d), or
within 90 days after receiving a change of location form submitted
pursuant to subdivision (b), the department shall give written notice
to the applicant or provider that either paragraph (1), (2), (3), or
(4) of subdivision (f) applies, or shall on the 91st day grant the
applicant or provider provisional provider status pursuant to this
section for a period no longer than 12 months, effective from the
91st day.
   (h) (1) If the application package that was noticed as incomplete
under paragraph (2) of subdivision (f) is resubmitted with all
requested information and documentation, and received by the
department within 60 days of the date on the notice, the department
shall, within 60 days of the resubmission, send a notice that any of
the following applies:
   (A) The applicant or provider is being granted provisional
provider status for a period of 12 months, effective from the date on
the notice.
   (B) The application package is denied for any other reasons
provided for in paragraph (4) of subdivision (f).
   (C) The department is exercising its authority under Section
14043.37, 14043.4, or 14043.7 to conduct background checks,
preenrollment inspections, or unannounced visits.
   (2) (A) If the application package that was noticed as incomplete
under paragraph (2) of subdivision (f) is not resubmitted with all
requested information and documentation and received by the
department within 60 days of the date on the notice, the application
package shall be denied by operation of law. The applicant or
provider may reapply by submitting a new application package that
shall be reviewed de novo.
   (B) If the failure to resubmit is by a currently enrolled provider
as defined in Section 14043.1, including providers applying for
continued enrollment, the failure may make the provider also subject
to deactivation of the provider's number and all of the business
addresses used by the provider to provide services, goods, supplies,
or merchandise to Medi-Cal beneficiaries.
   (C) Notwithstanding subparagraph (A), if the notice of an
incomplete application package included a request for information or
documentation related to grounds for denial under Section 14043.2 or
14043.36, the applicant or provider shall not reapply for enrollment
or continued enrollment in the Medi-Cal program or for participation
in any health care program administered by the department or its
agents or contractors for a period of three years.
   (i) (1) If the department exercises its authority under Section
14043.37, 14043.4, or 14043.7 to conduct background checks,
preenrollment inspections, or unannounced visits, the applicant or
provider shall receive notice, from the department, after the
conclusion of the background check, preenrollment inspection, or
unannounced visit of either of the following:
   (A) The applicant or provider is granted provisional provider
status for a period of 12 months, effective from the date on the
notice.
   (B) Discrepancies or failure to meet program requirements, as
prescribed by the department, have been found to exist during the
preenrollment period.
   (2) (A) The notice shall identify the discrepancies or failures,
and whether remediation can be made or not, and if so, the time
period within which remediation must be accomplished. Failure to
remediate discrepancies and failures as prescribed by the department,
or notification that remediation is not available, shall result in
denial of the application by operation of law. The applicant or
provider may reapply by submitting a new application package that
shall be reviewed de novo.
   (B) If the failure to remediate is by a currently enrolled
provider as defined in Section 14043.1, including providers applying
for continued enrollment, the failure may make the provider also
subject to deactivation of the provider's number and all of the
business addresses used by the provider to provide services, goods,
supplies, or merchandise to Medi-Cal beneficiaries.
   (C) Notwithstanding subparagraph (A), if the discrepancies or
failure to meet program requirements, as prescribed by the director,
included in the notice were related to grounds for denial under
Section 14043.2 or 14043.36, the applicant or provider shall not
reapply for three years.
   (j) If provisional provider status or preferred provisional
provider status is granted pursuant to this section, a provider
number shall be used by the provider for each business address for
which an application package has been approved. This provider number
shall be used exclusively for the locations for which it was
approved, unless the practice of the provider's profession or
delivery of services, goods, supplies, or merchandise is such that
services, goods, supplies, or merchandise are rendered or delivered
at locations other than the provider's business address and this
practice or delivery of services, goods, supplies, or merchandise has
been disclosed in the application package approved by the department
when the provisional provider status or preferred provisional
provider status was granted.
   (k) Except for providers subject to subdivision (c) of Section
14043.47, a provider currently enrolled in the Medi-Cal program at
one or more locations who has submitted an application package for
enrollment at a new location or a change in location pursuant to
subdivision (a), or filed a change of location form pursuant to
subdivision (b), may submit claims for services, goods, supplies, or
merchandise rendered at the new location until the application
package or change of location form is approved or denied under this
section, and shall not be subject, during that period, to
deactivation, or be subject to any delay or nonpayment of claims as a
result of billing for services rendered at the new location as
herein authorized. However, the provider shall be considered during
that period to have been granted provisional provider status or
preferred provisional provider status and be subject to termination
of that status pursuant to Section 14043.27. A provider that is
subject to subdivision (c) of Section 14043.47 may come within the
scope of this subdivision upon submitting documentation in the
application package that identifies the physician providing
supervision for every three locations. If a provider submits claims
for services rendered at a new location before the application for
that location is received by the department, the department may deny
the claim.
   (l) An applicant or a provider whose application for enrollment,
continued enrollment, or a new location or change in location has
been denied pursuant to this section, may appeal the denial in
accordance with Section 14043.65.
   (m) (1) Upon receipt of a complete and accurate claim for an
individual nurse provider, the department shall adjudicate the claim
within an average of 30 days.
   (2) During the budget proceedings of the 2006-07 fiscal year, and
each fiscal year thereafter, the department shall provide data to the
Legislature specifying the timeframe under which it has processed
and approved the provider applications submitted by individual nurse
providers.
   (3) For purposes of this subdivision, "individual nurse providers"
are providers authorized under certain home- and community-based
waivers and under the state plan to provide nursing services to
Medi-Cal recipients in the recipients' own homes rather than in
institutional settings.
   (n)  The amendments to subdivision (b), which implement a change
of location form, and the addition of paragraph (2) to subdivision
(c), the amendments to subdivision (e), and the addition of
subdivision (g), which prescribe different processing timeframes for
physicians and physician groups, as contained in Chapter 693 of the
Statutes of 2007, shall become operative on July 1, 2008.
   (o) (1) This section shall become operative on the effective date
of the state plan amendment necessary to implement this section, as
stated in the declaration executed by the director pursuant to
paragraph (2).
   (2) Upon approval of the state plan amendment necessary to
implement this section under Sections 455.434 and 455.450 of Title 42
of the Code of Federal Regulations, the director shall execute a
declaration, to be retained by the director, that states that this
approval has been obtained and the effective date of the state plan
amendment. The department shall post the declaration on its Internet
Web site and transmit a copy of the declaration to the Legislature.
  SEC. 11.  Section 14043.28 of the Welfare and Institutions Code is
amended to read:
   14043.28.  (a) (1) If an application package is denied under
Section 14043.26 or provisional provider status or preferred
provisional provider status is terminated under Section 14043.27, the
applicant or provider shall be prohibited from reapplying for
enrollment or continued enrollment in the Medi-Cal program or for
participation in any health care program administered by the
department or its agents or contractors for a period of three years
from the date the application package is denied or the provisional
provider status is terminated, except as provided otherwise in
paragraph (2) of subdivision (h), or paragraph (2) of subdivision
(i), of Section 14043.26 and as set forth in this section.
   (2) If the application is denied under paragraph (2) of
subdivision (h) of Section 14043.26 because the applicant failed to
resubmit an incomplete application package or is denied under
paragraph (2) of subdivision (i) of Section 14043.26 because the
applicant failed to remediate discrepancies, the applicant may
resubmit an application in accordance with paragraph (2) of
subdivision (h) or paragraph (2) of subdivision (i), respectively.
   (3) If the denial of the application package is based upon a
conviction for any offense or for any act included in Section
14043.36 or termination of the provisional provider status or
preferred provisional provider status is based upon a conviction for
any offense or for any act included in paragraph (1) of subdivision
(c) of Section 14043.27, the applicant or provider shall be
prohibited from reapplying for enrollment or continued enrollment in
the Medi-Cal program or for participation in any health care program
administered by the department or its agents or contractors for a
period of 10 years from the date the application package is denied or
the provisional provider status or preferred provisional provider
status is terminated.
   (4) If the denial of the application package is based upon two or
more convictions for any offense or for any two or more acts included
in Section 14043.36 or termination of the provisional provider
status or preferred provisional provider status is based upon two or
more convictions for any offense or for any two acts included in
paragraph (1) of subdivision (c) of Section 14043.27, the applicant
or provider shall be permanently barred from enrollment or continued
enrollment in the Medi-Cal program or for participation in any health
care program administered by the department or its agents or
contractors.
   (5) The prohibition in paragraph (1) against reapplying for three
years shall not apply if the denial of the application or termination
of provisional provider status or preferred provisional provider
status is based upon any of the following:
   (A) The grounds provided for in paragraph (4), or subparagraph (B)
of paragraph (7), of subdivision (c) of Section 14043.27.
   (B) The grounds provided for in subdivision (d) of Section
14043.27, if the investigation is closed without any adverse action
being taken.
   (C) The grounds provided for in paragraph (6) of subdivision (c)
of Section 14043.27. However, the department may deny reimbursement
for claims submitted while the provider was noncompliant with the
federal Clinical Laboratory Improvement Amendments of 1988 (CLIA) (42
U.S.C. Sec. 263a et seq.).
   (b) (1) If an application package is denied under subparagraph
(A), (B), or (D) of paragraph (4) of subdivision (f) of Section
14043.26, or with respect to a provider described in subparagraph (B)
of paragraph (2) of subdivision (h), or subparagraph (B) of
paragraph (2) of subdivision (i), of Section 14043.26, or provisional
provider status or preferred provisional provider status is
terminated based upon any of the grounds stated in subparagraph (A)
of paragraph (7), or paragraphs (1), (2), (3), (5), and (8) to (12),
inclusive, of subdivision (c) of Section 14043.27, all business
addresses of the applicant or provider shall be deactivated and the
applicant or provider shall be removed from enrollment in the
Medi-Cal program by operation of law.
   (2) If the termination of provisional provider status is based
upon the grounds stated in subdivision (d) of Section 14043.27 and
the investigation is closed without any adverse action being taken,
or is based upon the grounds in subparagraph (B) of paragraph (7) of
subdivision (c) of Section 14043.27 and the applicant or provider
obtains the appropriate license, permits, or approvals covering the
period of provisional provider status, the termination taken pursuant
to subdivision (c) of Section 14043.27 shall be rescinded, the
previously deactivated provider numbers shall be reactivated, and the
provider shall be reenrolled in the Medi-Cal program, unless there
are other grounds for taking these actions.
   (c) Claims that are submitted or caused to be submitted by an
applicant or provider who has been suspended from the Medi-Cal
program for any reason or who has had its provisional provider status
terminated or had its application package for enrollment or
continued enrollment denied and all business addresses deactivated
may not be paid for services, goods, merchandise, or supplies
rendered to Medi-Cal beneficiaries during the period of suspension or
termination or after the date all business addresses are
deactivated.
   (d) This section shall become inoperative on the effective date of
the necessary state plan amendment, as stated in the declaration
executed by the director pursuant to Section 14043.28 as added by
Section 12 of the act that added this subdivision, and is repealed on
the January 1 of the following year. The department shall post the
declaration on its Internet Web site and transmit a copy of the
declaration to the Legislature.
  SEC. 12.  Section 14043.28 is added to the Welfare and Institutions
Code, to read:
   14043.28.  (a) (1) If an application package is denied under
Section 14043.26 or provisional provider status or preferred
provisional provider status is terminated under Section 14043.27, the
applicant or provider shall be prohibited from reapplying for
enrollment or continued enrollment in the Medi-Cal program or for
participation in any health care program administered by the
department or its agents or contractors for a period of three years
from the date the application package is denied or the provisional
provider status is terminated, except as provided otherwise in
paragraph (2) of subdivision (h), or paragraph (2) of subdivision
(i), of Section 14043.26 and as set forth in this section.
   (2) If the application is denied under paragraph (2) of
subdivision (h) of Section 14043.26 because the applicant failed to
resubmit an incomplete application package or is denied under
paragraph (2) of subdivision (i) of Section 14043.26 because the
applicant failed to remediate discrepancies, the applicant may
resubmit an application in accordance with paragraph (2) of
subdivision (h) or paragraph (2) of subdivision (i), respectively.
   (3) If the denial of the application package is based upon a
conviction for any offense or for any act included in Section
14043.36 or termination of the provisional provider status or
preferred provisional provider status is based upon a conviction for
any offense or for any act included in paragraph (1) of subdivision
(c) of Section 14043.27, the applicant or provider shall be
prohibited from reapplying for enrollment or continued enrollment in
the Medi-Cal program or for participation in any health care program
administered by the department or its agents or contractors for a
period of 10 years from the date the application package is denied or
the provisional provider status or preferred provisional provider
status is terminated.
   (4) If the denial of the application package is based upon two or
more convictions for any offense or for any two or more acts included
in Section 14043.36 or termination of the provisional provider
status or preferred provisional provider status is based upon two or
more convictions for any offense or for any two acts included in
paragraph (1) of subdivision (c) of Section 14043.27, the applicant
or provider shall be permanently barred from enrollment or continued
enrollment in the Medi-Cal program or for participation in any health
care program administered by the department or its agents or
contractors.
   (5) The prohibition in paragraph (1) against reapplying for three
years shall not apply if the denial of the application or termination
of provisional provider status or preferred provisional provider
status is based upon any of the following:
   (A) The grounds provided for in paragraph (4), or subparagraph (B)
of paragraph (7), of subdivision (c) of Section 14043.27.
   (B) The grounds provided for in subdivision (d) of Section
14043.27, if the investigation is closed without any adverse action
being taken.
   (C) The grounds provided for in paragraph (6) of subdivision (c)
of Section 14043.27. However, the department may deny reimbursement
for claims submitted while the provider was noncompliant with the
federal Clinical Laboratory Improvement Amendments of 1988 (CLIA) (42
U.S.C. Sec. 263a et seq.).
   (D) The grounds provided for in subdivision (b) of Section
14043.36 for being terminated or excluded under Medicare or under the
Medicaid Program or Children's Health Insurance Program of any other
state.
   (b) (1) If an application package is denied under subparagraph
(A), (B), (D), or (E) of paragraph (4) of subdivision (f) of Section
14043.26, or with respect to a provider described in subparagraph (B)
of paragraph (2) of subdivision (h), or subparagraph (B) of
paragraph (2) of subdivision (i), of Section 14043.26, or provisional
provider status or preferred provisional provider status is
terminated based upon any of the grounds stated in subparagraph (A)
of paragraph (7), or paragraphs (1), (2), (3), (5), and (8) to (12),
inclusive, of subdivision (c) of Section 14043.27, all business
addresses of the applicant or provider shall be deactivated and the
applicant or provider shall be removed from enrollment in the
Medi-Cal program by operation of law.
   (2) If the termination of provisional provider status is based
upon the grounds stated in subdivision (d) of Section 14043.27 and
the investigation is closed without any adverse action being taken,
or is based upon the grounds in subparagraph (B) of paragraph (7) of
subdivision (c) of Section 14043.27 and the applicant or provider
obtains the appropriate license, permits, or approvals covering the
period of provisional provider status, the termination taken pursuant
to subdivision (c) of Section 14043.27 shall be rescinded, the
previously deactivated provider numbers shall be reactivated, and the
provider shall be reenrolled in the Medi-Cal program, unless there
are other grounds for taking these actions.
   (c) Claims that are submitted or caused to be submitted by an
applicant or provider who has been suspended from the Medi-Cal
program for any reason or who has had its provisional provider status
terminated or had its application package for enrollment or
continued enrollment denied and all business addresses deactivated
may not be paid for services, goods, merchandise, or supplies
rendered to Medi-Cal beneficiaries during the period of suspension or
termination or after the date all business addresses are
deactivated.
   (d) (1) This section shall become operative on the effective date
of the state plan amendment necessary to implement this section, as
stated in the declaration executed by the director pursuant to
paragraph (2).
   (2) Upon approval of the state plan amendment necessary to
implement this section under Sections 455.434 and 455.450 of Title 42
of the Code of Federal Regulations, the director shall execute a
declaration, to be retained by the director and posted on the
department's Internet Web site, that states that this approval has
been obtained and the effective date of the state plan amendment. The
department shall transmit a copy of the declaration to the
Legislature.
  SEC. 13.  Section 14043.36 of the Welfare and Institutions Code is
amended to read:
   14043.36.  (a) The department shall not enroll any applicant that
has been convicted of any felony or misdemeanor involving fraud or
abuse in any government program, or related to neglect or abuse of a
patient in connection with the delivery of a health care item or
service, or in connection with the interference with or obstruction
of any investigation into health care related fraud or abuse or that
has been found liable for fraud or abuse in any civil proceeding, or
that has entered into a settlement in lieu of conviction for fraud or
abuse in any government program, within the previous 10 years. In
addition, the department may deny enrollment to any applicant that,
at the time of application, is under investigation by the department
or any state, local, or federal government law enforcement agency for
fraud or abuse pursuant to Subpart A (commencing with Section
455.12) of Part 455 of Title 42 of the Code of Federal Regulations.
The department shall not deny enrollment to an otherwise qualified
applicant whose felony or misdemeanor charges did not result in a
conviction solely on the basis of the prior charges. If it is
discovered that a provider is under investigation by the department
or any state, local, or federal government law enforcement agency for
fraud or abuse, that provider shall be subject to temporary
suspension from the Medi-Cal program, which shall include temporary
deactivation of the provider's number, including all business
addresses used by the provider to obtain reimbursement from the
Medi-Cal program.
   (b) The director shall notify in writing the provider of the
temporary suspension and deactivation of the provider's number, which
shall take effect 15 days from the date of the notification.
Notwithstanding Section 100171 of the Health and Safety Code,
proceedings after the imposition of sanctions provided for in
subdivision (a) shall be in accordance with Section 14043.65.
   (c) A temporary suspension may be lifted when a resolution of an
investigation for fraud or abuse occurs.
   (d) This section shall become inoperative on the effective date of
the necessary state plan amendment, as stated in the declaration
executed by the director pursuant to Section 14043.36 as added by
Section 14 of the act that added this subdivision, and is repealed on
the January 1 of the following year. The department shall post the
declaration on its Internet Web site and transmit a copy of the
declaration to the Legislature.
  SEC. 14.  Section 14043.36 is added to the Welfare and Institutions
Code, to read:
   14043.36.  (a) The department shall not enroll any applicant that
has been convicted of any felony or misdemeanor involving fraud or
abuse in any government program, or related to neglect or abuse of a
patient in connection with the delivery of a health care item or
service, or in connection with the interference with or obstruction
of any investigation into health care related fraud or abuse or that
has been found liable for fraud or abuse in any civil proceeding, or
that has entered into a settlement in lieu of conviction for fraud or
abuse in any government program, within the previous 10 years. In
addition, the department may deny enrollment to any applicant that,
at the time of application, is under investigation by the department
or any state, local, or federal government law enforcement agency for
fraud or abuse pursuant to Subpart A (commencing with Section
455.12) of Part 455 of Title 42 of the Code of Federal Regulations.
The department shall not deny enrollment to an otherwise qualified
applicant whose felony or misdemeanor charges did not result in a
conviction solely on the basis of the prior charges. If it is
discovered that a provider is under investigation by the department
or any state, local, or federal government law enforcement agency for
fraud or abuse, that provider shall be subject to temporary
suspension from the Medi-Cal program, which shall include temporary
deactivation of the provider's number, including all business
addresses used by the provider to obtain reimbursement from the
Medi-Cal program.
   (b) If it is discovered that a provider has been terminated under
Medicare or under the Medicaid Program or Children's Health Insurance
Program in any other state, the provider shall not be enrolled in,
or shall be subject to termination from, the Medi-Cal program, which
shall include deactivation of the provider's enrolled numbers and all
business addresses used to obtain reimbursement from the Medi-Cal
program.
   (c) The director shall notify in writing the provider of the
temporary suspension and deactivation of the provider's number, which
shall take effect 15 days from the date of the notification.
Notwithstanding Section 100171 of the Health and Safety Code,
proceedings after the imposition of sanctions provided for in
subdivision (a) shall be in accordance with Section 14043.65.
   (d) A temporary suspension may be lifted when a resolution of an
investigation for fraud or abuse occurs.
   (e) (1) This section shall become operative on the effective date
of the state plan amendment necessary to implement this section, as
stated in the declaration executed by the director pursuant to
paragraph (2).
   (2) Upon approval of the state plan amendment necessary to
implement this section under Section 455.416 of Title 42 of the Code
of Federal Regulations, the director shall execute a declaration, to
be retained by the director and posted on the department's Internet
Web site, that states that this approval has been obtained and the
effective date of the state plan amendment. The department shall
transmit a copy of the declaration to the Legislature.
  SEC. 15.  Section 14043.38 is added to the Welfare and Institutions
Code, to read:
   14043.38.  (a) Provider types are designated as "limited,"
"moderate," or "high" categorical risk by the federal government in
Section 424.518 of Title 42 of the Code of Federal Regulations. The
department shall, at minimum, utilize the federal regulations in
determining a provider's or applicant's categorical risk.
   (b) If the department designates a provider as a "high"
categorical risk, the department shall conduct a criminal background
check and shall require submission of a set of fingerprints in
accordance with Section 13000 of the Penal Code. If fingerprints are
required, providers and any person with a 5-percent direct or
indirect ownership interest in the provider shall be required to
submit fingerprints in a manner determined by the department within
30 days of the request.
   (c) In accordance with Section 455.450 of Title 42 of the Code of
Federal Regulations, the department shall designate a provider as a
"high" categorical risk if any of the following occur:
   (1) The department imposes a payment suspension based on a
credible allegation of fraud, waste, or abuse.
   (2) The provider has an existing Medicaid overpayment based on
fraud, waste, or abuse.
   (3) The provider has been excluded by the federal Office of the
Inspector General or another state's Medicaid program within the
previous 10 years.
   (4) The federal Centers for Medicare and Medicaid Services lifted
a temporary moratorium within the previous six months for the
particular provider type submitting the application, the applicant
would have been prevented from enrolling based on that previous
moratorium, and the applicant applies for enrollment as a provider at
any time within six months from the date the moratorium was lifted.
   (d) (1) This section shall become operative on the effective date
of the state plan amendment necessary to implement this section, as
stated in the declaration executed by the director pursuant to
paragraph (2).
   (2) Upon approval of the state plan amendment necessary to
implement this section under Sections 424.518, 455.434, and 455.450
of Title 42 of the Code of Federal Regulations, the director shall
execute a declaration, to be retained by the director and posted on
the department's Internet Web site, that states that this approval
has been obtained and the effective date of the state plan amendment.
The department shall transmit a copy of the declaration to the
Legislature.
  SEC. 16.  Section 14043.4 of the Welfare and Institutions Code is
amended to read:
   14043.4.  (a) If discrepancies are found to exist during the
preenrollment period, the department may conduct additional
inspections prior to enrollment. Failure to remediate discrepancies
as prescribed by the director may result in denial of the application
for enrollment.  The department may deactivate all of the
provider's business addresses if the department determines that the
discrepancies are material to the provider's continued enrollment and
the provider's compliance with program requirements at the
additional business addresses. 
   (b) This section shall become inoperative on the effective date of
the necessary state plan amendment, as stated in the declaration
executed by the director pursuant to Section 14043.4 as added by
Section 17 of the act that added this subdivision, and is repealed on
the January 1 of the following year. The department shall post the
declaration on its Internet Web site and transmit a copy of the
declaration to the Legislature.
  SEC. 17.  Section 14043.4 is added to the Welfare and Institutions
Code, to read:
   14043.4.  (a) If discrepancies are found to exist during the
preenrollment period, the department may conduct additional
inspections prior to enrollment. Failure of a provider to remediate
discrepancies as prescribed by the director may result in denial of
the application for enrollment. The department may deactivate all of
the provider's business addresses if the department determines that
the discrepancies are material to the provider's continued enrollment
and the provider's compliance with program requirements at the
additional business addresses.
   (b) (1) This section shall become operative on the effective date
of the state plan amendment necessary to implement this section, as
stated in the declaration executed by the director pursuant to
paragraph (2).
   (2) Upon approval of the state plan amendment necessary to
implement this section under Section 455.416 of Title 42 of the Code
of Federal Regulations, the director shall execute a declaration, to
be retained by the director  and posted on the department's
Internet Web site  , that states that this approval has been
obtained and the effective date of the state plan amendment.  The
department shall   transmit a copy of the declaration to
the Legislature. 
  SEC. 18.  Section 14043.55 of the Welfare and Institutions Code is
amended to read:
   14043.55.  (a) The department may implement a 180-day moratorium
on the enrollment of providers in a specific provider of service
category, on a statewide basis or within a geographic area, except
that no moratorium shall be implemented on the enrollment of
providers who are licensed as clinics under Section 1204 of the
Health and Safety Code, health facilities under Chapter 2 (commencing
with Section 1250) of the Health and Safety Code, clinics exempt
from licensure under Section 1206 of the Health and Safety Code, or
natural persons licensed or certified under Division 2 (commencing
with Section 500) of the Business and Professions Code, the
Osteopathic Initiative Act, or the Chiropractic Initiative Act, when
the director determines this action is necessary to safeguard public
funds or to maintain the fiscal integrity of the program. This
moratorium may be extended or repeated when the director determines
this action is necessary to safeguard public funds or to maintain the
fiscal integrity of the program. The authority granted in this
section shall not be interpreted as a limitation on the authority
granted to the department in Section 14105.3.
   (b) This section shall become inoperative on the effective date of
the necessary state plan amendment, as stated in the declaration
executed by the director pursuant to Section 14043.55 as added by
Section 19 of the act that added this subdivision, and is repealed on
the January 1 of the following year. The department shall post the
declaration on its Internet Web site and transmit a copy of the
declaration to the Legislature.
  SEC. 19.  Section 14043.55 is added to the Welfare and Institutions
Code, to read:
   14043.55.  (a)  The department may implement a 180-day moratorium
on the enrollment of providers in a specific provider of service
category, on a statewide basis or within a geographic area, except
that no moratorium shall be implemented on the enrollment of
providers who are licensed as clinics under Section 1204 of the
Health and Safety Code, health facilities under Chapter 2 (commencing
with Section 1250) of the Health and Safety Code, clinics exempt
from licensure under Section 1206 of the Health and Safety Code, or
natural persons licensed or certified under Division 2 (commencing
with Section 500) of the Business and Professions Code, the
Osteopathic Initiative Act, or the Chiropractic Initiative Act, when
the director determines this action is necessary to safeguard public
funds or to maintain the fiscal integrity of the program. This
moratorium may be extended or repeated when the director determines
this action is necessary to safeguard public funds or to maintain the
fiscal integrity of the program. The authority granted in this
section shall not be interpreted as a limitation on the authority
granted to the department in Section 14105.3.
   (b) If the Secretary of the United States Department of Health and
Human Services establishes a temporary moratorium on enrollment as
described in federal regulations, the department shall establish a
corresponding moratorium covering the same period and provider types,
even if those provider types would not ordinarily be subject to a
moratorium under this section, unless the department determines that
the imposition of the moratorium will adversely impact beneficiaries
access to medical assistance. A federal moratorium adopted under this
subdivision shall not be subject to the director's determinations
regarding safeguards of public funds and program integrity or other
prerequisites that are necessary to implement a state-initiated
moratorium.
   (c) (1) This section shall become operative on the effective date
of the state plan amendment necessary to implement this section, as
stated in the declaration executed by the director pursuant to
paragraph (2).
   (2) Upon approval of the state plan amendment necessary to
implement this section under Section 455.470 of Title 42 of the Code
of Federal Regulations, the director shall execute a declaration, to
be retained by the director and posted on the department's Internet
Web site, that states that this approval has been obtained and the
effective date of the state plan amendment. The department shall
transmit a copy of the declaration to the Legislature.
  SEC. 20.  Section 14043.65 of the Welfare and Institutions Code is
amended to read:
   14043.65.  (a) Notwithstanding any other law, any applicant whose
application for enrollment as a provider or whose certification is
denied; or any provider who is denied continued enrollment or
certification, or denied enrollment for a new location, who has been
temporarily suspended, who has had payments suspended, who has had
one or more business addresses used to obtain reimbursement from the
Medi-Cal program deactivated, or whose provisional provider status or
preferred provisional provider status has been terminated pursuant
to this article or Section 14107.11, or Section 100185.5 of the
Health and Safety Code, or who has had a civil penalty imposed
pursuant to subdivision (a) of Section 14123.25; or any billing
agent, as defined in Section 14040, when the billing agent's
registration has been denied pursuant to subdivision (e) of Section
14040.5, may appeal this action by submitting a written appeal,
including any supporting evidence, to the director or the director's
designee. If the appeal is of a suspension of payment pursuant to
Section 14107.11, the appeal to the director or the director's
designee shall be limited to the credibility of the allegation
supporting the payment suspension, as described in subdivision (d) of
Section 14107.11, and shall not encompass investigation or
adjudication of the allegation. The appeal procedure shall not
include a formal administrative hearing under the Administrative
Procedure Act and shall not result in reactivation of any deactivated
provider numbers during appeal. An applicant, provider, or billing
agent that files an appeal pursuant to this section shall submit the
written appeal along with all pertinent documents and all other
relevant evidence to the director or to the director's designee
within 60 days of the date of notification of the department's
action. The director or the director's designee shall review all of
the relevant materials submitted and shall issue a decision within 90
days of the receipt of the appeal. The decision may provide that the
action taken should be upheld, continued, or reversed, in whole or
in part. The decision of the director or the director's designee
shall be final. Any further appeal shall be required to be filed in
accordance with Section 1085 of the Code of Civil Procedure.
                                                                 (b)
No applicant whose application for enrollment as a provider has been
denied pursuant to Section 14043.2, 14043.36, or 14043.4 may reapply
for a period of three years from the date the application is denied.
The three-year period shall commence upon the date of the denial
notice.
  SEC. 21.  Section 14043.7 of the Welfare and Institutions Code is
amended to read:
   14043.7.  (a) The department may make unannounced visits to any
applicant or to any provider for the purpose of determining whether
enrollment, continued enrollment, or certification is warranted, or
as necessary for the administration of the Medi-Cal program. At the
time of the visit, the applicant or provider shall be required to
demonstrate an established place of business appropriate and adequate
for the services billed or claimed to the Medi-Cal program, as
relevant to his or her scope of practice, as indicated by, but not
limited to, the following:
   (1) Being open and available to the general public.
   (2) Having regularly established and posted business hours.
   (3) Having adequate supplies in stock on the premises.
   (4) Meeting all local laws and ordinances regarding business
licensing and operations.
   (5) Having the necessary equipment and facilities to carry out
day-to-day business for his or her practice.
   (b) An unannounced visit pursuant to subdivision (a) shall be
prohibited with respect to clinics licensed under Section 1204 of the
Health and Safety Code, clinics exempt from licensure under Section
1206 of the Health and Safety Code, health facilities licensed under
Chapter 2 (commencing with Section 1250) of Division 2 of the Health
and Safety Code, and natural persons licensed or certified under
Division 2 (commencing with Section 500) of the Business and
Professions Code, the Osteopathic Initiative Act, or the Chiropractic
Initiative Act, unless the department has reason to believe that the
provider will defraud or abuse the Medi-Cal program or lacks the
organizational or administrative capacity to provide services under
the program.
   (c) Failure to remediate significant discrepancies in information
provided to the department by the provider or significant
discrepancies that are discovered as a result of an announced or
unannounced visit to a provider, for purposes of enrollment,
continued enrollment, or certification pursuant to subdivision (a)
shall make the provider subject to temporary suspension from the
Medi-Cal program, which shall include temporary deactivation of the
provider's number, including all business addresses used by the
provider to obtain reimbursement from the Medi-Cal program. The
director shall notify in writing the provider of the temporary
suspension and deactivation of provider numbers, which shall take
effect 15 days from the date of the notification. Notwithstanding
Section 100171 of the Health and Safety Code, proceedings after the
imposition of sanctions in this paragraph shall be in accordance with
Section 14043.65.
   (d) This section shall become inoperative on the effective date of
the necessary state plan amendment, as stated in the declaration
executed by the director pursuant to Section 14043.7 as added by
Section 22 of the act that added this subdivision, and is repealed on
the January 1 of the following year. The department shall post the
declaration on its Internet Web site and transmit a copy of the
declaration to the Legislature.
  SEC. 22.  Section 14043.7 is added to the Welfare and Institutions
Code, to read:
   14043.7.  (a) The department may make unannounced visits to any
applicant or to any provider for the purpose of determining whether
enrollment, continued enrollment, or certification is warranted, or
as necessary for the administration of the Medi-Cal program. If an
unannounced site visit is conducted by the department for any
enrolled provider, the provider shall permit access to any and all of
their provider locations. If a provider fails to permit access for
any site visit, the application shall be denied and the provider
shall be subject to deactivation. At the time of the visit, the
applicant or provider shall be required to demonstrate an established
place of business appropriate and adequate for the services billed
or claimed to the Medi-Cal program, as relevant to his or her scope
of practice, as indicated by, but not limited to, the following:
   (1) Being open and available to the general public.
   (2) Having regularly established and posted business hours.
   (3) Having adequate supplies in stock on the premises.
   (4) Meeting all local laws and ordinances regarding business
licensing and operations.
   (5) Having the necessary equipment and facilities to carry out
day-to-day business for his or her practice.
   (b) An unannounced visit pursuant to subdivision (a) shall be
prohibited with respect to clinics licensed under Section 1204 of the
Health and Safety Code, clinics exempt from licensure under Section
1206 of the Health and Safety Code, health facilities licensed under
Chapter 2 (commencing with Section 1250) of Division 2 of the Health
and Safety Code, and natural persons licensed or certified under
Division 2 (commencing with Section 500) of the Business and
Professions Code, the Osteopathic Initiative Act, or the Chiropractic
Initiative Act, unless the department has reason to believe that the
provider will defraud or abuse the Medi-Cal program or lacks the
organizational or administrative capacity to provide services under
the program.
   (c) Failure to remediate significant discrepancies in information
provided to the department by the provider or significant
discrepancies that are discovered as a result of an announced or
unannounced visit to a provider, for purposes of enrollment,
continued enrollment, or certification pursuant to subdivision (a)
shall make the provider subject to temporary suspension from the
Medi-Cal program, which shall include temporary deactivation of the
provider's number, including all business addresses used by the
provider to obtain reimbursement from the Medi-Cal program. The
director shall notify in writing the provider of the temporary
suspension and deactivation of provider numbers, which shall take
effect 15 days from the date of the notification. Notwithstanding
Section 100171 of the Health and Safety Code, proceedings after the
imposition of sanctions in this paragraph shall be in accordance with
Section 14043.65.
   (d) (1) This section shall become operative on the effective date
of the state plan amendment necessary to implement this section, as
stated in the declaration executed by the director pursuant to
paragraph (2).
   (2) Upon approval of the state plan amendment necessary to
implement this section under Section 455.416 of Title 42 of the Code
of Federal Regulations, the director shall execute a declaration, to
be retained by the director and posted on the department's Internet
Web site, that states that this approval has been obtained and the
effective date of the state plan amendment. The department shall
transmit a copy of the declaration to the Legislature.
  SEC. 23.  Section 14043.75 of the Welfare and Institutions Code is
amended to read:
   14043.75.  (a) The director may, in consultation with interested
parties, by regulation, adopt, readopt, repeal, or amend additional
measures to prevent or curtail fraud and abuse. Regulations adopted,
readopted, repealed, or amended pursuant to this section shall be
deemed 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). These emergency
regulations shall be deemed necessary for the immediate preservation
of the public peace, health and safety, or general welfare. Emergency
regulations adopted, amended, or repealed pursuant to this section
shall be exempt from review by the Office of Administrative Law. The
emergency regulations authorized by this section shall be submitted
to the Office of Administrative Law for filing with the Secretary of
State and publication in the California Code of Regulations.
   (b) Notwithstanding any other 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, implement, interpret, or make specific Sections 14043.15,
14043.25, 14043.26, 14043.27, 14043.28, 14043.29, 14043.341, and
14043.38 by means of a provider bulletin or similar instruction. The
department shall notify and consult with interested parties and
appropriate stakeholders in implementing, interpreting, or making
specific those provisions described in this subdivision, including
all of the following:
   (1) Notifying provider representatives of the proposed action or
change. The notice shall occur at least 10 business days prior to the
meeting provided for in paragraph (2).
   (2) Scheduling at least one meeting with interested parties and
appropriate stakeholders to discuss the action or change.
   (3) Allowing for written input regarding the action or change.
   (4) Providing at least 30 days' advance notice of the effective
date of the action or change.
  SEC. 24.  Section 14107.11 of the Welfare and Institutions Code is
amended to read:
   14107.11.  (a) Upon receipt of a credible allegation of fraud as
defined in subdivision (d) and for which an investigation is pending
under the Medi-Cal program against a provider as defined in Section
14043.1, or the commencement of a suspension under Section 14123, the
provider shall be temporarily placed under payment suspension,
unless it is determined there is a good cause exception, as defined
in subdivision (g), not to suspend the payments or to suspend them
only in part, and the department may do any of the following:
   (1) Collect any Medi-Cal program overpayment identified through an
audit or examination, or any portion thereof from any provider.
Notwithstanding Section 100171 of the Health and Safety Code, a
provider may appeal the collection of overpayments under this section
pursuant to procedures established in Article 5.3 (commencing with
Section 14170). Overpayments collected under this section shall not
be returned to the provider during the pendency of any appeal and may
be offset to satisfy audit or appeal findings if the findings are
against the provider. Overpayments will be returned to a provider
with interest if findings are in favor of the provider.
   (2) Give notification of the payment suspension for any goods,
services, supplies, or merchandise, or any portion thereof. The
department shall notify the provider within five days of any payment
suspension under this section. The department may delay notification
to the provider by 30 days if it is requested to do so in writing by
any law enforcement agency, which may be renewed in writing up to two
times and in no event may exceed 90 days. The notice to the provider
shall do all of the following:
   (A) State that the payment suspension is being imposed in
accordance with this subdivision and that the payment suspension is
for a temporary period and will not continue if it is determined that
no credible allegation of fraud remains against the provider or when
legal proceedings relating to the allegation are complete.
   (B) Cite the circumstances under which the payment suspension will
be terminated.
   (C) Specify, when appropriate, the type or types of claims for
which payment is being suspended.
   (D) Inform the provider of the right to submit written evidence
that would be admissible under the administrative adjudication
provisions of Chapter 5 (commencing with Section 11500) of Part 1 of
Division 3 of Title 2 of the Government Code, for consideration by
the department.
   (b) Notwithstanding Section 100171 of the Health and Safety Code,
a provider may appeal a payment suspension pursuant to Section
14043.65. Payments suspended under this section shall not be returned
to the provider during the pendency of any appeal and may be offset
to satisfy audit or appeal findings.
   (c) A payment suspension may be lifted when a resolution of an
investigation for fraud or abuse occurs as defined in subdivision (p)
of Section 14043.1.
   (d) An allegation of fraud shall be considered credible if it
exhibits indicia of reliability as recognized by state or federal
courts or by other law sufficient to meet the constitutional
prerequisite to a law enforcement search or seizure of comparable
business assets. The department shall carefully consider the
allegations, facts, data, and evidence with the same thoroughness as
a state or federal court would use in approving a warrant for a
search or seizure.
   (e) (1) On a quarterly basis, the Department of Justice, and any
other law enforcement agency that has accepted referrals for
investigation from the department, shall submit a report to the
department listing each referral and stating whether the referral
continues to be under investigation and whether it involves a
credible allegation of fraud. If the Department of Justice or a law
enforcement agency fails to submit a report under this subdivision,
the department may request the report from the Department of Justice
or the law enforcement agency on no more than a quarterly basis. The
Department of Justice or the law enforcement agency, as applicable,
shall provide the report within 30 days of the request.
   (2) Notwithstanding paragraph (1), no quarterly report shall be
required from a law enforcement agency, unless that law enforcement
agency has either received a referral from the department or reported
an open case to the department and has not yet reported rejection or
closure of that referral or open case.
   (f) A report, request, or notification submitted under this
section shall be exempt from the California Public Records Act
(Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1
of the Government Code). These records may be disclosed to law
enforcement agencies or other government entities that execute an
agreement conforming to subdivision (e) of Section 6254.5 of the
Government Code.
   (g) For purposes of this section, all of the following apply:
   (1) "Provider" has the same meaning as that term is defined in
Section 14043.1.
   (2) "Good cause exception" means a reason determined by the
department that falls under Section 455.23(e) or (f) of Title 42 of
the Code of Federal Regulations.
   (3) "Law enforcement agency" includes any agency employing peace
officers, as defined in Chapter 4.5 (commencing with Section 830) of
Title 3 of Part 2 of the Penal Code.
   (h) The director may, in consultation with interested parties,
adopt regulations to implement this section as necessary. These
regulations may be adopted as 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) and 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. The director shall
transmit these emergency regulations directly to the Secretary of
State for filing and the regulations shall become effective
immediately upon filing. Upon completion of the formal regulation
adoption process and prior to the expiration of the 120-day duration
period of emergency regulations, the director shall transmit directly
to the Secretary of State the adopted regulations, the rulemaking
file, and the certification of compliance as required by subdivision
(e) of Section 11346.1 of the Government Code.
  SEC. 25.  Section 14123.05 of the Welfare and Institutions Code is
amended to read:
   14123.05.  The department shall develop, in consultation with
provider representatives, including, but not limited to, physician,
pharmacy, and medical supplies providers, a process that enables a
provider to meet and confer with the appropriate department officials
after the issuance of a letter notifying the provider of a payment
suspension, pursuant to Section 14107.11, or a temporary suspension,
pursuant to subdivision (a) of Section 14043.36, for the purpose of
presenting and discussing information and evidence that may impact
the department's decision to modify or terminate the sanction.
  SEC. 26.  Section 14170.12 is added to the Welfare and Institutions
Code, to read:
   14170.12.  Effective January 1, 2012, and notwithstanding Section
19130 of the Government Code, the State Department of Health Care
Services may enter into contracts with one or more eligible Medicaid
Recovery Audit Contractors (RACs) pursuant to Section 1396a(a)(42)(B)
of Title 42 of the United States Code.
  SEC. 27.  Section 14409 of the Welfare and Institutions Code is
amended to read:
   14409.  (a) No prepaid health plan, marketing representative, or
marketing organization shall in any manner misrepresent itself, the
plans it represents, or the Medi-Cal program or the Healthy Families
Program. Violations of this section shall include, but are not
limited to:
   (1) False or misleading claims that marketing representatives are
employees or representatives of the state, county, or anyone other
than the prepaid health plan or the organization by whom they are
reimbursed.
   (2) False or misleading claims that the prepaid health plan is
recommended or endorsed by any state or county agency, or by any
other organization which has not certified its endorsement in writing
to the prepaid health plan.
   (3) False or misleading claims that the state or county recommends
that a Medi-Cal beneficiary enroll in a prepaid health plan.
   (4) Claims that a Medi-Cal beneficiary will lose his or her
benefits under the Medi-Cal program or any other health or welfare
benefits to which he or she is legally entitled, if he or she does
not enroll in a prepaid health plan.
   (b) Violations of this article or regulations adopted by the
department pursuant to this article shall result in one or more of
the following sanctions that are appropriate to the specific
violation, considering the nature of the offense and frequency of
occurrence within the prepaid health plan:
   (1) Revocation of one or more permitted methods of marketing.
   (2) Termination of authorization for a plan to provide application
assistance.
   (3) Refusal of the department to accept new enrollments for a
period specified by the department.
   (4) Refusal of the department to accept enrollments submitted by a
marketing representative or organization.
   (5) Forfeiture by the plan of all or part of the capitation
payments for persons enrolled as a result of such violations.
   (6) Requirement that the prepaid health plan in violation of this
article personally contact each enrollee enrolled to explain the
nature of the violation and inform the enrollee of his or her right
to disenroll.
   (7) Application of sanctions as provided in Section 14304.
   (8) Temporarily suspend capitation payments for beneficiaries
enrolled in violation of this article, or regulations adopted
thereunder, until the prepaid health plan is in substantial
compliance with the statutory and regulatory provisions.
   (c) Any marketing representative who violates subdivision (a)
while engaged in door-to-door solicitation is guilty of a
misdemeanor, and shall be subject to a fine of five hundred dollars
($500) or imprisonment in a county jail for six months, or both.
  SEC. 28.  If the Commission on State Mandates determines that this
act contains costs mandated by the state, reimbursement to local
agencies and school districts for those costs shall be made pursuant
to Part 7 (commencing with Section 17500) of Division 4 of Title 2 of
the Government Code.