Financial Review Inpatient Division
The Department of Health Care Services’ (DHCS) Audits and Investigations Financial Review Inpatient Division (FRID) is responsible for financial reviews and audits of Medi-Cal and other DHCS programs' inpatient providers.
FRID's primary audit objective is to conduct financial and compliance reviews and audits of Medi-Cal and other DHCS programs' inpatient providers to verify payments to providers of services to Medi-Cal beneficiaries and reported costs are valid, accurate and in compliance with governing laws, regulations, and program intent. Audited data is also provided to assist with provider rate setting purposes. Provider types audited include acute hospitals and long-term care facilities.
Provider Descriptions
Health care providers subject to audit include acute care inpatient hospitals and long-term care facilities.
- General Acute Care Hospital (GACH)
- Distinct Part Nursing Facility (DPNF)
- Distinct Part Pediatric Subacute (DP/PSA)
- Distinct Part Subacute Adult (DPSA)
- Freestanding Skilled Nursing Facility (FSNF-B)
- Freestanding Pediatric Subacute (FS/PSA)
- Freestanding Subacute Adult (FSSA)
- Home Office - Acute Hospital and all Long-Term Care Provider Types
- Intermediate Care Developmentally Disabled (ICF-DD)
- Intermediate Care Developmentally Disabled Habilitative (ICF-DD/H)
- Intermediate Care Developmentally Disabled Nursing (ICF-DD/N)
General Acute Care Hospital (GACH)
GACHs are medical facilities licensed to provide 24-hour inpatient services for the diagnosis, acute care and treatment of patients. GACHs that provide services to Medi-Cal beneficiaries are reimbursed for services that are deemed medically necessary and adhere to Medi-Cal policy via one of two reimbursement mechanisms depending on the ownership status: Private Hospitals and Non-Designated Public Hospitals (NDPH) versus Designated Public Hospitals (DPH). Private Hospitals and NDPHs are reimbursed through the All Patient Refined-Diagnosis Related Group (APR-DRG) methodology. The APR-DRG assigns a single diagnosis related group using a computerized algorithm that takes into account the patient’s diagnosis, age, major procedures performed, and discharge status. Each DRG has a relative weight that reflects the typical hospital resources needed to care for a patient with that code. This payment methodology is designed to encourage access to care, reward efficiency, improve payment transparency, and to pay similar hospitals for similar care. For some expensive hospital stays, an add-on payment called an Outlier is priced using the hospital’s filed Medi-Cal cost to charge ratio and associated charges. The hospitals’ specific cost to charge ratios are updated each year based on an as filed cost report and are subject to audit based on the total outlier payments received. Safety Net Financing Division (SNFD) determines which GACHs are audited by FRID for cost to charge ratio and outlier payment settlement.
DPHs are GACHs that are operated by a county, a city, or the University of California. DPHs are cost reimbursed through a Certified Public Expenditure (CPE) program via a daily per diem and as such their payments represent federal funding only. DPH receives supplemental federal funds and provides their share of local funds to cover program costs. FRID audits DPH cost reports annually. Each DPH has a corresponding Paragraph 14 of the STCs portion of the 1115 Waiver (P14 workbook) and final settlement schedule. FRID auditors perform the P14 and final settlement compilations on behalf of SNFD by incorporating the cost report data into workbooks and reconciling provider documents.
Distinct Part Nursing Facility (DPNF)
DPNF is a skilled nursing facility level of care licensed as a distinct part within a GACH. FRID performs rate setting audits of the costs reported by hospitals with DPNFs. Fee For Service Rates Development Division (FFSRDD) determines which DPNFs are audited by FRID for prospective DPNF rate setting purposes. DPNFs are reimbursed the lower of the facility specific rate or a median rate. Billing reviews may be performed to identify program overpayments due back to Medi-Cal.
Distinct Part Pediatric Subacute (DP/PSA)
DP/PSA is a contracted level of care within a DPNF through a Provider Participation Agreement with the Department. DP/PSAs provide services to persons under 21 years of age who use a medical technology that compensates for the loss of a vital bodily function. FFSRDD determines which DP/PSAs are audited by FRID for prospective DP/PSA rate setting purposes. DP/PSAs are reimbursed the lower of the facility specific rate or a median rate. Billing reviews may be performed to identify program overpayments due back to Medi-Cal.
Distinct Part Subacute Adult (DPSA)
DPSA is a contracted level of care within a DPNF through a Provider Participation Agreement with the Department. DPSA is designed for patients who do not require GACH care but require more intensive skilled nursing care than provided to DPNF patients. FFSRDD determines which DPSAs are audited by FRID for prospective DPSA rate setting purposes. DPSAs are reimbursed the lower of the facility specific rate or a median rate. Billing reviews may be performed to identify program overpayments due back to Medi-Cal.
Freestanding Skilled Nursing Facility (FSNF-B)
SNFs are health care facilities that provide skilled nursing care and supportive care to patients who require nursing care on an extended basis. FSNF-Bs provide 24-hour inpatient care that include medical, nursing, dietary, pharmaceutical services, and an activity program. FFSRDD determines which FSNF-Bs are audited by FRID for prospective SNF rate setting purposes. Billing reviews may be performed to identify program overpayments due back to Medi-Cal.
Freestanding Pediatric Subacute (FS/PSA)
FS/PSA is a contracted level of care within a freestanding skilled nursing level B facility through a Provider Participation Agreement with the Department. These facilities provide services to persons under 21 years of age who use a medical technology that compensates for the loss of a vital bodily function. FFSRDD determines which FS/PSAs are audited by FRID for prospective FS/PSA rate setting purposes. Billing reviews may be performed to identify program overpayments due back to Medi-Cal.
Freestanding Subacute Adult (FSSA)
FSSA is a contracted level of care within a freestanding skilled nursing level B facility through a Provider Participation Agreement with the Department. FSSA is designed for patients who do not require GACH care but require more intensive skilled nursing care than provided to level B skilled nursing facility patients. FFSRDD determines which FSSAs are audited by FRID for prospective FSSA rate setting purposes. Billing reviews may be performed to identify program overpayments due back to Medi-Cal.
Home Office - Acute Hospital and all Long-Term Care Provider Types
A home office is an organization that controls through ownership, lease or any other device, two or more health care facilities. The organization may include other business entities and/or organizations which are engaged in activities not directly related to patient care. Home offices are also referred to as chain operations, with the various subsidiaries as members of the chain. The office of the controlling organization generally incurs costs and provides services to or on behalf of the individual health facility.
Intermediate Care Facilities (ICF)
ICFs are health care facilities that provide 24-hour inpatient care that includes all equipment, drugs, services, and supplies necessary to provide intermediate care services to the developmentally disabled:
- ICF/DD facilities are in an institutional setting and are peer grouped by bed size of 1 to 59 or 60 plus beds.
- ICF/DD-H facilities are peer grouped by bed size of 4 to 6 beds or 7 to 15 beds.
- ICF/DD-N facilities are peer grouped by bed size of 4 to 6 beds or 7 to 15 beds.
Effective August 1, 2021, in accordance with Assembly Bill 133 (Chapter 143, Statutes of 2021) and Welfare and Institutions (W&I) Code Section 14105.194, the reimbursement rates for ICF/DD-H and ICF/DD-N facilities will be established at the 65th percentile of the group's projected costs, including the projected cost of complying with new state or federal mandates and the quality assurance fee. The State Plan requires a minimum of 15 percent of cost reports to be field audited each year. Facilities will be selected for audit on a random sample basis.
The purpose of the rate setting audit is to confirm reported costs are reasonable, allowable, and included in the rate. The objective of the audit is also to review client census to confirm total days are not understated, as it is the denominator in the rate setting calculation and can have a major impact on the rate. Billing reviews may be performed to identify program overpayments due back to Medi-Cal.
Intermediate Care Developmentally Disabled (ICF-DD)
ICF-DD means a health facility which provides care and support services to developmentally disabled clients whose primary need is for developmental services and who have a recurring but intermittent need for skilled nursing services.
Intermediate Care Developmentally Disabled Habilitative (ICF-DD/H)
The primary purpose of an ICF/DDH facility is to furnish 24-hour personal care, developmental, training, and habilitative and supportive health services in a facility with 15 beds or less to residents with a developmental disability. A developmental disability is a disability which originates before age 18 and is a permanent and substantial handicap as defined in the W&I Code, Section 4512. ICF/DDH facilities provide these services to developmentally disabled beneficiaries in the least restrictive community type setting.
Intermediate Care Developmentally Disabled Nursing (ICF-DD/N)
The primary purpose of an ICF/DDN facility is to furnish 24-hour nursing supervision, personal care, training and habilitative services in a facility with 4-15 beds to medically fragile developmentally disabled beneficiaries, or to beneficiaries who demonstrate a significant developmental delay that may lead to a developmental disability if not treated. Such beneficiaries shall have been certified by a physician as not requiring continuous skilled nursing care. ICF/DDN facilities provide services to the medically fragile developmentally disabled.
Resources
Reporting Medi-Cal Fraud
Health Care Fraud is a Crime.
Program Helpful Links
Contact Information
Financial Review Inpatient Division (FRID)
Department of Health Care Services
1500 Capitol Avenue, MS 2000
PO Box 997413
Sacramento, CA 95899-7413
Phone: (916) 440-7550
