Administrative Sanctions & Utilization Controls
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The Department of Health Care Services (Department) has the authority under the Welfare and Institutions Code to impose administrative sanctions and utilization controls on Medi-Cal providers. Some examples of common sanctions and utilization controls include the following:
Temporary Payment Suspension
A temporary payment suspension involves withholding reimbursement for claims submitted. When providers are placed on temporary payment suspension, they may continue to bill the Medi-Cal program for services provided. The reimbursement they claim is withheld and placed in a special holding account, pending the outcome of the investigation.
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 … not to suspend the payments or to suspend them only in part.
(Welfare and Institutions Code, Section 14107.11 and Welfare and Institutions Code Section 24005 [FPACT]; 42 C.F.R. Section 455.23).
Temporary Suspension
A temporary suspension allows the Department to temporarily suspend a provider from the Medi-Cal Program. Providers placed on temporary suspension are not entitled to reimbursement for any services provided to Medi-Cal beneficiaries.
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.
(Welfare and Institutions Code Sections 14043.36 (a))
Procedure/Drug Code Limitation (P/DCL)
The Department may limit, for 18 months or less, the American Medical Association’s Current Procedural Terminology Fourth Edition (CPT‐4) codes, the National Drug Codes (NDC), the Healthcare Common Procedure Coding System (HCPCS) codes, or codes established under Title II of the Health Insurance Portability & Accountability Act of 1996 (42 U.S.C. Sec. 1320d et seq.) for which any provider may bill, or for which reimbursement to any person or entity may be made by, the Medi‐Cal program or other health care programs administered by the Department if either of the following conditions exist:
(1) The Department determines, by audit or other investigation, that excessive services or billings, or abuse, has occurred, which may include the Department’s discovery or determination that a claim was submitted for reimbursement under the Medi‐Cal program for a nerve conduction test, electromyography, or procedures, tests, examinations, or other medical services that the Department has specified requires a certain residency or board certification, but the records did not contain, or the person or entity submitting the claim for reimbursement did not have, the certificate or diploma required by Section 14170.11.
(2) The Medical Board of California or other licensing authority or a court of competent jurisdiction limits a licensee’s practice of medicine or the rendering of health care, and the limitation precludes the licensee from performing services that could otherwise be reimbursed by the Medi‐Cal program or other health care programs administered by the Department.
(Welfare and Institutions Code, section 14044 (a)(1), 22 California Code of Regulations (CCR) Sections 51481, 51485, 54209).
Civil Money Penalty (CMP)
Any provider or person that presents or causes to be presented a claim for services to an officer, employee, or agent of the state, or of any Department or agency thereof as defined in appropriate state law, that the Director determines is for a medical or other item or service that the person knows or has reason to know; (a) was not provided as claimed, or (b) payment for which may not be made under the program in the following instances:
(1) when the person or provider has been suspended from participation in the program, or (2) when the Department determines that the services or items claimed are substantially in excess of the needs of individuals or are of a quality that fails to meet professionally recognized standards of health care, or (3) when the Department determines that a person has demonstrated a pattern of abusive overbilling of the program, or (4) when the Department determines that a person has intentionally or negligently made a false statement or representation on any request for payment submitted to the Medi‐Cal program; or (c) is submitted in violation of an agreement between the person and the state, shall be subject in addition to any other penalties that may be prescribed by law, to a civil money penalty of not more than three times the amount claimed for each item or service. For continuing intentional violations, a civil money penalty of not more than three times the amount claimed for each item or service may be imposed for each day the violation continues.
The director shall make the determination to assess civil money penalties and shall be responsible for the collection of the penalty amounts.
(2) Civil money penalties may be imposed in the following circumstances:
(A) If a provider presents or causes to be presented claims for payment by the Medi‐Cal program that are:
(i) Billed improperly, and are for a service or item about which the provider has received two or more warning notices of improper billing, the provider may, in addition to any other penalties that may be prescribed by law, be subject to a civil money penalty of one hundred dollars ($100) per claim, or up to two times the amount improperly claimed for each item or service, whichever is greater.
(ii) For a service or item for which the Department solicits provider costs for use in calculating Medi‐Cal reimbursement or in calculating and assigning Medi‐Cal reimbursement rates, the cost reports relevant to the claims are improperly calculated, and the provider has received two or more warning notices of improper cost report computation regarding substantially similar errors, the provider may, in addition to any other penalties that may be prescribed by law, be subject to a civil money penalty of one hundred dollars ($100) per adjustment by the Department to the costs submitted by the provider, or up to two times the amount improperly claimed for each item or service, whichever is greater.
(B) If a provider presents or causes to be presented claims for payment by the Medi‐Cal program that are:
(i) Billed improperly, and are for a service or item about which the provider has received three or more warning notices of improper billing, or has been assessed a penalty under subparagraph (A), the provider may, in addition to any other penalties that may be prescribed by law, be subject to a civil money penalty of one thousand dollars ($1,000) per claim, or up to three times the amount improperly claimed for each item or service, whichever is greater.
(ii) For a service or item for which the Department solicits provider costs for use in calculating Medi‐Cal reimbursement or in calculating and assigning Medi‐Cal reimbursement rates, and the cost reports relevant to the claims are improperly calculated, and the provider has received three or more warning notices of improper cost report computation regarding substantially similar errors, or has been assessed a penalty under subparagraph (A), the provider may, in addition to any other penalties that may be prescribed by law, be subject to a civil money penalty of one thousand dollars ($1,000) per adjustment by the Department to the costs submitted by the provider, or three times the amount claimed for each item or service, whichever is greater.
(Welfare and Institutions Code, sections 14123.2, 14123.25 (c), 22 California Code of Regulations (CCR) Section 51485.1).
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