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Amended IN Assembly May 16, 2019
Amended IN Assembly April 23, 2019
Amended IN Assembly April 01, 2019
Amended IN Assembly March 18, 2019

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Assembly Bill No. 1642

Introduced by Assembly Member Wood

February 22, 2019

An act to amend Sections 14132.91, 14197, 14197.05, and 14304 of, and to add Sections 14197.04 and 14301.15 to, the Welfare and Institutions Code, relating to Medi-Cal.

LEGISLATIVE COUNSEL'S DIGEST

AB 1642, as amended, Wood. Medi-Cal: managed care plans.

(1) Existing law establishes the Medi-Cal program, administered by the State Department of Health Care Services, under which health care services are provided to qualified, low-income persons through various health care delivery systems, including managed care pursuant to Medi-Cal managed care plan contracts. The Medi-Cal program is, in part, governed and funded by federal Medicaid program provisions. Existing federal regulations require a state that contracts with specified Medicaid managed care plans to develop and enforce network adequacy standards, to ensure that services covered under the Medicaid state plan are available and accessible to enrollees of specified Medicaid managed care plans in a timely manner, and to contract with a qualified external quality review organization (EQRO) to annually produce an external quality review technical report that summarizes findings on access and quality of care. Existing state law establishes, until January 1, 2022, certain time and distance and appointment time standards for specified services consistent with those federal regulations to ensure that Medi-Cal managed care covered services are available and accessible to enrollees of Medi-Cal managed care plans in a timely manner, and authorizes a Medi-Cal managed care plan to request approval from the department to use alternative access standards for the time and distance standards if specified conditions are met, including that the Medi-Cal managed care plan has exhausted all reasonable options to obtain providers to meet the applicable standard. Existing state law requires a Medi-Cal managed care plan to annually provide to the department, or upon the department’s request, a report that demonstrates the Medi-Cal managed care plan’s compliance with time and distance standards, and requires the EQRO to compile various data, by plan and by county, related to time and distance standards, including the number of requests for alternative access standards in the plan service area for time and distance.

This bill would require a Medi-Cal managed care plan to provide to the department additional information in its request for the alternative access standards, including a description of the reasons justifying the alternative access standards, and to report to the department on how the Medi-Cal managed care plan arranged for the delivery of Medi-Cal covered services to Medi-Cal enrollees, such as through the use of Medi-Cal covered transportation. The bill would require a Medi-Cal managed care plan that has received approval from the department to utilize an alternative access standard to assist an enrollee who would travel farther than the established time and distance standards in obtaining an appointment with an appropriate out-of-network provider within established appointment time standards, to arrange for Medi-Cal covered transportation for the enrollee, as necessary, and to inform all members in mailings of specified related matters, including the Medi-Cal managed care plan’s alternative time and distance standards and how to access Medi-Cal covered transportation.

This bill would require the information compiled by the EQRO to include the extent to which each Medi-Cal managed care plan uses clinically appropriate telecommunications technology to meet established time and distance standards.

(2) Existing law requires the department to pay capitation rates to Medi-Cal managed care plans using actuarial methods, and requires the Medi-Cal managed care capitation rates to be developed pursuant to specified factors, including health-plan-specific encounter and claims data.

This bill would require the department to establish department, in establishing capitation rates for Medi-Cal managed care plans that ensure plans, to consider beneficiary access to Medi-Cal covered services, including travel times to receive services, and the ability of each Medi-Cal managed care plan to comply with the time and distance requirements without seeking authorization from the department to adopt alternative access standards. requirements.

(3) Existing law requires the Director of Health Care Services, in accordance with specified procedures, to either terminate a contract with or impose one or more specified sanctions, including civil penalties pursuant to federal law, on a prepaid health plan or Medi-Cal managed care plan if the department makes a finding of noncompliance or for other good cause. Under existing law, the department may impose a civil penalty of no more than $25,000 on a plan contractor if the contractor fails to provide medically necessary services that the contractor is required to provide to an enrollee covered under the contract.

This bill would instead authorize the department to impose a civil penalty of no more than $100,000 if the contractor fails to provide medically necessary services that the contractor is required to provide to an enrollee covered under the contract, and to impose a civil penalty upon a contractor if they fail to achieve the 50th percentile of the Medicaid managed care plan minimum performance level on quality measures as established by the department.

(4) Existing law requires the department, subject to the availability of funding, to conduct a dental outreach and education program for Medi-Cal beneficiaries that informs them of specified matters, including how to obtain dental care through the Medi-Cal program.

This bill would require the department, subject to the availability of funding, to conduct a preventive services outreach and education program for Medi-Cal beneficiaries, and to consult with specified entities, including health care professional groups and experts, to develop this program. The bill would require the program to inform Medi-Cal beneficiaries about various topics, including how an individual may obtain assistance in accessing Medi-Cal covered services, and to include specified components, such as incorporating the importance of preventive care in ongoing outreach and advertising efforts related to the Medi-Cal program. The bill would authorize the department to direct a Medi-Cal managed care plan to provide funding for this program if the Medi-Cal managed care plan fails to meet the established minimum performance level of preventive service utilization rates.

Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO

Bill Text

The people of the State of California do enact as follows:

SECTION 1. Section 14132.91 of the Welfare and Institutions Code is amended to read:

14132.91. (a) Subject to the availability of funding, the department shall conduct a dental outreach and education program for Medi-Cal beneficiaries. The program shall inform Medi-Cal beneficiaries of all of the following:

(1) The availability of dental care and recommended frequencies for regular and preventive dental care.

(2) How to obtain dental care through the Medi-Cal program.

(3) How to avoid inappropriate care or fraudulent providers.

(4) How to obtain assistance in getting care or resolving problems with dental care.

(b) The program shall particularly target underserved populations and parents of young and adolescent children, and shall include all of the following components:

(1) Incorporation of dental themes and information in ongoing outreach and advertising efforts, including those for the Medi-Cal program.

(2) Education and outreach materials for inclusion in mailings to beneficiaries.

(3) Education and consumer protection materials for display and distribution at sites providing dental care to Medi-Cal beneficiaries, clinics, and other health care facilities and sites.

(c) The department shall consult with dental professional groups and experts, community organizations, advertising and media experts, and other parties, as the department deems appropriate, to develop and structure the program in an effective and efficient manner.

(d) (1) Subject to the availability of funding, the department shall conduct a preventive services outreach and education program for Medi-Cal beneficiaries for preventive services assigned a grade A or B by the United States Preventive Services Task Force. The program shall inform Medi-Cal beneficiaries of all of the following:

(A) The availability of Medi-Cal covered services, including preventive care, and recommended frequencies for regular and preventive care.

(B) How to obtain care through the Medi-Cal program.

(2) The preventive services outreach and education program shall particularly target underserved populations and parents of young and adolescent children, and shall include all of the following components:

(A) Incorporation of the importance of preventive care in ongoing outreach and advertising efforts, including those for the Medi-Cal program.

(B) Education and outreach materials for inclusion in mailings to beneficiaries.

(C) Education and consumer protection materials for display and distribution at sites providing health care to Medi-Cal beneficiaries, clinics, and other health care facilities and sites.

(3) The department shall consult with health care professional groups and experts, community organizations, advertising and media experts, and other parties, as the department deems appropriate, to develop and structure the program in an effective and efficient manner.

(4) If a Medi-Cal managed care plan fails to meet the department’s established minimum performance level of preventive service utilization rates, the department may direct the Medi-Cal managed care plan to provide funding for the preventive services outreach and education program as established pursuant to this subdivision.

SEC. 2. Section 14197 of the Welfare and Institutions Code is amended to read:

14197. (a) It is the intent of the Legislature that the department implement and monitor compliance with the time and distance requirements set forth in Sections 438.68, 438.206, and 438.207 of Title 42 of the Code of Federal Regulations and this section, to ensure that all Medi-Cal managed care covered services are available and accessible to enrollees of Medi-Cal managed care plans in a timely manner, as those standards were enacted in May 2016.

(b) Commencing January 1, 2018, for covered benefits under its contract, as applicable, a Medi-Cal managed care plan shall maintain a network of providers that are located within the following time and distance standards for the following services:

(1) For primary care, both adult and pediatric, 10 miles or 30 minutes from the beneficiary’s place of residence.

(2) For hospitals, 15 miles or 30 minutes from the beneficiary’s place of residence.

(3) For dental services provided by a Medi-Cal managed care plan, 10 miles or 30 minutes from the beneficiary’s place of residence.

(4) For obstetrics and gynecology primary care, 10 miles or 30 minutes from the beneficiary’s place of residence.

(c) Commencing July 1, 2018, for the covered benefits under its contracts, as applicable, a Medi-Cal managed care plan shall maintain a network of providers that are located within the following time and distance standards for the following services:

(1) For specialists, as defined in subdivision (h), adult and pediatric, including obstetric and gynecology specialty care, as follows:

(A) Up to 15 miles or 30 minutes from the beneficiary’s place of residence for the following counties: Alameda, Contra Costa, Los Angeles, Orange, Sacramento, San Diego, San Francisco, San Mateo, and Santa Clara.

(B) Up to 30 miles or 60 minutes from the beneficiary’s place of residence for the following counties: Marin, Placer, Riverside, San Joaquin, Santa Cruz, Solano, Sonoma, Stanislaus, and Ventura.

(C) Up to 45 miles or 75 minutes from the beneficiary’s place of residence for the following counties: Amador, Butte, El Dorado, Fresno, Kern, Kings, Lake, Madera, Merced, Monterey, Napa, Nevada, San Bernardino, San Luis Obispo, Santa Barbara, Sutter, Tulare, Yolo, and Yuba.

(D) Up to 60 miles or 90 minutes from the beneficiary’s place of residence for the following counties: Alpine, Calaveras, Colusa, Del Norte, Glenn, Humboldt, Imperial, Inyo, Lassen, Mariposa, Mendocino, Modoc, Mono, Plumas, San Benito, Shasta, Sierra, Siskiyou, Tehama, Trinity, and Tuolumne.

(2) For pharmacy services, 10 miles or 30 minutes from the beneficiary’s place of residence.

(3) For outpatient mental health services, as follows:

(B) Up to 30 miles or 60 minutes from the beneficiary’s place of residence for the following counties: Marin, Placer, Riverside, San Joaquin, Santa Cruz, Solano, Sonoma, Stanislaus, and Ventura.

(4) (A) For outpatient substance use disorder services other than opioid treatment programs, as follows:

(i) Up to 15 miles or 30 minutes from the beneficiary’s place of residence for the following counties: Alameda, Contra Costa, Los Angeles, Orange, Sacramento, San Diego, San Francisco, San Mateo, and Santa Clara.

(ii) Up to 30 miles or 60 minutes from the beneficiary’s place of residence for the following counties: Marin, Placer, Riverside, San Joaquin, Santa Cruz, Solano, Sonoma, Stanislaus, and Ventura.

(iii) Up to 60 miles or 90 minutes from the beneficiary’s place of residence for the following counties: Alpine, Amador, Butte, Calaveras, Colusa, Del Norte, El Dorado, Fresno, Glenn, Humboldt, Imperial, Inyo, Kern, Kings, Lake, Lassen, Madera, Mariposa, Mendocino, Merced, Modoc, Monterey, Mono, Napa, Nevada, Plumas, San Benito, San Bernardino, San Luis Obispo, Santa Barbara, Shasta, Sierra, Siskiyou, Sutter, Tehama, Trinity, Tulare, Tuolumne, Yolo, and Yuba.

(B) For opioid treatment programs, as follows:

(ii) Up to 30 miles or 60 minutes from the beneficiary’s place of residence for the following counties: Marin, Placer, Riverside, San Joaquin, Santa Cruz, Solano, Sonoma, Stanislaus, and Ventura.

(iii) Up to 45 miles or 75 minutes from the beneficiary’s place of residence for the following counties: Amador, Butte, El Dorado, Fresno, Kern, Kings, Lake, Madera, Merced, Monterey, Napa, Nevada, San Bernardino, San Luis Obispo, Santa Barbara, Sutter, Tulare, Yolo, and Yuba.

(iv) Up to 60 miles or 90 minutes from the beneficiary’s place of residence for the following counties: Alpine, Calaveras, Colusa, Del Norte, Glenn, Humboldt, Imperial, Inyo, Lassen, Mariposa, Mendocino, Modoc, Mono, Plumas, San Benito, Shasta, Sierra, Siskiyou, Tehama, Trinity, and Tuolumne.

(d) (1) (A) A Medi-Cal managed care plan shall comply with the appointment time standards developed pursuant to Section 1367.03 of the Health and Safety Code, Section 1300.67.2.2 of Title 28 of the California Code of Regulations, subject to any authorized exceptions in Section 1300.67.2.2 of Title 28 of the California Code of Regulations, and the standards set forth in contracts entered into between the department and Medi-Cal managed care plans.

(B) Commencing July 1, 2018, subparagraph (A) applies to Medi-Cal managed care plans that are not, as of January 1, 2018, subject to the appointment time standards described in subparagraph (A).

(2) A Medi-Cal managed care plan shall comply with the following availability standards for skilled nursing facility services and intermediate care facility services, as follows:

(A) Within five business days of the request for the following counties: Alameda, Contra Costa, Los Angeles, Orange, Sacramento, San Diego, San Francisco, San Mateo, and Santa Clara.

(B) Within seven business days of the request for the following counties: Marin, Placer, Riverside, San Joaquin, Santa Cruz, Solano, Sonoma, Stanislaus, and Ventura.

(C) Within 14 calendar days of the request for the following counties: Amador, Butte, El Dorado, Fresno, Kern, Kings, Lake, Madera, Merced, Monterey, Napa, Nevada, San Bernardino, San Luis Obispo, Santa Barbara, Sutter, Tulare, Yolo, and Yuba.

(D) Within 14 calendar days of the request for the following counties: Alpine, Calaveras, Colusa, Del Norte, Glenn, Humboldt, Imperial, Inyo, Lassen, Mariposa, Mendocino, Modoc, Mono, Plumas, San Benito, Shasta, Sierra, Siskiyou, Tehama, Trinity, and Tuolumne.

(3) A county Drug Medi-Cal organized delivery system shall provide an appointment within three business days to an opioid treatment program.

(4) A dental managed care plan shall provide an appointment within four weeks of a request for routine pediatric dental services and within 30 calendar days of a request for specialist pediatric dental services.

(e) (1) The department, upon request of a Medi-Cal managed care plan, may authorize alternative access standards for the time and distance standards established under this section if either of the following occur:

(A) The requesting Medi-Cal managed care plan has exhausted all other reasonable options to obtain providers to meet the applicable standard.

(B) The department determines that the requesting Medi-Cal managed care plan has demonstrated that its delivery structure is capable of delivering the appropriate level of care and access.

(2) If a Medi-Cal managed care plan cannot meet the time and distance standards set forth in this section, the Medi-Cal managed care plan shall submit a request for alternative access standards to the department, in the form and manner specified by the department. A request may be submitted at the same time as the Medi-Cal managed care plan submits its annual demonstration of compliance with time and distance standards, if known at that time.

(3) A request for alternative access standards shall be approved or denied on a ZIP Code and provider type, including specialty type, basis by the department within 90 days of submission of the request. The Medi-Cal managed care plan shall also include a description of the reasons justifying the alternative access standards based on those facts and circumstances, and how the Medi-Cal managed care plan intends to arrange for beneficiaries to access covered services if the health care provider is located outside of the time and distance standards specified in subdivision (c). The department may stop the 90-day timeframe, on one or more occasions as necessary, in the event of an incomplete submission or to obtain additional information from the Medi-Cal managed care plan requesting the alternative access standards. Upon submission of sufficient additional information to the department, the 90-day timeframe shall resume at the same point in time it was previously stopped, except if there is less than 30 days remaining in which case the department shall approve or deny the request within 30 days of submission of sufficient additional information. If the department rejects the Medi-Cal managed care plan’s proposal, the department shall inform the Medi-Cal managed care plan of the department’s reason for rejecting the proposal. The department shall post any approved alternative access standards on its internet website.

(4) The department may authorize a Medi-Cal managed care plan to use clinically appropriate telecommunications technology as a means of determining annual compliance with the time and distance standards established pursuant to this section or may approve alternative access to care, including telehealth consistent with the requirements of Section 2290.5 of the Business and Professions Code, e-visits, or other evolving and innovative technological solutions that are used to provide care from a distance.

(f) (1) Effective for contract periods commencing on or after July 1, 2018, a Medi-Cal managed care plan shall, on an annual basis and when requested by the department, demonstrate to the department both of the following:

(A) The Medi-Cal managed care plan’s compliance with the time and distance and appointment time standards developed pursuant to this section.

(B) How the Medi-Cal managed care plan arranged for the delivery of Medi-Cal covered services to Medi-Cal enrollees, such as through the use of either Medi-Cal covered transportation or clinically appropriate telecommunications technology, as specified in paragraph (4) of subdivision (c), if the enrollees of a Medi-Cal managed care plan needed to obtain health care services from a health care provider or a facility located outside of the time and distance standards, as specified in subdivision (c).

The report shall measure compliance separately for adult and pediatric services for primary care, behavioral health, and core specialist services.

(2) Effective for contract periods commencing on or after July 1, 2018, the department shall evaluate on an annual basis a Medi-Cal managed care plan’s compliance with the time and distance and appointment time standards implemented pursuant to this section. This evaluation may include, but need not be limited to, annual and random surveys, investigation of complaints, grievances or other indicia of noncompliance. Nothing in this subdivision shall be construed to limit the appeal rights of a Medi-Cal managed care plan under its contracts with the department.

(3) The department shall annually publish on its internet website a report that details the department’s findings in evaluating a Medi-Cal managed care plan’s compliance under paragraph (2). At a minimum, the department shall specify in this report those Medi-Cal managed care plans, if any, that were subject to a corrective action plan due to noncompliance with the time and distance and appointment time standards implemented pursuant to this section during the applicable year and the basis for the department’s finding of noncompliance. The report shall include a Medi-Cal managed care plan’s response to the corrective plan, if available.

(g) The department shall consult with Medi-Cal managed care plans, including mental health plans, health care providers, consumers, providers and consumers of long-term services and supports and organizations representing Medi-Cal beneficiaries in the implementation of the requirements of this section.

(h) For purposes of this section, the following definitions apply:

(1) “Medi-Cal managed care plan” means any individual, organization, or entity that enters into a contract with the department to provide services to enrolled Medi-Cal beneficiaries pursuant to any of the following:

(A) Article 2.7 (commencing with Section 14087.3), including dental managed care programs developed pursuant to Section 14087.46.

(B) Article 2.8 (commencing with Section 14087.5).

(D) Article 2.82 (commencing with Section 14087.98).

(E) Article 2.9 (commencing with Section 14088).

(F) Article 2.91 (commencing with Section 14089).

(G) Chapter 8 (commencing with Section 14200), including dental managed care plans.

(H) Chapter 8.9 (commencing with Section 14700).

(I) A county Drug Medi-Cal organized delivery system authorized under the California Medi-Cal 2020 Demonstration, Number 11-W-00193/9, as approved by the federal Centers for Medicare and Medicaid Services and described in the Special Terms and Conditions. For purposes of this subdivision, “Special Terms and Conditions” shall have the same meaning as set forth in subdivision (o) of Section 14184.10.

(2) “Specialist” means any of the following:

(A) Cardiology/interventional cardiology.

(B) Nephrology.

(D) Neurology.

(E) Endocrinology.

(F) Ophthalmology.

(G) Ear, nose, and throat/otolaryngology.

(H) Orthopedic surgery.

(I) Gastroenterology.

(J) Physical medicine and rehabilitation.

(K) General surgery.

(L) Psychiatry.

(M) Hematology.

(N) Oncology.

(O) Pulmonology.

(P) HIV/AIDS specialists/infectious diseases.

(i) Notwithstanding Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, the department, without taking any further regulatory action, may implement, interpret, or make specific this section by means of all-county letters, plan letters, plan or provider bulletins, or similar instructions until the time regulations are adopted.

(j) The department shall seek any federal approvals it deems necessary to implement this section. This section shall be implemented only to the extent that any necessary federal approvals are obtained and federal financial participation is available and is not otherwise jeopardized.

(k) This section shall remain in effect only until January 1, 2022, and as of that date is repealed, unless a later enacted statute that is enacted before January 1, 2022, deletes or extends that date.

SEC. 3. Section 14197.04 is added to the Welfare and Institutions Code, immediately following Section 14197, to read:

14197.04. (a) A Medi-Cal managed care plan that has received approval from the department to utilize an alternative access standard pursuant to subdivision (e) of Section 14197 shall assist an enrollee who is required to travel farther than the time and distance standards, as established in subdivision (c) of Section 14197, in obtaining an appointment with an appropriate out-of-network provider within the geographic area established pursuant to subdivision (b) of Section 14197 and the appointment time standards established pursuant to subdivision (d) of Section 14197.

(b) If an out-of-network provider is unavailable to render necessary health care services to an enrollee within the appointment time standards established pursuant to subdivision (d) of Section 14197, as specified in subdivision (a), the Medi-Cal managed care plan shall arrange for Medi-Cal covered transportation for an enrollee to obtain covered Medi-Cal services pursuant to Section 14132.

(c) A Medi-Cal managed care plan that has received approval from the department to utilize an alternative access standard pursuant to subdivision (e) of Section 14197 shall inform its members in the plan evidence of coverage or member handbook of both of the following:

(1) The alternative access standards.

(2) The Medi-Cal managed care plan contact information for enrollees to direct their questions about the alternative access standards, the availability of Medi-Cal covered transportation, and how to obtain Medi-Cal covered services.

(d) “Medi-Cal managed care plan” means any individual, organization, or entity that enters into a contract with the department to provide services to enrolled Medi-Cal beneficiaries pursuant to any of the following:

(1) Article 2.7 (commencing with Section 14087.3), including dental managed care programs developed pursuant to Section 14087.46.

(2) Article 2.8 (commencing with Section 14087.5).

(3) Article 2.81 (commencing with Section 14087.96).

(4) Article 2.82 (commencing with Section 14087.98).

(5) Article 2.91 (commencing with Section 14089).

(6) Chapter 8 (commencing with Section 14200), including dental managed care plans.

(7) Chapter 8.9 (commencing with Section 14700).

(8) A county Drug Medi-Cal organized delivery system authorized under the California Medi-Cal 2020 Demonstration, Number 11-W-00193/9, as approved by the federal Centers for Medicare and Medicaid Services and described in the Special Terms and Conditions. For purposes of this subdivision, “Special Terms and Conditions” shall have the same meaning as set forth in subdivision (o) of Section 14184.10.

(9) Chapter 3 (commencing with Section 101675) of Part 4 of Division 101 of the Health and Safety Code.

SEC. 4. Section 14197.05 of the Welfare and Institutions Code is amended to read:

14197.05. (a) As part of the federally required external quality review organization (EQRO) review of Medi-Cal managed care plans in the annual detailed technical report required by Section 438.364 of Title 42 of the Code of Federal Regulations, effective for contract periods commencing on or after July 1, 2018, the EQRO designated by the department shall compile the data described in subdivision (b), by plan and by county, for the purpose of informing the status of implementation of the requirements of Section 14197.

(b) (1) The information compiled by the EQRO shall include all of the following:

(A) Number of requests for alternative access standards in the plan service area for time and distance, categorized by provider types, including specialists, and by adult and pediatric.

(B) Number of allowable exceptions for the appointment time standard, if known, categorized by provider types, including specialists, and by adult and pediatric.

(C) Distance and driving time between the nearest network provider and ZIP Code of the beneficiary furthest from that provider for requests for alternative access standards.

(D) Approximate number of beneficiaries impacted by alternative access standards or allowable exceptions.

(E) Percentage of providers in the plan service area, by provider and specialty type, that are under a contract with a Medi-Cal managed care plan.

(F) The number of requests for alternative access standards approved or denied by ZIP Code and provider and specialty type, and the reasons for the approval or denial of the request for alternative access standards. If an approval is authorized, the reasons for approval shall identify whether the approval was granted for either of the following reasons:

(i) A provider was not located in the requested ZIP Code.

(ii) The Medi-Cal managed care plan was unable to enter into a contract with a provider or providers in the requested ZIP Code.

(G) The process of ensuring out-of-network access.

(H) Descriptions of contracting efforts and explanation for why a contract was not executed.

(I) Timeframe for approval or denial of a request for alternative access standards by the department.

(J) Consumer complaints, if any.

(K) The extent to which each Medi-Cal managed care plan uses clinically appropriate telecommunications technology, including telehealth, consistent with the requirements of Section 2290.5 of the Business and Professions Code, and e-visits, as specified in paragraph (4) of subdivision (e) of Section 14197, to meet the time and distance standards established pursuant to Section 14197.

(2) The information described in paragraph (1) shall be presented in a chart format to enable comparison among counties, provider types, and plans.

(c) The EQRO shall develop a methodology to assess information that will help inform the experience of individuals placed in a skilled nursing facility or intermediate care facility and the distance that they are placed from their place of residence. The EQRO shall report the results from the use of this methodology in the EQRO annual Medi-Cal managed care plan technical report.

(d) The department shall comply with the requirements of subsection (c) of Section 438.364 of Title 42 of the Code of Federal Regulations in making the information described in this section publicly available.

SEC. 5. Section 14301.15 is added to the Welfare and Institutions Code, to read:

14301.15. The department shall establish In establishing capitation rates that ensure rates, the department shall take into consideration both of the following:

(a) Beneficiary access to Medi-Cal covered services, including travel times to receive services.

(b) The ability of each Medi-Cal managed care plan to comply with the time and distance requirements, as set forth in subdivision (c) of Section 14197, and appointment time standards, as established pursuant to subdivision (d) of Section 14197, without seeking authorization from the department to adopt and alternative access standards approved pursuant to subdivision (e) of Section 14197. 14197 because the plan was unable to enter into a contract with a provider or providers in the relevant ZIP Code.

SEC. 6. Section 14304 of the Welfare and Institutions Code is amended to read:

14304. (a) The director shall terminate a contract with a prepaid health plan or a Medi-Cal managed health care plan if the director finds that the standards prescribed in this chapter, the regulations, or the contract are not being complied with, that claims accrued or to accrue have not or will not be recompensed, or for other good cause shown. Good cause includes, but is not necessarily limited to, three repeated and uncorrected findings of serious deficiencies that have the potential to endanger patient care, as defined by the department in accordance with this section, identified in the medical audits conducted by the department. Except in the event that the director determines there is an immediate threat to the health of Medi-Cal beneficiaries enrolled in the plan, at the request of the plan, the department shall hold a public hearing to commence 30 days after notice of intent to terminate the contract has been received by the plan. The department shall present evidence at the hearing showing good cause for the termination. The department shall assign an administrative law judge who shall provide a written recommendation to the department on the termination of the contract within 30 days after conclusion of the hearing. Reasonable notice of the hearing shall be given to the plan, to Medi-Cal beneficiaries enrolled in the plan, and others who may be directly interested, including any other persons and organizations as the director may deem necessary. The notice shall state the effective date of, and the reason for, the termination.

(b) In lieu of contract termination specified in subdivision (a), the director shall have the power and authority to take one or more of the following sanctions against a contractor for noncompliance with the findings by the director as specified in subdivision (a):

(1) Suspend enrollment and marketing activities.

(2) Require the contractor to suspend or terminate contractor personnel or subcontractors.

(3) Impose civil penalties in accordance with Section 438.704 of Title 42 of the Code of Federal Regulations, as follows:

(A) A limit of twenty-five thousand dollars ($25,000) for each determination of either of the following:

(i) The contractor misrepresents or falsifies information that is furnished to an enrollee, potential enrollee, or health care provider.

(ii) The contractor distributes directly, or indirectly through any agent or independent contractor, marketing materials that have not been approved by the department or that contain false or materially misleading information.

(B) A limit of one hundred thousand dollars ($100,000) for each determination of the following:

(i) The contractor conducts an act of discrimination against an enrollee on the basis of their health status or need for health care services. This includes termination of enrollment or refusal to reenroll a beneficiary, except as permitted under the Medicaid program, or any practice that would reasonably be expected to discourage enrollment by beneficiaries whose medical condition or history indicates probable need for substantial future medical services.

(ii) The contractor misrepresents or falsifies information that it furnishes to the federal Centers for Medicare and Medicaid Services or to the department.

(iii) The contractor fails to provide medically necessary services that the contractor is required to provide, under law or under its contract with the department, to an enrollee covered under the contract.

(C) A limit of fifteen thousand dollars ($15,000) for each beneficiary the department determines was not enrolled because of a discriminatory practice under clause (i) of subparagraph (B). This sanction is subject to the overall limit of one hundred thousand dollars ($100,000) under subparagraph (B).

(4) (A) Notwithstanding the penalties assessed for the violations set forth in subparagraphs (A), (B), and (C) of paragraph (3), the director may impose civil penalties in accordance with this section, as follows:

(i) The contractor violates any federal or state statute or regulation.

(ii) The contractor violates any provision of its contract with the department.

(iii) The contractor fails to achieve the 50th percentile of the Medicaid managed care plan minimum performance level on quality measures as established by the department.

(B) The civil penalties under this paragraph shall be assessed as follows:

(i) Five thousand dollars ($5,000) for the first violation.

(ii) Ten thousand dollars ($10,000) for the second violation.

(iii) Up to twenty-five thousand dollars ($25,000) for each subsequent violation.

(5) Make one or more of the temporary suspension orders set out in subdivision (d).

(6) Take other appropriate action as determined necessary by the department.

(c) The director shall give reasonable notice of their intention to apply any of the sanctions authorized by subdivision (b) to the plan and others who may be directly interested, including any other persons and organizations as the director may deem necessary. The notice shall include the effective date, the duration of, and the reason for each sanction proposed by the director. The penalties described in paragraphs (3) and (4) of subdivision (b) may be separately and independently assessed. Unless imposed in error, the penalties described in paragraphs (3) and (4) of subdivision (b) shall not be returned to the plan.

(d) Notwithstanding subdivisions (b) and (c), the director shall terminate a contract with a prepaid health plan or a Medi-Cal managed health care plan which the United States Secretary of Health and Human Services has determined does not meet the requirements for participation in the Medicaid program contained in Subchapter 19 (commencing with Section 1396) of Chapter 7 of Title 42 of the United States Code.

(e) (1) The department may make one or more of the following temporary suspension orders as an immediate sanction: temporarily suspend enrollment activities, temporarily suspend marketing activities, require the contractor temporarily to suspend specified personnel of the contractor, or require the contractor temporarily to suspend participation by a specified subcontractor. The temporary suspension orders must be effective no earlier than 20 days after the notice specified in subdivision (c).

(2) If the department issues a temporary suspension order as an immediate sanction, it shall notify the contractor of the nature and effective date of the temporary suspension and at the same time shall serve the provider with an accusation. Upon receipt of a notice of defense filed by the contractor, the department shall within 15 days set the matter for hearing, which shall be held as soon as possible, but not later than 30 days after receipt of the notice of hearing by the contractor. The hearing may be continued at the request of the contractor if a continuance is necessary to permit presentation of an adequate defense. The temporary suspension order shall remain in effect until the hearing is completed and the department has made a final determination on the merits. However, the temporary suspension order shall be deemed vacated if the director fails to make a final determination on the merits within 60 days after the original hearing has been completed.

(f) A contractor may request a hearing in connection with any sanctions applied pursuant to subdivision (b), other than those contained in a temporary suspension order, within 15 working days after the notice of the effective date of the sanctions has been given, by sending a letter so stating to the address specified in the notice. The department shall stay implementation of the sanction upon receipt of the request for a hearing. Implementation of the sanction shall remain stayed until the effective date of the final decision of the department.

(g) Except as otherwise provided in this section, all hearings to review the imposition of sanctions, including temporary suspension orders, shall be held pursuant to the procedures set forth in Section 100171 of the Health and Safety Code.

(h) The director may collect civil penalties by withholding the amount from capitation owed to the plan.