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A complex web of provider oversight in California

September 4, 2013
by Alison Knopf, Contributing Writer
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(Second in a two-part series)
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California officials’ ongoing investigation of treatment programs that have received state Medicaid funding for substance use services has coincided with state agency changes that in some circles may have created confusion about lines of responsibility.

The former state Department of Alcohol and Drug Programs (ADP) officially transferred to the Department of Health Care Services (DHCS) on July 1—that transfer originally was supposed to have taken place a year earlier. While most substance abuse treatment funding is now administered through California counties under a realignment process that occurred in the state, some who work in county jurisdictions may have continued to think that only the state had the authority to decide which providers to pay and which not to pay.

Yet Warren Daniels, CEO of Grass Valley-based provider Community Recovery Resources, says there should not have been any confusion at the county level; his program has contracts with six counties. “The contracts clearly state that if I do not perform at the required level, as witnessed by their audits, then they have the right to shut us down,” says Daniels.

It is not the county alcohol and drug programs administrator, however, who has the authority to stop paying a program that might have engaged in the questionable billing practices that the state is investigating—it is the county Board of Supervisors, says Tom Renfree, executive director of the County Alcohol & Drug Program Administrators Association of California (CADPAAC).

The most common fraud DHCS is looking into involves billing for services that weren’t delivered, Renfree told Addiction Professional. “I don’t know whether the providers highlighted by [the CNN and Center for Investigative Reporting investigation] are reflective of the makeup of the population that is committing the fraud,” he says.

While the boards of supervisors have the authority to suspend Drug Medi-Cal (DMC) payments, the counties’ hands still are tied to a certain extent, notes Renfree. “Even under realignment, we still have the ‘any willing provider’ provision that says if a county won’t contract with a certified Medicaid provider, that provider can go to the state,” he says.

Michael Cunningham, the former acting director of ADP who retired when the agency shut down this year, was in a difficult position as acting director; the most recent ADP director had been Renee Zito. “When Kathy Jett was [ADP] director, she shut down many of these fraudulent programs,” says Renfree. “She went to the attorney general.”

The treatment programs that are currently under investigation are located mainly in Los Angeles County, with a few in Riverside County, says Renfree. DHCS as of mid-August had suspended Medi-Cal payments to 43 provider organizations.

“I don’t know how many have been forcibly closed, but the ones that are under investigation are not getting paid,” says Renfree. “They’re coming to the counties for their checks, but the counties can’t pay them because they’re under investigation.”

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