DHCS Submits Alternative Proposal to Resolve California’s SMAA Deferral

On February 20, 2015, California’s Department of Health Care Services (DHCS) submitted a proposal to the federal Center for Medicare and Medicaid Services (CMS) that would bring a fair and swift end to the nearly three year long deferral of the school MAA program.

Instead of submitting a proposal for backcasting, a method DHCS and CMS had agreed last October as the final means to settle the deferral, DHCS submitted a proposal that — if approved — would pay all deferred claims a final settlement percentage based on the claim amount and eliminate the backcasting requirement. Under the DHCS proposal, claims under $25,000 would receive 100% and all claims over $25,001 would be paid at 75% or $25,000 (whichever is higher).

This settlement represents a compromise wherein schools would forfeit as much as 25% of their reimbursements for claims dating as far back as fiscal year 2009-10 to account for the programmatic compliance concerns cited by CMS as the result of their 2012 SMAA audit. These concerns included risks of artificially inflated time spent on Medi-Cal outreach and initial referrals, and claiming by general education classroom teachers.

There is no timetable for when CMS must respond to DHCS’ new proposal. Until the most recent proposal is approved or denied, California schools will continue to operate under the terms of the October 2014 settlement.