Sonoma County confronts state over $9 million in outstanding Medi-Cal mental health payments

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Sonoma County officials are calling on the state to make good on $8.7 million in “outstanding and delayed” Medi-Cal claims for mental health services for low-income residents with severe mental illness.

Local officials said the state is using a 7-year-old cost formula for calculating its Medi-Cal reimbursement rate for mental health services, and as a result the county has been short-changed $4.4 million in the past three years.

The state also owes the county an additional $4.3 million in reimbursements under an amendment to the state’s Medi-Cal agreement with the federal government, officials said.

“While we fill our jails and homeless shelters with severely mentally ill people, the state sits on nearly $9 million in Medi-Cal reimbursements,” said Shirlee Zane, chairwoman of the Board of Supervisors.

Last week, Zane fired off a letter to Jennifer Kent, director of the Department of Health Care Services, asking her department to reimburse the county based on the true cost of services it provides. In the June 21 letter, Zane said the state’s delay in using the county’s most recent cost reports has led to years of underpayment.

Michael Kennedy, the director of the county’s mental health divisions, said the state will eventually pay the outstanding Medi-Cal funds. But he said the delay creates “cash flow problems for counties.”

Kennedy said he’s been negotiating with state health care officials for more than a month and is close to a resolution. He said state officials have agreed to use the Medi-Cal billing rates in the county’s most recent cost reports, which the state has not yet audited.

“Before they were saying it had to be an approved claim,” said Kennedy. “That would mean they have to come and do an audit and they’re behind on those.”

Kennedy said he expected the state to make some of the outstanding payments in the fall.

“We’re working with the Department of Health Care Services to accomplish that and to make sure that we’re getting reimbursed as quickly as we can,” he said.

Medi-Cal, the state’s version of the federal Medicaid program for low-income patients, is administered by Department of Health Care Services. The state and federal government split the cost of the Medi-Cal program.

Medi-Cal paid mental health claims handled by Sonoma County amount to about $26 million a year, according to Kennedy.

The county pays for the services upfront and later gets reimbursed by the state for the federal government’s share of paying for the Medi-Cal program.

The Department of Health Care Services said its staff met with Sonoma County staff in May 2017 to discuss the county’s concerns. DHCS said its reimbursement process strictly adheres to rules established by the federal Centers for Medicare & Medicaid Services.

“DHCS is reviewing that process and information provided by Sonoma County to determine if additional payments are due to Sonoma County,” said DHCS spokesman Anthony Cava.

Zane said the outstanding payments create an “access problem” for local residents with severe mental illness.

“We’re being starved by the state,” she said.

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