STR Bill Id:SB 930 (Author:Evans)

SB 930

Page 1

SENATE THIRD READING

STR Bill Id:SB 930 (Author:Evans)

As Amended Ver:August 15, 2011

Majority vote

SENATE VOTE:23-16

HUMAN SERVICES4-1APPROPRIATIONS 11-6

SUMMARY: Repeals requirements that In-Home Supportive Services (IHSS) recipients provide fingerprint images and that provider timesheets include spaces for provider and recipient fingerprints; repeals the prohibition against providers using a post office box address to receive their paychecks; and, corrects problems with the provider appeals process. Specifically, this bill:

1)Repeals the requirement that IHSS recipients provide fingerprint images at the time of assessment or reassessment.

2)Repeals the requirement that the standardized timesheet include designated spaces for the index fingerprints of the provider and the recipient.

3)Deletes the requirements and prohibitions related to the use of a post office box address by an IHSS provider.

4)Requires the county or IHSS public authority to provide the state Department of Social Services (DSS) with an unmodified copy of the Department of Justice (DOJ) criminal offenderrecord information search response (CORI) if an IHSS provider or provider applicant has requested an appeal of a denial of placement on the IHSS provider registry as a result of a DOJ criminal background check.

5)Requires the county or public authority to provide an IHSS provider or provider applicant with an unmodified copy of his or her CORI with any notice of denial, along with information on how the individual may contest the accuracy or completeness of, or refute any erroneous information in the CORI.

FISCAL EFFECT: According to the Assembly Appropriations Committee:

Savings of $41.6 million ($21 million GF) spread over seven years associated with not implementing the finger imaging requirements. Those savings would be offset to an unknown degree by forgone savings associated with deterring fraudulent activity.

1)Absent this bill, it is assumed that the administrations would need to comply at some point with current law and implement the finger imaging requirements and the prohibition against providers using post office boxes. Previous budget estimates suggest that total costs for finger imaging would be approximately $41.6 million ($21 million GF) over seven years. Therefore, this bill removes that cost pressure.

2)Though these anti-fraud provisions were never implemented, the Governor's 2010-11 budget assumed all of the anti-fraud initiatives adopted in 2009 would result in approximately $390 million ($135 million GF) in savings in the first full year. It is unclear how much of that would have been attributable to finger imaging and the prohibition against post office boxes. Proponents of this finger imaging policy would argue, however, that there are foregone savings of perhaps tens of millions of dollars associated with this legislation.

Proponents of this legislation, on the other hand, argue that there is no evidence of widespread fraud in the IHSS program and therefore it is unlikely the level of savings assumed by the previous administration is realistic.

COMMENTS:

Anti-fraud measures: According to the author, this bill is intended to repeal three untenable components of the “IHSS Anti-Fraud Initiative” included in the 2009-10 budget trailer bill related to IHSS, AB 19 X4 (Evans), Chapter 17, Statutes of 2009 Fourth Extraordinary Session. The author says:

In 2009, Governor Schwarzenegger persuaded the Legislature to adopt the “IHSS Anti-Fraud Initiative.” The purpose of this effort was to ensure the identity of IHSS applicants and to prevent duplicate aid. The initiative included ten separate components. Three components of this initiative have proven to be costly and ineffective: (1) fingerprinting for all consumers, (2) provider and consumer fingerprints on timesheets, and (3) prohibition of the use of P.O. Boxes by providers on IHSS forms. There is no evidence to support the effectiveness of these three “anti-fraud” mandates. In the absence of this evidence, the $41.6 million to be spent on this part of the program should be spent on other priorities.

Background: In 2004, comprehensive legislation was enacted to standardize assessment of IHSS recipients' needs and to ensure integrity in the IHSS program, SB 1104 (Budget & Fiscal Review Committee), Chapter 224, Statutes of 2004. SB 1104 directed DSS and the Department of Health Care Services (DHCS) to develop a new provider enrollment form that each person seeking to provide supportive services must complete, sign under penalty of perjury, and submit to the county. SB 1104 also gave DHCS authority to investigate suspected instances of fraud in the IHSS program. SB 1104 required DSS, DHCS, and county quality assurance staff to work together and coordinate activities.

In July 2009, AB 1 X4 (Evans), Chapter 1, Statutes of 2009 Fourth Extraordinary Session, allocated additional 2009-10 and 2010-11 funds to DHCS and DSS for a total of 25 new fraud investigation and program integrity-related positions. AB 1 X4 (Evans)additionally included $10 million in additional funds to be allocated to counties based on their approved plans. AB 4 X4 (Evans), Chapter 4, Statutes of the 2009-10 Fourth Extraordinary Session, the human services trailer bill, also included changes to provisions governing the new provider enrollment form, requiring documentation to be submitted in person by applicant providers to county offices.

At the same time, AB 19 X4 (Evans), was enacted to enhance program integrity and anti-fraud protections in the IHSS program. AB 19 X4was considered through the budget process and was not vetted through legislative policy committees. It included the following anti-fraud measures: 1) new provider enrollment requirements; 2) fingerprinting and criminal background checks for all providers; 3) increased data matching with jail, death and other official records to eliminate fraudulent claims; 4) provider acknowledgement of delivering services; 5) provider orientations; 6) unannounced home visits; 7) fraud training for county staff; 8) prohibition on the use of post office boxes by providers on IHSS forms; 9) fingerprinting recipients; and, 10) fingerprints of recipient and provider on each timesheet. This bill repeals the last three of these measures.

No cost-benefit analysis was done at the time to support the anti-fraud measures of AB 19X4, including the fingerprinting requirements. Nonetheless, the 2009-10 Budget included the Schwarzenegger Administration's estimate of about $162 million General Fund savings as a result of new anti-fraud activities in the IHSS program. The estimated savings were based on an assumption of a basic 10% of program costs. No further empirical basis for the assumption was offered. The Administration's 2010-11 Budget estimated an annual General Fund Savings of $130 million annually from anti-fraud measures.

How common is IHSS fraud? Statewide data on the incidence of fraud in the IHSS program is lacking. Federal participation in the cost of IHSS services comes through the Medicaid program, and because DHCS is California’s single state agency for Medicaid, the unit charged with investigating reports of suspected fraud in the IHSS program is located within that department. As reported in June 2009, according to DHCS:

Currently there is no accurate means of measuring or monitoring IHSS fraud within the state. This is because of the number of jurisdictions involved and the various data collection systems in place . . . Because there is no accurate means of measuring or monitoring IHSS fraud within the state, we do not know the exact number of providers or recipients committing fraud.

In-Home Supportive Services: A Primer on Potential Fraud and Suggestions for Curbing It, California Senate Office of Oversight and Outcomes (June 26, 2009), p. 3.

While accurate statewide data on the incidence of IHSS fraud is lacking, there is no shortage of misinformation. For example, in support of the prior administration's anti-fraud proposals, Governor Schwarzenegger and a number of district attorneys repeatedly referenced a figure of 25% in fraudulent IHSS payments. This figure appears to have originated in a 2004 Spring Finance Letter in reference, not to fraud but, rather, to weaknesses and deficiencies in the needs assessments conducted at the time. Based on state level case reviews conducted for a number of years, the Finance Letter notes, "at least 10% of all paid services may be over-assessed or have not actually been provided." The Finance Letter then references the Governor's Budget for fiscal year 2004-05, which reportedly "acknowledged that up to 25% of the hours may be over-assessed." This 25% figure was then picked up by news media and reported as a reflection of fraud in the IHSS program, rather than over-assessments due to problems with the need assessment process then in use.

In short, available data do not support the conclusion that there is widespread fraud in the IHSS program. Nonetheless, this bill does not impact most of the anti-fraud measures enacted through AB 19X4 (Evans). It would cancel only the requirement that counties secure fingerprint images of applicants for and recipients of IHSS at the time of application or reapplication; the requirement that timesheets have a space for an index-finger print of both the recipient and the provider of IHSS; and, the prohibition against providers using a post office box for receipt of wage checks. In addition to “quality assurance” provisions added by the Legislature in 2004, seven of the ten measures included in AB 19 X4.

Duplicate aid fraud: Fingerprinting of IHSS recipients is purportedly intended to prevent duplicate aid fraud—i.e., receiving aid under more than one identity or in more than one county. Whatever the overall incidence of fraud in the IHSS program, no data are available on the incidence of this type of fraud. In fact, it is difficult to even conceive of scenarios of how such duplicate aid fraud might be perpetrated by the seniors and people with disabilities who receive IHSS services. As advocates opposing proposed 2010-11 Budget expenditures for proceeding with recipient fingerprinting pointedly remarked at the time, "[t]his is a solution in search of a problem; there is no evidence that people are disguising themselves as someone else to get IHSS, or that people are going from county to county to be bathed."

Arguments in support: Supporters of this bill note that the state has estimated that it would need $8.2 million this year alone, and a total of $41.6 million over the next 7 years, to implement the recipient fingerprinting requirement. "Clearly," these supporters say, "in these difficult fiscal times, the expenditure of millions to implement an anti-fraud initiative in the absence of demonstrated widespread fraud would be imprudent at best." Supporters point to a May 8, 2010, letter to DSS from the Obama Administration concerning fingerprinting in the CalFresh program, which notes that "[m]ost States satisfy the requirement to establish a system to prevent duplicate participation by matching names with social security numbers, which is far less costly than finger image systems yet equally effective at detecting duplicate participation."

On the issue of post office boxes,supporters note that there are many valid reasons that IHSS providers use post office boxes. Many IHSS providers live in rural areas where there are no alternative means for receiving mail. Also, many providers live with relatives or roommates who do not allow them to get mail sent to their residence. The U.S. Postal Service itself points out on its Web site that "[m]any customers value the privacy, security, and flexibility of a Post Office Box," noting, for example, that: "It's fast. Mail typically arrives faster at a PO Box than at a residential or business address" and "It's permanent. You can move around, but your PO Box address stays the same." Organizations representing counties and county human services departments assert that limiting the use of post office boxes may harm the ability of counties and consumers to recruit and retain providers. Supporters also point out that no evidence was ever offered to connect post office boxes with fraud.

Arguments in opposition: In opposition, the California District Attorneys Association (CDAA) suggests that the anti-fraud measures in question, and particularly the fingerprinting requirements have a deterrent effect and that repealing these measures "will significantly hinder efforts to deter persons from seeking duplicate aid and could potentially make the discovery of such fraud more difficult." CDAA also opposes repeal of the prohibition on using post office boxes, asserting that "[t]he less physical information law enforcement and prosecutors have about persons who would defraud the IHSS program, the harder it is to intercede and stop such activity."

Provider appeals: As a condition of being placed or maintained on a county's IHSS provider registry, AB 19 X4 required criminal background checks to be completed for all prospective IHSS providers as of October 1, 2009, and to be completed by July 2, 2010, for anyone already a provider on October 1, 2009.

Under California law, consistent with federal Medicaid law, an individual may not serve as a provider of services under the IHSS program for 10 years following a conviction for specified crimes involving fraud against a government health care or supportive services program, child endangerment, or elder or dependent adult abuse. (These are commonly referred to as "Tier 1" offenses.) The 2010 human services budget trailer bill, AB 1612 (Budget Committee), Chapter 725, Statutes of 2010, provided for the additional exclusion, with certain exceptions, of provider applicants for 10 years following a conviction for a violent or serious felony, as defined in the Penal Code, and other specified felony offenses. These exclusions, referred to as "Tier 2" offenses, apply prospectively, to new provider applicants, beginning 90 days following the effective date of that bill.

Persons disqualified from providing IHSS services based on prior conviction for a Tier 1 or Tier 2 offense have appeal rights to challenge the accuracy of a criminal background check. The author notes that there is a flaw in the statutory appeal process in that it does not authorize counties and public authorities to provide DSS with an actual copy of the individual's CORI in the event of an appeal. Instead, information from the CORI must be manually extracted from the CORI and copied into a separate document, which is then transmitted to DSS. This process increases the likelihood of DSS' receiving inaccurate information due to clerical errors or omissions.

This bill, by way of clean-up, corrects this situation by requiring that DSS be provided with an unmodified copy of the CORI itself. This bill further clarifies that the individual provider or provider applicant must be provided with an unmodified copy of his or her CORI in the event of a denial of eligibility to be placed on the IHSS registry, along with information on how the individual may contest the accuracy of information in the CORI.

Analysis Prepared by: Eric Gelber / HUM. S. / (916) 319-2089

FN: 0002199