(a) It is the intent of the Legislature to ensure overall program integrity in the AFDC-FC program through the establishment of an effective and efficient process for the collection of provider sustained overpayments. Furthermore, the intent of the Legislature is to ensure that children placed in AFDC-FC programs, including, but not limited to, group homes, short-term residential therapeutic programs, and foster family agencies, receive the level of care and supervision commensurate with the program’s paid rate.
(b) The department may collect a sustained overpayment from the party responsible for the sustained overpayment, regardless of whether the party remains in the business of providing any AFDC-FC programs, and regardless of whether the provider remains licensed by the department.
(c) For the purposes of this section, a provider overpayment is an overpayment that results from an audit period when a provider receives a rate reimbursement to which it is not entitled. If a provider receives a rate reimbursement to which it is not entitled, including, but not limited to, the provider failing to maintain a license, or failing to maintain its status as a nonprofit organization, or due to an overpayment determined as described in paragraph (1) of subdivision (d), it shall be liable to repay the overpayment.
(d) (1) Overpayments shall be determined by a provider audit pursuant to Section 11466.21, a department audit conducted pursuant to Section 11466.2, a management decision letter, or a provider self-reporting an overpayment. A self-reported overpayment may include a finding in the financial audit report submitted by the provider whether that finding is formally made in the financial audit report or discovered through department review of the report or other provider submission.
(2) If a hearing is not requested, or on the 60th day after an informal decision if a provider or the department does not file a notice of intent to file a formal appeal, or on the 30th day following a formal appeal hearing decision, whichever is latest, a provider overpayment shall be sustained for collection purposes and the department shall issue a demand letter for repayment of the sustained overpayment.
(3) The department shall establish a voluntary repayment agreement procedure with a maximum repayment period of nine years. The procedure shall take into account the amount of the overpayment, projected annual income of the program that caused the overpayment, a minimum repayment amount, including principal and interest, of 3 percent of annual income prorated on a monthly basis, simple interest for the first seven years of the voluntary repayment agreement on the overpayment amount based on the Surplus Money Investment Fund, and simple interest for the eighth and ninth years of the voluntary repayment agreement based on the prime rate at that time plus 3 percent. The department may consider renegotiation of a voluntary repayment agreement if the department determines that the agreement would cause severe harm to children in placement.
(4) The department shall establish an involuntary overpayment collection procedure, that shall take into account the amount of the overpayment, projected annual income, a minimum required repayment amount, including principal and interest, of 5 percent of the annual income prorated on a monthly basis, simple interest on the overpayment amount based on the Surplus Money Investment Fund, and a maximum repayment period of seven years. The department may consider renegotiation of an involuntary payment agreement if the department determines that the agreement would cause severe harm to children in placement.
(e) The department shall maintain, by regulation, all-county letter, or similar written directive, a procedure for recovery of any provider sustained overpayments. The department shall prioritize collection methods, which shall include voluntary repayment agreement procedures, involuntary overpayment collection procedures, including the use of a statutory lien, rate request denials, rate decreases, and rate terminations. The department may also deny rate requests, including requests for rate increases, or program changes or expansions, while an overpayment is due. The department shall seek recovery of provider sustained overpayments in a manner that does not jeopardize overall availability of placements for foster children.
(f) Whenever the department determines that a provider sustained overpayment has occurred, the department shall recover from the provider the full amount of the sustained overpayment, and simple interest on the sustained overpayment amount, pursuant to methods described in subdivision (e), against the provider’s income or assets.
(g) If a provider is successful in its appeal of a collected overpayment, it shall be repaid the collected overpayment plus simple interest based on the Surplus Money Investment Fund.
(Amended by Stats. 2017, Ch. 732, Sec. 82. (AB 404) Effective January 1, 2018.)