(a) Notwithstanding any other law, and in addition to any other remedial action available to the department, if a skilled nursing facility fails to meet or exceed one or more of the measures developed by the department, including, but not limited to, those developed pursuant to subdivision (b) of Section 14126.024, the department may assess sanctions as described in this section.

(b) (1) For each measure a skilled nursing facility fails to meet or exceed in a single rating period, the department may assess a sanction of five dollars ($5) for each Medi-Cal bed day within the rating period.

(2) For each measure a skilled nursing facility fails to meet or exceed, the department shall not assess an aggregate sanction that exceed one hundred fifty thousand dollars ($150,000) in a single rating period.

(c) The director may identify findings of noncompliance through any means, including, but not limited to, findings in audits, investigations, compliance reviews, quality improvement monitoring, routine monitoring, facility site surveys, encounter and provider data submissions, grievances and appeals, reviews of utilization data, fair hearing decisions, complaints from beneficiaries and other stakeholders, whistleblowers, and self-disclosures.

(d) Notwithstanding any other law, the amount of the assessed sanction, as calculated pursuant to subdivision (b), for a skilled nursing facility may be deducted by the department from any Medi-Cal payments to that facility until the sanction is paid in full. If the department deducts the sanction from the Medi-Cal payments to the facility, the department shall provide prior written notice to the facility, and, in taking into account the financial condition of the facility, may apply that deduction over a period of time.

(e) Notwithstanding any other law, if there is a merger, acquisition, or change of ownership involving a skilled nursing facility that has an outstanding sanction pursuant to this section, the successor skilled nursing facility shall be responsible for paying to the department the full amount of the outstanding sanction attributable to the facility for which it was assessed, upon the effective date of that transaction.

(f) The department may waive all or a portion of the sanction assessed under this section if a facility petitions for a waiver and the department determines, in its sole discretion, that the petitioning facility meets both of the following:

(1) The facility has demonstrated to the department’s satisfaction that sufficient corrective action has been taken to remediate the underlying deficiency.

(2) The facility has demonstrated to the department’s satisfaction that imposing the full amount of the sanction under this section has a high likelihood of creating an undue financial hardship for that facility or creates a significant difficulty in providing services to Medi-Cal beneficiaries.

(g) Any sanction collected by the department pursuant to this section shall be deposited into the General Fund, and, upon appropriation by the Legislature, shall be used to improve the quality of skilled nursing facility services under the Medi-Cal program, and to fund the department’s administrative costs associated with implementing the program described in this section.

(h) (1) If a facility disputes any sanction made pursuant to this section, the facility shall, within 30 days of the facility’s receipt of the sanction assessment, submit a request for appeal to the department. The request shall include a detailed statement describing the reason for appeal and include all supporting documents the facility will present at the hearing.

(2) Within 30 days of the department’s receipt of the facility’s request for appeal, the department shall submit to the facility its responsive arguments and all supporting documents that the department will present at the hearing.

(3) The department shall hear a timely appeal and issue a decision as follows:

(A) The hearing shall commence within 60 days from the date of receipt by the department of the facility’s timely request for appeal.

(B) The department shall issue a decision within 120 days from the date of receipt by the department of the facility’s timely request for appeal.

(C) The decision of the department’s hearing officer, when issued, shall be the final decision of the department.

(4) The appeals process set forth in this subdivision shall be exempt from Chapter 4.5 (commencing with Section 11400), and Chapter 5 (commencing with Section 11500), of Part 1 of Division 3 of Title 2 of the Government Code. The provisions of Sections 100171 and 131071 of the Health and Safety Code do not apply to appeals under this subdivision.

(5) If a hearing decision issued pursuant to subparagraph (C) of paragraph (3) of this subdivision is in favor of the department, the skilled nursing facility shall pay the sanctions to the department within 30 days of the facility’s receipt of the decision. The sanctions collected shall be deposited in accordance with subdivision (g).

(i) Any sanction issued pursuant to this section shall not prohibit any state or federal enforcement action, including, but not limited to, the State Department of Public Health’s investigation process or issuance of deficiencies or citations under Chapter 2.4 (commencing with Section 1417) of Division 2 of the Health and Safety Code.

(j) In implementing this section, the department may contract, as necessary, with California’s Medicare Quality Improvement Organization, or other entities deemed qualified by the department, not associated with a skilled nursing facility, to assist with development, collection, analysis, and reporting of the performance data pursuant to this section. The department may enter into exclusive or nonexclusive contracts, or amend existing contracts, on a bid or negotiated basis for purposes of implementing this subdivision. Contracts entered into or amended pursuant to this subdivision shall be exempt from Chapter 6 (commencing with Section 14825) of Part 5.5 of Division 3 of Title 2 of the Government Code, Part 2 (commencing with Section 10100) of Division 2 of the Public Contract Code, the State Administrative Manual, and the State Contracting Manual, and shall be exempt from the review or approval of any division of the State Department of General Services.

(k) This section shall be implemented only to the extent that any necessary federal approvals are obtained and federal financial participation is available and is not otherwise jeopardized.

(l) For purposes of this section, “skilled nursing facility” has the same meaning as set forth in subdivision (c) of § 1250 of the Health and Safety Code, excluding a nursing facility that is a distinct part of a facility that is licensed as a general acute care hospital as described in subdivision (a) of § 1250 of the Health and Safety Code.

(Added by Stats. 2022, Ch. 46, Sec. 10. (AB 186) Effective June 30, 2022. Conditionally inoperative as provided in subd. (a) of Section 14126.035. Inoperative after December 31, 2026, pursuant to Section 14126.036. Repealed as of January 1, 2028, pursuant to Section 14126.036.)