(a) (1) Notwithstanding any other law, the department shall audit the costs and revenues of skilled nursing facilities that are associated with the COVID-19 Public Health Emergency, as determined by the department, including, but not limited to, equivalent amounts paid pursuant to paragraph (15) of subdivision (c) of Section 14126.033, to determine whether a skilled nursing facility has adequately used increased Medicaid payments associated with the COVID-19 Public Health Emergency made pursuant to subdivision (a) of Section 14124.12 for only allowable costs. For purposes of this section, allowable costs shall include patient care, additional labor costs attributable to the COVID-19 Public Health Emergency including, but not limited to, increased wages or benefits, shift incentive payments, staff retention bonuses, pay differential for workers employed by more than one facility, and overtime payments to nonmanagerial workers, and other appropriate costs that support the delivery of patient care, including, but not limited to, personal protective equipment, COVID-19 testing for any workers regardless of whether they are symptomatic or asymptomatic, infection control measures and equipment, and additional staff training. The department shall conduct financial audits of facility costs and revenues under this section based on the categories defined in Section 14126.023, including, but not limited to, direct labor costs, indirect labor costs, and administrative costs, and in accordance with any terms of federal approval obtained pursuant to subdivision (d).

(2) For the costs and revenues associated with the time period of January 1, 2023, through December 31, 2023, the audit conducted pursuant to paragraph (1) shall include an audit of revenues received by a facility that were spent on additional labor costs attributable to the COVID-19 Public Health Emergency, including, but not limited to, increased wages or benefits, shift incentive payments, staff retention bonuses, pay differential for workers employed by more than one facility, and overtime payments to nonmanagerial workers. If a skilled nursing facility spent less than 85 percent of revenues associated with the COVID-19 Public Health Emergency on additional labor costs during this time period, the skilled nursing facility shall remit to the department the difference between that amount and 85 percent of revenues associated with the COVID-19 Public Health Emergency received by that facility. If the skilled nursing facility fails to remit this amount within 90 days, the department shall recoup that amount by withholding the remittance amount from any Medi-Cal payment made to the facility, or by any other means available by law.

(3) Such increased wages or benefits, shift incentive payments, staff retention bonuses, pay differential for workers employed by more than one facility, overtime payments to nonmanagerial workers or other additional labor costs shall qualify for the purposes of paragraph (2) if they were either of the following:

(A) Implemented prior to January 1, 2023, and continued during the 2023 calendar year.

(B) Implemented on or after January 1, 2023.

(b) For purposes of implementing this section, a skilled nursing facility that received increased Medicaid payments described in subdivision (a) shall disclose, at the time and in the form and manner specified by the department, any information requested by the department relating to costs and revenues associated with the COVID-19 Public Health Emergency. This may include, but is not limited to, documentation of any grant, loan, payment or other revenue received by the facility pursuant to any federal or state law related to the COVID-19 Public Health Emergency.

(c) To the extent permissible under federal law, and in addition to any other remedial actions available to the department, the department shall recoup any amounts of the increased Medicaid payments audited pursuant to paragraph (1) of subdivision (a) that were not used to support the delivery of patient care against any applicable Medicaid payments made to the facility.

(d) (1) The department shall seek any state plan amendments it deems necessary to audit the increased Medicaid payments described in subdivision (a) and recoup identified overpayments as described in this section.

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

(e) For purposes of this section, “COVID-19 Public Health Emergency” means the federal Public Health Emergency declaration made pursuant to Section 247d of Title 42 of the United States Code on January 30, 2020, entitled “Determination that a Public Health Emergency Exists Nationwide as the Result of the 2019 Novel Coronavirus,” and any renewal of that declaration.

(f) For any recoupment pursuant to paragraph (2) of subdivision (a) or subdivision (c) associated with the audit of costs and revenues for the time period of January 1, 2023, through December 31, 2023, the amounts associated with such recoupment shall be added on a one-time basis to the amount available for the Workforce and Quality Incentive Program described in Section 14126.024 in a subsequent rate year.

(Amended by Stats. 2022, Ch. 46, Sec. 11. (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.)