county granted Medi-Cal eligibility under Section 14005.4, 14005.7, or 14005.8 or Article 4. 4 (commencing with Section 14140).

cases.

determination the director shall impose such fiscal penalties as provided by this section to assure adequate county administrative performance.

spend down of excess income. When a sample case is found to include an ineligible person or a person with an understated spend down of excess income, written notification shall be sent to the county department that describes the error and requests a written response within two weeks. The county shall indicate whether it agrees or disagrees with the findings. If the county disagrees, the department shall reevaluate the error findings, taking into consideration any additional facts contained in the county’s response. The department shall again notify the county of the

department’s findings. If the county continues to disagree with the error findings, the county may appeal to the Chief of the Medi-Cal Policy Division, requesting that the department review the case and render a final decision. The director may reduce or waive the fiscal liability of a county if the department is unable to meet the minimum sample required, as defined in subdivision (c), or if an individual county experienced a natural disaster, job actions, or other occurrences that impacted the findings in an individual county as determined by the director.

period by dividing the number of completed case reviews in that county found in error by the number of case reviews in that county. State caused errors shall be determined by the department and shall not be included in this calculation. Case error rates shall be arrayed from highest to lowest. From this array, the department shall determine the percentage of counties liable as follows:

rates shall be liable if the state’s dollar error rate exceeds the federal standard by greater than 2 percent and less than or equal to 3 percent.

As used herein, “the state’s dollar error rate” means the Medicaid dollar error rate reported to the department by the United States Department of Health and Human Services, less any portion of this error rate attributable to state caused errors. The term “federal standard” means the Medicaid dollar error rate standard to which the state is held accountable.

For each county determined liable, the department shall calculate a penalty multiple

that shall be the product of a liable county’s case error rate multiplied by the liable county’s percentage of statewide Medi-Cal cases. Each county’s fiscal penalty shall be the product of a county’s penalty multiple divided by the sum of all penalty multiples, multiplied times the penalty bank. The penalty bank includes only quality control federal fiscal sanctions, federal withholds, federal disallowances, and any associated General Fund expenditures, minus the value of any state assumed errors and the General Fund share of the value of client caused errors. The case error rate and penalty multiple shall be adjusted by excluding client errors for the purpose of determining the associated General Fund expenditures.

If, after the department has assessed penalties to counties, the federal government reduces or eliminates any quality control federal fiscal sanction, federal withhold or federal disallowance, the department

shall reduce or eliminate the corresponding fiscal penalty assessment including any associated General Fund expenditures to liable counties.

that would have been incurred had that county not contravened the established state eligibility processing regulations and written instructions. This section shall not be construed to interfere with the rights of counties to out-station eligibility staff.

Notwithstanding the number of counties determined liable for fiscal penalties under this section, individual county corrective action plans as prescribed by the department shall be required from all counties that exceed a 15 percent case error rate.

counties.