Medi-Cal Update

Inpatient Services | November 2017 | Bulletin 518

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1. State Fiscal Year 2016 – 2017 DRG Outlier Recalculation Policy

The Department of Health Care Services (DHCS) has established an outlier recalculation policy for hospitals reimbursed under the All Patient Refined Diagnosis-Related Group (APR-DRG) for claims with dates of service on July 1, 2016 and through June 30, 2017, as follows:

DHCS will begin cost report audits in the manner and form prescribed in Welfare and Institutions Code (W&I Code), Section 14170(a)(1), and determine the audited cost-to-charge ratios (CCRs). Additional hospitals may be included in the outlier recalculation policy when DHCS audits cost reports due to issues such as incorrect reporting.

For those hospitals identified by the process described above, outlier recalculation will be conducted in accordance with the California Medicaid State Plan, Title 19 of the Social Security Act, California State Plan, Attachment 4.19-A, paragraph E.2, page 17.54, under Pre-and Post-Payment review:

When there is a material change between the reported CCR and the final audited CCR, outlier payments may be subject to recalculation based upon the audited CCR. A material change is defined as a change that would result in outlier payment adjustments exceeding $10,000 in a hospital’s fiscal year.

The outlier reconciliation may occur through the recoupment of funds or through an additional payment made to the hospital.

For further information or for help with questions about the state fiscal year 2016 – 2017 DRG outlier recalculation policy, providers may contact DHCS at

This provider bulletin is published under the authority specified in paragraph (2) of subdivision (f) of Section 14105.28 of the W&I Code, which provides in part:

“Notwithstanding the rulemaking provisions of Chapter 3.5 (commencing with Section 11340) of the Part 1 of Division 3 of Title 2 of the Government Code, or any other provision of law, the department may implement and administer this section by means of provider bulletins, all-county letters, manuals, or other similar instructions, without taking regulatory action.”

This provider bulletin governs should there be a conflict between this provider bulletin and any previous Department published provider bulletins, all-county letters, manuals, or other similar instructions relating to W&I Code, Section 14105.28.

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2. Coming Soon: Online PDF RAD and Medi-Cal Financial Summary

Providers will soon be able to securely view and download a PDF version of their paper Remittance Advice Details (RAD) and Medi-Cal Financial Summary. The PDF RADs will be available on the Medi-Cal website under the Transactions Services tab.

Note:  To access the transaction, providers must have a signed Medi-Cal Point of Service (POS) Network/Internet Agreement form on file, an NPI and PIN.

Benefits of PDF RAD
There will be many benefits to accessing RAD and Medi-Cal Financial Summary information online:

No provider payments will be made via PDF RADs. They will be informational only.

Providers should refer to future Medi-Cal Update bulletins for additional information.

Providers also are encouraged to sign up for the ASC X12N 835 transaction using the Electronic Health Care Claim Payment/Advice Receiver Agreement form (DHCS 6246 form). The form, which is expected to be modified in December, is located on the Forms page of the Medi-Cal website ( The Medi-Cal website contains 835 transactions generated for the last six weeks. For information about 835 transactions, providers may refer to “ASC X12N 835 Transaction” in the Part 1 Medi-Cal provider manual section, Remittance Advice Details (RAD): Electronic.

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3. RTD Generation to be Discontinued in Multiple Phases

The Department of Health Care Services (DHCS) will be phasing out the generation of Resubmission Turnaround Documents (RTDs) (Form 65-1) over the next 12 months. The discontinuation of RTDs will both increase claims processing efficiency and reduce costs.

RTDs will be discontinued in multiple phases. The new process will deny claims submitted with questionable or missing information instead of generating an RTD. As DHCS transitions from the use of RTDs to claim denials, providers can expect to receive fewer RTDs. When the project is completed, the use of RTDs will be completely discontinued.

The implementation of each RTD phase-out period will be announced in a future monthly bulletin. Providers are encouraged to routinely check the Medi-Cal website for more information.

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4. Update to Guidelines for SAR and eSAR Submission

California Children’s Services (CCS) and Genetically Handicapped Persons Program (GHPP) providers can submit Service Authorization Requests (SARs) in an electronic format for fee-for-service claims. This feature aims to eliminate the paper SAR process for providers with internet connectivity.

To submit electronic SARs (eSARs), providers must:

Then select one of the submission options:

  1. Utilize the newly enhanced online fillable form of the PEDI system to submit SARs electronically

  2. Generate and submit one of the supported file-based transmission formats:
    • Web-based file upload utility in the eSAR system to submit ASC X12 278 transactions
    • Simple Object Access Protocol (SOAP)/Hypertext Transfer Protocol Secure (HTTPS) secure web services method to transmit and receive ASC X12 278 transactions

Registered providers, clearinghouses or Managed Care Plans can complete and submit the eSAR requests on behalf of the providers and facilities in their network.

Paper SAR submissions remain an option for low-volume SAR providers or submitters who may have technical limitations or other practical reasons to do so.

Providers interested in converting from paper SAR to eSAR submission should contact the CMS Net Help Desk at or 1-866-685-8449 for helpful guidance and additional information.

This information is reflected in the following provider manual(s):

Provider Manual(s) Page(s) Updated
Audiology and Hearing Aids
Chronic Dialysis Clinics
Clinics and Hospitals
Durable Medical Equipment
General Medicine
Home Health Agencies/Home and Community-Based Services
Inpatient Services
Local Educational Agency
Medical Transportation
Orthotics and Prosthetics
Psychological Services
Rehabilitation Clinics
Vision Care
cal child sar (1, 12); genetic (4, 5)
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5. Get the Latest Medi-Cal News: Subscribe to MCSS Today


The Medi-Cal Subscription Service (MCSS) is a free service that keeps you up-to-date on the latest Medi-Cal news. Subscribers receive subject-specific emails for urgent announcements and other updates shortly, after posting on the Medi-Cal website.

Subscribing is simple and free!

  1. Go to the MCSS Subscriber Form
  2. Enter your email address and ZIP code
  3. Customize your subscription by selecting subject areas for NewsFlash announcements, Medi-Cal Update bulletins and/or System Status Alerts

After submitting the form, a welcome email will be sent to the provided email address. If you are unable to locate the welcome email in your inbox, check your junk email folder.

For more information about MCSS, please visit the MCSS Help page.

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6. Provider Manual Revisions

Pages updated due to ongoing provider manual revisions:

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