§ 14043.38

(a) Provider types are designated as “limited,” “moderate,” or “high” categorical risk by the federal government in Section 424.518 of Title 42 of the Code of Federal Regulations. The department shall, at minimum, utilize the federal regulations in determining a provider’s or applicant’s categorical risk.

(b) In accordance with Section 455.450 of Title 42 of the Code of Federal Regulations, the department shall designate a provider or applicant as a “high” categorical risk if any of the following occur:

(1) The department imposes a payment suspension based on a credible allegation of fraud, waste, or abuse.

(2) The provider or applicant has an existing Medicaid overpayment based on fraud, waste, or abuse.

(3) The provider or applicant has been excluded by the federal Office of the Inspector General or another state’s Medicaid program within the previous 10 years.

(4) The department or the federal Centers for Medicare and Medicaid Services lifted a temporary moratorium within the previous six months for the particular provider type submitting the application, the applicant would have been prevented from enrolling based on that previous moratorium, and the applicant applies for enrollment as a provider at any time within six months from the date the moratorium was lifted.

(c) If the department designates a provider or applicant as a “high” categorical risk, the department or the State Department of Public Health shall require the provider or applicant to undergo a fingerprint-based state and national criminal history background check by doing both of the following:

(1) Conduct a criminal background check of the following persons:

(A) The provider or applicant. If the provider or applicant is a nonprofit Drug Medi-Cal provider or applicant, the officers and executive director of the provider or applicant.

(B) Any person with a 5-percent or greater direct or indirect ownership interest in the provider or applicant.

(2) Require the following persons to submit a set of fingerprints within 30 days of the department’s or the State Department of Public Health’s request in a manner determined by the department or the State Department of Public Health:

(A) The provider or applicant. If the provider or applicant is a nonprofit Drug Medi-Cal provider or applicant, the officers and executive director of the provider or applicant.

(B) Any person with a 5-percent or greater direct or indirect ownership interest in the provider or applicant.

(d) (1) The department or the State Department of Public Health shall require the applicant or provider to submit to the Department of Justice fingerprint images and related information required by the Department of Justice for an individual specified in paragraph (2) of subdivision (c) who is subject to a state and national criminal history background check pursuant to subdivision (u) of Section 11105 of the Penal Code.

(2) The Department of Justice shall provide a state- or federal-level response to the department pursuant to paragraph (1) of subdivision (p) of Section 11105 of the Penal Code.

(3) The department or the State Department of Public Health shall request from the Department of Justice subsequent notification service, as provided pursuant to Section 11105.2 of the Penal Code, for persons described in paragraph (1).

(4) The Department of Justice shall charge a fee sufficient to cover the cost of processing the request described in this section. That fee shall be paid by the subject of the criminal background check.

(e) For persons subject to the requirements of subdivision (a) of Section 15660, the procedure for obtaining and submitting fingerprints and notification by the Department of Justice of criminal record information set forth in subdivision (c) of Section 15660 shall apply instead of the procedure set forth in subdivision (d).

(f) As used in this section, the following definitions shall apply:

(1) “Applicant” means an individual, including an ordering, referring, or prescribing individual, entity, or person with ownership or control interest in the applicant entity, managing employee, or agent that applies for enrollment as a provider in the Medi-Cal program that is subject to federal screening level requirements under Sections 424.518 and 455.450 of Title 42 of the Code of Federal Regulations.

(2) “Person with ownership or control interest,” “managing employee,” and “agent” have the same meanings as defined in Section 455.101 of Title 42 of the Code of Federal Regulations.

(3) “Provider” means an individual, entity, person with ownership or control interest in the entity, managing employee, or agent that is enrolled in the Medi-Cal program that furnishes, directly or indirectly, including all ordering, referring, and prescribing, any service, good, supply, or merchandise to a Medi-Cal beneficiary whose enrollment is subject to federal screening level requirements under Sections 424.518 and 455.450 of Title 42 of the Code of Federal Regulations.

(Amended by Stats. 2026, Ch. 313, Sec. 28. (AB 2796) Effective September 18, 2026.)