BILL ANALYSIS Ó
AB 690
Page 1
Date of Hearing: April 22, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
AB
690 (Wood) - As Introduced February 25, 2015
-----------------------------------------------------------------
|Policy |Health |Vote:|18 - 0 |
|Committee: | | | |
| | | | |
| | | | |
|-------------+-------------------------------+-----+-------------|
| | | | |
| | | | |
| | | | |
|-------------+-------------------------------+-----+-------------|
| | | | |
| | | | |
| | | | |
-----------------------------------------------------------------
Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill adds marriage and family therapists (MFTs) to the list
of health care professionals whose services are reimbursed
through Medi-Cal on a per-visit basis to federally qualified
health centers (FQHC) or rural health clinics (RHCs).
AB 690
Page 2
FISCAL EFFECT:
This bill may result in costs as follows:
1)If this bill increases access to mental health services in
Medi-Cal by allowing and incentivizing clinics to hire MFTs
where they were previously constrained on labor supply of
mental health professionals, it could result in cost pressure
to Medi-Cal to fund additional visits, potentially in the
millions of dollars (GF/federal). The impact of this bill is
somewhat blunted by another provision of law that prevents
clinics from receiving reimbursement for both a mental health
visit and a physical health visit in the same day.
2)In other cases, this bill could result in some clinics being
able to bill for visits that were previously not billable,
without changing anything about the care being delivered-for
example, if a clinic employed MFTs to provide care to Medi-Cal
beneficiaries, but was not billing Medi-Cal for MFT visits. In
that case, AB 690 could result in Medi-Cal costs by millions
or tens of millions of dollars (GF/federal) without providing
increased access or care. This dynamic is explained below.
Increased state costs would be incurred for clinics where a
clinic-specific prospective payment system (PPS) rate had
costs related to MFT visits "baked in" to the PPS rate prior
to this bill becoming law, and then were allowed to bill for
MFT visits after this bill became law. Because of how a
clinic's PPS rate is constructed, this is essentially
"double-dipping" or, from a state perspective, paying twice.
If clinics are able receive reimbursement for MFT visits
without recalculating their PPS rate to adjust for the fact
that MFT visits are reimbursable, costs could be significant.
AB 690
Page 3
Consider an example where a clinic has $12 million in costs
for Medi-Cal-reimbursable services and 100,000 Medi-Cal
reimbursable visits, equating to a PPS rate of $120/visit.
If, in addition to the 100,000 reimbursable visits, the clinic
also had 5,000 visits with MFTs (which are not reimbursable),
the costs of these covered mental health services would be
included in the $12 million numerator, but the visits would
not be reflected in the denominator. In this way, even though
MFT visits are not billable themselves, the costs this clinic
incurs to provide those 5,000 MFT visits are paid for
indirectly when the clinic receives a slightly "inflated" PPS
rate for each reimbursable visit, because the rate accounts
for such ancillary costs. By their very definition, PPS rates
are designed to cover the costs clinics incur for serving
Medi-Cal beneficiaries, and are designed such that the clinic
is made whole on an aggregate, but not necessarily a
per-visit, basis. To conclude the example above, the clinic in
question has a $120 PPS rate based on inclusion of MFT costs
in the numerator but exclusion of the visits in the
denominator. If this bill passes, this single clinic would
now be able to bill the state an additional $600,000
(GF/federal) ($120 PPS rate* 5,000 visits) without changing
anything or providing additional care. On the other hand, if a
different clinic's PPS rate does not include any costs for MFT
visits, there would be no cost impact attributable to that
clinic.
Due to a lack of data, it is unclear how many clinics have MFT
visits built in to their costs as described above, and how
many don't. But as stated, costs as a result of this dynamic
could plausibly be in the millions or tens of millions of
dollars (GF/federal funds).
3)Alternatively to (2), above, in a case where MFT-related costs
were included in a PPS rate as ancillary costs, the
AB 690
Page 4
"double-dipping" scenario could theoretically be avoided if
the PPS rate were recalculated to adjust for MFT visits now
being reimbursable through a process called a "change in scope
request." However, this process itself would lead to
administrative costs. DHCS administrative costs to
recalculate a PPS rate are estimated at $10,000 (GF/federal)
for each clinic. If a significant number of the 1,275
participating clinics needed recalculation of their PPS rates,
costs could be in the millions (GF/federal). It is unclear
whether this bill's change would trigger or even allow for a
recalculation through a change in scope request, since other
criteria are generally necessary to be able to submit such a
request. However, recalculating PPS rates could alleviate the
concern about double-billing. As an additional caveat, such a
recalculation could have unknown overall cost impacts, since
additional factors may have changed from the last PPS rate
calculation.
To demonstrate how the recalculation would work: if the PPS
rate in the example above were recalculated to account for the
fact that MFT visits were now billable, it would equate to
about $114/visit, instead of the current $120/visit. Thus,
each MFT visit would be reimbursed, but every other visit
would also be reimbursed at a slightly lower rate.
COMMENTS:
1)Purpose. According to the author, Medi-Cal reimbursement for
MFTs will allow clinics to see more low-income patients in
need of mental health services. The author states that under
existing law, psychologists and licensed clinical social
workers (LCSWs) are employed by RHCs and FQHCs to provide
mental health services, and receive reimbursement through
Medi-Cal for that care. However, the author points out that
while a RHC or FQHC can employ an MFT, the lack of
reimbursement for the care provided to Medi-Cal patients acts
AB 690
Page 5
as a disincentive for hiring. This bill is sponsored by the
California Primary Care Association (CPCA).
2)Clinic Reimbursement. Because of their unique role in
providing health care to underserved communities and the
uninsured, policymakers have historically attempted to ensure
that community clinics remain financially viable. Federal law
requires federally funded health programs, including Medicaid
and Children's Health Insurance Program (CHIP), to pay clinics
using a special reimbursement structure commonly called a
prospective payment system (PPS). According to DHCS Form
3090, the Freestanding FQHC Cost Report Form, PPS rates are a
clinic-specific per-visit rate, and are calculated by dividing
costs for Medi-Cal-reimbursable services by Medi-Cal
reimbursable visits. PPS rates are also adjusted by a growth
rate to account for inflation. In addition, clinics can
request a recalculation of their PPS rates based on a change
in their scope of services. All clinics must provide at least
a defined scope of primary care and mental health services,
but may provide additional services as well. If clinics are
paid by managed care plans in amounts less than their PPS
rates, there is a reconciliation performed to ensure clinics
get paid the full PPS rate through a wrap-around payment paid
by DCHS. For Medi-Cal, current PPS rates vary from around $80
to over $650 per visit, depending on the mix of services
provided at each clinic.
According to the Centers for Medicare and Medicaid Services
(CMS), in October 2014, Medicare also began paying FQHCs a
national visit-based PPS rate of $158.85, with some
adjustments. FQHCs also are able to bill Medicare for separate
visits when a mental health visit occurs on the same day as a
medical visit.
3)Costs for MFT Services May Already Be Reflected in Base PPS
Rate. Under current state law, an FQHC or RHC "visit" means a
face-to-face encounter between a patient and certain type of
health care provider defined in state law. A visit must be
documented in order for a clinic to be reimbursed. According
AB 690
Page 6
to DHCS, for clinics that provide MFTs within their approved
scope of service, MFT services are included in the
all-inclusive calculation of the PPS rate, but are not
separately billable.
For example, a patient could visit a clinic to receive a
medical check-up and be referred directly to an MFT employed
by the clinic for mental health services. According to DHCS,
MFT services rendered are reflected in the baseline PPS
cost-based rate as long as they are within the approved clinic
scope of service. At this time, however, a facility could not
receive reimbursement for an MFT visit without receiving other
services. This bill would allow such reimbursement.
4)One-Visit Rule. Under current law, clinics are limited to
reimbursement for one visit per day, unless the second visit
is dental-related. This so-called "one-visit rule" has caused
difficulty in integrating behavioral with physical health
services at clinics, since clinics are either forced to absorb
the cost of a mental health visit or direct a patient to
return the next day, which often results in missed
appointments and lack of care. The one-visit rule is often
cited as the most significant impediment to providing mental
health services on the same day. DHCS indicates the PPS rate
already accounts for costs of same-day visits by a dynamic
similar to that explained in comment #3, above.
5)FQHC Payment Reform. The PPS system has been criticized as
encouraging a higher volume of services rather than rewarding
quality and efficiency, as well as limiting innovation by
restricting provider types and care delivery settings that are
reimbursable. DHCS and the California Primary Care Association
(of community clinics) have been discussing reforming the PPS
methodology for several years.
DHCS proposed to seek federal approval for a different payment
methodology for clinics beginning in 2012-13. Instead of
paying clinics per-visit PPS rates, the department proposed to
integrate all FQHC/RHC costs into managed care capitated rates
and reduce rates by a percentage. Under this proposal,
AB 690
Page 7
payments made to FQHCs and RHCs would be in the form of a
capitated payment to provide a broad range of services for
Medi-Cal managed care beneficiaries who have selected or been
assigned to their clinic. The Legislature rejected this
proposal during budget deliberations, though there appears to
be broad agreement that some payment reforms are worth
pursuing. On April 24, 2014, DHCS proposed an alternative
payment model for urban FQHCs that provided for capitated
payments and increased flexibility. The California Primary
Care Association and DHCS are in discussion about alternative
payment models. If it were to occur, a wholesale
transformation of the way FQHCs are paid would likely obviate
the need for this bill. However, such a transformation does
not appear imminent, at least on a statewide basis.
6)Opposition. The National Association of Social
Workers-California Chapter (NASW-CA) opposes the bill because
they believe there is a sufficient workforce of social
workers, and only social workers have the training and skills
necessary to treat this community.
7)Related Legislation.
a) SB 147 (Hernandez), pending in the Senate Appropriations
Committee, requires the DHCS to authorize a three-year
payment reform pilot project for FQHCs using an alternative
payment methodology.
b) AB 858 (Wood), pending in this Committee, requires
Medi-Cal reimbursement to FQHCs and RHCs for two visits
taking place on the same day at a single location when the
patient suffers illness or injury requiring additional
diagnosis or treatment after the first visit, or when the
patient has a medical visit and another health visit with a
mental health provider or dental provider.
1)Previous Legislation.
a) AB 1785 (Lowenthal) of 2012 was similar to this bill and
was held on the Suspense File of this committee.
AB 690
Page 8
b) AB 1445 (Chesbro) of 2009 was similar to AB 848 (Wood),
and was held on the Suspense file in the Senate
Appropriations Committee.
c) SB 260 (Steinberg) of 2007 was similar to AB 1445 and
was vetoed by Governor Schwarzenegger on budgetary
concerns.
1)Staff Comments. If MFTs are added to the list of billable
providers, the committee may wish to consider how to mitigate
potential increased costs described in fiscal comment #2.
These potential costs represent a pure transfer of funds from
the state to certain FQHCs, without providing increased access
or care.
Analysis Prepared by:Lisa Murawski / APPR. / (916)
319-2081