BILL ANALYSIS                                                                                                                                                                                                    ”

                                                                    AB 1863

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          Date of Hearing:  April 6, 2016


                               Lorena Gonzalez, Chair

          1863 (Wood) - As Introduced February 10, 2016

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          Urgency:  No  State Mandated Local Program:  NoReimbursable:  No


          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), and  
          specifies procedures for adjusting rates for clinics who elect  
          to bill Medi-Cal. 


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          FISCAL EFFECT:

          1)One-time costs, potentially in the millions, to recalculate  
            the prospective payment system (PPS) rate for clinics that are  
            providing MFT services or wish to add those services  
            (GF/federal). The bill requires clinics that currently include  
            marriage and family therapist services in the costs used to  
            calculate their PPS rate to seek a recalculation of the rate  
            to allow the clinic to bill for visits. Recalculating a PPS  
            rate requires a detailed review of utilization and  
            expenditures by clinics. For example, assuming the cost per  
            review is about $10,000 and 500 clinics seek a recalculation,  
            the administrative costs to the Department of Health Care  
            Services (DHCS) would be about $5 million.

          2)No significant increase in costs is expected for the current  
            level of MFT services in eligible clinics. A clinic employing  
            MFTs may be able to bill for more face-to-face encounters, but  
            the PPS rate will be adjusted to account for those visits such  
            that there is no projected net cost impact.

          3)On the other hand, if this bill increases access to mental  
            health services in Medi-Cal by increasing the ability of  
            clinics to employ qualified mental health professionals where  
            the supply previously was constrained, it could result in  
            unknown cost pressure to Medi-Cal to fund additional visits.   
            There are nearly 40,000 licensed MFTs in the state, as  
            compared to 22,000 LCSWs and 21,000 psychologists, suggesting  
            increased flexibility to hire MFTs could lead to better access  
            to mental health visits.  




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          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  
            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.  

          3)Costs for MFT Services May Already Be Reflected in Base PPS  


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            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  
            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)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.  DHCS  
            and the CPCA, the sponsor of this bill, have been discussing  
            reforming the PPS methodology for several years.  Chapter 760,  
            Statutes of 2015 (SB 147, HernŠndez) authorizes a three-year  
            payment reform pilot project for federally qualified health  
            centers (FQHCs) using an alternative payment methodology (APM)  
            authorized under federal Medicaid law, but not all clinics  
            will participate. Theoretically, if clinic payment methodology  
            was reformed on a permanent and statewide basis in a way that  
            allowed clinics complete flexibility to choose provider types,  
            a bill like this, specifying payment for a certain provider  
            type, would not be necessary. But although this possibility is  
            on the horizon, such a comprehensive change does not appear  
          5)Support and 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  


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            necessary to treat this community.  The California  
            Psychological Association is also opposed.

            The bill is supported by California Association of Marriage  
            and Family Therapists, AIDS Project Los Angeles, and the  
            County Health Executives Association of California, in  
            addition to CPCA and a number of clinic organizations.

          6)Related Legislation. SB 1335 (Mitchell), pending in Senate  
            Health Committee, authorizes FQHCs and RHCs to elect to have  
            Drug Medi-Cal and specialty mental health services to be  
            reimbursed on a fee-for-service basis, according to the same  
            criteria that applies to pharmacy and dental services.

          7)Previous Legislation.  

             a)   AB 858 (Wood) of 2015 included a similar provision  
               adding MFTs to the list of healthcare professionals that  
               could bill Medi-Cal for purposes of an FQHC or RHC visit.   
               SB 858 and five other bills were vetoed by Governor Brown  
               who indicated that 
             such "bills unnecessarily codify certain existing health care  
               benefits or require the expansion or development of new  
               benefits and procedures in the Medi-Cal program.  Taken  
               together, these bills would require new spending at a time  
               when there is considerable uncertainty in the funding of  
               this program. Until the fiscal outlook for Medi-Cal is  
               stabilized, I cannot support any of these measures."  The  
               author believes the fiscal outlook for Medi-Cal has  
               stabilized due to recent state actions and the veto message  
               is thereby addressed.

             b)   AB 690 (Wood) of 2015 was substantially similar to the  
               provisions of this bill. It was held in the Assembly  
               Appropriations suspense file when its provisions were  


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               merged with those of AB 858.

             c)   AB 1785 (Lowenthal) of 2012 was similar to this bill and  
               was held on the Suspense File of this committee. 

             d)   AB 1445 (Chesbro) of 2009 was similar to AB 848 (Wood),  
               and was held on the Suspense File in the Senate  
               Appropriations Committee.

             e)   SB 260 (Steinberg) of 2007 was similar to AB 1445 and  
               was vetoed by Governor Schwarzenegger on budgetary  

          Analysis Prepared by:Lisa Murawski / APPR. / (916)