BILL ANALYSIS                                                                                                                                                                                                    



          SENATE COMMITTEE ON HEALTH
                          Senator Ed Hernandez, O.D., Chair

          BILL NO:                    AB 1863             
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          |AUTHOR:        |Wood                                           |
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          |VERSION:       |May 27, 2016                                   |
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          |HEARING DATE:  |June 22, 2016  |               |               |
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          |CONSULTANT:    |Scott Bain                                     |
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           SUBJECT  :  Medi-Cal:  federally qualified health centers:  rural  
          health centers

           SUMMARY  : Adds marriage and family therapists to the list of healthcare  
          professionals that qualify for a face-to-face encounter with a  
          patient at Federally Qualified Health Centers or Rural Health  
          Clinics for purposes of a per-visit Medi-Cal payment under the  
          prospective payment system. 

          Existing law:
          1)Establishes the Medi-Cal program, administered by the  
            Department of Health Care Services (DHCS), which provides  
            comprehensive health care coverage for low-income individuals.  
            Federally Qualified Health Center (FQHC) and Rural Health  
            Clinic (RHC) services are covered benefits under the Medi-Cal  
            program.

          2)Requires FQHCs and RHCs to be reimbursed on a per-visit basis.  
            Defines a "visit" as a face-to-face encounter between an FQHC  
            or RHC patient and the following health care providers: a  
            physician, physician assistant, nurse practitioner, certified  
            nurse midwife, clinical psychologist, licensed clinical social  
            worker, visiting nurse, podiatrist, dentist, optometrist,  
            chiropractor, comprehensive perinatal services practitioner  
            providing comprehensive perinatal services, a four-hour day of  
            attendance at an Adult Day Health Care Center; and, any other  
            provider identified in the state plan's definition of an FQHC  
            or RHC visit. The reimbursement structure for FQHCs and RHCs  
            is known as the prospective payment system (PPS).

          3)Requires FQHC and RHC per-visit rates to be increased by the  
            Medicare Economic Index (MEI) applicable to primary care  
            services in the manner provided for in federal law.







          AB 1863 (Wood)                                      Page 2 of ?
          
          

          4)Permits FQHC or RHC to apply for an adjustment to its  
            per-visit rate based on a change in the scope of services  
            provided by the FQHC or RHC. Requires rate changes based on a  
            change in the scope of services provided by an FQHC or RHC to  
            be evaluated in accordance with Medicare reasonable cost  
            principles.
          
          This bill:
          1)Adds marriage and family therapists (MFTs) to the list of  
            health care professionals that qualify for a face-to-face  
            encounter with a patient at FQHCs or RHCs for purposes of a  
            per-visit Medi-Cal payment under the PPS. 

          2)Requires, if an FQHC or RHC that currently includes the cost  
            of the services of a MFT for the purposes of establishing its  
            FQHC or RHC rate and chooses to bill these services as a  
            separate visit, the FQHC or RHC to apply for an adjustment to  
            its per-visit PPS rate. Requires the FQHC or RHC, after the  
            rate adjustment has been approved by DHCS, to bill these  
            services as a separate visit. 

          3)Permits an FQHC or RHC that applies for an adjustment to its  
            PPS rate to continue to bill for all other FQHC or RHC visits  
            at its existing per-visit rate, subject to reconciliation,  
            until the rate adjustment for visits between an FQHC or RHC  
            patient and a MFT has been approved. 

          4)Requires any approved increase or decrease in the provider's  
            PPS rate to be made within six months after the date of  
            receipt of DHCS' rate adjustment forms and to be retroactive  
            to the beginning of the fiscal year in which the FQHC or RHC  
            submits the request, but in no case the effective date be  
            earlier than January 1, 2008.

          5)Requires an FQHC or RHC that does not provide MFT services,  
            and later elects to add these services and to bill for these  
            services as a separate visit to process the addition of these  
            services as a change in scope of service.

          6)Requires multiple encounters with MFTs that take place on the  
            same day to constitute a single visit. 

          7)Modifies existing law FQHC and RHC dental hygienist in  
            alterative practice provisions when the FQHC and RHC currently  








          AB 1863 (Wood)                                      Page 3 of ?
          
          
            includes the cost of the services of a dental hygienist in  
            alternative practice in its FQHC or RHC rate by requiring the  
            FQHC or RHC to apply for an adjustment to its per-visit rate  
            if the FQHC or RHC chooses to bill these services as a  
            separate visit.

          8)Modifies existing law FQHC and RHC provisions that require an  
            FQHC or RHC that does not provide dental hygienist in  
            alternative practice services, and later elects to add these  
            services to process the addition of those services as a change  
            in scope of service if the FQHC and RHC bills these services  
            as a separate visit.

           FISCAL  
          EFFECT :  According to the Assembly Appropriations Committee: 

          1)One-time costs, potentially in the millions, to recalculate  
            the PPS rate for clinics that are providing MFT services or  
            wish to add those services (GF/federal). The bill requires  
            clinics that currently include MFT 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 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.  









          AB 1863 (Wood)                                      Page 4 of ?
          
          
           PRIOR  
          VOTES  :  
          
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          |Assembly Floor:                     |78 - 1                      |
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          |Assembly Appropriations Committee:  |19 - 0                      |
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          |Assembly Health Committee:          |18 - 0                      |
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          COMMENTS  :
          1)Author's statement.  According to the author, as part of  
            California's implementation of the Affordable Care Act (ACA),  
            mental health and substance abuse disorder services were  
            deemed an essential health benefit for Medi-Cal managed care  
            plans.  Along with the expansion of behavioral health benefits  
            for Medi-Cal beneficiaries, there has been an extensive  
            enrollment expansion as well. Within the primary care setting,  
            up to 26% of patients have some mental health disorder. One in  
            seven Californians are served by community clinics and health  
            centers (CCHCs) and behavioral health services are available  
            onsite at CCHCs in 50 of California's 58 counties. It is  
            essential we maximize availability to qualified mental health  
            providers and assure access is offered in key areas served  
            primarily by rural health clinics and FQHCs. As of February  
            2012, there were 31,865 licensed MFTs in California, and  
            19,009 LCSW and 16,228 licensed psychologists. Adding MFTs to  
            the list of PPS billable providers will solve existing gaps in  
            workforce capacity by providing clinics with an adequate  
            source of funding for their employment, which will also help  
            meet the demand for mental health services, particularly in  
            rural communities.

          2)Background on FQHCs and RHCs. FQHCs and RHCs are federal  
            designated clinics that are required to serve medically  
            underserved populations that provide primary care services.  
            FQHCs and RHCs provided over 10.5 million Medi-Cal visits in  
            2013. Demand for Medi-Cal services is expected to increase due  
            to the expansion of Medi-Cal eligibility as a result of the  
            Medicaid expansion and the enrollment simplification  
            provisions of the federal ACA. 

          Medi-Cal reimbursement to FQHCs and RHCs is governed by state  








          AB 1863 (Wood)                                      Page 5 of ?
          
          
            and federal law. FQHCs and RHCs are reimbursed by Medi-Cal on  
            a per-visit rate which is known as the PPS. Each FQHC and RHC  
            has a specific PPS Medi-Cal rate for each face-to-face  
            encounter, irrespective of the reason for the visit. For  
            Medi-Cal managed care plan patients, DHCS reimburses FQHCs and  
            RHCs for the difference between its per-visit PPS rate and the  
            payment made by the plan. This payment is known as a "wrap  
            around" payment. The Medi-Cal managed care wrap-around rate  
            was established to reimburse providers for the difference  
            between their PPS rate and their Medi-Cal managed care  
            reimbursement rate. 

          FQHCs and RHCs are both reimbursed under the PPS system. The  
            average ($178.14) and median ($157.24) PPS rate paid to an  
            FQHC and RHC in 2014-15 is considerably higher than the most  
            common primary care visit reimbursement rates in Medi-Cal, but  
            it also includes additional services not included in a primary  
            care visit. The rationale for the enhanced reimbursement is to  
            ensure that FQHCs and RHCs do not use federal grant funds  
            intended for uninsured and special needs populations to  
            back-fill for potentially below-cost Medicare or Medi-Cal  
            rates. Because FQHCs are required to receive an MEI adjustment  
            to their rates under federal law, and because of their role in  
            providing primary care access to the Medi-Cal population,  
            FQHCs have been exempted from the Medi-Cal rate reductions  
            enacted in prior budget years.

          3)Recent Changes in Medi-Cal Coverage for Mental Health and  
            Substance Use Services. Mental health and substance use  
            disorder services in Medi-Cal have been significantly changed  
            since the implementation of the ACA. 


          SB X1 1 (Hernandez and Steinberg, Chapter 4, Statutes of 2013)  
            required Medi-Cal to cover the additional mental and substance  
            use disorder benefits for both the newly eligible expansion  
            population and the current Medi-Cal population. SB X1 1  
            requires mental health services included in the essential  
            health benefit (EHB) package adopted by the state (the  
            Legislature adopted the Kaiser Small Group Product [Kaiser  
            Product] as the state's EHB for the individual and small group  
            health insurance market last session) to be covered under  
            Medi-Cal, to the extent those services are not covered Medi-Cal  
            benefits now. The additional mental health benefits required to  
            be provided include group therapy and psychology (for  








          AB 1863 (Wood)                                      Page 6 of ?
          
          
            non-specialty mental health program qualifying individuals). In  
            addition, SB X1 1 required Medi-Cal to provide coverage for  
            additional substance abuse disorder services included in the  
            EHB adopted by the state. The additional substance use disorder  
            services provided include:
               a)     Intensive Outpatient Treatment (Day Care  
                 Rehabilitation) - For non-pregnant/postpartum  
                 beneficiaries (only pregnant women were eligible for this  
                 service under Drug Medi-Cal prior to this change);

               b)     Residential Substance Use Disorder Services - For  
                 non-pregnant/postpartum beneficiaries (only pregnant women  
                 were eligible for this service under Drug Medi-Cal prior  
                 to this change); and,

               c)     Elective Inpatient Detox - This benefit was made  
                 broadly available (prior to this change, individuals had  
                 to have an underlying physical medical condition in order  
                 to receive inpatient detoxification services). 


            SB X1 1 also required Medi-Cal managed care plans to provide  
            coverage for "mild to moderate" mental health benefits covered  
            in the state plan, except for those benefits provided by county  
            mental health plans under the Specialty Mental Health Services  
            Waiver. Under the previous system, Medi-Cal managed care plans  
            covered mental health services within the scope of practice of  
            a primary care physician under their contracts with DHCS, while  
            county specialty mental health plans provided mental health  
            services to individuals with severe mental illness, and  
            Medi-Cal fee-for-service provided services to individuals who  
            fell between those two plans. SB X1 1 effectively provided  
            mid-level mental health services through the Medi-Cal managed  
            care plan, instead of in fee-for-services, resulting in more  
            coordinated care and better access to services.


            In 2014, DHCS received federal approval of State Plan Amendment  
            (SPA) 14-012, which allowed MFTs to be providers of psychology  
            services under Medi-Cal. In addition, registered MFT interns,  
            registered associate clinical social workers and psychology  
            assistants were added as providers of psychology services under  
            the direction of a licensed mental health professional within  
            their scope of services. The SPA was approved May 2, 2014 with  
            an effective date of January 1, 2014.








          AB 1863 (Wood)                                      Page 7 of ?
          
          

          1)Related legislation. SB 1335 (Mitchell), authorizes FQHCs and  
            RHCs to receive reimbursement from county specialty mental  
            health plans and through Drug Medi-Cal under the terms of a  
            contract between the FQHC and RHC and either the county or  
            DHCS outside of the regular Medi-Cal reimbursement structure  
            that applies to FQHCs and RHCs.  SB 1335 is pending in the  
            Assembly Health Committee.

          2)Prior legislation. 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: 

               These 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 co0nsiderable uncertainty in the funding of  
               this program. 

               Until the fiscal outlook for Medi-Cal is stabilized, I  
               cannot support any of these measures.

            AB 690 (Wood of 2015), was substantially similar to the  
            provisions of this bill. AB 690 was held on the Assembly  
            Appropriations suspense file. 


            AB 1785 (Lowenthal of 2012), would have added MFTs to the list  
            of health care providers whose services are reimbursed through  
            Medi-Cal on a per-visit basis by FQHCs and RHCs. AB 1785 was  
            held on the Assembly Appropriations suspense file.

            SB 260 (Steinberg of 2007), was substantially similar to this  
            bill. SB 260 was vetoed by Governor Schwarzenegger who cited  
            concerns about the fiscal impact of the bill. 


          3)Support. This bill is sponsored by CaliforniaHealth+ Advocates  
            (CH+A is also known as the California Primary Care Association  
            (CPCA), which writes that this bill will allow MFTs working in  
            FQHCs to become billable providers in Medi-Cal.  CH+A) writes,  
            as part of California's implementation of the ACA, mental  








          AB 1863 (Wood)                                      Page 8 of ?
          
          
            health and substance use disorder services were deemed an  
            essential health benefit for Medi-Cal managed care health  
            plans.  Recognizing the workforce shortage of personnel able  
            to meet the demand for mental health services created by  
            expanded insurance coverage, DHCS updated the Medicaid State  
            Plan to include MFTs as Medi-Cal mental health providers.   
            However, the State did not update FQHC statute to allow FQHCs  
            and RHCs to include MFTs as Medi-Cal billable providers. CPCA  
            writes that this bill will also lower the total cost of care  
            because these patients will be seeking preventive, primary  
            care services, in order to address their behavioral health  
            needs before they end up in crisis and access care through  
            much more expensive and less ineffective avenues such as an  
            emergency room.  

            The County Behavioral Health Directors Associations (CBHDA)  
            writes in support that the ACA expanded mental health and  
            substance use disorders and has resulted in a major expansion  
            in the number of Medi-Cal beneficiaries. CBHDA writes that it  
            is appropriate to maximize access to qualified mental health  
            providers and assure access is available in key areas  
            primarily served by RHCs and FQHCs. CBHDA concludes that  
            adding MFTs to the list of PPS billable providers will reduce  
            existing gaps in workforce capacity by providing clinics with  
            an adequate source of funding for their professionals and will  
            help meet the demand for mental health services.

          4)Opposition. The National Association of Social  
            Workers-California Chapter (NASW-CA) writes in opposition that  
            this bill is unnecessary as there are sufficient numbers of  
            unemployed social workers that can fill these positions and  
            California schools of social work graduate approximately  
            10,000 bachelors and master's degree social workers each year,  
            and there are another 13,000 in the pipeline to receive their  
            full license. In addition, NASW-CA maintains these clinics  
            serve a population that is very diverse and in poverty, and  
            that while both MFT's and social workers have mental health  
            training, only social workers have extensive training in  
            providing culturally competent services to these disadvantaged  
            and impoverished communities. NASW-CA states a social worker  
            is trained to view clients from the  
            person-in-the-environment/whole person perspective, as opposed  
            to simply focusing on the pathology of a mental illness.  
            Finally, NASW-CA argues this bill could be very costly for  
            each FQHC to recalculate their PPS rate and it believes this  








          AB 1863 (Wood)                                      Page 9 of ?
          
          
            bill is costly, unnecessary and ill-timed as a recently  
            enacted law contains a pilot program for a different payment  
            methodology for FQHCs.

            The California Psychological Association writes in opposition  
            that the long history of non-competitive salaries and  
            potentially remote work locations would seem to necessitate  
            this bill. However, there has been movement by the psychology  
            profession, resulting in increases of psychologists in these  
            settings. The move towards integrated health care model makes  
            psychologists poised to be the best trained clinicians to work  
            with a team of interdisciplinary clinicians in FQHCs and RHCs.

            The Department of Finance is opposed to this measure, arguing  
            this bill is unnecessary and will result in unknown but  
            potentially significant General Fund costs in the Medi-Cal  
            program. 
          
           SUPPORT AND OPPOSITION  :
          Support:  CaliforniaHealth+ Advocates (sponsor)
                    AIDS Project Los Angeles
                    Arroyo Vista Family Health Center
                    Association of California Healthcare Districts
                    Board of Behavioral Sciences
                    Borrego Health
                              California School-Based Health Alliance
                    California Academy of Family Physicians
                    California Association of Marriage and Family  
               Therapists
                    Clinicas De Salud Del Pueblo
                    Coalition of Orange County Community Health Centers
                    Community Clinic Association of Los Angeles County
                    Community Health Partnership
                    County Behavioral Health Directors Association
                    County Health Executives Association of California
                    County of Santa Clara
                    Family Health Centers of San Diego
                    Golden Valley Health Center
                    Health Alliance of Northern CA
                    L.A. Care Health Plan 
                    La Maestra Community Health Centers
                    Northeast Valley Health Corporation
                    Omni Family Health
                    Operation Samahan
                    Santa Clara County Board of Supervisors 








          AB 1863 (Wood)                                      Page 10 of ?
          
          
                    West County Health Centers
                    Westside Family Health Center
          
          Oppose:   California Psychological Association
                    Department of Finance
                    National Association of Social Workers, California  
                    Chapter


          
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