BILL ANALYSIS Ó
SENATE COMMITTEE ON HEALTH
Senator Ed Hernandez, O.D., Chair
BILL NO: SB 147
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|AUTHOR: |Hernandez |
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|VERSION: |April 7, 2015 |
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|HEARING DATE: |April 15, 2015 | | |
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|CONSULTANT: |Scott Bain |
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SUBJECT : Federally qualified health centers.
SUMMARY : Requires the Department of Health Care Services (DHCS) to
authorize a three-year payment reform pilot project for
federally qualified health centers (FQHCs) using an alternative
payment methodology (APM) authorized under federal Medicaid law.
Requires a FQHC participating in the pilot to receive a per
member per month wrap-cap payment for each of its APM enrollees
from a Medi-Cal managed care health plan, instead of the wrap
around payment FQHCs currently receive from DHCS.
Existing law:
1.Establishes the Medi-Cal program as California's Medicaid
program, administered by the Department of Health Care
Services (DHCS), which provides comprehensive health care
coverage for low-income individuals. FQHC services are covered
benefits under the Medi-Cal program.
2.Requires FQHCs to be reimbursed on a per-visit basis. Defines
a "visit" as a face-to-face encounter between an FQHC 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
visit.
3.Requires FQHC 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.
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4.Permits an FQHC to apply for an adjustment to its per-visit
rate based on a change in the scope of services provided by
the FQHC. Requires rate changes based on a change in the scope
of services provided by an FQHC to be evaluated in accordance
with Medicare reasonable cost principles.
5.Authorizes, under federal Medicaid law, states to provide for
payment to an FQHC in an amount which is determined under an
APM that is:
a. Agreed to by the state and the FQHC; and,
b. Results in payment to the FQHC of an amount
which is at least equal to the amount otherwise
required to be paid to the FQHC.
This bill:
1.Requires DHCS to authorize a three-year payment reform pilot
project for FQHCs using an APM. Requires implementation of the
APM pilot project to begin no sooner than July 1, 2016,
subject to federal approval. Requires the APM pilot project to
comply with federal APM requirements, and requires DHCS to
file a state plan amendment (SPA) as necessary for the
implementation of this bill.
2.Requires DHCS to notify every FQHC of the APM pilot project
and to invite any interested FQHC to notify DHCS that the FQHC
agrees to participate with respect to one or more of the
FQHC's sites. Requires the SPA, consistent with federal law,
to specify that DHCS and participating FQHCs agree to the APM.
3.Prohibits an FQHC site participating in the APM pilot project
from receiving traditional wrap-around payments for visits
within the APM scope of services it provides to its APM
enrollees.
Payments from Health Plans to FQHCs in Pilot
4.Requires an FQHC participating in the pilot, in addition to
its base payment, and any applicable incentive payment, to
receive a per member per month (PMPM) wrap-cap payment from
the health plan or its secondary payor (such as a medical
group or independent practice association) for each of its APM
enrollees.
5.Requires DHCS to determine the wrap-cap amount specific to
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each participating FQHC, and for each APM aid category.
Defines the APM aid categories for purposes of the pilot as
adults, children, seniors and persons with disabilities, and
the adult Medicaid expansion population.
6.Requires each health plan to pay a participating FQHC that is
in the plan provider network the wrap-cap amounts for each APM
enrollee of that FQHC, or, in cases where a secondary payer is
involved, provide the necessary amounts to the secondary payer
and require that secondary payer to make the required wrap-cap
payments to the FQHC.
7.Permits the health plan, the secondary payer, as applicable,
and the participating FQHC to choose the manner in which the
wrap-cap payments are made, provided the resulting payment is
equal to the full amount of the wrap-cap payments to which the
participating FQHC is entitled, taking into account, among
other provisions, changes in the number of APM enrollees
within the APM aid categories. Requires the health plan, in
cases where a secondary payer is involved, to demonstrate and
certify to DHCS that it has contracts or other arrangements in
place that provide for meeting the requirements, and if
secondary payer fails to comply with the applicable
requirements, makes the health plan be responsible to ensure
the participating FQHC receives all payments due under this
bill in a timely manner.
8.Requires DHCS, in consultation with each participating FQHC
and health plan, to use the best available data for a recent
agreed-upon time period that reflects the audit and
reconciliation payment adjustments for the pilot participating
FQHCs. Requires the determinations to take into account
specified factors.
9.Prohibits the wrap-cap payments to FQHCs from being decreased
for the first three years of the APM pilot project, unless
agreed to by DHCS and the applicable participating FQHC.
Payments from DHCS to Health Plans in Pilot
10.Requires DHCS to determine an APM supplemental capitation
amount for each APM aid category to be paid by DHCS to the
health plan, expressed as a PMPM amount. Requires the APM
supplemental capitation amount to be a weighted average of the
aggregate wrap-cap amounts determined, that at a minimum takes
into account an estimation of the distribution of APM
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enrollees among the participating FQHCs for each APM aid
category.
11.Prohibits the APM supplemental capitation amounts to health
plans from being decreased for the first three years of the
APM pilot project, unless agreed to by DHCS and the health
plan.
12.Requires DHCS to adjust the amounts paid to health plans and
FQHCs in the pilot at least annually for any change to the
prospective payment system rate for participating FQHCs,
including changes resulting from a change in the MEI and any
changes in the FQHC's scope of services.
13.Requires the total APM supplemental capitation amounts paid
to health plans to be adjusted by DHCS as necessary to take
into account adjustments to the number of APM enrollees by APM
aid category no later than the 10th day of each month.
Risk Corridor, Rate Adjustment and True Up in Pilot
14.Requires DHCS, during the duration of the APM pilot project,
to establish a risk corridor structure for the health plans
relating to the payment requirement, designed within specified
parameters.
15.Requires DHCS, with stakeholder input, to establish a rate
adjustment structure on a FQHC site-specific basis that
permits an aggregate adjustment to the wrap-cap when actual
utilization of services at a participating FQHC's site exceeds
or falls below expectations that were reflected within the
calculation of the rates.
16.Allows DHCS, in consultation with FQHCs and health plans
interested in participating in the APM pilot project, to
modify the adjustment process or methodology to comply with
federal law and obtain federal approval of necessary
amendments to the Medi-Cal state plan.
17.Permits a participating FQHC, a health plan or DHCS to
request an APM enrollee true-up to assure the total amount of
the APM supplemental capitation or wrap-cap payments, as
applicable, are adjusted to accurately reflect the number of
applicable APM enrollees.
Opting Out of Pilot
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18.Allows a participating FQHC, with respect to one or more
sites of its choosing, to opt to discontinue its participation
in the pilot project subject to a notice requirement of no
less than 30 days and no greater than 45 days, as established
by DHCS.
19.Allows a health plan to opt to discontinue its participation
in the pilot project, subject to a notice requirement of no
less than 30 days and no greater than 45 days, as established
by the DHCS if the risk corridor structure in this bill is
amended at any time while the pilot project is in effect.
Requires DHCS to place a provision in a plan's contract giving
the plan the ability to discontinue its participation in the
APM pilot project under this provision.
Evaluation of Pilot
20.Requires, within six months of the conclusion of pilot
project, an evaluation to be completed by an independent
entity, which is required to report its findings to DHCS and
the Legislature. Makes the evaluation be contingent on the
availability of non-state General Fund moneys for this
purpose. Requires the evaluation to:
a. Assess whether the APM pilot project produced
improvements in access to primary care services, care
quality, patient experience, and overall health
outcomes for APM enrollees;
b. Include existing FQHC-required quality metrics
and an assessment of how the changes in financing
allowed for alternative types of primary care visits
and alternative touches between the participating FQHC
and the patient; and,
c. Assess whether the APM pilot project's efforts
to improve primary care resulted in changes to patient
service utilization patterns, including the reduced
utilization of avoidable high cost services.
FISCAL
EFFECT : This bill has not been analyzed by a fiscal committee.
COMMENTS :
1.Author's statement. According to the author, the APM pilot
project established by this bill would require DHCS to
establish a three-year health reform pilot project that would
dramatically alter the way FQHCs deliver primary care and are
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reimbursed by Medi-Cal. In participating counties, this bill
would replace the existing per visit Medi-Cal payment
methodology with a capitated system through Medi-Cal managed
care plans using the APM option authorized under federal law.
The capitated payment would provide greater flexibility in
health care delivery for the FQHC by enabling the FQHC to
provide different types of health care services without having
to meet the per visit billing requirement to generate Medi-Cal
revenue. For example, an FQHC could use the capitation payment
to provide a patient with different services on the same day
(an FQHC cannot bill separately for a primary care visit and a
mental health care appointment that occur on the same day
under current DHCS policy), or to provide health care services
through different means (such as phone consultation and email
consultation) or through different providers types (such as
dieticians).
2.Background on FQHCs. In 1989, Congress established FQHCs as a
new provider type. FQHCs are public or tax-exempt entities
which receive a direct grant from the federal government under
Section 330 of the Public Health Service Act, or are
determined by the federal Department of Health and Human
Services to meet the requirements for receiving such grants.
Federal law defines the services to be provided by FQHCs for
Medicaid purposes and included special payment provisions to
ensure that they would be reimbursed for 100 percent of their
reasonable costs associated with furnishing these services.
One of the legislative purposes in doing so was to ensure that
federal grant funds are not used to subsidize health center or
program services to Medicaid beneficiaries. State Medicaid
programs must pay for covered services provided by FQHCs.
There are over 820 FQHC locations (FQHCs may have more than
one clinic location) in California.
3.Current Medi-Cal Reimbursement to FQHCs. Federal Medicaid
payment to FQHCs are governed by state (Medi-Cal in
California) and federal law. In December 2000, Congress
required states to change their FQHC payment methodology from
a retrospective to a prospective payment system (PPS). This
federal law change established (for existing FQHCs) a
per-visit baseline payment rate equal to 100 percent of the
center's average costs per visit incurred during 1999 and 2000
which were reasonable and related to the cost of furnishing
such services. States are required to pay FQHCs a per-visit
rate, which is equal to the baseline PPS payment rate,
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increased each year by the MEI, and adjusted to take into
account any increase or decrease in the scope of such services
furnished by the FQHC during that fiscal year. Under PPS,
State Medicaid agencies are required to pay centers their PPS
per-visit rate (or an APM, discussed below) for each
face-to-face encounter between a Medicaid beneficiary and one
of the FQHC's billable providers for a covered service.
For Medi-Cal managed care plan patients, DHCS is required to
reimburse an FQHC 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 comply with federal and
state regulation to reimburse a provider for the difference
between their PPS rate and their Medi-Cal managed care
reimbursement.
FQHCs and Rural Health Clinics (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.
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.
This bill calls for a pilot program using an APM where FQHCs
would receive PMPM payments from the health plan, and would no
longer receive a "wrap around" payment from DHCS. CMS has
indicated a state may accept an FQHC's written assertion that
the amount paid under the APM results in payment that at least
equals the amount to which the FQHC is entitled under the PPS.
In 2010, approximately 21 states used an APM to pay some or
all of their FQHCs, according to a September 2011 report from
the National Association of Community Health Centers.
4.Financial protections in bill for FQHCs and health plans. This
bill establishes an annual rate adjustment process if actual
"traditional" visit utilization exceeds or drops below the
baseline PMPM utilization projections used for rate setting
purposes. Under this language, a decrease in traditional FQHC
utilization that exceeds 30 percent would trigger a process
that potentially results in a pilot FQHC paying back a portion
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of its revenue to the health plan. An increase in FQHC
utilization of 5 percent in year one, 7.5 percent in year two,
and 10 percent in year three would trigger a rate adjustment
process resulting in the health plan making a rate adjustment
payment to the FQHC.
In addition, this bill establishes a "risk corridor" structure
for the wrap cap payments required under the pilot program.
Under a risk corridor, the DHCS and the health plan would
share in a portion of a limited amount of a demonstration
plan's profit or loss relative to the plan's wrap-cap
payments. Under the risk corridor structure, for costs in
excess of the wrap-cap payments:
a. The health plan is fully responsible for the costs of
the wrap-cap payments in excess of the total APM
supplemental capitation amounts up to .5 percent;
b. The health plan and DHCS share responsibility for the
costs of the wrap-cap payments to participating FQHCs that
are between .5 percent and up to one percent above the
total APM supplemental capitation amount; and,
c. DHCS is fully responsible for the total costs of the
wrap-cap payments that are more than one percent in excess
of the health plan's total APM supplemental capitation
amount.
For revenue in excess of total aggregate costs (savings):
a. The health plan retains the APM supplemental capitation
amount in excess of the total costs of the wrap-cap
payments up to .5 percent;
b. The health plan and DHCS share the benefit of the APM
supplemental capitation amount in excess of the total costs
of the wrap-cap payments that are between .5 and up to one
percent below the total APM supplemental capitation amount;
and,
c. DHCS fully retains the APM supplemental capitation
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amount in excess of the total costs of the wrap-cap
payments that are greater than one percent below the total
APM supplemental capitation amount.
An example of how the risk corridors would work is if the APM
costs for a plan are $1,000, the plan is at risk for costs
between $1,000 to $1,005, DHCS and the plan would split costs
between $1,005 and $1,010, and DHCS would be responsible for
costs above $1,010. Similarly, the plans can capture the
savings of revenue above costs between $995 to $1,000, share
savings with DHCS for savings between $990 and $995 and the
state retains savings below $990. The risk corridor limits the
financial risk for health plans by protecting them financially
for amounts above the percentage thresholds. The language also
protects the FQHCs as it prevents plans from assigning all
enrollees to lowest cost FQHC because the plan that was paid
too much would not retain excess revenue.
1.Locations participating in pilot program. This bill does not
specify the FQHC and counties that will participate in the
proposed pilot as bill proponents believe doing so in statute
would require a federal waiver of the "statewideness" Medicaid
requirement. The FQHCs that have expressed interest in
participating in the pilot are identified in two phases. The
first phase consists of 22 FQHCs with over 60 locations in 10
counties, and the second phase is 16 FQHCs with over 40
locations in seven counties.
2.Prior DHCS proposals. In 2012-13, DHCS proposed, as part of
the Governor's budget, to change the Medi-Cal payment
methodology for FQHCs and RHCs under an APM. Under DHCS'
proposal, payments made to FQHCs and RHCs participating in
Medi-Cal managed care plan contracts would have changed from a
cost and volume-based payment to a fixed payment to provide a
broad range of services to its enrollees. A waiver of current
operating restrictions would allow FQHCs and RHCs to provide
group visits, telehealth, and telephonic disease management.
The waiver would have also allowed FQHCs to perform multiple
services on the same day. DHCS assumed an efficiency savings
of ten percent and would have removed this amount from the
funding provided to Medi-Cal managed care plans. This proposal
was rejected by the Legislature.
On April 25, 2014, DHCS released a proposed APM for a pilot
program at FQHCs located in urban areas. Under the pilot, the
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payor of FQHC services would transition from DHCS to Medi-Cal
managed care plans. The pilot would ensure FQHCs are
reimbursed at no less than the PPS rate, as prescribed under
federal regulations, while incentivizing delivery system and
practice transformation at FQHCs through flexibilities
available under a full capitation payment structure. DHCS'
objective for the pilot is to transition the delivery of care
at FQHCs from its current volume-based system to one that
better aligns the financing and delivery of health services.
The APM payment structure has been the subject of multiple
meetings between the sponsors of this bill and DHCS.
3.Related legislation. AB 690 (Wood), would add marriage and
family therapists to the list of providers for which FQHCs and
RHCs are able to bill under PPS for a face-to-face encounter.
AB 690 passed out of the Assembly Health on April 7, 2015 on
an 18-0 vote.
AB 858 (Wood), 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. AB 858 is
currently scheduled for hearing in the Assembly Health
Committee on April 14, 2015.
4.Prior legislation.
SB 1081 (Hernandez), of 2014, would have required DHCS to
authorize a three-year alternative payment Medi-Cal
methodology pilot project for FQHCs under which participating
FQHCs would receive capitated monthly payments for each
Medi-Cal managed care enrollee assigned to the FQHC in place
of the wrap-around, fee-for-service per-visit payments from
DHCS. SB 1081 was held on the Senate Appropriations suspense
file.
SB 1150 (Hueso and Correa), would have required 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. SB 1150 was held on the Senate Appropriations
suspense file.
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AB 1445 (Chesbro), of 2009-10, was substantially similar to SB
1150. AB 1445 was held on the Senate Appropriations suspense
file.
SB 260 (Steinberg), of 2007, was also similar to SB 1150. SB
260 was vetoed by Governor Schwarzenegger. In his veto
message, Governor Schwarzenegger argued the bill will increase
General Fund pressure at a time of continuing budget
challenges, and that allowing separate billing for mental
health services would lead to increased costs that the state
could not afford.
SB 36 (Chesbro), Chapter 527, Statutes of 2003, established a
statutory structure for Medi-Cal payments for services
provided by FQHCs and RHCs in compliance with federal law,
changing from fee-for-service to a per-visit basis.
5.Support. This bill is jointly sponsored by the California
Primary Care Association (CPCA), the California Association of
Public Hospitals and Health Systems (CAPHHS) and L.A. Care
Health Plan (LA Care). CPCA states the APM pilot project
established by this bill will enable FQHCs to deliver care
differently by converting the per visit rate FQHCs receive
today to a capitation payment. Under the proposal, the
capitated payment would afford the FQHC with greater
flexibility in health care delivery as they no longer will
have to meet the per visit billing requirements. For example,
an FQHC could use the monthly capitation payment to provide
health care services in new ways, such as phone consultation
or answer patient questions via email. They could also utilize
a more diverse array of qualified professionals, such as
clinical pharmacists and dieticians.
CAPHHS argues FQHCs have been working to find new, more
patient-centered and efficient ways to provide services, in
order to meet the needs of a growing Medi-Cal patient
population. However, the payment structure for FQHCs
reimburses these clinics through a federally mandated bundled
PPS based on face-to-face visits with a limited number of
health professionals. Recognizing the need to experiment with
a payment methodology that ultimately moves away from the
volume based PPS structure, this bill would allow FQHCs the
flexibility to further invest in team-based care and
alternative delivery models that offer more appropriate and
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cost effective care. Under this pilot program, FQHC providers
could better integrate behavioral health and primary care,
utilize group visits, email and phone care management, and
team care the employs a greater array of ancillary staff, such
as community health workers and nurses.
LA Care writes in support that a capitated payment would allow
greater flexibility in health care delivery by enabling FQHCs
to provide different types of services without having to meet
the current per visit billing requirement. For example, the
wrap cap payment could be used to provide a patient with
different services on the same day or to provide services
through phone consultations or communicate with patient on
routine issues via email. In addition, this bill would allow
FQHCs the ability to provide more services than currently
provided by allowing them to use additional provider types
such as dieticians and social workers. LA Care concludes that
the passage of this bill will allow FQHCs to move toward
achieving the Triple Aim goals contained in the Affordable
Care Act by testing new payment methodologies and delivery
reforms.
6.Amendments. Staff recommends clarifying amendments as to their
applicability to the pilot versus traditional payments.
SUPPORT AND OPPOSITION :
Support: California Association of Public Hospitals and Health
Systems (co-sponsor)
California Primary Care Association (co-sponsor)
L.A. Care Health Plan (co-sponsor)
American Federation of State, County, and Municipal
Employees, AFL-CIO
California Association of Physician Groups
California Chapter National Association of Social
Workers
Oppose: None received
-- END --
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