BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SB 147| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: SB 147 Author: Hernandez (D) Amended: 4/21/15 Vote: 21 SENATE HEALTH COMMITTEE: 9-0, 4/15/15 AYES: Hernandez, Nguyen, Hall, Mitchell, Monning, Nielsen, Pan, Roth, Wolk SENATE APPROPRIATIONS COMMITTEE: 7-0, 5/28/15 AYES: Lara, Bates, Beall, Hill, Leyva, Mendoza, Nielsen SUBJECT: Federally qualified health centers SOURCE: California Association of Public Hospitals California Primary Care Association L.A. Care Health Plan DIGEST: This bill 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. This bill requires an FQHC participating in the pilot to receive a per member per month (PMPM) 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. ANALYSIS: SB 147 Page 2 Existing law: 1) Establishes the Medi-Cal program as California's Medicaid program, administered by 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 specified health care providers. 3) 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 as necessary for the implementation of this bill. 2) Requires an FQHC participating in the pilot, in addition to its base payment, and any applicable incentive payment, to receive a 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. 3) Requires DHCS to determine the wrap-cap amount specific to 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 SB 147 Page 3 the adult Medicaid expansion population. 4) 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. 5) 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 enrollees among the participating FQHCs for each APM aid category. 6) 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, and 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. 7) 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 Medicare Economic Index and any changes in the FQHC's scope of services. 8) 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. 9) 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. 10)Requires DHCS, with stakeholder input, to establish a rate SB 147 Page 4 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. 11)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. 12)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. 13)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. 14)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. 15)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. Comments 1)Author's statement. According to the author, "[T]he APM pilot project established by this bill would require DHCS to SB 147 Page 5 establish a three-year health reform pilot project that would dramatically alter the way FQHCs deliver primary care and are 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)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). 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. 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. FISCAL EFFECT: Appropriation: No Fiscal Com.:YesLocal: No SB 147 Page 6 According to the Senate Appropriations Committee: Likely costs of $450,000 per year for one to two years to develop the pilot project and apply for federal approval of the pilot project (General Fund and federal funds). One-time costs of $150,000 to $300,000 to prepare an evaluation of the pilot project (private funds). Unknown potential additional tax revenues to the state (General Fund). The state imposes a tax on Medi-Cal managed care organizations. To the extent that payments for services provided in federally qualified health centers shift from direct payments from DHCS to capitated payments made to managed care plans (who would then provide capitated payments to centers), this bill will increase managed care plan revenues and subsequent tax revenues. The size of this impact will depend on the scale of the pilot project. SUPPORT: (Verified5/26/15) California Association of Public Hospitals and Health Systems (co-source) California Primary Care Association (co-source) L.A. Care Health Plan (co-source) AltaMed Health Services Corporation American Federation of State, County and Municipal Employees, AFL-CIO Arroyo Vista Family Health Center California Association of Physician Groups Clinica Monsenor Oscar A. Romero Community Clinic Association of Los Angeles County National Association of Social Workers - California Chapter Northeast Valley Health Corporation OPPOSITION: (Verified5/28/15) SB 147 Page 7 None received ARGUMENTS IN 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 allows FQHCs the flexibility to further invest in team-based care and alternative delivery models that offer more appropriate and 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 allows FQHCs the ability to SB 147 Page 8 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. Prepared by:Scott Bain / HEALTH / 5/30/15 17:08:14 **** END ****