BILL ANALYSIS Ó
SB 147
Page 1
SENATE THIRD READING
SB
147 (Hernandez)
As Amended August 31, 2015
Majority vote
SENATE VOTE: 40-0
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|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Health |18-0 |Bonta, Maienschein, | |
| | |Bonilla, Burke, | |
| | |Chávez, Chiu, Gomez, | |
| | |Gonzalez, Roger | |
| | |Hernández, Lackey, | |
| | |Nazarian, | |
| | | | |
| | | | |
| | |Ridley-Thomas, | |
| | |Rodriguez, Santiago, | |
| | |Steinorth, Thurmond, | |
| | |Waldron, Wood | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Appropriations |17-0 |Gomez, Bigelow, | |
| | |Bloom, Bonta, | |
| | |Calderon, Chang, | |
SB 147
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| | |Nazarian, Eggman, | |
| | |Gallagher, Eduardo | |
| | |Garcia, Holden, | |
| | |Jones, Quirk, Rendon, | |
| | |Wagner, Weber, Wood | |
| | | | |
| | | | |
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SUMMARY: Requires the Department of Health Care Services (DHCS)
to authorize a three-year payment reform pilot project for
federally qualified health centers (FQHCs). Specifically, this
bill:
1)Requires DHCS to authorize an alternative payment methodology
(APM) pilot for participating clinics by no sooner than July 1,
2016, subject to federal approvals. Allows DHCS to limit
participation in the pilot, as specified.
2)Specifies participation in the APM pilot is voluntary for a
clinic and mandatory for a health plan that contracts with a
clinic.
3)Describes in detail the fiscal methodology to create a
capitated, per member per month payment, in place of a clinic's
existing per-visit "prospective payment system" (PPS) rate.
4)Requires an independent evaluation be conducted, provided
foundation funds are available. Also requires DHCS to report
regularly to the Legislature on implementation.
5)Conditions implementation on federal approval, allows DHCS
flexibility to modify the program if necessary for federal
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approval, and allows DHCS to implement through their standards
communications, without adopting regulations.
FISCAL EFFECT: According to the Assembly Appropriations
Committee:
1)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/federal/potential private funds).
2)One-time costs of $150,000 to $300,000 to prepare an evaluation
of the pilot project (private funds). At least one foundation
has expressed an expectation in writing that they will continue
to provide financial support to the state for this APM effort,
including for an evaluation and technical assistance to clinics.
3)Although DHCS intends the pilot be cost-neutral, there is the
potential for unknown costs or savings for Medi-Cal health care
services provided by participating clinics. Because the
opportunity for both costs and savings exists, on balance, there
is not likely to be a significant net cost to changing the
payment methodology for participating clinics.
Implementation of an APM has the potential to change patterns of
health care services utilization and health care practice at
clinics. This bill outlines "risk corridors" that limit the
fiscal risk and benefit for clinics and plans. Certain
scenarios may result in the department making additional
payments, or retaining additional savings, from what is
projected. Since the projected costs based on the APM are
supposed to equate to what the department would pay using
traditional per-visit methodology, differences from this
projection mean additional costs or savings as compared to the
status quo. It is difficult or impossible to quantify these
effects. Over the long term, it is hopeful that the new
methodology would result in either cost savings from increased
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efficiency, or, more likely based on how clinic's rates are
currently constructed, a higher level of service for the same
costs.
COMMENTS:
1)Purpose. According to the author, the APM pilot project
established by this bill would require DHCS to authorize a
three-year health reform demonstration project that 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.
2)Background on FQHCs. FQHCs are public or tax-exempt entities
which receive a direct grant from the federal government under
the Public Health Service Act Section 330, or are determined by
the federal Department of Health and Human Services to meet the
requirements for receiving grants. Federal law provides special
payment provisions to ensure that they would be reimbursed for
100% of their reasonable costs associated with furnishing these
services. In December 2000, Congress required states to change
their FQHC payment methodology from a retrospective to a PPS.
Under PPS, State Medicaid agencies are required to pay centers
their PPS per-visit rate for each face-to-face encounter between
a Medicaid beneficiary and one of the FQHC's billable providers
for a covered service.
3)Support. This bill is jointly sponsored by the California
Primary Care Association, the California Association of Public
Hospitals and Health Systems and Los Angeles Care Health Plan.
Supporters state the APM pilot project will enable FQHCs to
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deliver care differently by converting the per visit rate FQHCs
receive today to a capitation payment. The capitated payment
would afford the FQHC with greater flexibility as they no longer
will have to meet the per visit billing requirements.
There is no known opposition to this bill.
Analysis Prepared by:
Roger Dunstan / HEALTH / (916) 319-2097 FN:
0001712