Amended in Assembly September 4, 2015

Amended in Assembly July 14, 2015

Amended in Senate April 28, 2015

Amended in Senate April 6, 2015

Senate BillNo. 610


Introduced by Senator Pan

February 27, 2015


An act to amend Sections 14087.325 and 14132.100 of the Welfare and Institutions Code, relating to Medi-Cal.

LEGISLATIVE COUNSEL’S DIGEST

SB 610, as amended, Pan. Medi-Cal: federally qualified health centers: rural health clinics: managed care contracts.

Existing law provides for the Medi-Cal program, which is administered by the State Department of Health Care Services and under which qualified low-income persons receive health care benefits. The Medi-Cal program is, in part, governed and funded by federal Medicaid provisions. Existing law provides that federally qualified health center (FQHC) services and rural health clinic (RHC) services, as defined, are covered benefits under the Medi-Cal program to be reimbursed, to the extent that federal financial participation is obtained, to providers on a per-visit basis.

Existing law authorizes an FQHC or RHC to apply for an adjustment to its per-visit rate, based on a change in the scope of services provided, as prescribed. Existing law establishes alternative ratesetting procedures with respect to a new entity that first qualifies as an FQHC or RHC in the year 2001 or later, a newly licensed facility at a new location added to an existing FQHC or RHC or an existing FQHC or RHC that is relocated. Two of the procedures are referred to as comparability approaches, based on the rates of 3 similarly situated FQHCs and RHCs. The 3rd procedure requires, at a new entity’s one-time election, that the department establish the reimbursement rate, calculated on a per-visit basis, that equals 100% of the projected allowable costs to the FQHC or RHC of furnishing services during its first 12 months of operation as an FQHC or RHC.

This bill would require the department to finalize a new rate within 1 year after an FQHC’s or RHC’s submission of a scope-of-service rate change. With respect to a new FQHC or RHC that has elected for the department to establish its reimbursement rate based on projected allowable costs as described above, this bill would require the department to finalize that rate within 1 year after the submission of the actual cost report from the first full 12 months of operation, as specified.

This bill would revise the department’s responsibilities with respect to a new entity or a relocated FQHC or RHC that selects either of the comparability approaches. The bill would require the department to review the comparable facilities to determine if any of them do not meet the comparability threshold and, if so, to notify the new entity, and request a supplemental submission, as prescribed. The bill would require the department to conduct an initial review of a scope-of-service rate change request within 30 days after submission by the FQHC or RHC, and notify the FQHC or RHC by the 31st day after submission if the department determines that additional information is necessary, as prescribed. The bill would require the department to finalize the FQHC’s or RHC’s rate within 1 year after receiving a submission the department determines to be complete.

This bill would require the department to correct erroneous payments at least quarterly to reprocess past claims and ensure all claims are reimbursed at the appropriate finalized new rate.

Existing law requires the department to administer a program to ensure that total payments to FQHCs and RHCs operating as managed care subcontractors comply with applicable federal law regarding payment for services provided by FQHCs and RHCs. Under the department’s program, existing law requires FQHCs and RHCs subcontracting with specified managed care plans to seek supplemental reimbursement from the department through a per visit fee-for-service billing system. To be reimbursed under these provisions, existing law requires each FQHC and RHC to submit to the department for approval a rate differential based on the FQHC’s or RHC’s reasonable cost or the prospective payment rate. Within 6 months of the end of the FQHC’s or RHC’s fiscal year, existing law requires, to the extent feasible, the department to perform an annual reconciliation to reasonable cost, and make payments to, or obtain recovery from, the FQHC or RHC.

This bill would impose various requirements on the department regarding the reconciliation process described above. The bill would require the department to complete the final reconciliation review and pay to the center or clinic any remaining amount owed within 18 months after the last date of the fiscal year for which the department is conducting the review.

begin insert

This bill would incorporate additional changes to Section 14132.100 of the Welfare and Institutions Code made by this bill and AB 858 to take effect if both bills are chaptered and this bill is chaptered last.

end insert

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

P3    1

SECTION 1.  

Section 14087.325 of the Welfare and Institutions
2Code
is amended to read:

3

14087.325.  

(a) The department shall require, as a condition
4of obtaining a contract with the department, that any local initiative,
5as defined in Section 53810 of Title 22 of the California Code of
6Regulations, offer a subcontract to any entity defined in Section
71396d(l)(2)(B) of Title 42 of the United States Code providing
8services as defined in Section 1396d(a)(2)(C) of Title 42 of the
9United States Code and operating in the service area covered by
10the local initiative’s contract with the department. These entities
11are also known as federally qualified health centers.

12(b) Except as otherwise provided in this section, managed care
13subcontracts offered to a federally qualified health center or a rural
14health clinic, as defined in Section 1396d(l)(1) of Title 42 of the
15United States Code, by a local initiative, county organized health
16system, as defined in Section 12693.05 of the Insurance Code,
17commercial plan, as defined in Section 53810 of Title 22 of the
18California Code of Regulations, or a health plan contracting with
19a geographic managed care program, as defined in subdivision (g)
20of Section 53902 of Title 22 of the California Code of Regulations,
21shall be on the same terms and conditions offered to other
P4    1subcontractors providing a similar scope of service. Any
2beneficiary, subscriber, or enrollee of a program or plan who
3affirmatively selects, or is assigned by default to, a federally
4qualified health center or rural health clinic under the terms of a
5contract between a plan, government program, or any subcontractor
6of a plan or program, and a federally qualified health center or
7rural health clinic, shall be assigned directly to the federally
8qualified health center or rural health clinic, and not to any
9 individual provider performing services on behalf of the federally
10qualified health center or rural health clinic.

11(c) The department shall provide incentives in the competitive
12application process described in paragraph (1) of subdivision (b)
13of Section 53800 of Title 22 of the California Code of Regulations,
14to encourage potential commercial plans as defined in Section
1553810 of Title 22 of the California Code of Regulations to offer
16subcontracts to these federally qualified health centers.

17(d) Reimbursement to federally qualified health centers and
18rural health centers for services provided pursuant to a subcontract
19with a local initiative, a commercial plan, geographic managed
20care program health plan, or a county organized health system,
21shall be paid in a manner that is not less than the level and amount
22of payment that the plan would make for the same scope of services
23if the services were furnished by a provider that is not a federally
24qualified health center or rural health clinic.

25(e) The department shall administer a program to ensure that
26total payments to federally qualified health centers and rural health
27clinics operating as managed care subcontractors pursuant to
28subdivision (d) comply with applicable federal law pursuant to
29Sections 1902(bb) and 1903(m)(2)(A)(ix) of the Social Security
30Act (42 U.S.C. Secs. 1396a(bb) and 1396b(m)(2)(A)(ix)). Under
31the department’s program, federally qualified health centers and
32rural health clinics subcontracting with local initiatives, commercial
33plans, county organized health systems, and geographic managed
34care program health plans shall seek supplemental reimbursement
35from the department through a per visit fee-for-service billing
36system utilizing the state’s Medi-Cal fee-for-service claims
37processing system contractor. To carry out this per visit payment
38process, each federally qualified health system and rural health
39clinic shall submit to the department for approval a rate differential
40calculated to reflect the amount necessary to reimburse the federally
P5    1qualified health center or rural health clinic for the difference
2between the payment the center or clinic received from the
3managed care health plan and either the interim rate established
4by the department based on the center’s or clinic’s reasonable cost
5or the center’s or clinic’s prospective payment rate. The department
6shall adjust the computed rate differential as it deems necessary
7to minimize the difference between the center’s or clinic’s revenue
8from the plan and the center’s or clinic’s cost-based reimbursement
9or the center’s or clinic’s prospective payment rate.

10(1) In addition, the department shall perform an annual
11reconciliation to reasonable cost, and make payments to, or obtain
12a recovery from, the center or clinic.

13(2) The department shall perform an initial review of the
14reconciliation filing within 30 days after receipt. If the department
15determines during the initial review that a payment is owed to the
16center or clinic, the department shall pay to the center or clinic at
17least 80 percent of the amount owed within 30 days after
18completion of the initial review or in any event within 60 days
19after receipt of the reconciliation filing.

20(3) The department shall complete the final reconciliation review
21and shall pay to the center or clinic the remaining amount owed
22within 18 months after the last date of the fiscal year for which
23the department is conducting the review.

24(f) In calculating the capitation rates to be paid to local
25initiatives, commercial plans, geographic managed care program
26health plans, and county organized health systems, the department
27shall not include the additional dollar amount applicable to
28cost-based reimbursement that would otherwise be paid, absent
29cost-based reimbursement, to federally qualified health centers
30and rural health clinics in the Medi-Cal fee-for-service program.

31(g) On or before September 30, 2002, the director shall conduct
32a study of the actual and projected impact of the transition from a
33cost-based reimbursement system to a prospective payment system
34for federally qualified health centers and rural health clinics. In
35conducting the study, the director shall evaluate the extent to which
36the prospective payment system stimulates expansion of services,
37including new facilities to expand capacity of the centers, and the
38extent to which actual and estimated prospective payment rates of
39federally qualified health centers and rural health clinics for the
40first five years of the prospective payment system are reflective
P6    1of the cost of providing services to Medi-Cal beneficiaries. Clinics
2may submit cost reporting information to the department to provide
3data for the study.

4(h) The department shall approve all contracts between federally
5qualified health centers or rural health clinics and any local
6initiative, commercial plan, geographic managed care program
7health plan, or county organized health system in order to ensure
8compliance with this section.

9(i) This section shall not preclude the department from
10establishing pilot programs pursuant to Section 14087.329.

11

SEC. 2.  

Section 14132.100 of the Welfare and Institutions
12Code
is amended to read:

13

14132.100.  

(a) The federally qualified health center services
14described in Section 1396d(a)(2)(C) of Title 42 of the United States
15Code are covered benefits.

16(b) The rural health clinic services described in Section
171396d(a)(2)(B) of Title 42 of the United States Code are covered
18benefits.

19(c) Federally qualified health center services and rural health
20clinic services shall be reimbursed on a per-visit basis in
21accordance with the definition of “visit” set forth in subdivision
22(g).

23(d) Effective October 1, 2004, and on each October 1 thereafter,
24until no longer required by federal law, federally qualified health
25center (FQHC) and rural health clinic (RHC) per-visit rates shall
26be increased by the Medicare Economic Index applicable to
27primary care services in the manner provided for in Section
281396a(bb)(3)(A) of Title 42 of the United States Code. Prior to
29January 1, 2004, FQHC and RHC per-visit rates shall be adjusted
30by the Medicare Economic Index in accordance with the
31methodology set forth in the state plan in effect on October 1,
322001.

33(e) (1) An FQHC or RHC may apply for an adjustment to its
34per-visit rate based on a change in the scope of services provided
35by the FQHC or RHC. Rate changes based on a change in the
36scope of services provided by an FQHC or RHC shall be evaluated
37in accordance with Medicare reasonable cost principles, as set
38forth in Part 413 (commencing with Section 413.1) of Title 42 of
39the Code of Federal Regulations, or its successor.

P7    1(2) Subject to the conditions set forth in subparagraphs (A) to
2(D), inclusive, of paragraph (3), a change in scope of service means
3any of the following:

4(A) The addition of a new FQHC or RHC service that is not
5incorporated in the baseline prospective payment system (PPS)
6rate, or a deletion of an FQHC or RHC service that is incorporated
7in the baseline PPS rate.

8(B) A change in service due to amended regulatory requirements
9or rules.

10(C) A change in service resulting from relocating or remodeling
11 an FQHC or RHC.

12(D) A change in types of services due to a change in applicable
13technology and medical practice utilized by the center or clinic.

14(E) An increase in service intensity attributable to changes in
15the types of patients served, including, but not limited to,
16populations with HIV or AIDS, or other chronic diseases, or
17homeless, elderly, migrant, or other special populations.

18(F) Any changes in any of the services described in subdivision
19(a) or (b), or in the provider mix of an FQHC or RHC or one of
20its sites.

21(G) Changes in operating costs attributable to capital
22expenditures associated with a modification of the scope of any
23of the services described in subdivision (a) or (b), including new
24or expanded service facilities, regulatory compliance, or changes
25in technology or medical practices at the center or clinic.

26(H) Indirect medical education adjustments and a direct graduate
27medical education payment that reflects the costs of providing
28teaching services to interns and residents.

29(I) Any changes in the scope of a project approved by the federal
30Health Resources and Service Administration (HRSA).

31(3) No change in costs shall, in and of itself, be considered a
32scope-of-service change unless all of the following apply:

33(A) The increase or decrease in cost is attributable to an increase
34or decrease in the scope of services defined in subdivisions (a) and
35(b), as applicable.

36(B) The cost is allowable under Medicare reasonable cost
37principles set forth in Part 413 (commencing with Section 413) of
38Subchapter B of Chapter 4 of Title 42 of the Code of Federal
39Regulations, or its successor.

P8    1(C) The change in the scope of services is a change in the type,
2intensity, duration, or amount of services, or any combination
3thereof.

4(D) The net change in the FQHC’s or RHC’s rate equals or
5exceeds 1.75 percent for the affected FQHC or RHC site. For
6FQHCs and RHCs that filed consolidated cost reports for multiple
7sites to establish the initial prospective payment reimbursement
8rate, the 1.75-percent threshold shall be applied to the average
9per-visit rate of all sites for the purposes of calculating the cost
10associated with a scope-of-service change. “Net change” means
11the per-visit rate change attributable to the cumulative effect of all
12increases and decreases for a particular fiscal year.

13(4) An FQHC or RHC may submit requests for scope-of-service
14changes once per fiscal year, only within 90 days following the
15beginning of the FQHC’s or RHC’s fiscal year. Any approved
16increase or decrease in the provider’s rate shall be retroactive to
17the beginning of the FQHC’s or RHC’s fiscal year in which the
18request is submitted.

19(5) An FQHC or RHC shall submit a scope-of-service rate
20change request within 90 days after the beginning of any FQHC
21or RHC fiscal year occurring after the effective date of this section,
22if, during the FQHC’s or RHC’s prior fiscal year, the FQHC or
23RHC experienced a decrease in the scope of services provided that
24the FQHC or RHC either knew or should have known would have
25resulted in a significantly lower per-visit rate. If an FQHC or RHC
26discontinues providing onsite pharmacy or dental services, it shall
27submit a scope-of-service rate change request within 90 days after
28the beginning of the following fiscal year. The rate change shall
29be effective as provided for in paragraph (4). As used in this
30paragraph, “significantly lower” means an average per-visit rate
31decrease in excess of 2.5 percent.

32(6) (A) The department shall conduct an initial review of a
33scope-of-service rate change request within 30 days after
34submission by an FQHC or RHC.

35(B)  If the department determines that additional information is
36necessary to finalize a new rate, the department shall notify the
37FQHC or RHC, no later than the 31st day after submission. The
38notification shall state the reason or reasons the submitted
39information is insufficient and shall request submission of
40supplemental information from the FQHC or RHC.

P9    1(C) Within one year after receiving a submission that it
2determines to be complete, the department shall finalize the
3FQHC’s or RHC’s rate and shall update the provider master file
4within 10 business days.

5(7) Notwithstanding paragraph (4), if the approved
6scope-of-service change or changes were initially implemented
7on or after the first day of an FQHC’s or RHC’s fiscal year ending
8in calendar year 2001, but before the adoption and issuance of
9written instructions for applying for a scope-of-service change,
10the adjusted reimbursement rate for that scope-of-service change
11shall be made retroactive to the date the scope-of-service change
12was initially implemented. Scope-of-service changes under this
13paragraph shall be required to be submitted within the later of 150
14days after the adoption and issuance of the written instructions by
15the department, or 150 days after the end of the FQHC’s or RHC’s
16fiscal year ending in 2003.

17(8) All references in this subdivision to “fiscal year” shall be
18construed to be references to the fiscal year of the individual FQHC
19or RHC, as the case may be.

20(f) (1) An FQHC or RHC may request a supplemental payment
21if extraordinary circumstances beyond the control of the FQHC
22or RHC occur after December 31, 2001, and PPS payments are
23insufficient due to these extraordinary circumstances. Supplemental
24payments arising from extraordinary circumstances under this
25subdivision shall be solely and exclusively within the discretion
26of the department and shall not be subject to subdivision (l). These
27supplemental payments shall be determined separately from the
28scope-of-service adjustments described in subdivision (e).
29Extraordinary circumstances include, but are not limited to, acts
30of nature, changes in applicable requirements in the Health and
31Safety Code, changes in applicable licensure requirements, and
32changes in applicable rules or regulations. Mere inflation of costs
33alone, absent extraordinary circumstances, shall not be grounds
34for supplemental payment. If an FQHC’s or RHC’s PPS rate is
35sufficient to cover its overall costs, including those associated with
36the extraordinary circumstances, then a supplemental payment is
37not warranted.

38(2) The department shall accept requests for supplemental
39payment at any time throughout the prospective payment rate year.

P10   1(3) Requests for supplemental payments shall be submitted in
2writing to the department and shall set forth the reasons for the
3request. Each request shall be accompanied by sufficient
4documentation to enable the department to act upon the request.
5Documentation shall include the data necessary to demonstrate
6that the circumstances for which supplemental payment is requested
7meet the requirements set forth in this section. Documentation
8shall include all of the following:

9(A) A presentation of data to demonstrate reasons for the
10FQHC’s or RHC’s request for a supplemental payment.

11(B) Documentation showing the cost implications. The cost
12impact shall be material and significant, two hundred thousand
13dollars ($200,000) or 1 percent of a facility’s total costs, whichever
14is less.

15(4) A request shall be submitted for each affected year.

16(5) Amounts granted for supplemental payment requests shall
17be paid as lump-sum amounts for those years and not as revised
18PPS rates, and shall be repaid by the FQHC or RHC to the extent
19that it is not expended for the specified purposes.

20(6) The department shall notify the provider of the department’s
21discretionary decision in writing.

22(g) (1) An FQHC or RHC “visit” means a face-to-face
23encounter between an FQHC or RHC patient and a physician,
24physician assistant, nurse practitioner, certified nurse-midwife,
25clinical psychologist, licensed clinical social worker, or a visiting
26nurse. For purposes of this section, “physician” shall be interpreted
27in a manner consistent with the federal Centers for Medicare and
28Medicaid Services’ Medicare Rural Health Clinic and Federally
29Qualified Health Center Manual (Publication 27), or its successor,
30only to the extent that it defines the professionals whose services
31are reimbursable on a per-visit basis and not as to the types of
32services that these professionals may render during these visits
33and shall include a physician and surgeon, podiatrist, dentist,
34optometrist, and chiropractor. A visit shall also include a
35face-to-face encounter between an FQHC or RHC patient and a
36comprehensive perinatal services practitioner, as defined in Section
3751179.1 of Title 22 of the California Code of Regulations,
38providing comprehensive perinatal services, a four-hour day of
39attendance at an adult day health care center, and any other provider
40identified in the state plan’s definition of an FQHC or RHC visit.

P11   1(2) (A) A visit shall also include a face-to-face encounter
2between an FQHC or RHC patient and a dental hygienist or a
3dental hygienist in alternative practice.

4(B) Notwithstanding subdivision (e), an FQHC or RHC that
5currently includes the cost of the services of a dental hygienist in
6alternative practice for the purposes of establishing its FQHC or
7RHC rate shall apply for an adjustment to its per-visit rate, and,
8after the rate adjustment has been approved by the department,
9shall bill these services as a separate visit. However, multiple
10encounters with dental professionals that take place on the same
11day shall constitute a single visit. The department shall develop
12the appropriate forms to determine which FQHC’s or RHC’s rates
13shall be adjusted and to facilitate the calculation of the adjusted
14rates. An FQHC’s or RHC’s application for, or the department’s
15approval of, a rate adjustment pursuant to this subparagraph shall
16not constitute a change in scope of service within the meaning of
17subdivision (e). An FQHC or RHC that applies for an adjustment
18to its rate pursuant to this subparagraph may continue to bill for
19all other FQHC or RHC visits at its existing per-visit rate, subject
20to reconciliation, until the rate adjustment for visits between an
21FQHC or RHC patient and a dental hygienist or a dental hygienist
22in alternative practice has been approved. Any approved increase
23or decrease in the provider’s rate shall be made within six months
24after the date of receipt of the department’s rate adjustment forms
25pursuant to this subparagraph and shall be retroactive to the
26beginning of the fiscal year in which the FQHC or RHC submits
27the request, but in no case shall the effective date be earlier than
28January 1, 2008.

29(C) An FQHC or RHC that does not provide dental hygienist
30or dental hygienist in alternative practice services, and later elects
31to add these services, shall process the addition of these services
32as a change in scope of service pursuant to subdivision (e).

33(h) If FQHC or RHC services are partially reimbursed by a
34third-party payer, such as a managed care entity (as defined in
35Section 1396u-2(a)(1)(B) of Title 42 of the United States Code),
36the Medicare Program, or the Child Health and Disability
37Prevention (CHDP) program, the department shall reimburse an
38FQHC or RHC for the difference between its per-visit PPS rate
39and receipts from other plans or programs on a contract-by-contract
40basis and not in the aggregate, and may not include managed care
P12   1financial incentive payments that are required by federal law to
2be excluded from the calculation.

3(i) (1) An entity that first qualifies as an FQHC or RHC in the
4year 2001 or later, a newly licensed facility at a new location added
5to an existing FQHC or RHC, and any entity that is an existing
6FQHC or RHC that is relocated to a new site shall each have its
7reimbursement rate established in accordance with one of the
8following methods, as selected by the FQHC or RHC:

9(A) The rate may be calculated on a per-visit basis in an amount
10that is equal to the average of the per-visit rates of three comparable
11FQHCs or RHCs located in the same or adjacent area with a similar
12caseload.

13(B) In the absence of three comparable FQHCs or RHCs with
14a similar caseload, the rate may be calculated on a per-visit basis
15in an amount that is equal to the average of the per-visit rates of
16three comparable FQHCs or RHCs located in the same or an
17adjacent service area, or in a reasonably similar geographic area
18with respect to relevant social, health care, and economic
19characteristics.

20(C) At a new entity’s one-time election, the department shall
21establish a reimbursement rate, calculated on a per-visit basis, that
22is equal to 100 percent of the projected allowable costs to the
23FQHC or RHC of furnishing FQHC or RHC services during the
24first 12 months of operation as an FQHC or RHC. After the first
2512-month period, the projected per-visit rate shall be increased by
26the Medicare Economic Index (MEI) then in effect. The projected
27allowable costs for the first 12 months shall be cost settled and the
28prospective payment reimbursement rate shall be adjusted based
29on actual and allowable cost per visit. The department shall finalize
30a new rate within one year after the submission of the actual cost
31report from the first full 12 months of operation and shall update
32the department provider master file within 10 business days after
33finalizing the rate.

34(D) The department may adopt any further and additional
35methods of setting reimbursement rates for newly qualified FQHCs
36or RHCs as are consistent with Section 1396a(bb)(4) of Title 42
37of the United States Code.

38(2) (A) In order for an FQHC or RHC to establish the
39comparability of its caseload, the department shall require that the
40FQHC or RHC submit its most recent annual utilization report as
P13   1submitted to the Office of Statewide Health Planning and
2Development, unless the FQHC or RHC was not required to file
3an annual utilization report. FQHCs or RHCs that have experienced
4changes in their services or caseload subsequent to the filing of
5the annual utilization report may submit to the department a
6completed report in the format applicable to the prior calendar
7year. FQHCs or RHCs that have not previously submitted an annual
8utilization report shall submit to the department a completed report
9in the format applicable to the prior calendar year. The FQHC or
10RHC shall not be required to submit the annual utilization report
11for the comparable FQHCs or RHCs to the department, but shall
12be required to identify the comparable FQHCs or RHCs. This
13paragraph shall apply only to a facility that selects the
14comparability approach described in subparagraph (A) or (B) of
15paragraph (1).

16(B) The department shall conduct an initial review of the three
17FQHCs or RHCs for the purpose of determining comparability
18within 30 days after submission by the new entity. If the department
19determines one or more of the submitted centers or clinics do not
20meet the comparability threshold, the department shall notify the
21new entity no later than the 31st day after submission.

22(C) The notification shall state the reason or reasons for the
23finding of noncomparability and shall request a supplemental
24submission from the new entity. The request shall clearly state
25whether the new entity shall submit data from one, two, or three
26FQHCs or RHCs to meet the comparability threshold. Once the
27new entity submits its supplemental information, the initial review
28process described in subparagraph (B) shall apply.

29(D) Within one year after receiving a submission determined
30by the department to be comparable, the department shall finalize
31the new entity’s rate and shall update the provider master file
32within 10 business days.

33(3) The rate for any newly qualified entity set forth under this
34subdivision shall be effective retroactively to the later of the date
35that the entity was first qualified by the applicable federal agency
36as an FQHC or RHC, the date a new facility at a new location was
37added to an existing FQHC or RHC, or the date on which an
38existing FQHC or RHC was relocated to a new site. The FQHC
39or RHC shall be permitted to continue billing for Medi-Cal covered
40benefits on a fee-for-service basis until it is informed of its
P14   1enrollment as an FQHC or RHC, and the department shall reconcile
2the difference between the fee-for-service payments and the
3FQHC’s or RHC’s prospective payment rate at that time.

4(j) Visits occurring at an intermittent clinic site, as defined in
5subdivision (h) of Section 1206 of the Health and Safety Code, of
6an existing FQHC or RHC, or in a mobile unit as defined by
7paragraph (2) of subdivision (b) of Section 1765.105 of the Health
8and Safety Code, shall be billed by and reimbursed at the same
9rate as the FQHC or RHC establishing the intermittent clinic site
10or the mobile unit, subject to the right of the FQHC or RHC to
11request a scope-of-service adjustment to the rate.

12(k) An FQHC or RHC may elect to have pharmacy or dental
13services reimbursed on a fee-for-service basis, utilizing the current
14fee schedules established for those services. These costs shall be
15adjusted out of the FQHC’s or RHC’s clinic base rate as
16scope-of-service changes. An FQHC or RHC that reverses its
17election under this subdivision shall revert to its prior rate, subject
18to an increase to account for all MEI increases occurring during
19the intervening time period, and subject to any increase or decrease
20associated with applicable scope-of-services adjustments as
21provided in subdivision (e).

22(l) FQHCs and RHCs may appeal a grievance or complaint
23concerning ratesetting, scope-of-service changes, and settlement
24of cost report audits, in the manner prescribed by Section 14171.
25The rights and remedies provided under this subdivision are
26cumulative to the rights and remedies available under all other
27provisions of law of this state.

28(m) The department shall, by no later than March 30, 2008,
29promptly seek all necessary federal approvals in order to implement
30this section, including any amendments to the state plan. To the
31extent that any element or requirement of this section is not
32approved, the department shall submit a request to the federal
33Centers for Medicare and Medicaid Services for any waivers that
34would be necessary to implement this section.

35(n) The department shall implement this section only to the
36extent that federal financial participation is obtained.

37(o) The department shall correct erroneous payments at least
38 quarterly to reprocess past claims and ensure all claims are
39reimbursed at the finalized new rate determined pursuant to either
40subdivision (e) or (i).

P15   1begin insert

begin insertSEC. 2.1end insertbegin insert.end insert  

end insert

begin insertSection 14132.100 of the end insertbegin insertWelfare and Institutions
2Code
end insert
begin insert is amended to read:end insert

3

14132.100.  

(a) The federally qualified health center services
4described in Section 1396d(a)(2)(C) of Title 42 of the United States
5Code are covered benefits.

6(b) The rural health clinic services described in Section
71396d(a)(2)(B) of Title 42 of the United States Code are covered
8benefits.

9(c) Federally qualified health center services and rural health
10clinic services shall be reimbursed on a per-visit basis in
11accordance with the definition of “visit” set forth in subdivision
12(g).

13(d) Effective October 1, 2004, and on each Octoberbegin delete 1,end deletebegin insert 1end insert
14 thereafter, until no longer required by federal law, federally
15qualified health center (FQHC) and rural health clinic (RHC)
16per-visit rates shall be increased by the Medicare Economic Index
17applicable to primary care services in the manner provided for in
18Section 1396a(bb)(3)(A) of Title 42 of the United States Code.
19Prior to January 1, 2004, FQHC and RHC per-visit rates shall be
20adjusted by the Medicare Economic Index in accordance with the
21methodology set forth in the state plan in effect on October 1,
222001.

23(e) (1) An FQHC or RHC may apply for an adjustment to its
24per-visit rate based on a change in the scope of services provided
25by the FQHC or RHC. Rate changes based on a change in the
26scope of services provided by an FQHC or RHC shall be evaluated
27in accordance with Medicare reasonable cost principles, as set
28forth in Part 413 (commencing with Section 413.1) of Title 42 of
29 the Code of Federal Regulations, or its successor.

30(2) Subject to the conditions set forth in subparagraphs (A) to
31(D), inclusive, of paragraph (3), a change in scope of service means
32any of the following:

33(A) The addition of a new FQHC or RHC service that is not
34incorporated in the baseline prospective payment system (PPS)
35rate, or a deletion of an FQHC or RHC service that is incorporated
36in the baseline PPS rate.

37(B) A change in service due to amended regulatory requirements
38or rules.

39(C) A change in service resulting from relocating or remodeling
40an FQHC or RHC.

P16   1(D) A change in types of services due to a change in applicable
2technology and medical practice utilized by the center or clinic.

3(E) An increase in service intensity attributable to changes in
4the types of patients served, including, but not limited to,
5populations with HIV or AIDS, or other chronic diseases, or
6homeless, elderly, migrant, or other special populations.

7(F) Any changes in any of the services described in subdivision
8(a) or (b), or in the provider mix of an FQHC or RHC or one of
9its sites.

10(G) Changes in operating costs attributable to capital
11expenditures associated with a modification of the scope of any
12of the services described in subdivision (a) or (b), including new
13or expanded service facilities, regulatory compliance, or changes
14in technology or medical practices at the center or clinic.

15(H) Indirect medical education adjustments and a direct graduate
16medical education payment that reflects the costs of providing
17teaching services to interns and residents.

18(I) Any changes in the scope of a project approved by the federal
19Health Resources andbegin delete Serviceend deletebegin insert Servicesend insert Administration (HRSA).

20(3) No change in costs shall, in and of itself, be considered a
21scope-of-service change unless all of the following apply:

22(A) The increase or decrease in cost is attributable to an increase
23or decrease in the scope of services defined in subdivisions (a) and
24(b), as applicable.

25(B) The cost is allowable under Medicare reasonable cost
26principles set forth in Part 413 (commencing with Section 413) of
27Subchapter B of Chapter 4 of Title 42 of the Code of Federal
28Regulations, or its successor.

29(C) The change in the scope of services is a change in the type,
30intensity, duration, or amount of services, or any combination
31thereof.

32(D) The net change in the FQHC’s or RHC’s rate equals or
33exceeds 1.75 percent for the affected FQHC or RHC site. For
34FQHCs and RHCs that filed consolidated cost reports for multiple
35sites to establish the initial prospective payment reimbursement
36rate, the 1.75-percent threshold shall be applied to the average
37per-visit rate of all sites for the purposes of calculating the cost
38associated with a scope-of-service change. “Net change” means
39the per-visit rate change attributable to the cumulative effect of all
40increases and decreases for a particular fiscal year.

P17   1(4) An FQHC or RHC may submit requests for scope-of-service
2changes once per fiscal year, only within 90 days following the
3beginning of the FQHC’s or RHC’s fiscal year. Any approved
4increase or decrease in the provider’s rate shall be retroactive to
5the beginning of the FQHC’s or RHC’s fiscal year in which the
6request is submitted.

7(5) An FQHC or RHC shall submit a scope-of-service rate
8change request within 90 daysbegin delete ofend deletebegin insert afterend insert the beginning of any FQHC
9or RHC fiscal year occurring after the effective date of this section,
10if, during the FQHC’s or RHC’s prior fiscal year, the FQHC or
11RHC experienced a decrease in the scope of services provided that
12the FQHC or RHC either knew or should have known would have
13resulted in a significantly lower per-visit rate. If an FQHC or RHC
14discontinues providing onsite pharmacy or dental services, it shall
15submit a scope-of-service rate change request within 90 daysbegin delete ofend delete
16begin insert afterend insert the beginning of the following fiscal year. The rate change
17shall be effective as provided for in paragraph (4). As used in this
18paragraph, “significantly lower” means an average per-visit rate
19decrease in excess of 2.5 percent.

begin insert

20(6) (A) The department shall conduct an initial review of a
21scope-of-service rate change request within 30 days after
22submission by an FQHC or RHC.

end insert
begin insert

23(B) If the department determines that additional information is
24necessary to finalize a new rate, the department shall notify the
25FQHC or RHC, no later than the 31st day after submission. The
26notification shall state the reason or reasons the submitted
27information is insufficient and shall request submission of
28supplemental information from the FQHC or RHC.

end insert
begin insert

29(C) Within one year after receiving a submission that it
30determines to be complete, the department shall finalize the
31FQHC’s or RHC’s rate and shall update the provider master file
32within 10 business days.

end insert
begin delete

33(6)

end delete

34begin insert(7)end insert Notwithstanding paragraph (4), if the approved
35scope-of-service change or changes were initially implemented
36on or after the first day of an FQHC’s or RHC’s fiscal year ending
37in calendar year 2001, but before the adoption and issuance of
38written instructions for applying for a scope-of-service change,
39the adjusted reimbursement rate for that scope-of-service change
40shall be made retroactive to the date the scope-of-service change
P18   1was initially implemented. Scope-of-service changes under this
2paragraph shall be required to be submitted within the later of 150
3days after the adoption and issuance of the written instructions by
4the department, or 150 days after the end of the FQHC’s or RHC’s
5fiscal year ending in 2003.

begin delete

6(7)

end delete

7begin insert(8)end insert All references in this subdivision to “fiscal year” shall be
8construed to be references to the fiscal year of the individual FQHC
9or RHC, as the case may be.

10(f) (1) An FQHC or RHC may request a supplemental payment
11if extraordinary circumstances beyond the control of the FQHC
12or RHC occur after December 31, 2001, and PPS payments are
13insufficient due to these extraordinary circumstances. Supplemental
14payments arising from extraordinary circumstances under this
15subdivision shall be solely and exclusively within the discretion
16of the department and shall not be subject to subdivision (l). These
17supplemental payments shall be determined separately from the
18scope-of-service adjustments described in subdivision (e).
19Extraordinary circumstances include, but are not limited to, acts
20of nature, changes in applicable requirements in the Health and
21Safety Code, changes in applicable licensure requirements, and
22 changes in applicable rules or regulations. Mere inflation of costs
23alone, absent extraordinary circumstances, shall not be grounds
24for supplemental payment. If an FQHC’s or RHC’s PPS rate is
25sufficient to cover its overall costs, including those associated with
26the extraordinary circumstances, then a supplemental payment is
27not warranted.

28(2) The department shall accept requests for supplemental
29payment at any time throughout the prospective payment rate year.

30(3) Requests for supplemental payments shall be submitted in
31writing to the department and shall set forth the reasons for the
32request. Each request shall be accompanied by sufficient
33documentation to enable the department to act upon the request.
34Documentation shall include the data necessary to demonstrate
35that the circumstances for which supplemental payment is requested
36meet the requirements set forth in this section. Documentation
37shall include all of the following:

38(A) A presentation of data to demonstrate reasons for the
39FQHC’s or RHC’s request for a supplemental payment.

P19   1(B) Documentation showing the cost implications. The cost
2impact shall be material and significant, two hundred thousand
3dollars ($200,000) or 1 percent of a facility’s total costs, whichever
4is less.

5(4) A request shall be submitted for each affected year.

6(5) Amounts granted for supplemental payment requests shall
7be paid as lump-sum amounts for those years and not as revised
8PPS rates, and shall be repaid by the FQHC or RHC to the extent
9that it is not expended for the specified purposes.

10(6) The department shall notify the provider of the department’s
11discretionary decision in writing.

12(g) (1) An FQHC or RHC “visit” means a face-to-face
13encounter between an FQHC or RHC patient and a physician,
14physician assistant, nurse practitioner, certified nurse-midwife,
15clinical psychologist, licensed clinical social worker, or a visiting
16nurse. For purposes of this section, “physician” shall be interpreted
17in a manner consistent with thebegin insert federalend insert Centers for Medicare and
18Medicaid Services’ Medicare Rural Health Clinic and Federally
19Qualified Health Center Manual (Publication 27), or its successor,
20only to the extent that it defines the professionals whose services
21are reimbursable on a per-visit basis and not as to the types of
22services that these professionals may render during these visits
23and shall include abegin delete physician and surgeon,end deletebegin insert medical doctor,
24osteopath,end insert
podiatrist, dentist, optometrist, and chiropractor. A visit
25shall also include a face-to-face encounter between an FQHC or
26RHC patient and a comprehensive perinatalbegin delete servicesend delete practitioner,
27as defined in Sectionbegin delete 51179.1end deletebegin insert 51179.7end insert of Title 22 of the California
28Code of Regulations, providing comprehensive perinatal services,
29a four-hour day of attendance at an adult day health care center,
30and any other provider identified in the state plan’s definition of
31an FQHC or RHC visit.

32(2) (A) A visit shall also include a face-to-face encounter
33between an FQHC or RHC patient and a dentalbegin delete hygienist orend delete
34begin insert hygienist,end insert a dental hygienist in alternativebegin delete practice.end deletebegin insert practice, or a
35marriage and family therapist.end insert

36(B) Notwithstanding subdivision (e), an FQHC or RHC that
37currently includes the cost of the services of a dental hygienist in
38alternativebegin delete practiceend deletebegin insert practice, or a marriage and family therapist,end insert
39 for the purposes of establishing its FQHC or RHC rate shall apply
40for an adjustment to its per-visit rate, and, after the rate adjustment
P20   1has been approved by the department, shall bill these services as
2a separate visit. However, multiple encounters with dental
3professionalsbegin insert or marriage and family therapistsend insert that take place on
4the same day shall constitute a single visit. The department shall
5develop the appropriate forms to determine which FQHC’s orbegin delete RHCend delete
6begin insert RHC’send insert rates shall be adjusted and to facilitate the calculation of
7the adjusted rates. An FQHC’s or RHC’s application for, or the
8department’s approval of, a rate adjustment pursuant to this
9subparagraph shall not constitute a change in scope of service
10within the meaning of subdivision (e). An FQHC or RHC that
11applies for an adjustment to its rate pursuant to this subparagraph
12may continue to bill for all other FQHC or RHC visits at its existing
13per-visit rate, subject to reconciliation, until the rate adjustment
14for visits between an FQHC or RHC patient and a dentalbegin delete hygienist
15orend delete
begin insert hygienist,end insert a dental hygienist in alternativebegin delete practiceend deletebegin insert practice, or
16a marriage and family therapistend insert
has been approved. Any approved
17increase or decrease in the provider’s rate shall be made within
18six months after the date of receipt of the department’s rate
19adjustment forms pursuant to this subparagraph and shall be
20retroactive to the beginning of the fiscal year in which the FQHC
21or RHC submits the request, but in no case shall the effective date
22be earlier than January 1, 2008.

23(C) An FQHC or RHC that does not provide dentalbegin delete hygienist
24orend delete
begin insert hygienist,end insert dental hygienist in alternativebegin delete practiceend deletebegin insert practice, or
25marriage and family therapistend insert
services, and later elects to add these
26services, shall process the addition of these services as a change
27in scope of service pursuant to subdivision (e).

28(h) If FQHC or RHC services are partially reimbursed by a
29third-party payer, such as a managed care entity (as defined in
30Section 1396u-2(a)(1)(B) of Title 42 of the United States Code),
31the Medicarebegin delete Program,end deletebegin insert program,end insert or the Child Health and Disability
32Prevention (CHDP) program, the department shall reimburse an
33FQHC or RHC for the difference between its per-visit PPS rate
34and receipts from other plans or programs on a contract-by-contract
35basis and not in the aggregate, and may not include managed care
36financial incentive payments that are required by federal law to
37be excluded from the calculation.

38(i) (1) An entity that first qualifies as an FQHC or RHC in the
39year 2001 or later, a newly licensed facility at a new location added
40to an existing FQHC or RHC, and any entity that is an existing
P21   1FQHC or RHC that is relocated to a new site shall each have its
2reimbursement rate established in accordance with one of the
3following methods, as selected by the FQHC or RHC:

4(A) The rate may be calculated on a per-visit basis in an amount
5that is equal to the average of the per-visit rates of three comparable
6FQHCs or RHCs located in the same or adjacent area with a similar
7caseload.

8(B) In the absence of three comparable FQHCs or RHCs with
9a similar caseload, the rate may be calculated on a per-visit basis
10in an amount that is equal to the average of the per-visit rates of
11three comparable FQHCs or RHCs located in the same or an
12adjacent service area, or in a reasonably similar geographic area
13with respect to relevant social, health care, and economic
14characteristics.

15(C) At a new entity’s one-time election, the department shall
16establish a reimbursement rate, calculated on a per-visit basis, that
17is equal to 100 percent of the projected allowable costs to the
18FQHC or RHC of furnishing FQHC or RHC services during the
19first 12 months of operation as an FQHC or RHC. After the first
2012-month period, the projected per-visit rate shall be increased by
21the Medicare Economic Indexbegin insert (MEI)end insert then in effect. The projected
22allowable costs for the first 12 months shall be cost settled and the
23prospective payment reimbursement rate shall be adjusted based
24on actual and allowable cost per visit.begin insert The department shall finalize
25a new rate within one year after the submission of the actual cost
26report from the first full 12 months of operation and shall update
27the department provider master file within 10 business days after
28finalizing the rate.end insert

29(D) The department may adopt any further and additional
30methods of setting reimbursement rates for newly qualified FQHCs
31or RHCs as are consistent with Section 1396a(bb)(4) of Title 42
32of the United States Code.

33(2) begin insert(A)end insertbegin insertend insert In order for an FQHC or RHC to establish the
34comparability of itsbegin delete caseload for purposes of subparagraph (A) or
35(B) of paragraph (1),end delete
begin insert caseload,end insert the department shall require that
36the FQHC or RHC submit its most recent annual utilization report
37as submitted to the Office of Statewide Health Planning and
38Development, unless the FQHC or RHC was not required to file
39an annual utilization report. FQHCs or RHCs that have experienced
40changes in their services or caseload subsequent to the filing of
P22   1the annual utilization report may submit to the department a
2completed report in the format applicable to the prior calendar
3year. FQHCs or RHCs that have not previously submitted an annual
4utilization report shall submit to the department a completed report
5in the format applicable to the prior calendar year. The FQHC or
6RHC shall not be required to submit the annual utilization report
7for the comparable FQHCs or RHCs to the department, but shall
8be required to identify the comparable FQHCs or RHCs.begin insert end insertbegin insertThis
9 paragraph shall apply only to a facility that selects the
10comparability approach described in subparagraph (A) or (B) of
11paragraph (1).end insert

begin insert

12(B) The department shall conduct an initial review of the three
13FQHCs or RHCs for the purpose of determining comparability
14within 30 days after submission by the new entity. If the department
15determines one or more of the submitted centers or clinics do not
16meet the comparability threshold, the department shall notify the
17new entity no later than the 31st day after submission.

end insert
begin insert

18(C) The notification shall state the reason or reasons for the
19finding of noncomparability and shall request a supplemental
20submission from the new entity. The request shall clearly state
21whether the new entity shall submit data from one, two, or three
22FQHCs or RHCs to meet the comparability threshold. Once the
23new entity submits its supplemental information, the initial review
24process described in subparagraph (B) shall apply.

end insert
begin insert

25(D) Within one year after receiving a submission determined
26by the department to be comparable, the department shall finalize
27the new entity’s rate and shall update the provider master file
28within 10 business days.

end insert

29(3) The rate for any newly qualified entity set forth under this
30subdivision shall be effective retroactively to the later of the date
31that the entity was first qualified by the applicable federal agency
32as an FQHC or RHC, the date a new facility at a new location was
33added to an existing FQHC or RHC, or the date on which an
34existing FQHC or RHC was relocated to a new site. The FQHC
35or RHC shall be permitted to continue billing for Medi-Cal covered
36benefits on a fee-for-service basisbegin insert under its existing provider
37number,end insert
until it is informed of itsbegin delete enrollment as anend delete FQHC orbegin delete RHC,end delete
38begin insert RHC enrollment approval,end insert and the department shall reconcile the
39difference between the fee-for-service payments and the FQHC’s
40or RHC’s prospective payment rate at that time.

P23   1(j) Visits occurring at an intermittent clinic site, as defined in
2subdivision (h) of Section 1206 of the Health and Safety Code, of
3an existing FQHC or RHC, or in a mobile unit as defined by
4paragraph (2) of subdivision (b) of Section 1765.105 of the Health
5and Safety Code, shall be billed by and reimbursed at the same
6rate as the FQHC or RHC establishing the intermittent clinic site
7or the mobile unit, subject to the right of the FQHC or RHC to
8request a scope-of-service adjustment to the rate.

9(k) An FQHC or RHC may elect to have pharmacy or dental
10services reimbursed on a fee-for-service basis, utilizing the current
11fee schedules established for those services. These costs shall be
12adjusted out of the FQHC’s or RHC’s clinic base rate as
13scope-of-service changes. An FQHC or RHC that reverses its
14election under this subdivision shall revert to its prior rate, subject
15to an increase to account for allbegin delete MEIend deletebegin insert Medicare Economic Indexend insert
16 increases occurring during the intervening time period, and subject
17to any increase or decrease associated with applicable
18begin delete scope-of-servicesend deletebegin insert scope-of-serviceend insert adjustments as provided in
19subdivision (e).

20(l) FQHCs and RHCs may appeal a grievance or complaint
21concerning ratesetting, scope-of-service changes, and settlement
22of cost report audits, in the manner prescribed by Section 14171.
23The rights and remedies provided under this subdivision are
24cumulative to the rights and remedies available under all other
25provisions of law of this state.

26(m) The department shall,begin delete byend delete no later than March 30, 2008,
27promptly seek all necessary federal approvals in order to implement
28this section, including any amendments to the state plan. To the
29extent that any element or requirement of this section is not
30approved, the department shall submit a request to the federal
31Centers for Medicare and Medicaid Services for any waivers that
32would be necessary to implement this section.

33(n) The department shall implement this section only to the
34extent that federal financial participation is obtained.

begin insert

35(o)  The department shall correct erroneous payments at least
36quarterly to reprocess past claims and ensure all claims are
37reimbursed at the finalized new rate determined pursuant to either
38subdivision (e) or (i).

end insert
39begin insert

begin insertSEC. end insertbegin insert3.end insert  

end insert
begin insert

Section 2.1 of this bill incorporates amendments to
40Section 14132.100 of the Welfare and Institutions Code proposed
P24   1by both this bill and Assembly Bill 858. It shall only become
2operative if (1) both bills are enacted and become effective on or
3before January 1, 2016, (2) each bill amends Section 14132.100
4of the Welfare and Institutions Code, and (3) this bill is enacted
5after Assembly Bill 858, in which case Section 2 of this bill shall
6not become operative.

end insert


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