BILL ANALYSIS Ó
SENATE COMMITTEE ON HEALTH
Senator Ed Hernandez, O.D., Chair
BILL NO: SB 610
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|AUTHOR: |Pan |
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|VERSION: |April 6, 2015 |
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|HEARING DATE: |April 22, 2015 | | |
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|CONSULTANT: |Scott Bain |
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SUBJECT : Medi-Cal: federally qualified health centers and
rural health clinics: managed care contracts
SUMMARY : Establishes timeframes for the Department of Health Care
Services (DHCS) to review and finalize federally qualified
health center (FQHC) and rural health clinic (RHC)
Medi-Cal-related scope of service changes and reconciliation
changes, and requires DHCS to make payments within specified
timeframes if reconciliation payments are owed. Establishes
timeframes for DHCS to finalize rates for new FQHCs and RHCs.
Requires DHCS to update the provider master file within
specified timeframes with the rates for new FQHCs and RHCs and
when a scope of service change is complete. Requires DHCS to
correct erroneous payments at least quarterly, and to reprocess
past claims and ensure all claims are reimbursed at the
finalized new rate.
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 and RHC services are
covered benefits under the Medi-Cal program.
2.Requires FQHCs and RHCs to be reimbursed on a per-visit basis.
Defines a "visit" as a face-to-face encounter between an FQHC
or RHC patient and specified health care providers.
3.Permits an FQHC or RHC to apply for an adjustment to its
per-visit rate based on a change in the scope of services
provided by the FQHC or RHC. Requires rate changes based on a
change in the scope of services provided by an FQHC or RHC to
be evaluated in accordance with Medicare reasonable cost
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principles.
4.Requires FQHCs and RHCs subcontracting with Medi-Cal managed
care plans to seek supplemental reimbursement from DHCS
through a per visit fee-for-service billing system (referred
to as the "wrap around" payment). Requires each FQHC and RHC
to submit to DHCS for approval a rate differential calculated
to reflect the amount necessary to reimburse the FQHC or RHC
for the difference between the payment the FQHC or RHC
received from the Medi-Cal managed care health plan and either
the interim rate established by DHCS based on the FQHC or
RHC's reasonable cost or the FQHC or RHC's prospective payment
rate.
5.Requires DHCS to adjust the computed rate differential as it
deems necessary to minimize the difference between the FQHC or
RHC's revenue from the Medi-Cal managed care plan and the
FQHC's or RHC's cost-based reimbursement or the FQHC's or
RHC's prospective payment rate.
6.Requires DHCS, to the extent feasible, within six months of
the end of the FQHC or RHC's fiscal year, to perform an annual
reconciliation to reasonable cost, and make payments to, or
obtain a recovery from, the FQHC or RHC.
7.Requires that an entity that first qualifies as an FQHC or
RHC, a newly licensed facility at a new location added to an
existing FQHC or RHC, and any entity that is an existing FQHC
or RHC that is relocated to a new site to have its
reimbursement rate established in accordance with one of the
following methods, as selected by the FQHC or RHC:
a. The rate may be calculated on a per-visit basis in
an amount that is equal to the average of the per-visit
rates of three comparable FQHCs or RHCs located in the
same or adjacent area with a similar caseload; and,
b. In the absence of three comparable FQHCs or RHCs
with a similar caseload, the rate may be calculated on a
per-visit basis in an amount that is equal to the average
of the per-visit rates of three comparable FQHCs or RHCs
located in the same or an adjacent service area, or in a
reasonably similar geographic area with respect to
relevant social, health care, and economic
characteristics.
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c. At a new entity's one-time election, DHCS is
required to establish a reimbursement rate, calculated on
a per-visit basis, that is equal to 100 percent of the
projected allowable costs to the FQHC or RHC of
furnishing FQHC or RHC services during the first 12
months of operation as an FQHC or RHC. After the first
12-month period, the projected per-visit rate is required
to be increased by the Medicare Economic Index (MEI) then
in effect. The projected allowable costs for the first 12
months are required to be cost settled and the
prospective payment reimbursement rate is required to be
adjusted based on actual and allowable cost per visit.
This bill:
Reconciliation Changes
1.Requires reconciliation to be based upon the reconciliation
filing submitted to DHCS by the FQHC or RHC.
2.Requires DHCS to perform an initial review of the
reconciliation filing within 30 days of receipt.
3.Requires DHCS to pay to the FQHC or RHC at least 80 percent of
the amount owed within 30 days of completion of the initial
review or in any event within 60 days of receipt of the
reconciliation filing, if DHCS determines during the initial
review that a payment is owed to the FQHC or RHC.
4.Requires DHCS to complete the final reconciliation review and
to pay to the FQHC or RHC the remaining amount owed within 15
months of the last date of the fiscal year for which DHCS is
conducting the review.
Scope of Service Changes
5.Requires DHCS to conduct an initial review of a
scope-of-service rate change request within 30 days after
submission by an FQHC or RHC.
6.Requires DHCS to notify the FQHC or RHC, no later than the
31st day after submission if DHCS determines that additional
information is necessary to finalize a new rate. Requires the
notification to state the reason or reasons the submitted
information is insufficient and to request submission of
supplemental information from the FQHC or RHC.
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7.Requires DHCS to finalize the FQHC's or RHC's rate within 90
days after receiving a submission that it determines to be
complete. Requires DHCS to update the provider master file
within 10 business days.
Rates for New FQHCs and RHCs
8.Requires DHCS to finalize a new rate within 90 days after the
submission of the actual cost report from the first full 12
months of operation. Requires DHCS to update the DHCS provider
master file within 10 business days of finalizing the rate.
9.Requires DHCS to conduct an initial review of the three FQHCs
or RHCs for the purpose of determining comparability within 30
days of submission by the new entity. Requires DHCS to notify
the new entity no later than the 31st day after submission if
DHCS determines one or more of the submitted FQHCs or RHCs do
not meet the comparability threshold.
10.Requires the notification to state the reason or reasons for
the finding of noncomparability and to request a supplemental
submission from the new entity. Requires the DHCS request to
clearly state whether the new entity must submit data from
one, two, or three FQHCs or RHCs to meet the comparability
threshold. Requires, once the new entity submits its
supplemental information, the initial review process described
in 9) above to apply.
11.Requires DHCS to finalize the new entity's rate within 90
days after receiving a submission determined by DHCS to be
comparable. Requires DHCS to update the provider master file
within 10 business days.
Erroneous Payment Corrections
12.Requires DHCS to correct erroneous payments at least
quarterly, and to reprocess past claims and ensure all claims
are reimbursed at the finalized new rate determined if there
has been a scope of service change or if the FQHC or RHC is a
new entity.
FISCAL
EFFECT : This bill has not been analyzed by a fiscal committee.
COMMENTS :
1.Author's statement. According to the author, with the growing
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Medi-Cal population and the implementation of the Affordable
Care Act, FQHCs and RHCs become an increasingly important
provider to maintain access to quality health care. Their
ability to provide quality care is currently being
jeopardized. A lack of timelines placed on DHCS has blocked
clinics from valuable funding that could enable them to better
treat their patients or increase services to more patients.
This legislation is needed because it will ensure access to
quality care by making sure clinics get their money in a
timely manner. This bill keeps DHCS efficient and accountable
for the payments it promised to our clinics.
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 and RHCs. Federal
Medicaid payment to FQHCs and RHCs 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 and RHCs a per-visit rate, which is equal to the
baseline PPS payment rate, 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 or RHC during
that fiscal year. An example of a scope of service change
would be the addition of a new service, such as dental
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services or technology or from relocating or remodeling an
FQHC or RHC. 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.
FQHCs and RHCs are both reimbursed under the PPS system. The
average ($178.14) and median ($157.24) PPS rate paid to an
FQHC and RHC in 2014-15 is considerably higher than the most
common primary care visit reimbursement rates in Medi-Cal, but
it also includes additional services not included in a primary
care visit. Because FQHCs are required to receive an MEI
adjustment to their rates under federal law, and because of
their role in providing primary care to the Medi-Cal
population, FQHCs have been exempted from the Medi-Cal rate
reductions.
4.Annual reconciliation. 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 Medi-Cal managed care 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 FQHC or RHC for the difference
between their PPS rate and their Medi-Cal managed care
reimbursement.
Within six months after the end of FQHC or RHC's fiscal year,
DHCS is required, to the extent feasible, to perform an annual
reconciliation to reasonable cost and to either make payments
to or obtain a recovery from the FQHC or RHC. The annual
reconciliation is established to provide additional
reimbursement to FQHCs and RHCs for the difference between
their interim rate or PPS rate per visit and payments made by
the Medi-Cal managed care plans. The annual reconciliation
process was developed to ensure that the amounts paid for
Medi-Cal managed care visits are equal to the full PPS rate
that would apply to those visits. DHCS reconciles the wrap
around amounts paid, the PPS rate, and the amounts received
from the FQHC's and RHC's managed care plan. Clinics submit
their annual reconciliation at the end of their fiscal year.
DHCS indicates it has three years from the received date to
finalize the clinic's reconciliation. A DHCS auditor reviews
reconciliation when it is received to ensure forms are
complete, and a 60 percent tentative settlement is paid to the
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FQHC or RHC if the amount is due to the FQHC/RHC, at the
auditor's discretion.
5.Support. This bill is sponsored by the California Primary Care
Association (CPCA), which argues the current lack of timelines
has resulted in DHCS taking years to finalize rates and settle
outstanding debts. CPCA states health centers are forced to
carry enormous debt for services rendered, sometimes up to a
million dollars. Considering health centers operate on thin
margins, often two percent or less, this significantly impacts
their bottom line and ability to effectively deliver services
to Medi-Cal beneficiaries. Opening private lines of credit to
carry the debt has become common even though the state does
not reimburse health centers for interest accrual on that
debt. CPCA states it takes DHCS approximately five years to
set a new reimbursement rate, and for annual reconciliation,
it currently takes approximately three years for FQHCs and
RHCs to receive final payment. CPCA argues the timelines will
provide health centers with reasonable clarity on
reimbursement rates and reconciliation, allowing them to
direct more focus and funding toward improving patient care
and services, rather than increasing cash reserves to
accommodate delays in reimbursement.
6.Policy comments.
a. The timeframes contained in this bill
establish new statutory timeframes and do not amend an
existing law timeframe. In the case of reconciliation
provisions, this bill requires a faster response and
higher interim payment amounts than is current DHCS
practice. For example, DHCS' reconciliation-related
documents indicate it has three years from the
received date to finalize a clinic's reconciliation,
and it has a 60 percent interim settlement, which can
be subject to change at DHCS's discretion.
Under this bill, DHCS has to complete the final
reconciliation review and to pay to the FQHC or RHC
the remaining amount owed within 15 months of the last
date of the fiscal year for which DHCS is conducting
the review, and DHCS is required to pay at least 80
percent of the amount owed within 30 days of
completion of the initial review or in any event
within 60 days of receipt of the reconciliation
filing, if DHCS determines during the initial review
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that a payment is owed to the FQHC or RHC.
b. This bill requires reconciliation to be based
upon the reconciliation filing submitted to DHCS by
the FQHC or RHC. As drafted, this language would seem
to prevent DHCS from using other payment information
(such as from health plans or DHCS data) in performing
the payment reconciliation. The author has agreed to
delete this provision with an author's amendment.
SUPPORT AND OPPOSITION :
Support: California Primary Care Association (sponsor)
Asian Pacific Health Care Venture, Inc.
AltaMed Health Services Corporation
Association of California Healthcare Districts
California Academy of Family Physicians
Community Clinic Association of Los Angeles County
East Valley Community Health Center, Inc.
El Proyetco Del Barrio
St. John's Well Child & Family Center
Thirty-five individuals
Oppose: None received
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