BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session SB 610 (Pan) - Medi-Cal: federally qualified health centers: rural health clinics: managed care contracts ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: April 28, 2015 |Policy Vote: HEALTH 8 - 0 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: No | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: May 11, 2015 |Consultant: Brendan McCarthy | | | | ----------------------------------------------------------------- This bill meets the criteria for referral to the Suspense File. Bill Summary: SB 610 would modify existing timelines and establish new timelines relating to the process for setting rates and making payments to Federally Qualified Health Centers (FQHCs) and Rural Health Clinics (RHCs) through the Medi-Cal program. Fiscal Impact: Increased administrative costs, likely in the millions, to comply with the new or accelerated deadlines in the bill (General Fund and federal funds). The bill would require the Department of Health Care Services to complete its review of a proposed change in scope of service or determine a final rate SB 610 (Pan) Page 1 of ? for a FQHC or RHC much faster than is current practice. Unknown changes in the timing of payments made to FQHCs or RHCs due to changes in the processes and deadlines for making reconciliation payments or correcting erroneous payments (General Fund and federal funds). The bill creates new timelines or accelerates existing timelines under which the Department must make certain payments to FQHCs and RHCs. By accelerating payments to FQHCs and RHCs, the state will likely incur Medi-Cal costs sooner than would otherwise occur. The Medi-Cal program is budgeted on a cash basis (meaning that the state budget reflects costs as payments are made). To the extent that the bill results in payments being made earlier, to some extent the bill will result in shifting of costs between budget years. The bill is not anticipated to increase overall Medi-Cal costs for payments to FQHCs or RHCs. Background: Under current law, the Medi-Cal program provides health care coverage for certain low income and disabled individuals. In the Medi-Cal fee-for-service system, FQHCs and RHCs are paid a per-visit payment known as the prospective payment system (PPS). The PPS rate is based on a baseline rate that reflects a FQHC's or RHC's costs to provide services in 1999-2000, adjusted for inflation. When a Medi-Cal beneficiary in the managed care system receives care from a FQHC or RHC, the managed care plan makes a per-visit payment to the center. Because the rates paid by managed care plans are significantly below the PPS rate, the state makes a supplemental "wrap-around" payment to the FQHC or RHC to bring the total payment up to the PPS rate. Proposed Law: SB 610 would modify existing timelines and establish new timelines relating to the process for setting rates and making payments to Federally Qualified Health Centers (FQHCs) and Rural Health Clinics (RHCs) through the Medi-Cal program. Specific provisions of the bill would: Require the Department of Health Care Services to determine whether a request for a change in scope of service by a FQHC SB 610 (Pan) Page 2 of ? or RHC is complete within 30 days and finalize the review of the request within 90 days of determining that the proposal is complete. (Current law does not impose a deadline on the Department. Under current practice, the Department has 90 days to review the request, if the Department finds the proposal is incomplete, the deadline is extended for another 90 days); Require the Department to finalize a new rate based on cost (for a new FQHC or RHC) within 90 days of submittal of the actual cost report from the first 12 months of operation. (Current law does not set a deadline for finalizing the new rate. Under current practice, the Department determines an interim rate [80% of cost] within four weeks and may take up to three years to establish the final rate.); Require the Department to determine whether a request to establish a new rate based on comparable clinics (for a new FQHC or RHC) is complete within 30 days and finalize a new rate based on comparable clinics within 90 days of determining the request is complete. (Under current practice there is no deadline.); Require the Department to make a reconciliation payment (if necessary) of at least 80% of the estimated amount owed to a FQHC or RHC within 60 days of receiving a reconciliation filing and to complete the final reconciliation review and pay the remaining amount within 15 months. (Under current practice, the Department provides an interim payment of 60% of the estimated amount due within five to six months and makes a final payment within 3 years); Require the Department to correct erroneous payments quarterly, including making payments for reprocessed claims due to the establishment of a new rate for a new FQHC or RHC or if there has been an approved scope of service change. (Under current practice there is no deadline for making erroneous payments). Related Legislation: SB 147 (Hernandez) would require the Department of Health Care Services to authorize a three-year pilot project, under which federally qualified health centers would receive capitated monthly payments from Medi-Cal managed care plans in lieu of wrap-around payments from Medi-Cal for individual visits. That bill is on this committee's Suspense File. SB 610 (Pan) Page 3 of ? Staff Comments: As noted above, the changes in the bill will change the timing of payments made by the state to FQHCs and RHCs. The changes are not anticipated to change the total amounts of the payments. -- END --