BILL ANALYSIS                                                                                                                                                                                                    



          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
          
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          |Version: April 28, 2015         |Policy Vote: HEALTH 8 - 0       |
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          |Urgency: No                     |Mandate: No                     |
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          |Hearing Date: May 11, 2015      |Consultant: Brendan McCarthy    |
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          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  







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            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  








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            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.










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          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.


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