BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 610|
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THIRD READING
Bill No: SB 610
Author: Pan (D)
Amended: 4/28/15
Vote: 21
SENATE HEALTH COMMITTEE: 8-0, 4/22/15
AYES: Hernandez, Nguyen, Mitchell, Monning, Nielsen, Pan,
Roth, Wolk
NO VOTE RECORDED: Hall
SENATE APPROPRIATIONS COMMITTEE: 7-0, 5/28/15
AYES: Lara, Bates, Beall, Hill, Leyva, Mendoza, Nielsen
SUBJECT: Medi-Cal: federally qualified health centers:
rural health clinics: managed care contracts
SOURCE: California Primary Care Association
DIGEST: This bill 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. This bill
establishes timeframes for DHCS to finalize rates for new FQHCs
and RHCs. This bill 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. This
bill 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.
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ANALYSIS:
Existing law:
1)Establishes the Medi-Cal program as California's Medicaid
program, administered by 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
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.
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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.
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% 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:
1)Requires DHCS to perform an initial review of the
reconciliation filing within 30 days of receipt.
2)Requires DHCS to pay to the FQHC or RHC at least 80% of the
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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.
3)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.
4)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.
5)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.
6)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.
7)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.
8)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.
9)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
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supplemental information, the initial review process described
in #8 above to apply.
10)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.
11)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.
Comments
1)Author's statement. According to the author, with the growing
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 clinics.
2)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). 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 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
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Medicaid beneficiary and one of the FQHC's billable providers
for a covered service.
3)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% tentative settlement is paid to the FQHC
or RHC if the amount is due to the FQHC/RHC, at the auditor's
discretion.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
According to the Senate Appropriations Committee:
1)Increased administrative costs, likely in the millions, to
comply with the new or accelerated deadlines in this bill
(General Fund and federal funds). This bill requires DHCS to
complete its review of a proposed change in scope of service
or determine a final rate for a FQHC or RHC much faster than
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is current practice.
2)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). This bill creates new
timelines or accelerates existing timelines under which DHCS
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 this bill results in payments being made earlier, to some
extent this bill will result in shifting of costs between
budget years. This bill is not anticipated to increase overall
Medi-Cal costs for payments to FQHCs or RHCs.
SUPPORT: (Verified5/27/15)
California Primary Care Association (source)
Asian Pacific Health Care Venture, Inc.
AltaMed Health Services Corporation
Association of California Healthcare Districts
Bienvenidos Community Health Center
California Academy of Family Physicians
Community Clinic Association of Los Angeles County
East Valley Community Health Center, Inc.
El Proyetco Del Barrio
Peach Tree Health
St. John's Well Child & Family Center
35 individuals
OPPOSITION: (Verified 5/27/15)
None received
ARGUMENTS IN 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
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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. CPAC states that, considering
health centers operate on thin margins, often 2% 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.
Prepared by:Scott Bain / HEALTH /
5/30/15 16:45:59
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