BILL ANALYSIS Ó
SB 610
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Date of Hearing: June 30, 2015
ASSEMBLY COMMITTEE ON HEALTH
Rob Bonta, Chair
SB
610 (Pan) - As Amended April 28, 2015
SENATE VOTE: 39-0
SUBJECT: Medi-Cal: federally qualified health centers: rural
health clinics: managed care contracts.
SUMMARY: Establishes timelines for the Department of Health
Care Services (DHCS) to review and finalize specified rates and
complete annual reconciliations for federally qualified health
centers (FQHCs) and rural health clinics (RHCs). Specifically,
this bill:
1)Within 30 days of receipt, requires DHCS to perform an initial
review of reconciliation filings. Also requires DHCS, in the
same timeframe, to perform an initial review of annual
reimbursements that reconcile the difference between the
payment provided to the FQHC or RHC by a managed care health
plan and either the rate established by DHCS for the
reasonable costs of care or the clinic's prospective payment
rate (a per-visit baseline payment rate equal to 100% of the
center's average costs per visit).
2)If a payment is owed to the center or clinic, requires DHCS to
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pay the clinic or center at least 80% of the amount owed
within 30 days of completion of the review or within 60 days
of receipt of the reconciliation filing.
3)Requires DHCS to complete the final reconciliation review and
pay the center or clinic any remaining balance within 15
months from the last date of the fiscal year for which DHCS
conducted 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, and to notify the entity no
later than 31 days after submission of the request if
additional information is necessary.
5)Requires DHCS to finalize the scope-of-service rates for
existing FQHCs and RHCs within 90 days of receiving a complete
request, as specified, and to update the provider master file
within 10 business days.
6)Requires DHCS to finalize the reimbursement rates for new
FQHCs and RHCs within 90 days of receiving a complete request,
as specified, and to update the provider master file within 10
business days.
7)Requires DHCS to correct erroneous payments at least
quarterly, to reprocess past claims, and ensure all claims are
reimbursed at the most recently finalized rate.
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8)Makes technical cleanup changes in to references to existing
federal law.
EXISTING LAW:
1)Establishes the Medi-Cal Program under the direction of DHCS
to provide low-income qualifying individuals health care and a
uniform schedule of benefits, including services provided by
FQHCs and RHCs as defined in federal law.
2)Defines an FQHC as a federally-approved entity that serves a
population that is medically underserved, or a special
medically underserved population comprised of migratory and
seasonal agricultural workers, the homeless, and residents of
public housing, by providing, either through the staff and
supporting resources of the center or through contracts or
cooperative arrangements.
3)Defines an RHC as an FQHC located in a non-urbanized area
currently designated as a federally designated or certified
health care or provider shortage area.
4)Requires local health plans that subcontract with FQHCs and
RHCs to provide reimbursement for services rendered at a level
not less than plans pay for similar services provided outside
of FQHCs and RHCs.
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5)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).
6)Requires DHCS, to the extent possible, to perform an annual
reconciliation of reasonable costs, and make payments to an
FQHC or RHC within six months of the end of an FQHC or RHC's
fiscal year.
7)Requires DHCS to adjust the computed rate differential as it
deems necessary to minimize the difference between the FQHC's
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.
8)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 once per year, as specified.
9)Requires newly established, licensed, or located FQHCs and
RHCs to have their reimbursement rates established as one of
the following options, as selected by the FQHC or RHC:
a) The rate may be calculated based on a per-visit basis in
an amount 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;
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b) In the absence of three comparable FQHCs or RHCs with a
similar caseload, the rate may be calculated as in a) using
three comparable FQHCs or RHCs located in the same or
adjacent service area, or in a reasonably similar
geographic area, with similar characteristics in the
patient population; or,
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 for services provided in the first
12 months of operation. After this period, the rate is
increased by the Medicare Economic Index (MEI) in effect at
that time. The projected allowable costs for the first 12
months are required to be cost settled and the prospective
payment rate is required to be adjusted based on the actual
and allowable cost of the visit.
FISCAL EFFECT: According to the Senate Appropriations
Committee, increased administrative costs, likely in the
millions, to comply with the new or accelerated deadlines in the
bill (General Fund (GF) and federal funds). This bill would
require 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 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 (GF 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,
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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.
COMMENTS:
1)PURPOSE OF THIS BILL. The author states that with the growing
Medi-Cal population and the implementation of the Patient
Protection and Affordable Care Act, FQHCs and RHCs have become
increasingly important to maintain access to quality health
care, and their ability to provide quality care is currently
being jeopardized. The author contends FQHCs and RHCs are
being blocked from valuable funding that could enable them to
better treat patients and increase services to patients as a
result of a lack of timelines from DHCS for reimbursements.
The author states DHCS currently takes approximately five
years to finalize a new rate; during this time, clinics are
only reimbursed for 80% of what they are owed. The author
further maintains DHCS currently takes approximately three
years to finalize reconciliation payments, which has resulted
in the state owing nearly 50 million dollars to the clinics,
according to a March 2015 survey cited by the author. The
author states this bill is needed to ensure quality care by
making sure these clinics receive their money in a timely
manner. The author concludes this bill will keep DHCS
efficient and accountable for the payments owed to FQHCs and
RHCs.
2)BACKGROUND.
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a) FQHCs and RHCs. FQHCs are community-based, nonprofit or
public organizations that provide services to people who
lack access to other health care, including those without
insurance, residents of rural and underserved areas, and
some Medicaid patients. These health care services are
available to all people, regardless of their ability to
pay. FQHCs include community health centers, migrant
health centers, health care for the homeless health centers
and public housing primary care centers. Most FQHCs
receive federal grant funding under Section 330 of the
Public Health Service Act. RHCs are a subset of FQHCs
which provide primary health care services in medically
underserved areas, but differ from health centers in
several ways. Because of provider scarcity in rural areas,
RHCs tend to employ mid-level providers such as nurse
practitioners or physician assistants. Primary care
practices that can document their main purpose is to
provide primary care services in a rural area may qualify
to be an RHC.
b) Reimbursement Rates. In 2001, federal law required
states to phase out cost-based, fee-for-service
reimbursement to FQHCs and instead to use an all-inclusive,
per-visit, prospective payment system (PPS). For 2001,
each state was allowed to set the base rate using each
FQHC's reasonable costs to providing Medi-Cal-covered
services in 1999 and 2000, with subsequent years' payments
being adjusted annually using the MEI for primary care.
Currently, FQHCs and RHCs are paid per patient visit by the
Medi-Cal program, rather than by billing for each
individual service as is typically done by many other
clinics and providers. This system is based on the average
of each health center's reasonable costs per patient visit;
thus, each health center has its own payment rate. The
rate is adjusted annually for inflation and for any change
in scope of services provided.
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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.
c) Annual Reconciliations. DHCS provides additional
reimbursement to FQHCs and RHCs for the difference between
their PPS rate per visit and payments made by their managed
care plans and Medicare. DHCS developed an annual
reconciliation process 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
amounts paid, the PPS rate, and the amounts received from
the FQHC's and RHC's managed care plan, Medicare, and third
party payers. Each clinic is required to submit their
annual reconciliation at the end of their fiscal year.
According to DHCS, it has three years from the received
date to finalize the FQHC's or RHC's reconciliation.
During this process, the clinic will receive tentative
retroactive adjustment settlements based on the filed data
reported on the reconciliation request. The 60% interim
settlement may be subjected to change at DHCS' discretion.
3)SUPPORT. The California Primary Care Association, the sponsor
of this bill, states it is currently taking DHCS years to
finalize rates and settle outstanding debts due to the lack of
current timelines. The sponsor states health centers and
clinics are currently being forced to carry enormous debt for
services rendered that can cost a single health center over $1
million. The sponsor contends that the establishment of
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timelines for DHCS will provide health centers with reasonable
clarity on reimbursement rates and reconciliation and allow
them to direct more focus and funding towards improving
patient care and services, rather than increasing cash
reserves to accommodate delays in reimbursement.
Supporters of this bill state reimbursement delays addressed
in this bill are very common and can take up to four or five
years, causing serious cash flow challenges for FQHCs and
RHCs. Supporters state this bill will ultimately improve the
level of care that can be provided by FQHCs and RHCs because
they will have more time to focus on patient care rather than
on debt management.
4)RELATED LEGISLATION. SB 147 (Ed Hernandez) requires DHCS to
authorize a three-year payment reform pilot project for FQHCs
using an alternative payment methodology (APM) authorized
under federal Medicaid law. Requires an FQHC participating in
the pilot to receive a per member per month wrap-cap payment
for each of its APM enrollees from a Medi-Cal managed care
health plan, instead of the wrap around payment FQHCs
currently receive from DHCS. SB 147 is currently pending in
the Assembly Health Committee.
5)PREVIOUS LEGISLATION.
a) AB 2051 (Gonzalez), Chapter 356, Statutes of 2014, among
other provisions, requires DHCS, within 30 calendar days of
receiving confirmation of certification as a Medi-Cal
provider for an applicant that is an affiliate primary care
clinic, to provide written notice to the applicant
informing the applicant that its Medi-Cal enrollment is
approved.
b) SB 442 (Ducheny), Chapter 502, Statutes of 2010,
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streamlines administrative processes for community clinics
to apply for affiliate clinic licensure from the Department
of Public Health.
6)CHAPTERING OUT. As currently written, AB 690 (Wood) and AB
858 (Wood), both currently pending in the Senate
Appropriations Committee, amend the same code sections as this
bill. Amendments should be taken to avoid chaptering out
conflicts, should all bills be enacted.
7)POLICY COMMENTS. The timeframes contained in this bill
establish new statutory timeframes. For example, in the case
of reconciliation provisions, this bill requires a faster
initial response and higher interim payment amounts than is
current DHCS practice. According to DHCS' initial rate
setting documents, DHCS indicates it has three years from the
received date to finalize a clinic's reconciliation, and it
pays a 60% interim settlement, which is 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% 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.
It is unclear how well DHCS will be able to adjust to the new,
aggressive timelines established under this bill. If the
timelines are too stringent for DHCS, there may be unintended
consequences having DHCS set an inappropriate reimbursement
rate or of increased incorrect reconciliations, the latter of
which could mount administrative burden significantly. The
Committee may wish to amend the timelines in this bill to
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better reflect DHCS' caseload capabilities.
REGISTERED SUPPORT / OPPOSITION:
Support
California Primary Care Association (sponsor)
AIDS Project Los Angeles
Alameda Health Consortium
American Federation of State, County and Municipal Employees,
AFL-CIO
AltaMed (prior version)
Asian Health Services
Asian Pacific Health Care Venture, Inc. (prior version)
Association of California Healthcare Districts
Bartz-Altadonna Community Health Center
Bienvenidos
Community Clinic Consortium
Council of Community Clinics
East Valley Community Health Center, Inc. (prior version)
El Proyecto del Barrio, Inc. (prior version)
Health and Life Organization, Inc.
La Clínica
La Maestra Community Health Centers
LifeLong Medical Care
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Northeast Valley Health Corporation
Peach Tree Health (prior version)
Saban Community Clinic
St. John's Well Child & Family Center (prior version)
Tiburcio Vásquez Health Center, Inc.
White Memorial Community Health Center
Several individuals
Opposition
None on file.
Analysis Prepared by:An-Chi Tsou / HEALTH / (916)
319-2097