BILL ANALYSIS Ó
SB 610
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Date of Hearing: August 19, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
SB 610
(Pan) - As Amended July 14, 2015
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill imposes new timelines and shortens existing timelines
for Medi-Cal payments to federally qualified health centers and
rural health centers (FQHCs and RHCs, or clinics).
FISCAL EFFECT:
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1)This bill could be implemented by increasing staff assigned to
audits and reconciliations, at a temporary cost in the range
of $2.5 million per year for two years (GF/federal). The
current staffing level is able to meet the annual demand for
audits and reconciliations, and does not have a backlog
according to existing timelines. However, as timelines are
shortened by this bill, a backlog will be created.
Accelerating this workload prospectively, as well as
processing past-year workload to catch up, will require more
administrative staff on a temporary basis. The long-term
ongoing workload impact is unclear. Conservatively,
provisions related to more frequent erroneous payment
corrections may have some ongoing costs, in the range of
$100,000 (GF/federal).
2)Unknown changes in the timing of payments made to clinics due
to changes in the processes and deadlines for making
reconciliation payments or correcting erroneous payments
(GF/federal). The bill creates new timelines or accelerates
existing timelines under which DHCS must make certain payments
to clinics. By accelerating payments, the state will 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 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 clinics.
COMMENTS:
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1)Purpose. The purpose of this bill is to expedite payments to
clinics for Medi-Cal services rendered. The author states
this bill is needed to ensure quality care by making sure
these clinics receive their money in a timely manner.
2)Clinic Reimbursement. Because of their unique role in
providing health care to underserved communities and the
uninsured, policymakers have historically attempted to ensure
that community clinics remain financially viable. Federal law
requires federally funded health programs, including Medicaid
and Children's Health Insurance Program (CHIP), to pay clinics
using a special reimbursement structure commonly called a
prospective payment system (PPS). According to DHCS Form
3090, the Freestanding FQHC Cost Report Form, PPS rates are a
clinic-specific, per-visit rate, and are calculated by
dividing costs for Medi-Cal-reimbursable services by Medi-Cal
reimbursable visits. If clinics are paid by managed care plans
in amounts less than their PPS rates, there is a
reconciliation performed to ensure clinics get paid the full
PPS rate through a wrap-around payment paid by DCHS. For
Medi-Cal, current PPS rates vary from around $80 to over $650
per visit, depending on the mix of services provided at each
clinic. The median PPS rate is around $157.
3)Status Quo. If a new clinic or new clinic site is to be
opened, the clinic must apply for a site-specific PPS rate.
DHCS currently takes approximately five years to finalize a
new rate; during this time, clinics are reimbursed for 60% of
what is projected they are owed. For existing clinics,
annual reconciliation is performed to ensure clinics are paid
according to their PPS rates. DHCS currently takes
approximately three years to finalize reconciliation payments,
which has resulted in the state owing nearly $50 million to
the clinics, according to a March 2015 survey cited by the
author.
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The chart below indicates the activities performed, their
purpose, the current timelines and amounts, and what this bill
proposes.
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|Activity |Purpose |Curre| Proposed |
| | |nt | |
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|-------------+---------------------+------------+-------------|
|Annual |Ensure clinic |3 years |18 months |
|Reconciliatio|receives PPS rate | | |
|n payment |for all billable | | |
|calculation |visits. | | |
|-------------+---------------------+------------+-------------|
|Payments |Pay a clinic the |60% interim |80% interim |
|reflecting |balance owed, |payment |payment |
|reconciliatio|according to the |while |while |
|n |reconciliation |pending. |pending. |
| |calculation. | | |
|-------------+---------------------+------------+-------------|
|New rate |Identify the PPS |5 years |12 months |
|calculation |rate at which a new | |from |
| |clinic will be | |submittal of |
| |reimbursed. | |initial year |
| | | |of data |
|-------------+---------------------+------------+-------------|
|Payments |Reimburse a new | | |
|reflecting |clinic the according | | |
|new rates |to the calculated | | |
| |PPS rate. | | |
|-------------+---------------------+------------+-------------|
|Comparability|Identify a new PPS |Usually |12 months; |
| requests |rate based on |around 4 |30 days to |
| |comparability with |months |note |
| |other clinics. | |findings of |
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| | | |non-comparabi|
| | | |lity. |
|-------------+---------------------+------------+-------------|
|Scope of |Calculate a new PPS |90 days in |90 days in |
|service rate |rate, based on a |practice |statute |
|change |modified scope of | | |
|request |services. | | |
| | | | |
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Clinics indicate because of the long lag time in receiving
payment, in order to maintain operations, they are forced to
take lines of credit at high interest rates.
4)Comment. Payment timelines that stretch on for years, in a
sector as dynamic as delivery of health care services, appear
difficult for providers to manage. It is unclear why audits
and reconciliations are processed so many years in arrears.
It seems to be in the state's interest to enhance stability to
clinics that serve so many of the state's Medi-Cal enrollees.
Even if the state moves to a different methodology for clinic
reimbursement, as is being considered on a pilot basis by SB
147 (Hernández), also being heard today, there will still be
years of annual reconciliations to perform. The benefit
clinics would receive from greater certainty, and a reduction
in finance charges associated with lines of credit, should be
weighed against the temporary increase in state costs and
workload. Accelerating these payments also has a budget
impact, but it is essentially paying off debt for costs
already incurred in past years.
Analysis Prepared by:Lisa Murawski / APPR. / (916)
319-2081
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