BILL ANALYSIS Ó
SB 610
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SENATE THIRD READING
SB
610 (Pan)
As Amended July 14, 2015
Majority vote
SENATE VOTE: 39-0
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|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Health |18-0 |Bonta, Maienschein, | |
| | |Bonilla, Burke, Chiu, | |
| | |Gomez, Gonzalez, | |
| | |Roger Hernández, | |
| | |Lackey, McCarty, | |
| | |Nazarian, Patterson, | |
| | |Ridley-Thomas, | |
| | |Rodriguez, Steinorth, | |
| | |Thurmond, Waldron, | |
| | |Wood | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Appropriations |17-0 |Gomez, Bigelow, | |
| | |Bloom, Bonta, | |
| | |Calderon, Chang, | |
| | |Nazarian, Eggman, | |
| | |Gallagher, Eduardo | |
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| | |Garcia, Holden, | |
| | |Jones, Quirk, Rendon, | |
| | |Wagner, Weber, Wood | |
| | | | |
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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)Requires, within 30 days of receipt, 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)Requires, if a payment is owed to the center or clinic, DHCS
to 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 18
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
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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 one year 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 one year 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.
8)Makes technical cleanup changes in to references to existing
federal law.
FISCAL EFFECT: According to the Assembly Appropriations
Committee, 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 (General Fund
(GF)/federal funds). 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
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costs, in the range of $100,000 (GF/federal).
The Assembly Appropriations Committee also states there are
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). This
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 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 clinics.
COMMENTS: 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.
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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 Medicare Economic Index (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.
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.
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
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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.
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 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.
There is no known opposition to this bill on file.
Analysis Prepared by:
An-Chi Tsou / HEALTH / (916) 319-2097 FN:
0001671
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