BILL ANALYSIS Ó SB 610 Page 1 SENATE THIRD READING SB 610 (Pan) As Amended September 4, 2015 Majority vote SENATE VOTE: 39-0 -------------------------------------------------------------------- |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, | | | | | | | SB 610 Page 2 | | | | | | | |Eduardo Garcia, | | | | |Holden, Jones, Quirk, | | | | |Rendon, Wagner, Weber, | | | | |Wood | | | | | | | | | | | | -------------------------------------------------------------------- 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. SB 610 Page 3 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 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. 9)Include provisions that address chaptering out conflicts with AB 858 (Wood) of the current legislative session. 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 SB 610 Page 4 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). 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 SB 610 Page 5 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. 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 SB 610 Page 6 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. 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. SB 610 Page 7 Analysis Prepared by: An-Chi Tsou / HEALTH / (916) 319-2097 FN: 0002185