Amended in Senate April 5, 2016

Senate Bill No. 1335

Introduced by Senator Mitchell

February 19, 2016

An act to amend Section 14132.100 of the Welfare and Institutions Code, relating to Medi-Cal.

LEGISLATIVE COUNSEL’S DIGEST

SB 1335, as amended, Mitchell. Med-Cal benefits: federally qualified health centers and rural health centers: Drug Medi-Cal and specialty mental health services.

Existing law provides for the Medi-Cal program, which is administered by the State Department of Health Care Services and under which qualified low-income persons receive health care benefits, including specialty mental health services. The Medi-Cal program is, in part, governed and funded by federal Medicaid provisions.

Existing law establishes the Drug Medi-Cal Treatment Program (Drug Medi-Cal), under which the department is authorized to enter into contracts with each county for various alcohol and drug treatment services, including substance use disorder services, narcotic treatment program services, naltrexone services, and outpatient drug-free services, to Medi-Cal beneficiaries. Specialty mental health services and Drug Medi-Cal Services and provided pursuant to waivers from the federal Centers for Medicare and Medicaid Services.

Existing law provides that federally qualified health center (FQHC) services and rural health clinic (RHC) services, as defined, are covered benefits under the Medi-Cal program to be reimbursed, to the extent that federal financial participation is obtained, to providers on a per-visit basis. Existing law authorizes FQHCs and RHCs to elect to have pharmacy or dental services reimbursed on a fee-for-service basis, utilizing the current fee schedules established for those services and requires those costs to be adjusted out of the FQHC’s or RHC’s clinic base rate as scope-of-service changes.

This bill begin insert additionally end insert would authorize FQHCs and RHCs to elect to begin delete have end delete begin insert provide end insert Drug Medi-Cal and begin delete specialty mental health services reimbursed on a fee-for-service basis, according to the same criteria as applied to pharmacy and dental services. end delete begin insert to receive reimbursement for those services pursuant to the terms of a contract or contracts mutually agreed upon by the FQHC or RHC and the county or the department, pursuant to specified requirements. The bill also would authorize FQHCs and RHCs to elect to provide specialty mental health services and to receive reimbursement for those services pursuant to the terms of a contract or contracts mutually agreed upon by the FQHC or RHC and mental health plans that contract with the state. end insert

begin insert

The bill’s requirements would be implemented only to the extent that federal financial participation is available and any federal approvals have been obtained.

end insert

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 14132.100 of the Welfare and Institutions
Code is amended to read:

14132.100.  

(a) The federally qualified health center services
described in Section 1396d(a)(2)(C) of Title 42 of the United States
Code are covered benefits.

(b) The rural health clinic services described in Section
1396d(a)(2)(B) of Title 42 of the United States Code are covered
benefits.

(c) Federally qualified health center services and rural health
clinic services shall be reimbursed on a per-visit basis in
accordance with the definition of “visit” set forth in subdivision
(g).

(d) Effective October 1, 2004, and on each October 1, thereafter,
until no longer required by federal law, federally qualified health
center (FQHC) and rural health clinic (RHC) per-visit rates shall
be increased by the Medicare Economic Index applicable to
primary care services in the manner provided for in Section
1396a(bb)(3)(A) of Title 42 of the United States Code. Prior to
January 1, 2004, FQHC and RHC per-visit rates shall be adjusted
by the Medicare Economic Index in accordance with the
methodology set forth in the state plan in effect on October 1,
2001.

(e) (1) An FQHC or RHC may apply for an adjustment to its
per-visit rate based on a change in the scope of services provided
by the FQHC or RHC. Rate changes based on a change in the
scope of services provided by an FQHC or RHC shall be evaluated
in accordance with Medicare reasonable cost principles, as set
forth in Part 413 (commencing with Section 413.1) of Title 42 of
the Code of Federal Regulations, or its successor.

(2) Subject to the conditions set forth in subparagraphs (A) to
(D), inclusive, of paragraph (3), a change in scope of service means
any of the following:

(A) The addition of a new FQHC or RHC service that is not
incorporated in the baseline prospective payment system (PPS)
rate, or a deletion of an FQHC or RHC service that is incorporated
in the baseline PPS rate.

(B) A change in service due to amended regulatory requirements
or rules.

(C) A change in service resulting from relocating or remodeling
an FQHC or RHC.

(D) A change in types of services due to a change in applicable
technology and medical practice utilized by the center or clinic.

(E) An increase in service intensity attributable to changes in
the types of patients served, including, but not limited to,
populations with HIV or AIDS, or other chronic diseases, or
homeless, elderly, migrant, or other special populations.

(F) Any changes in any of the services described in subdivision
(a) or (b), or in the provider mix of an FQHC or RHC or one of
its sites.

(G) Changes in operating costs attributable to capital
expenditures associated with a modification of the scope of any
of the services described in subdivision (a) or (b), including new
or expanded service facilities, regulatory compliance, or changes
in technology or medical practices at the center or clinic.

(H) Indirect medical education adjustments and a direct graduate
medical education payment that reflects the costs of providing
teaching services to interns and residents.

(I) Any changes in the scope of a project approved by the federal
Health Resources and Services Administration (HRSA).

(3) No change in costs shall, in and of itself, be considered a
scope-of-service change unless all of the following apply:

(A) The increase or decrease in cost is attributable to an increase
or decrease in the scope of services defined in subdivisions (a) and
(b), as applicable.

(B) The cost is allowable under Medicare reasonable cost
principles set forth in Part 413 (commencing with Section 413) of
Subchapter B of Chapter 4 of Title 42 of the Code of Federal
Regulations, or its successor.

(C) The change in the scope of services is a change in the type,
intensity, duration, or amount of services, or any combination
thereof.

(D) The net change in the FQHC’s or RHC’s rate equals or
exceeds 1.75 percent for the affected FQHC or RHC site. For
FQHCs and RHCs that filed consolidated cost reports for multiple
sites to establish the initial prospective payment reimbursement
rate, the 1.75-percent threshold shall be applied to the average
per-visit rate of all sites for the purposes of calculating the cost
associated with a scope-of-service change. “Net change” means
the per-visit rate change attributable to the cumulative effect of all
increases and decreases for a particular fiscal year.

(4) An FQHC or RHC may submit requests for scope-of-service
changes once per fiscal year, only within 90 days following the
beginning of the FQHC’s or RHC’s fiscal year. Any approved
increase or decrease in the provider’s rate shall be retroactive to
the beginning of the FQHC’s or RHC’s fiscal year in which the
request is submitted.

(5) An FQHC or RHC shall submit a scope-of-service rate
change request within 90 days of the beginning of any FQHC or
RHC fiscal year occurring after the effective date of this section,
if, during the FQHC’s or RHC’s prior fiscal year, the FQHC or
RHC experienced a decrease in the scope of services provided that
the FQHC or RHC either knew or should have known would have
resulted in a significantly lower per-visit rate. If an FQHC or RHC
discontinues providing onsite pharmacy or dental services, it shall
submit a scope-of-service rate change request within 90 days of
the beginning of the following fiscal year. The rate change shall
be effective as provided for in paragraph (4). As used in this
paragraph, “significantly lower” means an average per-visit rate
decrease in excess of 2.5 percent.

(6) Notwithstanding paragraph (4), if the approved
scope-of-service change or changes were initially implemented
on or after the first day of an FQHC’s or RHC’s fiscal year ending
in calendar year 2001, but before the adoption and issuance of
written instructions for applying for a scope-of-service change,
the adjusted reimbursement rate for that scope-of-service change
shall be made retroactive to the date the scope-of-service change
was initially implemented. Scope-of-service changes under this
paragraph shall be required to be submitted within the later of 150
days after the adoption and issuance of the written instructions by
the department, or 150 days after the end of the FQHC’s or RHC’s
fiscal year ending in 2003.

(7) All references in this subdivision to “fiscal year” shall be
construed to be references to the fiscal year of the individual FQHC
or RHC, as the case may be.

(f) (1) An FQHC or RHC may request a supplemental payment
if extraordinary circumstances beyond the control of the FQHC
or RHC occur after December 31, 2001, and PPS payments are
insufficient due to these extraordinary circumstances. Supplemental
payments arising from extraordinary circumstances under this
subdivision shall be solely and exclusively within the discretion
of the department and shall not be subject to subdivision (l). These
supplemental payments shall be determined separately from the
scope-of-service adjustments described in subdivision (e).
Extraordinary circumstances include, but are not limited to, acts
of nature, changes in applicable requirements in the Health and
Safety Code, changes in applicable licensure requirements, and
changes in applicable rules or regulations. Mere inflation of costs
alone, absent extraordinary circumstances, shall not be grounds
for supplemental payment. If an FQHC’s or RHC’s PPS rate is
sufficient to cover its overall costs, including those associated with
the extraordinary circumstances, then a supplemental payment is
not warranted.

(2) The department shall accept requests for supplemental
payment at any time throughout the prospective payment rate year.

(3) Requests for supplemental payments shall be submitted in
writing to the department and shall set forth the reasons for the
request. Each request shall be accompanied by sufficient
documentation to enable the department to act upon the request.
Documentation shall include the data necessary to demonstrate
that the circumstances for which supplemental payment is requested
meet the requirements set forth in this section. Documentation
shall include all of the following:

(A) A presentation of data to demonstrate reasons for the
FQHC’s or RHC’s request for a supplemental payment.

(B) Documentation showing the cost implications. The cost
impact shall be material and significant, two hundred thousand
dollars ($200,000) or 1 percent of a facility’s total costs, whichever
is less.

(4) A request shall be submitted for each affected year.

(5) Amounts granted for supplemental payment requests shall
be paid as lump-sum amounts for those years and not as revised
PPS rates, and shall be repaid by the FQHC or RHC to the extent
that it is not expended for the specified purposes.

(6) The department shall notify the provider of the department’s
discretionary decision in writing.

(g) (1) An FQHC or RHC “visit” means a face-to-face
encounter between an FQHC or RHC patient and a physician,
physician assistant, nurse practitioner, certified nurse-midwife,
clinical psychologist, licensed clinical social worker, or a visiting
nurse. For purposes of this section, “physician” shall be interpreted
in a manner consistent with the Centers for Medicare and Medicaid
Services’ Medicare Rural Health Clinic and Federally Qualified
Health Center Manual (Publication 27), or its successor, only to
the extent that it defines the professionals whose services are
reimbursable on a per-visit basis and not as to the types of services
that these professionals may render during these visits and shall
include a physician and surgeon, podiatrist, dentist, optometrist,
and chiropractor. A visit shall also include a face-to-face encounter
between an FQHC or RHC patient and a comprehensive perinatal
services practitioner, as defined in Section 51179.1 of Title 22 of
the California Code of Regulations, providing comprehensive
perinatal services, a four-hour day of attendance at an adult day
health care center, and any other provider identified in the state
plan’s definition of an FQHC or RHC visit.

(2) (A) A visit shall also include a face-to-face encounter
between an FQHC or RHC patient and a dental hygienist or a
dental hygienist in alternative practice.

(B) Notwithstanding subdivision (e), an FQHC or RHC that
currently includes the cost of the services of a dental hygienist in
alternative practice for the purposes of establishing its FQHC or
RHC rate shall apply for an adjustment to its per-visit rate, and,
after the rate adjustment has been approved by the department,
shall bill these services as a separate visit. However, multiple
encounters with dental professionals that take place on the same
day shall constitute a single visit. The department shall develop
the appropriate forms to determine which FQHC’s or RHC rates
shall be adjusted and to facilitate the calculation of the adjusted
rates. An FQHC’s or RHC’s application for, or the department’s
approval of, a rate adjustment pursuant to this subparagraph shall
not constitute a change in scope of service within the meaning of
subdivision (e). An FQHC or RHC that applies for an adjustment
to its rate pursuant to this subparagraph may continue to bill for
all other FQHC or RHC visits at its existing per-visit rate, subject
to reconciliation, until the rate adjustment for visits between an
FQHC or RHC patient and a dental hygienist or a dental hygienist
in alternative practice has been approved. Any approved increase
or decrease in the provider’s rate shall be made within six months
after the date of receipt of the department’s rate adjustment forms
pursuant to this subparagraph and shall be retroactive to the
beginning of the fiscal year in which the FQHC or RHC submits
the request, but in no case shall the effective date be earlier than
January 1, 2008.

(C) An FQHC or RHC that does not provide dental hygienist
or dental hygienist in alternative practice services, and later elects
to add these services, shall process the addition of these services
as a change in scope of service pursuant to subdivision (e).

(h) If FQHC or RHC services are partially reimbursed by a
third-party payer, such as a managed care entity (as defined in
Section 1396u-2(a)(1)(B) of Title 42 of the United States Code),
the Medicare Program, or the Child Health and Disability
Prevention (CHDP) program, the department shall reimburse an
FQHC or RHC for the difference between its per-visit PPS rate
and receipts from other plans or programs on a contract-by-contract
basis and not in the aggregate, and may not include managed care
financial incentive payments that are required by federal law to
be excluded from the calculation.

(i) (1) An entity that first qualifies as an FQHC or RHC in the
year 2001 or later, 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 shall each 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.

(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, the department shall
establish a reimbursement rate, calculated on a per-visit basis, that
is equal to 100 percent 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 shall be increased by
the Medicare Economic Index then in effect. The projected
allowable costs for the first 12 months shall be cost settled and the
prospective payment reimbursement rate shall be adjusted based
on actual and allowable cost per visit.

(D) The department may adopt any further and additional
methods of setting reimbursement rates for newly qualified FQHCs
or RHCs as are consistent with Section 1396a(bb)(4) of Title 42
of the United States Code.

(2) In order for an FQHC or RHC to establish the comparability
of its caseload for purposes of subparagraph (A) or (B) of paragraph
(1), the department shall require that the FQHC or RHC submit
its most recent annual utilization report as submitted to the Office
of Statewide Health Planning and Development, unless the FQHC
or RHC was not required to file an annual utilization report. FQHCs
or RHCs that have experienced changes in their services or
caseload subsequent to the filing of the annual utilization report
may submit to the department a completed report in the format
applicable to the prior calendar year. FQHCs or RHCs that have
not previously submitted an annual utilization report shall submit
to the department a completed report in the format applicable to
the prior calendar year. The FQHC or RHC shall not be required
to submit the annual utilization report for the comparable FQHCs
or RHCs to the department, but shall be required to identify the
comparable FQHCs or RHCs.

(3) The rate for any newly qualified entity set forth under this
subdivision shall be effective retroactively to the later of the date
that the entity was first qualified by the applicable federal agency
as an FQHC or RHC, the date a new facility at a new location was
added to an existing FQHC or RHC, or the date on which an
existing FQHC or RHC was relocated to a new site. The FQHC
or RHC shall be permitted to continue billing for Medi-Cal covered
benefits on a fee-for-service basis until it is informed of its
enrollment as an FQHC or RHC, and the department shall reconcile
the difference between the fee-for-service payments and the
FQHC’s or RHC’s prospective payment rate at that time.

(j) Visits occurring at an intermittent clinic site, as defined in
subdivision (h) of Section 1206 of the Health and Safety Code, of
an existing FQHC or RHC, or in a mobile unit as defined by
paragraph (2) of subdivision (b) of Section 1765.105 of the Health
and Safety Code, shall be billed by and reimbursed at the same
rate as the FQHC or RHC establishing the intermittent clinic site
or the mobile unit, subject to the right of the FQHC or RHC to
request a scope-of-service adjustment to the rate.

begin delete

(k) An FQHC or RHC may elect to have Drug Medi-Cal
services, specialty mental health services, pharmacy services, or
dental services reimbursed on a fee-for-service basis, utilizing the
current fee schedules established for those services. These costs
shall be adjusted out of the FQHC’s or RHC’s clinic base rate as
scope-of-service changes. An FQHC or RHC that reverses its
election under this subdivision shall revert to its prior rate, subject
to an increase to account for all MEI increases occurring during
the intervening time period, and subject to any increase or decrease
associated with applicable scope-of-services adjustments as
provided in subdivision (e).

end delete begin insert

(k) (1) Notwithstanding any other provision of this section
requiring the use of a per-visit reimbursement rate, as described
in subdivision (a), this subdivision shall govern reimbursement
for services identified in this subdivision.

end insert begin insert

(2) An FQHC or RHC may elect to have pharmacy services or
dental services reimbursed on a fee-for-services basis, utilizing
the current fee schedules established for those services.

end insert begin insert

(3) If an FQHC or RHC and one or more mental health plans
that contract with the department pursuant to Section 14712
mutually agree to enter into a contract to have the FQHC or RHC
provide specialty mental health services to Medi-Cal beneficiaries
as part of the mental health plan’s network, the FQHC or RHC
shall elect to have specialty mental health services reimbursed
pursuant to the terms of the contract or contracts and outside of
the per-visit PPS rate.

end insert begin insert

(4) An FQHC or RHC may elect to become certified to provide
services in the Drug Medi-Cal program, and reimbursement for
those services shall be governed by this paragraph.

end insert begin insert

(A) If the FQHC is located in a county that has elected to
participate in the Drug Medi-Cal organized delivery system, the
FQHC or RHC may elect to receive reimbursement pursuant to a
mutually agreed upon contract between the county and the FQHC
or RHC.

end insert begin insert

(B) If the county does not elect to participate in the Drug
Medi-Cal organized delivery system, an FQHC or RHC may elect
to contract through the department as a Drug Medi-Cal provider.

end insert begin insert

(5) (A) If an FQHC or RHC elects reimbursement pursuant to
paragraph (2), (3), or (4), pursuant to which the costs associated
with providing the services are part of the FQHC’s or RHC’s clinic
base rate, those costs shall be adjusted out of the FQHC’s or
RHC’s clinic base rate as scope-of-service changes and payment
pursuant to subdivision (h) shall not apply.

end insert begin insert

(B) An FQHC or RHC that reverses its election under this
subdivision shall revert to its prior rate, subject to an increase to
account for all MEI increases occurring during the intervening
time period, and subject to any increases or decreases associated
with applicable scope-of-services adjustments as provided in
subdivision (e).

end insert

(l) FQHCs and RHCs may appeal a grievance or complaint
concerning ratesetting, scope-of-service changes, and settlement
of cost report audits, in the manner prescribed by Section 14171.
The rights and remedies provided under this subdivision are
cumulative to the rights and remedies available under all other
provisions of law of this state.

(m) The department shall, no later than March 30, 2008,
promptly seek all necessary federal approvals in order to implement
this section, including any amendments to the state plan. To the
extent that any element or requirement of this section is not
approved, the department shall submit a request to the federal
Centers for Medicare and Medicaid Services for any waivers that
would be necessary to implement this section.

(n) The department shall implement this section only to the
extent that federal financial participation is obtained.

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert The amendments made by this act to subdivision (k)
of Section 14132.100 of the Welfare and Institutions Code shall end insert

begin insert be implemented only to the extent that federal financial
participation is available and any necessary federal approvals
have been obtained. end insert