BILL ANALYSIS Ó SB 1335 Page 1 Date of Hearing: June 21, 2016 ASSEMBLY COMMITTEE ON HEALTH Jim Wood, Chair SB 1335 (Mitchell) - As Amended April 20, 2016 SENATE VOTE: 39-0 SUBJECT: Medi-Cal benefits: federally qualified health centers and rural health centers: Drug Medi-Cal and specialty mental health services. SUMMARY: Authorizes federally qualified health centers (FQHCs) and rural health clinics (RHCs) to provide specialty mental health and Drug Medi-Cal (DMC) services and be reimbursed for such services under a contract with the county or the Department of Health Care Services (DHCS) and authorizes the reimbursement to be outside the regular Medi-Cal reimbursement structure that applies to FQHCs and RHCs. Specifically, this bill: 1)Permits an FQHC or RHC to do the following: a) Elect to have specialty mental health services reimbursed pursuant to the terms of the contract/s and outside of the per-visit prospective payment system (PPS) if an FQHC or RHC and one or more mental health plans that contract with DHCS for specialty mental health mutually agree to enter into a contract to have the FQHC or RHC SB 1335 Page 2 provide specialty mental health services to Medi-Cal beneficiaries as part of the mental health plan's (MHP) network; and, b) Elect to become certified to provide services in the DMC program, and receive reimbursement for these services as follows: i) If the FQHC is located in a county that has elected to participated in the DMC organized delivery system (ODS), elect to receive reimbursement under a contract mutually agreed upon between the county and an FQHC or RHC; or, ii) If the county does not elect to participate in DMC, the FQHC or RHC can elect to contract through DHCS as a DMC provider. 2)Requires, if an FQHC or RHC elects reimbursement under 1) above, pursuant to which the costs associated with providing the services are part of the FQHC's or RHC's clinic base rate, those costs must be adjusted out of the FQHC's or RHC's clinic base rate as scope-of-service changes, and the PPS payment would not apply. 3)Requires DHCS to implement this bill only to the extent that federal financial participation is obtained. 4)Makes other technical and conforming changes. EXISTING LAW: SB 1335 Page 3 1)Establishes the Medi-Cal program as California's Medicaid program, administered by DHCS, which provides comprehensive health care coverage for low-income individuals. FQHC and RHC services are covered benefits under the Medi-Cal program. 2)Requires FQHCs and RHCs to be reimbursed on a per-visit basis. Defines a "visit" as a face-to-face encounter between an FQHC or RHC patient and specified health care providers. The Medi-Cal reimbursement to FQHCs and RHCs on a per-visit rate is known as PPS. 3)Permits an FQHC or RHC to elect to have pharmacy or dental services reimbursed on a fee-for-service (FFS) basis, utilizing the current fee schedules established for those services. Requires these costs to be adjusted out of the FQHC's or RHC's clinic base rate as scope-of-service change. 4)Establishes DMC, under which DHCS is authorized to enter into contracts with each county for various alcohol and drug treatment services for Medi-Cal beneficiaries. 5)Requires DHCS to implement managed mental health care for Medi-Cal beneficiaries through contracts with mental health plans. Allows MHPs to include individual counties, counties acting jointly, or an organization or nongovernmental entity determined by DHCS to meet MHP standards. 6)Requires MHPs to provide specialty mental health services to eligible Medi-Cal beneficiaries, including both adults and children. FISCAL EFFECT: According to the Senate Appropriations Committee: 1) One-time costs, likely in the low hundreds of thousands for revising regulations and seeking any necessary federal approvals to allow the payment procedures authorized under the bill (General Fund (GF)/federal funds (FF)). SB 1335 Page 4 2)One-time costs, likely less than $200,000, to recalculate the PPS rate for clinics that contract with counties or the state to provide specialty mental health services or services under DMC (GF/FF). The bill would require clinics that contract to provide those additional services to be paid pursuant to the contract for those services. The bill would require the DHCS to recalculate the PPS for those clinics to adjust the costs for providing such services out of the clinic's PPS rate base. The process for recalculating a PPS rate requires a detailed review of utilization and expenditures by clinics. The PPS rate paid to clinics is likely to be much higher than the rates paid by counties for specialty mental health services or DMC. Therefore, most clinics would probably not elect to contract for services that would require them to recalculate their PPS rate. COMMENTS: 1)PURPOSE OF THIS BILL. According to the author, as the growing need for behavioral health care services continues to go unmet, barriers that impair the ability of community clinics and health centers to participate as providers in the DMC and as providers contracted with county specialty MHPs should be eliminated. This bill will help community clinics more easily provide substance use disorder treatment and medically necessary specialty mental health services to our most vulnerable communities by allowing FQHCs and RHCs to elect reimbursement on a FFS basis instead of the PPS basis, thereby expanding the services offered and provider types available at SB 1335 Page 5 FQHCs and RHCs. 2)BACKGROUND. FQHCs and RHCs serve a significant portion of the uninsured and underinsured in California. They are open-door providers that treat patients on a sliding scale fee structure and make their services available regardless of a patient's ability to pay. There are approximately 600 FQHCs and 350 RHCs in California. All FQHCs, and a majority of the RHCs, are either non-profit community clinics or government entities. Because clinics are safety net providers, their continued survival depends heavily on the stability and adequacy of revenues from the Medi-Cal program. FQHCs and RHCs are paid by Medi-Cal on a "per visit" basis in an amount equal to the clinic's cost of delivering services. Essentially, DHCS calculates the annual cost of care provided by each clinic and divides the total by the number of visits to determine a per visit rate. Community clinics and health centers provide health care to 14% of Californians. This figure is even higher in rural or remote areas that struggle to attract and retain health care providers. Mental health and substance abuse services are part of the essential health care benefits under the Patient Protection and Affordable Care Act. As such, they are a part of Medi-Cal. Along with the expansion of these benefits, the expansion of the Medi-Cal program overall has increased the number of beneficiaries to over 14 million, placing even greater demands on Medi-Cal providers. Reimbursement to FQHCs and RHCs is governed by state and federal law. FQHCs and RHCs are reimbursed by Medi-Cal on a per-visit rate which is known as the PPS. For Medi-Cal managed care plan patients, DHCS reimburses FQHCs and RHCs for the difference between its per-visit PPS rate and the payment made by the plan. This payment is known as a "wrap around" payment. The Medi-Cal managed care wrap-around rate was SB 1335 Page 6 established to reimburse providers for the difference between their PPS rate and their Medi-Cal managed care reimbursement rate. The Medi-Cal Specialty Mental Health Services Program and DMC are "carved-out" of the broader Medi-Cal program, are administered by DHCS, and operated under federal waivers approved by the Centers for Medicare and Medicaid Services. DHCS contracts with a MHP in each county to provide or arrange for the provision of Medi-Cal specialty mental health services. Under the terms of the specialty mental health waiver and state regulation, FQHC services are not covered by county mental health plans. DHCS is in the process of implementing the new DMC waiver referred to as DMC ODS, under which counties can elect to opt-in to administer the benefit, and Medi-Cal beneficiaries will receive a richer drug treatment benefit package than in counties that do not opt-in. As counties have begun planning to implement the new DMC ODS, at least one county counsel in Los Angeles County has questioned whether county specialty mental health plans can claim FFP if they contract with FQHCs. This bill would clarify that contracting with county specialty mental health plans and county or state DMC programs is allowed, and that contracting would be through contract and outside the normal PPS Medi-Cal rate paid to FQHCs and RHCs. 3)SUPPORT. The California Primary Care Association, the sponsor of this bill, and the California Pan-Ethnic Health Network state that this bill clarifies that FQHCs and RHCs can contract with DMC or MHP providers and receive reimbursement for DMC and MHP-contracted services outside of the PPS rate and this bill will have little or no cost to the state while increasing access for these services for Medi-Cal enrollees. The California Chapter of the American College of Emergency Physicians notes that this bill will improve access to addiction and mental health treatment. The County Health Executives Association of California points out that this bill will help to increase counties' ability to recruit FQHCs and RHCs to provide behavioral health and substance use disorder SB 1335 Page 7 services and to improve counties' ability to deliver integrated services for Medi-Cal eligible individuals. 4)RELATED LEGISLATION. AB 1863 (Wood) adds marriage and family therapists (MFTs) to the list of healthcare professionals that qualify for a face-to-face encounter with a patient at FQHCs or RHCs for purposes of a per-visit Medi-Cal payment under the PPS. Makes conforming changes, including requiring an FQHC or an RHC that includes the costs of the services of an MFT that chooses to bill these services as a separate visit, to apply for an adjustment to its per-visit rate; that multiple encounters with an MFT on the same day constitutes a single visit; adjustment of rates; and, change in scope of service requirements. AB 1863 is pending in Senate Health Committee. REGISTERED SUPPORT / OPPOSITION: Support California Primary Care Association (co-sponsor) Community Clinic Association of Los Angeles County (co-sponsor) Los Angeles County Board of Supervisors (co-sponsor) AIDS Project Los Angeles Alliance for Rural Community Health AltaMed Health Services Corporation Asian Health Services California Chapter of the American College of Emergency Physicians California Health+Advocates California Pan-Ethnic Health Network SB 1335 Page 8 Coalition of Orange County Community Clinic Consortium County Health Executives Association of California County of Los Angeles East Valley Community Health Center Health and Life Organization, Inc. Health Center Partners of Southern California Kheir Center L.A. Care Health Plan La Clinica de La Raza Los Angeles LGBT Center Mountain Valleys Health Centers Neighborhood Healthcare North East Medical Services Northeast Valley Health Corporation Sacramento Native American Health Center, Inc. San Ysidro Health Center South Central Family Health Center Opposition None on file. Analysis Prepared by:Rosielyn Pulmano / HEALTH / (916) 319-2097 SB 1335 Page 9