SB 147: Federally qualified health centers.
- Session Year: 2015-2016
- House: Senate
- Latest Version Date: 2015-10-10
Existing law provides for the Medi-Cal program, which is administered by the State Department of Health Care Services, under which qualified low-income individuals receive health care services. The Medi-Cal program is, in part, governed and funded by federal Medicaid Program provisions. Existing law provides that federally qualified health center (FQHC) services, as described, 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. Visit is defined as a face-to-face encounter between a patient of an FQHC and specified health care professionals. Existing federal law authorizes a state plan to provide for payment in any fiscal year to an FQHC for specified services in an amount that is determined under an alternative payment methodology (APM) if it is agreed to by the state and the FQHC and results in a payment to the FQHC of an amount that is at least equal to the amount otherwise required to be paid to the FQHC.
This bill would require the department to authorize an APM pilot project, to commence no sooner than July 1, 2016, for FQHCs that agree to participate. The bill would require the department to authorize implementation of an APM pilot project with respect to a county for a period of up to 3 years. The bill would require the department to determine an APM supplemental capitation amount for each APM aid category to be paid by the department to each principal health plan that contains at least one participating FQHC in its provider network, as specified. The bill would require, except as specified, the department to contract with an independent entity to perform an evaluation of the APM pilot project, and would require that the evaluation be completed and provided to the Legislature, to the extent practicable, within 6 months of the conclusion of the APM pilot project in certain counties, as specified.
Existing law provides for the Medi-Cal program, which is administered by the State Department of Health Care Services, under which qualified low-income individuals receive health care services. The Medi-Cal program is, in part, governed and funded by federal Medicaid Program provisions. Existing law provides that federally qualified health center (FQHC) services, as described, 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. Visit is defined as a face-to-face encounter between a patient of an FQHC and specified health care professionals. Existing federal law authorizes a state plan to provide for payment in any fiscal year to an FQHC for specified services in an amount that is determined under an alternative payment methodology (APM) if it is agreed to by the state and the FQHC and results in a payment to the FQHC of an amount that is at least equal to the amount otherwise required to be paid to the FQHC.
This bill would require the department to authorize an APM pilot project, to commence no sooner than July 1, 2016, for FQHCs that agree to participate. The bill would require the department to authorize implementation of an APM pilot project with respect to a county for a period of up to 3 years. The bill would require the department to determine an APM supplemental capitation amount for each APM aid category to be paid by the department to each principal health plan that contains at least one participating FQHC in its provider network, as specified. The bill would require, except as specified, the department to contract with an independent entity to perform an evaluation of the APM pilot project, and would require that the evaluation be completed and provided to the Legislature, to the extent practicable, within 6 months of the conclusion of the APM pilot project in certain counties, as specified.
Existing law provides for the Medi-Cal program, which is administered by the State Department of Health Care Services, under which qualified low-income individuals receive health care services. The Medi-Cal program is, in part, governed and funded by federal Medicaid Program provisions. Existing law provides that federally qualified health center (FQHC) services, as described, 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. Visit is defined as a face-to-face encounter between a patient of an FQHC and specified health care professionals. Existing federal law authorizes a state plan to provide for payment in any fiscal year to an FQHC for specified services in an amount that is determined under an alternative payment methodology (APM) if it is agreed to by the state and the FQHC and results in a payment to the FQHC of an amount that is at least equal to the amount otherwise required to be paid to the FQHC.
This bill would require the department to authorize an APM pilot project, to commence no sooner than July 1, 2016, for FQHCs that agree to participate. The bill would require the department to authorize implementation of an APM pilot project with respect to a county for a period of up to 3 years. The bill would require the department to determine an APM supplemental capitation amount for each APM aid category to be paid by the department to each principal health plan that contains at least one participating FQHC in its provider network, as specified. The bill would require, except as specified, the department to contract with an independent entity to perform an evaluation of the APM pilot project, and would require that the evaluation be completed and provided to the Legislature, to the extent practicable, within 6 months of the conclusion of the APM pilot project in certain counties, as specified.
Existing law provides for the Medi-Cal program, which is administered by the State Department of Health Care Services, under which qualified low-income individuals receive health care services. The Medi-Cal program is, in part, governed and funded by federal Medicaid Program provisions. Existing law provides that federally qualified health center (FQHC) services, as described, 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. Visit is defined as a face-to-face encounter between a patient of an FQHC and specified health care professionals. Existing federal law authorizes a state plan to provide for payment in any fiscal year to an FQHC for specified services in an amount that is determined under an alternative payment methodology (APM) if it is agreed to by the state and the FQHC and results in a payment to the FQHC of an amount that is at least equal to the amount otherwise required to be paid to the FQHC.
This bill would require the department to authorize an APM pilot project, to commence no sooner than July 1, 2016, for FQHCs that agree to participate. The bill would require the department to authorize implementation of an APM pilot project with respect to a county for a period of up to 3 years. The bill would require the department to determine an APM supplemental capitation amount for each APM aid category to be paid by the department to each principal health plan that contains at least one participating FQHC in its provider network, as specified. The bill would require, except as specified, that the department to contract with an independent entity to perform an evaluation of the APM pilot project be completed by an independent entity project, and would require that the evaluation be completed and provided to the Legislature, to the extent practicable, within 6 months of the conclusion of the APM pilot project, and would require the independent entity to report the findings to the department and the Legislature. project in certain counties, as specified.
Existing law provides for the Medi-Cal program, which is administered by the State Department of Health Care Services, under which qualified low-income individuals receive health care services. The Medi-Cal program is, in part, governed and funded by federal Medicaid Program provisions. Existing law provides that federally qualified health center (FQHC) services, as described, 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. Visit is defined as a face-to-face encounter between a patient of an FQHC and specified health care professionals. Existing federal law authorizes a state plan to provide for payment in any fiscal year to an FQHC for specified services in an amount that is determined under an alternative payment methodology (APM) if it is agreed to by the state and the FQHC and results in a payment to the FQHC of an amount that is at least equal to the amount otherwise required to be paid to the FQHC.
This bill would require the department to authorize a 3-year an APM pilot project, to commence no sooner than July 1, 2016, for FQHCs that agree to participate. The bill would require the department to authorize implementation of an APM pilot project with respect to a county for a period of up to 3 years. The bill would require the department to determine an APM supplemental capitation amount for each APM aid category to be paid by the department to each principle principal health plan that contains at least one participating FQHC in its provider network, as specified. Under the APM pilot project, participating FQHCs would receive a per member per month wrap-cap payment for each of its APM enrollees, as specified. The bill would require each principal health plan to pay a participating FQHC that is in the plan provider network the wrap-cap amounts, as determined, for each APM enrollee of that FQHC. The bill would require, except as specified, that an evaluation of the APM pilot project be completed by an independent entity within 6 months of the conclusion of the APM pilot project, and would require the independent entity to report the findings to the department and the Legislature.
Existing law provides for the Medi-Cal program, which is administered by the State Department of Health Care Services, under which qualified low-income individuals receive health care services. The Medi-Cal program is, in part, governed and funded by federal Medicaid Program provisions. Existing law provides that federally qualified health center (FQHC) services, as described, 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. Visit is defined as a face-to-face encounter between a patient of an FQHC and specified health care professionals. Existing federal law authorizes a state plan to provide for payment in any fiscal year to an FQHC for specified services in an amount that is determined under an alternative payment methodology (APM) if it is agreed to by the state and the FQHC and results in a payment to the FQHC of an amount that is at least equal to the amount otherwise required to be paid to the FQHC.
This bill would require the department to authorize a 3-year APM pilot project, to commence no sooner than July 1, 2016, for FQHCs that agree to participate. The bill would require the department to determine an APM supplemental capitation amount for each APM aid category to be paid by the department to each principle health plan that contains at least one participating FQHC in its provider network, as specified. Under the APM pilot project, participating FQHCs would receive a per member per month wrap-cap payment for each of its APM enrollees, as specified. The bill would require each principal health plan to pay a participating FQHC that is in the plan provider network the wrap-cap amounts, as determined, for each APM enrollee of that FQHC. The bill would require, except as specified, that an evaluation of the APM pilot project be completed by an independent entity within 6 months of the conclusion of the APM pilot project, and would require the independent entity to report the findings to the department and the Legislature.
Existing law provides for the Medi-Cal program, which is administered by the State Department of Health Care Services, under which qualified low-income individuals receive health care services. The Medi-Cal program is, in part, governed and funded by federal Medicaid Program provisions. Existing law provides that federally qualified health center (FQHC) services, as described, 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. Visit is defined as a face-to-face encounter between a patient of an FQHC and specified health care professionals. Existing federal law authorizes a state plan to provide for payment in any fiscal year to an FQHC for specified services in an amount that is determined under an alternative payment methodology (APM) if it is agreed to by the state and the FQHC and results in a payment to the FQHC of an amount that is at least equal to the amount otherwise required to be paid to the FQHC.
This bill would require the department to authorize a 3-year APM pilot project project, to commence no sooner than July 1, 2016, for FQHCs that would be implemented in any county and FQHC willing to participate. that agree to participate. The bill would require the department to determine an APM supplemental capitation amount for each APM aid category to be paid by the department to each principle health plan that contains at least one participating FQHC in its provider network, as specified. Under the APM pilot project, participating FQHCs would receive capitated monthly payments for each Medi-Cal managed care enrollee assigned to the FQHC in place of the wrap-around, fee-for-service per-visit payments from the department. a per member per month wrap-cap payment for each of its APM enrollees, as specified. The bill would require each principal health plan to pay a participating FQHC that is in the plan provider network the wrap-cap amounts, as determined, for each APM enrollee of that FQHC. The bill would require, except as specified, that an evaluation of the APM pilot project be conducted completed by an independent entity within 6 months after the APM pilot project is completed, of the conclusion of the APM pilot project, and that would require the independent entity to report the findings to the department and the Legislature.
Existing law provides for the Medi-Cal program, which is administered by the State Department of Health Care Services, under which qualified low-income individuals receive health care services. The Medi-Cal program is, in part, governed and funded by federal Medicaid Program provisions. Existing law provides that federally qualified health center (FQHC) services, as described, 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. Visit is defined as a face-to-face encounter between a patient of an FQHC and specified health care professionals. Existing federal law authorizes a state plan to provide for payment in any fiscal year to an FQHC for specified services in an amount that is determined under an alternative payment methodology (APM) if it is agreed to by the state and the FQHC and results in a payment to the FQHC of an amount that is at least equal to the amount otherwise required to be paid to the FQHC.
This bill would require the department to authorize a 3-year APM pilot project for FQHCs that would be implemented in any county and FQHC willing to participate. Under the APM pilot project, participating FQHCs would receive capitated monthly payments for each Medi-Cal managed care enrollee assigned to the FQHC in place of the wrap-around, fee-for-service per-visit payments from the department. The bill would require, except as specified, that an evaluation of the APM pilot project be conducted by an independent entity within 6 months after the APM pilot project is completed, and that the independent entity report the findings to the department and the Legislature.
For purposes of this article, the following definitions apply:
(a)Alternative payment methodology (APM) has the same meaning as specified in Section 1396a(bb)(6) of Title 42 of the United States Code.
(b)APM aid category means a Medi-Cal category of aid designated by the department. For all its APM enrollees in an APM aid category, a participating FQHC site shall receive compensation as described under the APM pilot project. The APM aid categories may include, but are not limited to, all of the following categories of aid:
(1)Adults.
(2)Children.
(3)Seniors and persons with disabilities.
(4)The adult expansion population eligible pursuant to Section 14005.60, to the extent the department determines, in consultation with health plans and interested FQHCs, that sufficient data is available to allow for inclusion of this population in the APM pilot project. This paragraph shall not be construed to prohibit inclusion of the adult expansion population in the APM pilot project on a date subsequent to initial authorization pursuant to subdivision (a) of Section 14138.12.
(c)APM enrollee means a member who is assigned by a principal health plan or subcontracting payer to a participating FQHC for primary care services and who is within one of the designated APM aid categories.
(d)APM pilot project means the pilot project authorized by this article.
(e)APM scope of services means the scope of services for a participating FQHC for which its per-visit rate was determined pursuant to Section 14132.100, but only to the extent those services are covered pursuant to the contract between the department and the applicable principal health plan.
(f)APM supplemental capitation means an additional, APM aid category-specific, PMPM amount that is paid by the department to a principal health plan having one or more participating FQHCs in its provider network.
(g)Clinic-specific PMPM means the monthly, per assigned member, capitated amount the principal health plan or subcontracting payer is required to pay to the participating FQHC for the APM scope of services. The clinic-specific PMPM is exclusive of any incentive payments and shall be developed to reflect the amount the participating FQHC would have received under the prospective payment system methodology set forth in Section 14132.100.
(h)FQHC means any community or public federally qualified health center, as defined in Section 1396d(l)(2)(B) of Title 42 of the United States Code and providing services as defined in Section 1396d(a)(2)(C) of Title 42 of the United States Code.
(i)Member means a Medi-Cal beneficiary who is enrolled with a principal health plan or subcontracting payer.
(j)Participating FQHC means an FQHC participating in the APM pilot project at one or more of the FQHCs sites. Participating FQHC also refers to an FQHCs site that is participating in the APM pilot project.
(k)PMPM and per member per month both mean a monthly payment made for providing or arranging health care services for a member and may refer to a payment by the department to a principal health plan, or by a principal health plan to a subcontracting payer, or by a principal health plan or subcontracting payer to an FQHC, or from and to other entities as specified in this article.
(l)Principal health plan means an organization or entity that enters into a contract with the department pursuant to Article 2.7 (commencing with Section 14087.3), Article 2.8 (commencing with Section 14087.5), Article 2.81 (commencing with Section 14087.96), Article 2.82 (commencing with Section 14087.98), Article 2.91 (commencing with Section 14089), or Chapter 8 (commencing with Section 14200), to provide or arrange for the care of Medi-Cal beneficiaries within a county in which the APM pilot project is implemented.
(m)Subcontracting payer means an organization or entity that subcontracts with a principal health plan to provide or arrange for the care of its members and contains one or more participating FQHCs in its provider network.
(n)Traditional encounter means a face-to-face encounter that is recognized as a billable visit, as described in subdivision (g) of Section 14132.100.
(o)Traditional wrap-around payment means the supplemental payments payable to an FQHC in the absence of the APM pilot project with respect to services provided to Medi-Cal managed care enrollees, which are made by the department pursuant to subdivision (e) of Section 14087.325 and subdivision (h) of Section 14132.100.
14138.10.The Legislature finds and declares all of the following:
(a)The federal Patient Protection and Affordable Care Act has made and continues to make significant progress in driving health care delivery system reforms that emphasize health outcomes, efficiency, patient satisfaction, and value.
(b)California has expanded Medi-Cal to cover more than 12 million residents, roughly one-third of the states population. To meet the needs of the states growing patient population, California must continue to explore new strategies to expand access to high quality and cost-effective primary care services.
(c)With such a large portion of the states population receiving health care services through Medi-Cal, it is imperative that patient-centered innovations drive Medi-Cal reforms.
(d)Health care today is more than a face-to-face visit with a provider, but rather a whole-person approach, often including a physician, a care team of other health care providers, technology inside and outside of a health center, and wellness activities including nutrition and exercise classes, all of which are designed to be more easily incorporated into a patients daily life.
(e)Accessible health care in a manner that fits a patients needs is important for improving patient satisfaction, building trust, and ultimately improving health outcomes.
(f)In an attempt to invest up front in health care services that can prevent longer term avoidable high-cost services, the federal Patient Protection and Affordable Care Act made a significant investment in FQHCs.
(g)FQHCs are essential community providers, providing high quality, cost-effective comprehensive primary care services to underserved communities.
(h)Today FQHCs face certain restrictions because the current payment structure reimburses an FQHC only when there is a traditional encounter with a provider. Current law prohibits payment for both a primary care visit and mental health visit on the same day.
(i)A more practical approach financially incentivizes FQHCs to provide the right care at the right time. Restructuring the current visit based, fee-for-service model with a capitated equivalent affords FQHCs the assurance of payment and the flexibility to deliver care in the most appropriate patient-centered manner.
(j)A reformed payment methodology will enable FQHCs to take advantage of alternative encounters. Alternative encounters, such as group visits, same-day mental health services, and telephone and email consultations, are effective care delivery methods and contribute to a patients overall health and well-being.
14138.11.It is the intent of the Legislature to test an alternative payment methodology for FQHCs, as permitted by federal law, and to design and implement the APM to do all of the following:
(a)Provide patient-centered care delivery options to Californias expansive Medi-Cal population.
(b)Promote cost efficiencies, and improve population health and patient satisfaction.
(c)Improve the capacity of FQHCs to deliver high-quality care to a population growing in numbers and in complexity of needs.
(d)Transition away from a payment system that rewards volume with a flexible alternative that recognizes the value added when Medi-Cal beneficiaries are able to more easily access the care they need and when providers are able to deliver care in the most appropriate manner to patients.
(e)Track alternative encounters at FQHCs in order to establish a data set from which alternative encounters may be assigned a value that can be used in future ratesetting.
(f)Implement the APM where the FQHC receives at least the same amount of funding it would receive under the current payment system, and in a manner that does not disrupt patient care or threaten FQHC viability.
14138.12.(a)(1)The department shall authorize a payment reform pilot project for FQHCs using an APM in accordance with this article.
(2)Implementation of the APM pilot project shall begin no sooner than July 1, 2016, subject to any necessary federal approvals.
(3)The department shall authorize implementation of an APM pilot project with respect to a county for a period of up to three years.
(4)At least 90 days prior to implementation of an APM pilot project for a participating FQHC site in a county, the department shall notify a principal health plan in writing of the principal health plans specific APM supplemental capitation rate for the participating FQHC in the county. The notification from the department to the principal health plan shall be based on the rates submitted by the department for federal approval. If the APM supplemental capitation rates are modified after the notification to a principal health plan, the department shall notify a principal health plan of the revised rates and, if the principal health plan requests, adjust the implementation date of the APM pilot project for a participating FQHC in a county so that it occurs at least 90 days after the revised rate notification.
(5)At least 90 days prior to implementation of an APM pilot project for a participating FQHC site in a county, the department shall notify a principal health plan and the FQHC site in writing of the clinic-specific PMPM rate for the participating FQHC site in the county.
(6)The APM pilot project for a participating FQHC site in a county shall begin no sooner than the first day of the month following the month in which the department received federal approval of the principal health plans specific APM supplemental capitation rates.
(b)The APM pilot project shall comply with federal APM requirements and the department shall file a state plan amendment and seek any federal approvals as necessary for the implementation of this article. Nothing in this article shall be construed to authorize the department to seek federal approval to affirmatively waive Section 1396a(bb)(6) of Title 42 of the United States Code.
(c)Nothing in this article shall be construed to limit or eliminate services provided by FQHCs as covered benefits in the Medi-Cal program.
14138.13.(a)The department shall notify every FQHC in the state of the APM pilot project and shall invite any interested FQHC to apply for participation in the APM with respect to one or more of the FQHCs sites. Consistent with federal law, the state plan amendment described in subdivision (b) of Section 14138.12 shall specify that the department and each participating FQHC voluntarily agrees to the APM.
(b)(1)The department shall develop, in consultation with interested FQHCs and principal health plans and consistent with federal law, the eligibility criteria to be used in evaluating applications from interested FQHCs for participation in the pilot project, which shall include, but need not be limited to, the following:
(A)The FQHC has the demonstrated ability to collect and submit encounter data in a form and manner that satisfies department requirements.
(B)The FQHC is in good standing with the relevant state and federal regulators.
(C)The FQHC has the financial and administrative capacity to undertake payment reform.
(2)In addition to the criteria listed in paragraph (1), the department may take into consideration the number of APM enrollees assigned by a plan at each FQHC site as an eligibility requirement for FQHC participation.
(3)In accordance with the process and criteria developed pursuant to paragraphs (1) and (2), the department shall approve or deny an interested FQHC site application for participation in the pilot project. The department may limit the number of participating FQHCs in the pilot project and the number of counties in which the pilot project will operate.
(4)All principal health plans and applicable subcontracting payers are required to participate in the APM pilot project pursuant to this article to the extent that one or more contracted FQHC sites located in the plans county are selected to participate in the pilot project.
(c)The APM shall be applied only with respect to a participating FQHC for services the FQHC provides to its APM enrollees that are within its APM scope of services.
(d)Payment to the participating FQHC shall continue to be governed by the provisions of Sections 14087.325 and 14132.100 for services provided with respect to both of the following categories of patients:
(1)A Medi-Cal beneficiary who receives services from any FQHC to which the beneficiary is not assigned for primary care services under the APM pilot project by a principal health plan or subcontracting payer.
(2)A person who is a Medi-Cal beneficiary, but who is not a Medi-Cal beneficiary within a designated APM aid category.
(e)A participating FQHC, with respect to one or more sites of its choosing, may opt to discontinue its participation in the pilot project subject to a notice requirement of no less than 120 days.
14138.14.(a)A participating FQHC shall be compensated for the APM scope of services provided to its APM enrollees pursuant to this section.
(b)A participating FQHC shall receive from the principal health plan or applicable subcontracting payer reimbursement for each APM enrollee in the form of a clinic-specific PMPM for the applicable APM aid category. The department shall determine the clinic-specific PMPM for each APM aid category taking into account all the following factors:
(1)Historical utilization of FQHC services by assigned members in each APM aid category.
(2)The participating FQHCs prospective payment system rate and applicable adjustments relevant for the fiscal year, such as annual rate adjustments.
(3)Other trend and utilization adjustments as appropriate in order to reflect the level of reimbursement that would have been received by the participating FQHCs in the absence of the APM pilot project.
(c)A participating FQHC and applicable principal health plan or subcontracting payer may enter into arrangements in which the clinic-specific PMPM amount required in subdivision (b) is paid in more than one capitated increment, as long as the total capitation each month received by the participating FQHC is equivalent to the clinic-specific PMPM.
(d)In cases where a subcontracting payer is involved, the principal health plan shall demonstrate and certify to the department that it has contracts or other arrangements in place that provide for meeting the requirements in subdivision (b) and to the extent that the subcontracting payer fails to comply with the applicable requirements in this article, the principal health plan shall then be responsible to ensure the participating FQHC receives all payments due under this article in a timely manner.
(e)The department shall adjust the amounts in subdivision (b) as necessary to account for any change to the prospective payment system rate for participating FQHCs, including changes resulting from a change in the Medicare Economic Index pursuant to subdivision (d) of Section 14132.100, and any changes in the FQHCs scope of services pursuant to subdivision (e) of Section 14132.100.
(f)An FQHC site participating in the APM pilot project shall not receive traditional wrap-around payments pursuant to Sections 14132.100 and 14087.325 for visits within the APM scope of services it provides to its APM enrollees.
14138.15.(a)A principal health plan shall be compensated by the department for the services provided to its APM enrollees pursuant to this section.
(b)For each principal health plan that contains at least one participating FQHC in its provider network, the department shall determine an APM supplemental capitation amount for each APM aid category to be paid by the department to the principal health plan, which shall be expressed as a PMPM amount. This supplemental capitation amount will be in addition to the funding for the APM scope of services already contained in the principal health plans capitated rates paid by the department and shall be actuarially sound. The department shall determine the APM supplemental capitation amount for each APM aid category, taking into account all of the following factors:
(1)The clinic-specific PMPM amounts for each APM aid category for each participating FQHC in the plans network.
(2)The funding for the APM scope of services already contained in the principal health plans capitated rates.
(3)The historical wrap-around payments paid by the department for participating FQHCs for assigned members in each APM aid category.
(4)As applicable, the likely distribution of members among multiple participating FQHCs.
(c)The principal health plan shall report to the department, in a form to be determined by the department in consultation with the principal health plan, the number of APM enrollees for each APM aid category in the plan each month.
(d)The department shall pay each principal health plan its applicable APM supplemental capitation amount for the number of APM enrollees for each APM aid category reported by the principal health plan pursuant to subdivision (c).
(e)The department, in consultation with the principal health plans, shall develop methods to verify the information reported pursuant to subdivision (c), and may adjust the payments made pursuant to subdivision (d) as appropriate to reflect the verified number of APM enrollees for each APM aid category.
(f)The department shall adjust the amounts in subdivision (b) as necessary to account for any change to the prospective payment system rate for participating FQHCs, including changes resulting from a change in the Medicare Economic Index pursuant to subdivision (d) of Section 14132.100, and any changes in the FQHCs scope of services pursuant to subdivision (e) of Section 14132.100.
14138.16.(a)For the duration of the APM pilot project, the department shall establish a risk corridor structure for the principal health plans relating only to the APM supplemental capitation payments pursuant to Section 14138.15, to the extent consistent with principles of actuarial soundness.
(b)The risk sharing of the costs under this section shall be constructed by the department so that it is symmetrical with respect to risk and profit, and so that all of the following apply:
(1)The principal health plan is fully responsible for all costs up to one-half of 1 percent in excess of the APM supplemental capitation amounts.
(2)The principal health plan shall fully retain the revenues paid through the APM supplemental capitation amounts in excess of the costs incurred up to one-half of 1 percent below the APM supplemental capitation amounts.
(3)The principal health plan and the department shall share equally in the responsibility for costs in excess of the APM supplemental capitation amounts that are greater than one-half of 1 percent but less than 1 percent above the APM supplemental capitation amounts.
(4)The principal health plan and the department shall share equally the benefit of the revenues paid through the APM supplemental capitation amounts in excess of the costs incurred that are greater than one-half of 1 percent but less than 1 percent below the APM supplemental capitation amounts.
(5)The department shall be fully responsible for all costs in excess of the APM supplemental capitation amounts that are more than 1 percent above the APM supplemental capitation amounts.
(6)The department shall fully retain the revenues paid through the APM supplemental capitation amounts in excess of the costs incurred greater than 1 percent below the supplemental capitation amounts.
(c)The department shall develop specific contract language to implement the requirements of this section that shall be incorporated into the contracts of each affected principal health plan.
(d)This section shall be implemented only to the extent that any necessary federal approvals or waivers are obtained.
14138.17.(a)In order to ensure participating FQHCs have an incentive to manage visits and costs, while at the same time exercising a reasonable amount of flexibility to deliver care in the most efficient and quality driven manner, for the duration of the APM pilot project the department shall, in accordance with this subdivision, establish a payment adjustment structure. The payment adjustment structure shall be developed with stakeholder input and shall meet the requirements of Section 1396a(bb)(6) of Title 42 of the United States Code.
(b)The payment adjustment structure shall be applicable on a site-specific basis.
(c)The payment adjustment structure shall permit an aggregate adjustment to the payments received when actual utilization of services for a participating FQHCs site exceeds or falls below expectations that were reflected within the calculation of the rates developed pursuant to Sections 14138.14 and 14138.15. For purposes of this payment adjustment structure, both actual and expected utilization shall be expressed as the total number of traditional encounters that would be recognized pursuant to subdivision (g) of Section 14132.100 for the APM enrollees of the participating FQHCs site across all APM aid categories and averaged on a per member per year basis.
(d)An adjustment pursuant to this section shall occur no more than once per year per participating FQHCs site during the APM pilot project and shall be subject to approval by the department.
(1)An adjustment to payments in the case of higher than expected utilization shall be triggered when utilization exceeds projections by more than 5 percent for the first year, 71/2 percent for the second year, and 10 percent for the third year. If the trigger level is reached in a given year, the participating FQHC site shall receive an aggregate payment adjustment from the principal health plan or applicable subcontracting payer that is based upon the difference between its actual utilization for the year and 105 percent of projected utilization for the first year, the difference between actual utilization and 1071/2 percent of projected utilization for the second year, and the difference between actual utilization and 110 percent of projected utilization for the third year. The payment adjustment in each instance shall be calculated as follows:
(A)The actual total utilization, expressed as traditional encounters, for the applicable year shall be determined.
(B)The projected total utilization contained in the clinic-specific PMPMs for the actual APM enrollees for the applicable year shall be determined.
(C)The amount in subparagraph (B) shall be adjusted to reflect the applicable comparison utilization for the year as follows:
(i)Multiplied by 1.05 for year one.
(ii)Multiplied by 1.075 for year two.
(iii)Multiplied by 1.1 for year three.
(D)The amount in subparagraph (C) shall be subtracted from the amount in subparagraph (A).
(E)The amount in subparagraph (D) shall be multiplied by the per-visit rate that was determined pursuant to Section 14132.100 for the participating FQHC site yielding the payment adjustment for the participating FQHC site. The payment adjustment shall be paid to the participating FQHC site by the principal health plan, or subcontracting payer, as applicable, in one aggregate payment.
(2)(A)To incentivize care delivery in ways that may vary from traditional delivery of care, participating FQHCs shall have the flexibility to experience a lower than expected visit utilization of up to 30 percent of projected utilization. If an FQHC sites actual utilization is at a level that is more than 30 percent lower than the projected utilization, the department shall review, in consultation with the principal health plan, or subcontracting payer, as applicable, the FQHC sites relevant data to identify the cause or causes of the difference, including, but not limited to, its volume of alternative encounters. If the department is able to determine that all or part of the lower than expected utilization was due to objective factors developed by the department in consultation with the principal health plans and FQHCs that are related to delivery system transformation and enhancements, such as alternative encounters, the department shall allow the participating FQHC site to retain all or a portion of the payments attributable to the utilization decrease that exceeds 30 percent lower than the projected utilization. If the department is unable to determine that all or a portion of the utilization decrease in excess of 30 percent was related to delivery system transformation and enhancements according to the objective criteria developed pursuant to this subparagraph, the participating FQHC site shall be required to refund the applicable payment amount to the principal health plan or subcontracting payer pursuant to subparagraph (B).
(B)The total amount refunded by the participating FQHC site to the principal health plan or subcontracting payer shall be limited to an amount calculated as follows:
(i)The actual total utilization, expressed as traditional encounters, for the applicable year shall be determined.
(ii)The projected total utilization contained in the clinic-specific PMPMs for the actual APM enrollees for the applicable year shall be determined and multiplied by 70 percent.
(iii)The amount in clause (i) shall be subtracted from the amount in clause (ii).
(iv)The amount in clause (iii) shall be multiplied by the participating FQHC sites per-visit rate that was determined pursuant to Section 14132.100, yielding the maximum amount of the refund to be made by the participating FQHC site. The refund shall be paid in one aggregate payment.
(C)Any adjustment made pursuant to this paragraph shall be requested by a principal health plan, subcontracting payer, or FQHC, no later than 90 days after that determination by the department pursuant to subparagraph (A).
14138.18.(a)The department, in consultation with interested FQHCs and principal health plans, may modify any methodology, process, or provision specified in this article to the extent necessary to comply with federal law or to obtain any necessary federal approvals.
(b)This article shall be implemented only to the extent that federal financial participation is available and any necessary federal approvals have been obtained.
(c)In the event of a conflict between a provision in this article and the terms of a federally approved APM, the terms of the federally approved APM shall control.
14138.19.In the event of an epidemic, or similar catastrophic occurrence that the department determines is likely to result in at least a 30 percent increase in actual utilization per member per month within the APM scope of services for one or more APM aid categories at a participating FQHC site, the department may adjust, or require the adjustment of, payments made pursuant to this article as it deems necessary to account for the utilization increase at the affected participating FQHC site. The department shall make the determination described in this section upon written request of a participating FQHC site.
14138.21.Nothing in this article shall be deemed to affect the amounts paid or the reimbursement methodology applicable to FQHCs for dental services that are provided outside the scope of a contract between the department and an applicable principal health plan that is in effect as of July 1, 2015.
(a)The department shall contract with an independent entity to perform an evaluation of the APM pilot project authorized pursuant to this article. To the extent practicable, the evaluation shall be completed and provided to the appropriate fiscal and policy committees of the Legislature within six months of the conclusion of the pilot project in those counties that are included in the initial pilot project implementation authorized pursuant to paragraph (2) of subdivision (a) of Section 14138.12. The department shall carry out the duty imposed pursuant to this subdivision only if there are sufficient private foundation or nonprofit foundation funds available for this purpose. A report submitted pursuant to this subdivision shall be submitted in compliance with Section 9795 of the Government Code.
(b)The evaluation by the independent entity shall assess and report on whether the APM pilot project produced improvements in access to primary care services, care quality, patient experience, and overall health outcomes for APM enrollees. The evaluation shall include existing FQHC required quality metrics and an assessment of how the changes in financing allowed for alternative types of primary care visits and alternative encounters between the participating FQHC and the patient and how those changes affected volume of same-day visits for mental and physical health conditions. The evaluation shall also assess whether the APM pilot projects efforts to improve primary care resulted in changes to patient service utilization patterns, including the reduced utilization of avoidable high-cost services and services provided outside the FQHC. The evaluation shall also identify any administrative and financial implementation issues for FQHCs that may arise if subsequent legislation makes the pilot program operative statewide.
14138.22.(a)Notwithstanding Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, the department may implement, interpret, or make specific this article by means of all-county letters, plan letters, plan or provider bulletins, or similar instructions, without taking regulatory action.
(b)Beginning January 1, 2017, and notwithstanding Section 10231.5 of the Government Code, the department shall provide a status report to the Legislature regarding any instruction issued by the department pursuant to subdivision (a) on a semiannual basis until six months after implementation of the pilot project authorized pursuant to this article.
(c)It is the intent of the Legislature, if the scope of the pilot project authorized by this article is extended, that the department adopt regulations to implement this article.
14138.23.For purposes of implementing this article, the department may enter into exclusive or nonexclusive contracts on a bid or negotiated basis, including contracts for the purpose of obtaining subject matter expertise or other technical assistance. Any contract entered into or amended pursuant to this section shall be exempt from Part 2 (commencing with Section 10100) of Division 2 of the Public Contract Code and Chapter 6 (commencing with Section 14825) of Part 5.5 of Division 3 of the Government Code, and shall be exempt from the review or approval of any division of the Department of General Services.
For purposes of this article, the following definitions apply:
(a)Alternative payment methodology (APM) has the same meaning as specified in Section 1396a(bb)(6) of Title 42 of the United States Code.
(b)APM aid category means a Medi-Cal category of aid designated by the department. For all its APM enrollees in an APM aid category, a participating FQHC site shall receive compensation as described under the APM pilot project. The APM aid categories may include, but are not limited to, all of the following categories of aid:
(1)Adults.
(2)Children.
(3)Seniors and persons with disabilities.
(4)The adult expansion population eligible pursuant to Section 14005.60, to the extent the department determines, in consultation with health plans and interested FQHCs, that sufficient data is available to allow for inclusion of this population in the APM pilot project. This paragraph shall not be construed to prohibit inclusion of the adult expansion population in the APM pilot project on a date subsequent to initial authorization pursuant to subdivision (a) of Section 14138.12.
(c)APM enrollee means a member who is assigned by a principal health plan or subcontracting payer to a participating FQHC for primary care services and who is within one of the designated APM aid categories.
(d)APM pilot project means the pilot project authorized by this article.
(e)APM scope of services means the scope of services for a participating FQHC for which its per-visit rate was determined pursuant to Section 14132.100, but only to the extent those services are covered pursuant to the contract between the department and the applicable principal health plan.
(f)APM supplemental capitation means an additional, APM aid category-specific, PMPM amount that is paid by the department to a principal health plan having one or more participating FQHCs in its provider network.
(g)Clinic-specific PMPM means the monthly, per assigned member, capitated amount the principal health plan or subcontracting payer is required to pay to the participating FQHC for the APM scope of services. The clinic-specific PMPM is exclusive of any incentive payments and shall be developed to reflect the amount the participating FQHC would have received under the prospective payment system methodology set forth in Section 14132.100.
(h)FQHC means any community or public federally qualified health center, as defined in Section 1396d(l)(2)(B) of Title 42 of the United States Code and providing services as defined in Section 1396d(a)(2)(C) of Title 42 of the United States Code.
(i)Member means a Medi-Cal beneficiary who is enrolled with a principal health plan or subcontracting payer.
(j)Participating FQHC means an FQHC participating in the APM pilot project at one or more of the FQHCs sites. Participating FQHC also refers to an FQHCs site that is participating in the APM pilot project.
(k)PMPM and per member per month both mean a monthly payment made for providing or arranging health care services for a member and may refer to a payment by the department to a principal health plan, or by a principal health plan to a subcontracting payer, or by a principal health plan or subcontracting payer to an FQHC, or from and to other entities as specified in this article.
(l)Principal health plan means an organization or entity that enters into a contract with the department pursuant to Article 2.7 (commencing with Section 14087.3), Article 2.8 (commencing with Section 14087.5), Article 2.81 (commencing with Section 14087.96), Article 2.82 (commencing with Section 14087.98), Article 2.91 (commencing with Section 14089), or Chapter 8 (commencing with Section 14200), to provide or arrange for the care of Medi-Cal beneficiaries within a county in which the APM pilot project is implemented.
(m)Subcontracting payer means an organization or entity that subcontracts with a principal health plan to provide or arrange for the care of its members and contains one or more participating FQHCs in its provider network.
(n)Traditional encounter means a face-to-face encounter that is recognized as a billable visit, as described in subdivision (g) of Section 14132.100.
(o)Traditional wrap-around payment means the supplemental payments payable to an FQHC in the absence of the APM pilot project with respect to services provided to Medi-Cal managed care enrollees, which are made by the department pursuant to subdivision (e) of Section 14087.325 and subdivision (h) of Section 14132.100.
14138.10.The Legislature finds and declares all of the following:
(a)The federal Patient Protection and Affordable Care Act has made and continues to make significant progress in driving health care delivery system reforms that emphasize health outcomes, efficiency, patient satisfaction, and value.
(b)California has expanded Medi-Cal to cover more than 12 million residents, roughly one-third of the states population. To meet the needs of the states growing patient population, California must continue to explore new strategies to expand access to high quality and cost-effective primary care services.
(c)With such a large portion of the states population receiving health care services through Medi-Cal, it is imperative that patient-centered innovations drive Medi-Cal reforms.
(d)Health care today is more than a face-to-face visit with a provider, but rather a whole-person approach, often including a physician, a care team of other health care providers, technology inside and outside of a health center, and wellness activities including nutrition and exercise classes, all of which are designed to be more easily incorporated into a patients daily life.
(e)Accessible health care in a manner that fits a patients needs is important for improving patient satisfaction, building trust, and ultimately improving health outcomes.
(f)In an attempt to invest up front in health care services that can prevent longer term avoidable high-cost services, the federal Patient Protection and Affordable Care Act made a significant investment in FQHCs.
(g)FQHCs are essential community providers, providing high quality, cost-effective comprehensive primary care services to underserved communities.
(h)Today FQHCs face certain restrictions because the current payment structure reimburses an FQHC only when there is a traditional encounter with a provider. Current law prohibits payment for both a primary care visit and mental health visit on the same day.
(i)A more practical approach financially incentivizes FQHCs to provide the right care at the right time. Restructuring the current visit based, fee-for-service model with a capitated equivalent affords FQHCs the assurance of payment and the flexibility to deliver care in the most appropriate patient-centered manner.
(j)A reformed payment methodology will enable FQHCs to take advantage of alternative encounters. Alternative encounters, such as group visits, same-day mental health services, and telephone and email consultations, are effective care delivery methods and contribute to a patients overall health and well-being.
14138.11.It is the intent of the Legislature to test an alternative payment methodology for FQHCs, as permitted by federal law, and to design and implement the APM to do all of the following:
(a)Provide patient-centered care delivery options to Californias expansive Medi-Cal population.
(b)Promote cost efficiencies, and improve population health and patient satisfaction.
(c)Improve the capacity of FQHCs to deliver high-quality care to a population growing in numbers and in complexity of needs.
(d)Transition away from a payment system that rewards volume with a flexible alternative that recognizes the value added when Medi-Cal beneficiaries are able to more easily access the care they need and when providers are able to deliver care in the most appropriate manner to patients.
(e)Track alternative encounters at FQHCs in order to establish a data set from which alternative encounters may be assigned a value that can be used in future ratesetting.
(f)Implement the APM where the FQHC receives at least the same amount of funding it would receive under the current payment system, and in a manner that does not disrupt patient care or threaten FQHC viability.
14138.12.(a)(1)The department shall authorize a payment reform pilot project for FQHCs using an APM in accordance with this article.
(2)Implementation of the APM pilot project shall begin no sooner than July 1, 2016, subject to any necessary federal approvals.
(3)The department shall authorize implementation of an APM pilot project with respect to a county for a period of up to three years.
(4)At least 90 days prior to implementation of an APM pilot project for a participating FQHC site in a county, the department shall notify a principal health plan in writing of the principal health plans specific APM supplemental capitation rate for the participating FQHC in the county. The notification from the department to the principal health plan shall be based on the rates submitted by the department for federal approval. If the APM supplemental capitation rates are modified after the notification to a principal health plan, the department shall notify a principal health plan of the revised rates and, if the principal health plan requests, adjust the implementation date of the APM pilot project for a participating FQHC in a county so that it occurs at least 90 days after the revised rate notification.
(5)At least 90 days prior to implementation of an APM pilot project for a participating FQHC site in a county, the department shall notify a principal health plan and the FQHC site in writing of the clinic-specific PMPM rate for the participating FQHC site in the county.
(6)The APM pilot project for a participating FQHC site in a county shall begin no sooner than the first day of the month following the month in which the department received federal approval of the principal health plans specific APM supplemental capitation rates.
(b)The APM pilot project shall comply with federal APM requirements and the department shall file a state plan amendment and seek any federal approvals as necessary for the implementation of this article. Nothing in this article shall be construed to authorize the department to seek federal approval to affirmatively waive Section 1396a(bb)(6) of Title 42 of the United States Code.
(c)Nothing in this article shall be construed to limit or eliminate services provided by FQHCs as covered benefits in the Medi-Cal program.
14138.13.(a)The department shall notify every FQHC in the state of the APM pilot project and shall invite any interested FQHC to apply for participation in the APM with respect to one or more of the FQHCs sites. Consistent with federal law, the state plan amendment described in subdivision (b) of Section 14138.12 shall specify that the department and each participating FQHC voluntarily agrees to the APM.
(b)(1)The department shall develop, in consultation with interested FQHCs and principal health plans and consistent with federal law, the eligibility criteria to be used in evaluating applications from interested FQHCs for participation in the pilot project, which shall include, but need not be limited to, the following:
(A)The FQHC has the demonstrated ability to collect and submit encounter data in a form and manner that satisfies department requirements.
(B)The FQHC is in good standing with the relevant state and federal regulators.
(C)The FQHC has the financial and administrative capacity to undertake payment reform.
(2)In addition to the criteria listed in paragraph (1), the department may take into consideration the number of APM enrollees assigned by a plan at each FQHC site as an eligibility requirement for FQHC participation.
(3)In accordance with the process and criteria developed pursuant to paragraphs (1) and (2), the department shall approve or deny an interested FQHC site application for participation in the pilot project. The department may limit the number of participating FQHCs in the pilot project and the number of counties in which the pilot project will operate.
(4)All principal health plans and applicable subcontracting payers are required to participate in the APM pilot project pursuant to this article to the extent that one or more contracted FQHC sites located in the plans county are selected to participate in the pilot project.
(c)The APM shall be applied only with respect to a participating FQHC for services the FQHC provides to its APM enrollees that are within its APM scope of services.
(d)Payment to the participating FQHC shall continue to be governed by the provisions of Sections 14087.325 and 14132.100 for services provided with respect to both of the following categories of patients:
(1)A Medi-Cal beneficiary who receives services from any FQHC to which the beneficiary is not assigned for primary care services under the APM pilot project by a principal health plan or subcontracting payer.
(2)A person who is a Medi-Cal beneficiary, but who is not a Medi-Cal beneficiary within a designated APM aid category.
(e)A participating FQHC, with respect to one or more sites of its choosing, may opt to discontinue its participation in the pilot project subject to a notice requirement of no less than 120 days.
14138.14.(a)A participating FQHC shall be compensated for the APM scope of services provided to its APM enrollees pursuant to this section.
(b)A participating FQHC shall receive from the principal health plan or applicable subcontracting payer reimbursement for each APM enrollee in the form of a clinic-specific PMPM for the applicable APM aid category. The department shall determine the clinic-specific PMPM for each APM aid category taking into account all the following factors:
(1)Historical utilization of FQHC services by assigned members in each APM aid category.
(2)The participating FQHCs prospective payment system rate and applicable adjustments relevant for the fiscal year, such as annual rate adjustments.
(3)Other trend and utilization adjustments as appropriate in order to reflect the level of reimbursement that would have been received by the participating FQHCs in the absence of the APM pilot project.
(c)A participating FQHC and applicable principal health plan or subcontracting payer may enter into arrangements in which the clinic-specific PMPM amount required in subdivision (b) is paid in more than one capitated increment, as long as the total capitation each month received by the participating FQHC is equivalent to the clinic-specific PMPM.
(d)In cases where a subcontracting payer is involved, the principal health plan shall demonstrate and certify to the department that it has contracts or other arrangements in place that provide for meeting the requirements in subdivision (b) and to the extent that the subcontracting payer fails to comply with the applicable requirements in this article, the principal health plan shall then be responsible to ensure the participating FQHC receives all payments due under this article in a timely manner.
(e)The department shall adjust the amounts in subdivision (b) as necessary to account for any change to the prospective payment system rate for participating FQHCs, including changes resulting from a change in the Medicare Economic Index pursuant to subdivision (d) of Section 14132.100, and any changes in the FQHCs scope of services pursuant to subdivision (e) of Section 14132.100.
(f)An FQHC site participating in the APM pilot project shall not receive traditional wrap-around payments pursuant to Sections 14132.100 and 14087.325 for visits within the APM scope of services it provides to its APM enrollees.
14138.15.(a)A principal health plan shall be compensated by the department for the services provided to its APM enrollees pursuant to this section.
(b)For each principal health plan that contains at least one participating FQHC in its provider network, the department shall determine an APM supplemental capitation amount for each APM aid category to be paid by the department to the principal health plan, which shall be expressed as a PMPM amount. This supplemental capitation amount will be in addition to the funding for the APM scope of services already contained in the principal health plans capitated rates paid by the department and shall be actuarially sound. The department shall determine the APM supplemental capitation amount for each APM aid category, taking into account all of the following factors:
(1)The clinic-specific PMPM amounts for each APM aid category for each participating FQHC in the plans network.
(2)The funding for the APM scope of services already contained in the principal health plans capitated rates.
(3)The historical wrap-around payments paid by the department for participating FQHCs for assigned members in each APM aid category.
(4)As applicable, the likely distribution of members among multiple participating FQHCs.
(c)The principal health plan shall report to the department, in a form to be determined by the department in consultation with the principal health plan, the number of APM enrollees for each APM aid category in the plan each month.
(d)The department shall pay each principal health plan its applicable APM supplemental capitation amount for the number of APM enrollees for each APM aid category reported by the principal health plan pursuant to subdivision (c).
(e)The department, in consultation with the principal health plans, shall develop methods to verify the information reported pursuant to subdivision (c), and may adjust the payments made pursuant to subdivision (d) as appropriate to reflect the verified number of APM enrollees for each APM aid category.
(f)The department shall adjust the amounts in subdivision (b) as necessary to account for any change to the prospective payment system rate for participating FQHCs, including changes resulting from a change in the Medicare Economic Index pursuant to subdivision (d) of Section 14132.100, and any changes in the FQHCs scope of services pursuant to subdivision (e) of Section 14132.100.
14138.16.(a)For the duration of the APM pilot project, the department shall establish a risk corridor structure for the principal health plans relating only to the APM supplemental capitation payments pursuant to Section 14138.15, to the extent consistent with principles of actuarial soundness.
(b)The risk sharing of the costs under this section shall be constructed by the department so that it is symmetrical with respect to risk and profit, and so that all of the following apply:
(1)The principal health plan is fully responsible for all costs up to one-half of 1 percent in excess of the APM supplemental capitation amounts.
(2)The principal health plan shall fully retain the revenues paid through the APM supplemental capitation amounts in excess of the costs incurred up to one-half of 1 percent below the APM supplemental capitation amounts.
(3)The principal health plan and the department shall share equally in the responsibility for costs in excess of the APM supplemental capitation amounts that are greater than one-half of 1 percent but less than 1 percent above the APM supplemental capitation amounts.
(4)The principal health plan and the department shall share equally the benefit of the revenues paid through the APM supplemental capitation amounts in excess of the costs incurred that are greater than one-half of 1 percent but less than 1 percent below the APM supplemental capitation amounts.
(5)The department shall be fully responsible for all costs in excess of the APM supplemental capitation amounts that are more than 1 percent above the APM supplemental capitation amounts.
(6)The department shall fully retain the revenues paid through the APM supplemental capitation amounts in excess of the costs incurred greater than 1 percent below the supplemental capitation amounts.
(c)The department shall develop specific contract language to implement the requirements of this section that shall be incorporated into the contracts of each affected principal health plan.
(d)This section shall be implemented only to the extent that any necessary federal approvals or waivers are obtained.
14138.17.(a)In order to ensure participating FQHCs have an incentive to manage visits and costs, while at the same time exercising a reasonable amount of flexibility to deliver care in the most efficient and quality driven manner, for the duration of the APM pilot project the department shall, in accordance with this subdivision, establish a payment adjustment structure. The payment adjustment structure shall be developed with stakeholder input and shall meet the requirements of Section 1396a(bb)(6) of Title 42 of the United States Code.
(b)The payment adjustment structure shall be applicable on a site-specific basis.
(c)The payment adjustment structure shall permit an aggregate adjustment to the payments received when actual utilization of services for a participating FQHCs site exceeds or falls below expectations that were reflected within the calculation of the rates developed pursuant to Sections 14138.14 and 14138.15. For purposes of this payment adjustment structure, both actual and expected utilization shall be expressed as the total number of traditional encounters that would be recognized pursuant to subdivision (g) of Section 14132.100 for the APM enrollees of the participating FQHCs site across all APM aid categories and averaged on a per member per year basis.
(d)An adjustment pursuant to this section shall occur no more than once per year per participating FQHCs site during the APM pilot project and shall be subject to approval by the department.
(1)An adjustment to payments in the case of higher than expected utilization shall be triggered when utilization exceeds projections by more than 5 percent for the first year, 71/2 percent for the second year, and 10 percent for the third year. If the trigger level is reached in a given year, the participating FQHC site shall receive an aggregate payment adjustment from the principal health plan or applicable subcontracting payer that is based upon the difference between its actual utilization for the year and 105 percent of projected utilization for the first year, the difference between actual utilization and 1071/2 percent of projected utilization for the second year, and the difference between actual utilization and 110 percent of projected utilization for the third year. The payment adjustment in each instance shall be calculated as follows:
(A)The actual total utilization, expressed as traditional encounters, for the applicable year shall be determined.
(B)The projected total utilization contained in the clinic-specific PMPMs for the actual APM enrollees for the applicable year shall be determined.
(C)The amount in subparagraph (B) shall be adjusted to reflect the applicable comparison utilization for the year as follows:
(i)Multiplied by 1.05 for year one.
(ii)Multiplied by 1.075 for year two.
(iii)Multiplied by 1.1 for year three.
(D)The amount in subparagraph (C) shall be subtracted from the amount in subparagraph (A).
(E)The amount in subparagraph (D) shall be multiplied by the per-visit rate that was determined pursuant to Section 14132.100 for the participating FQHC site yielding the payment adjustment for the participating FQHC site. The payment adjustment shall be paid to the participating FQHC site by the principal health plan, or subcontracting payer, as applicable, in one aggregate payment.
(2)(A)To incentivize care delivery in ways that may vary from traditional delivery of care, participating FQHCs shall have the flexibility to experience a lower than expected visit utilization of up to 30 percent of projected utilization. If an FQHC sites actual utilization is at a level that is more than 30 percent lower than the projected utilization, the department shall review, in consultation with the principal health plan, or subcontracting payer, as applicable, the FQHC sites relevant data to identify the cause or causes of the difference, including, but not limited to, its volume of alternative encounters. If the department is able to determine that all or part of the lower than expected utilization was due to objective factors developed by the department in consultation with the principal health plans and FQHCs that are related to delivery system transformation and enhancements, such as alternative encounters, the department shall allow the participating FQHC site to retain all or a portion of the payments attributable to the utilization decrease that exceeds 30 percent lower than the projected utilization. If the department is unable to determine that all or a portion of the utilization decrease in excess of 30 percent was related to delivery system transformation and enhancements according to the objective criteria developed pursuant to this subparagraph, the participating FQHC site shall be required to refund the applicable payment amount to the principal health plan or subcontracting payer pursuant to subparagraph (B).
(B)The total amount refunded by the participating FQHC site to the principal health plan or subcontracting payer shall be limited to an amount calculated as follows:
(i)The actual total utilization, expressed as traditional encounters, for the applicable year shall be determined.
(ii)The projected total utilization contained in the clinic-specific PMPMs for the actual APM enrollees for the applicable year shall be determined and multiplied by 70 percent.
(iii)The amount in clause (i) shall be subtracted from the amount in clause (ii).
(iv)The amount in clause (iii) shall be multiplied by the participating FQHC sites per-visit rate that was determined pursuant to Section 14132.100, yielding the maximum amount of the refund to be made by the participating FQHC site. The refund shall be paid in one aggregate payment.
(C)Any adjustment made pursuant to this paragraph shall be requested by a principal health plan, subcontracting payer, or FQHC, no later than 90 days after that determination by the department pursuant to subparagraph (A).
14138.18.(a)The department, in consultation with interested FQHCs and principal health plans, may modify any methodology, process, or provision specified in this article to the extent necessary to comply with federal law or to obtain any necessary federal approvals.
(b)This article shall be implemented only to the extent that federal financial participation is available and any necessary federal approvals have been obtained.
(c)In the event of a conflict between a provision in this article and the terms of a federally approved APM, the terms of the federally approved APM shall control.
14138.19.In the event of an epidemic, or similar catastrophic occurrence that the department determines is likely to result in at least a 30 percent increase in actual utilization per member per month within the APM scope of services for one or more APM aid categories at a participating FQHC site, the department may adjust, or require the adjustment of, payments made pursuant to this article as it deems necessary to account for the utilization increase at the affected participating FQHC site. The department shall make the determination described in this section upon written request of a participating FQHC site.
14138.21.Nothing in this article shall be deemed to affect the amounts paid or the reimbursement methodology applicable to FQHCs for dental services that are provided outside the scope of a contract between the department and an applicable principal health plan that is in effect as of July 1, 2015.
(a)The department shall contract with an independent entity to perform an evaluation of the APM pilot project authorized pursuant to this article. To the extent practicable, the evaluation shall be completed and provided to the appropriate fiscal and policy committees of the Legislature within six months of the conclusion of the pilot project in those counties that are included in the initial pilot project implementation authorized pursuant to paragraph (2) of subdivision (a) of Section 14138.12. The department shall carry out the duty imposed pursuant to this subdivision only if there are sufficient private foundation or nonprofit foundation funds available for this purpose. A report submitted pursuant to this subdivision shall be submitted in compliance with Section 9795 of the Government Code.
(b)The evaluation by the independent entity shall assess and report on whether the APM pilot project produced improvements in access to primary care services, care quality, patient experience, and overall health outcomes for APM enrollees. The evaluation shall include existing FQHC required quality metrics and an assessment of how the changes in financing allowed for alternative types of primary care visits and alternative encounters between the participating FQHC and the patient and how those changes affected volume of same-day visits for mental and physical health conditions. The evaluation shall also assess whether the APM pilot projects efforts to improve primary care resulted in changes to patient service utilization patterns, including the reduced utilization of avoidable high-cost services and services provided outside the FQHC. The evaluation shall also identify any administrative and financial implementation issues for FQHCs that may arise if subsequent legislation makes the pilot program operative statewide.
14138.22.(a)Notwithstanding Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, the department may implement, interpret, or make specific this article by means of all-county letters, plan letters, plan or provider bulletins, or similar instructions, without taking regulatory action.
(b)Beginning January 1, 2017, and notwithstanding Section 10231.5 of the Government Code, the department shall provide a status report to the Legislature regarding any instruction issued by the department pursuant to subdivision (a) on a semiannual basis until six months after implementation of the pilot project authorized pursuant to this article.
(c)It is the intent of the Legislature, if the scope of the pilot project authorized by this article is extended, that the department adopt regulations to implement this article.
14138.23.For purposes of implementing this article, the department may enter into exclusive or nonexclusive contracts on a bid or negotiated basis, including contracts for the purpose of obtaining subject matter expertise or other technical assistance. Any contract entered into or amended pursuant to this section shall be exempt from Part 2 (commencing with Section 10100) of Division 2 of the Public Contract Code and Chapter 6 (commencing with Section 14825) of Part 5.5 of Division 3 of the Government Code, and shall be exempt from the review or approval of any division of the Department of General Services.
For purposes of this article, the following definitions apply:
(a)Alternative payment methodology (APM) has the same meaning as specified in Section 1396a(bb)(6) of Title 42 of the United States Code.
(b)APM aid category means a Medi-Cal category of aid designated by the department. For all its APM enrollees in an APM aid category, a participating FQHC site shall receive compensation as described under the APM pilot project. The APM aid categories may include, but are not limited to, all of the following categories of aid:
(1)Adults.
(2)Children.
(3)Seniors and persons with disabilities.
(4)The adult expansion population eligible pursuant to Section 14005.60, to the extent the department determines, in consultation with health plans and interested FQHCs, that sufficient data is available to allow for inclusion of this population in the APM pilot project. This paragraph shall not be construed to prohibit inclusion of the adult expansion population in the APM pilot project on a date subsequent to initial authorization pursuant to subdivision (a) of Section 14138.12.
(c)APM enrollee means a member who is assigned by a principal health plan or subcontracting payer to a participating FQHC for primary care services and who is within one of the designated APM aid categories.
(d)APM pilot project means the pilot project authorized by this article.
(e)APM scope of services means the scope of services for a participating FQHC for which its per-visit rate was determined pursuant to Section 14132.100. 14132.100, but only to the extent those services are covered pursuant to the contract between the department and the applicable principal health plan.
(f)APM supplemental capitation means an additional, APM aid category-specific, PMPM amount that is paid by the department to a principal health plan having one or more participating FQHCs in its provider network.
(g)Clinic-specific PMPM means the monthly, per assigned member, capitated amount the principal health plan or subcontracting payer is required to pay to the participating FQHC for the APM scope of services. The clinic-specific PMPM is exclusive of any incentive payments and shall be developed to reflect the amount the participating FQHC would have received under the prospective payment system methodology set forth in Section 14132.100.
(h)FQHC means any community or public federally qualified health center, as defined in Section 1396d(l)(2)(B) of Title 42 of the United States Code and providing services as defined in Section 1396d(a)(2)(C) of Title 42 of the United States Code.
(i)Member means a Medi-Cal beneficiary who is enrolled with a principal health plan or subcontracting payer.
(j)Participating FQHC means an FQHC participating in the APM pilot project at one or more of the FQHCs sites. Participating FQHC also refers to a an FQHCs site that is participating in the APM pilot project.
(k)PMPM and per member per month both mean a monthly payment made for providing or arranging health care services for a member and may refer to a payment by the department to a principal health plan, or by a principal health plan to a subcontracting payer, or by a principal health plan or subcontracting payer to an FQHC, or from and to other entities as specified in this article.
(l)Principal health plan means an organization or entity that enters into a contract with the department pursuant to Article 2.7 (commencing with Section 14087.3), Article 2.8 (commencing with Section 14087.5), Article 2.81 (commencing with Section 14087.96), Article 2.82 (commencing with Section 14087.98), Article 2.91 (commencing with Section 14089), or Chapter 8 (commencing with Section 14200), to provide or arrange for the care of Medi-Cal beneficiaries within a county in which the APM pilot project is implemented.
(m)Subcontracting payer means an organization or entity that subcontracts with a principal health plan to provide or arrange for the care of its members and contains one or more participating FQHCs in its provider network.
(n)Traditional encounter means a face-to-face encounter that is recognized as a billable visit, as described in subdivision (g) of Section 14132.100.
(o)Traditional wrap-around payment means the supplemental payments payable to an FQHC in the absence of the APM pilot project with respect to services provided to Medi-Cal managed care enrollees, which are made by the department pursuant to subdivision (e) of Section 14087.325 and subdivision (h) of Section 14132.100.
14138.10.The Legislature finds and declares all of the following:
(a)The federal Patient Protection and Affordable Care Act has made and continues to make significant progress in driving health care delivery system reforms that emphasize health outcomes, efficiency, patient satisfaction, and value.
(b)California has expanded Medi-Cal to cover more than 12 million residents, roughly one-third of the states population. To meet the needs of the states growing patient population, California must continue to explore new strategies to expand access to high quality and cost-effective primary care services.
(c)With such a large portion of the states population receiving health care services through Medi-Cal, it is imperative that patient-centered innovations drive Medi-Cal reforms.
(d)Health care today is more than a face-to-face visit with a provider, but rather a whole-person approach, often including a physician, a care team of other health care providers, technology inside and outside of a health center, and wellness activities including nutrition and exercise classes, all of which are designed to be more easily incorporated into a patients daily life.
(e)Accessible health care in a manner that fits a patients needs is important for improving patient satisfaction, building trust, and ultimately improving health outcomes.
(f)In an attempt to invest up front in health care services that can prevent longer term avoidable high-cost services, the federal Patient Protection and Affordable Care Act made a significant investment in FQHCs.
(g)FQHCs are essential community providers, providing high quality, cost-effective comprehensive primary care services to underserved communities.
(h)Today FQHCs face certain restrictions because the current payment structure reimburses an FQHC only when there is a traditional encounter with a provider. Current law prohibits payment for both a primary care visit and mental health visit on the same day.
(i)A more practical approach financially incentivizes FQHCs to provide the right care at the right time. Restructuring the current visit based, fee-for-service model with a capitated equivalent affords FQHCs the assurance of payment and the flexibility to deliver care in the most appropriate patient-centered manner.
(j)A reformed payment methodology will enable FQHCs to take advantage of alternative encounters. Alternative encounters, such as group visits, same-day mental health services services, and telephone and email consultations, are effective care delivery methods and contribute to a patients overall health and well-being.
14138.11.It is the intent of the Legislature to test an alternative payment methodology for FQHCs, as permitted by federal law, and to design and implement the APM to do all of the following:
(a)Provide patient-centered care delivery options to Californias expansive Medi-Cal population.
(b)Promote cost efficiencies, and improve population health and patient satisfaction.
(c)Improve the capacity of FQHCs to deliver high-quality care to a population growing in numbers and in complexity of needs.
(d)Transition away from a payment system that rewards volume with a flexible alternative that recognizes the value added when Medi-Cal beneficiaries are able to more easily access the care they need and when providers are able to deliver care in the most appropriate manner to patients.
(e)Track alternative encounters at FQHCs in order to establish a data set from which alternative encounters may be assigned a value that can be used in future ratesetting.
(f)Implement the APM where the FQHC receives at least the same amount of funding it would receive under the current payment system, and in a manner that does not disrupt patient care or threaten FQHC viability.
14138.12.(a)(1)The department shall authorize a payment reform pilot project for FQHCs using an APM in accordance with this article.
(2)Implementation of the APM pilot project shall begin no sooner than July 1, 2016, subject to any necessary federal approvals.
(3)The department shall authorize implementation of an APM pilot project with respect to a county for a period of up to three years.
(4)At least 90 days prior to implementation of an APM pilot project for a participating FQHC site in a county, the department shall notify a principal health plan in writing of the principal health plans specific APM supplemental capitation rate for the participating FQHC in the county. The notification from the department to the principal health plan shall be based on the rates submitted by the department for federal approval. If the APM supplemental capitation rates are modified after the notification to a principal health plan, the department shall notify a principal health plan of the revised rates and, if the principal health plan requests, adjust the implementation date of the APM pilot project for a participating FQHC in a county so that it occurs at least 90 days after the revised rate notification.
(5)At least 90 days prior to implementation of an APM pilot project for a participating FQHC site in a county, the department shall notify a principal health plan and the FQHC site in writing of the clinic-specific PMPM rate for the participating FQHC site in the county.
(6)The APM pilot project for a participating FQHC site in a county shall begin no sooner than the first day of the month following the month in which the department received federal approval of the principal health plans specifie specific APM supplemental capitation rates.
(b)The APM pilot project shall comply with federal APM requirements and the department shall file a state plan amendment and seek any federal approvals as necessary for the implementation of this article. Nothing in this article shall be construed to authorize the department to seek federal approval to affirmatively waive Section 1396a(bb)(6) of Title 42 of the United States Code.
(c)Nothing in this article shall be construed to limit or eliminate services provided by FQHCs as covered benefits in the Medi-Cal program.
14138.13.(a)The department shall notify every FQHC in the state of the APM pilot project and shall invite any interested FQHC to apply for participation in the APM with respect to one or more of the FQHCs sites. Consistent with federal law, the state plan amendment described in subdivision (b) of Section 14138.12 shall specify that the department and each participating FQHC voluntarily agrees to the APM.
(b)(1)The department shall develop, in consultation with interested FQHCs and principal health plans and consistent with federal
law, the eligibility criteria to be used in evaluating applications from interested FQHCs for participation in the pilot project, which shall include, but need not be limited to, the following:
(A)The FQHC has the demonstrated ability to collect and submit encounter data in a form and manner that satisfies department requirements.
(B)The FQHC is in good standing with the relevant state and federal regulators.
(C)The FQHC has the financial and administrative capacity to undertake payment reform.
(2)In addition to the criteria listed in paragraph (1), the department may take into consideration the number of APM enrollees assigned by a plan at each FQHC site as an eligibility requirement for FQHC participation.
(3)In accordance with the process and criteria developed pursuant to paragraphs (1) and (2), the department shall approve or deny an interested FQHC site application for participation in the pilot project. The department may limit the number of participating FQHCs in the pilot project and the number of counties in which the pilot project will operate.
(4)All principal health plans and applicable subcontracting payers are required to participate in the APM pilot project pursuant to this article to the extent that one or more contracted FQHC sites located in the plans county are selected to participate in the pilot project.
(c)The APM shall be applied only with respect to a participating FQHC for services the FQHC provides to its APM enrollees that are within its APM scope of services.
(d)Payment to the participating FQHC shall continue to be governed by the provisions of Sections 14132.100 and 14087.325 14087.325 and 14132.100 for services provided with respect to both of the following categories of patients:
(1)A Medi-Cal beneficiary who receives services from any FQHC to which the beneficiary is not assigned for primary care services under the APM pilot project by a principal health plan or subcontracting payer.
(2)A person who is a Medi-Cal beneficiary, but who is not a Medi-Cal beneficiary within a designated APM aid category.
(e)A participating FQHC, with respect to one or more sites of its choosing, may opt to discontinue its participation in the pilot project subject to a notice requirement of no less than 120 days.
14138.14.(a)A participating FQHC shall be compensated for the APM scope of services provided to its APM enrollees pursuant to this section.
(b)A participating FQHC shall receive from the principal health plan or applicable subcontracting payer reimbursement for each APM enrollee in the form of a clinic-specific PMPM for the applicable APM aid category. The department shall determine the clinic-specific PMPM for each APM aid category taking into account all the following factors:
(1)Historical utilization of FQHC services by assigned members in each APM aid category.
(2)The participating FQHCs prospective payment system rate and applicable adjustments relevant for the fiscal year, such as annual rate adjustments.
(3)Other trend and utilization adjustments as appropriate in order to reflect the level of reimbursement that would have been received by the participating FQHCs in the absence of the APM pilot project.
(c)A participating FQHC and applicable principal health plan or subcontracting payer may enter into arrangements in which the clinic-specific PMPM amount required in subdivision (b) is paid in more than one capitated increment, as long as the total capitation each month received by the participating FQHC is equivalent to the clinic-specific PMPM.
(d)In cases where a subcontracting payer is involved, the principal health plan shall demonstrate and certify to the department that it has contracts or other arrangements in place that provide for meeting the requirements in subdivision (b) and to the extent that the subcontracting payer fails to comply with the applicable requirements in this article, the principal health plan shall then be responsible to ensure the participating FQHC receives all payments due under this article in a timely manner.
(e)The department shall adjust the amounts in subdivision (b) as necessary to account for any change to the prospective payment system rate for participating FQHCs, including changes resulting from a change in the Medicare Economic Index pursuant to subdivision (d) of Section 14132.100, and any changes in the FQHCs scope of services pursuant to subdivision (e) of Section 14132.100.
(f)An FQHC site participating in the APM pilot project shall not receive traditional wrap-around payments pursuant to Sections 14132.100 and 14087.325 for visits within the APM scope of services it provides to its APM enrollees.
14138.15.(a)A principal health plan shall be compensated by the department for the services provided to its APM enrollees pursuant to this section.
(b)For each principal health plan that contains at least one participating FQHC in its provider network, the department shall determine an APM supplemental capitation amount for each APM aid category to be paid by the department to the principal health plan, which shall be expressed as a PMPM amount. This supplemental capitation amount will be in addition to the funding for the APM scope of services already contained in the principal health plans capitated rates paid by the department and shall be actuarially sound. The department shall determine the APM supplemental capitation amount for each APM aid category, taking into account all of the following factors:
(1)The clinic-specific PMPM amounts for each APM aid category for each participating FQHC in the plans network.
(2)The funding for the APM scope of services already contained in the principal health plans capitated rates.
(3)The historical wrap-around payments paid by the department for participating FQHCs for assigned members in each APM aid category.
(4)As applicable, the likely distribution of members among multiple participating FQHCs.
(c)The principal health plan shall report to the department, in a form to be determined by the department in consultation with the principal health plan, the number of APM enrollees for each APM aid category in the plan each month.
(d)The department shall pay each principal health plan its applicable APM supplemental capitation amount for the number of APM enrollees for each APM aid category reported by the principal health plan pursuant to subdivision (c).
(e)The department, in consultation with the principal health plans, shall develop methods to verify the information reported pursuant to subdivision (c), and may adjust the payments made pursuant to subdivision (d) as appropriate to reflect the verified number of APM enrollees for each APM aid category.
(f)The department shall adjust the amounts in subdivision (b) as necessary to account for any change to the prospective payment system rate for participating FQHCs, including changes resulting from a change in the Medicare Economic Index pursuant to subdivision (d) of Section 14132.100, and any changes in the FQHCs scope of services pursuant to subdivision (e) of Section 14132.100.
14138.16.(a)For the duration of the APM pilot project, the department shall establish a risk corridor structure for the principal health plans relating only to the APM supplemental capitation payments pursuant to Section 14138.15, to the extent consistent with principals principles of actuarial soundness.
(b)The risk sharing of the costs under this section shall be constructed by the department so that it is symmetrical with respect to risk and profit, and so that all of the following apply:
(1)The principal health plan is fully responsible for all costs up to one-half of 1 percent in excess of the APM supplemental capitation amounts.
(2)The principal health plan shall fully retain the revenues paid through the APM supplemental capitation amounts in excess of the costs incurred up to one-half of 1 percent below the APM supplemental capitation amounts.
(3)The principal health plan and the department shall share equally in the responsibility for costs in excess of the APM supplemental capitation amounts that are greater than one-half of 1 percent but less than 1 percent above the APM supplemental capitation amounts.
(4)The principal health plan and the department shall share equally the benefit of the revenues paid through the APM supplemental capitation amounts in excess of the costs incurred that are greater than one-half of 1 percent but less than 1 percent below the APM supplemental capitation amounts.
(5)The department shall be fully responsible for all costs in excess of the APM supplemental capitation amounts that are more than 1 percent above the APM supplemental capitation amounts.
(6)The department shall fully retain the revenues paid through the APM supplemental capitation amounts in excess of the costs incurred greater than 1 percent below the supplemental capitation amounts.
(c)The department shall develop specific contract language to implement the requirements of this section that shall be incorporated into the contracts of each affected principal health plan.
(d)This section shall be implemented only to the extent that any necessary federal approvals or waivers are obtained.
14138.17.(a)In order to ensure participating FQHCs have an incentive to manage visits and costs, while at the same time exercising a reasonable amount of flexibility to deliver care in the most efficient and quality driven manner, for the duration of the APM pilot project the department shall, in accordance with this subdivision, establish a payment adjustment structure. The payment adjustment structure shall be developed with stakeholder input and shall meet the requirements of Section 1396a(bb)(6) of Title 42 of the United States Code.
(b)The payment adjustment structure shall be applicable on a site-specific basis.
(c)The payment adjustment structure shall permit an aggregate adjustment to the payments received when actual utilization of services for a participating FQHCs site exceeds or falls below expectations that were reflected within the calculation of the rates developed pursuant to Sections 14138.14 and 14138.15. For purposes of this payment adjustment structure, both actual and expected utilization shall be expressed as the total number of traditional encounters that would be recognized pursuant to subdivision (g) of Section 14132.100 for the APM enrollees of the participating FQHCs site across all APM aid categories and averaged on a per member per year basis.
(d)An adjustment pursuant to this section shall occur no more than once per year per participating FQHCs site during the APM pilot project and shall be subject to approval by the department.
(1)An adjustment to payments in the case of higher than expected utilization shall be triggered when utilization exceeds projections by more than 5 percent for the first year, 71/2 percent for the second year, and 10 percent for the third year. If the trigger level is reached in a given year, the participating FQHC site shall receive an aggregate payment adjustment from the principal health plan or applicable subcontracting payer that is based upon the difference between its actual utilization for the year and 105 percent of projected utilization for the first year, the difference between actual utilization and 1071/2 percent of projected utilization for the second year, and the difference between actual utilization and 110 percent of projected utilization for the third year. The payment adjustment in each instance shall be calculated as follows:
(A)The actual total utilization, expressed as traditional encounters, for the applicable year shall be determined.
(B)The projected total utilization contained in the clinic-specific PMPMs for the actual APM enrollees for the applicable year shall be determined.
(C)The amount in subparagraph (B) shall be adjusted to reflect the applicable comparison utilization for the year as follows:
(i)Multiplied by 1.05 for year one.
(ii)Multiplied by 1.075 for year two.
(iii)Multiplied by 1.1 for year three.
(D)The amount in subparagraph (C) shall be subtracted from the amount in subparagraph (A).
(E)The amount in subparagraph (D) shall be multiplied by the per-visit rate that was determined pursuant to Section 14132.100 for the participating FQHC site yielding the payment adjustment for the participating FQHC site. The payment adjustment shall be paid to the participating FQHC site by the principal health plan, or subcontracting payer, as applicable, in one aggregate payment.
(2)(A)To incentivize care delivery in ways that may vary from traditional delivery of care, participating FQHCs shall have the flexibility to experience a lower than expected visit utilization of up to 30 percent of projected utilization. If an FQHC sites actual utilization is at a level that is more than 30 percent lower than the projected utilization, the department shall review, in consultation with the principal health plan, or subcontracting payer, as applicable, the FQHC sites relevant data to identify the cause or causes of the difference, including, but not limited to, its volume of alternative encounters. If the department is able to determine that all or part of the lower than expected utilization was due to objective factors developed by the department in consultation with the principal health plans and FQHCs that are related to delivery system transformation and enhancements, such as alternative encounters, the department shall allow the participating FQHC site to retain all or a portion of the payments attributable to the utilization decrease that exceeds 30 percent lower than the projected utilization. If the department is unable to determine that all or a portion of the utilization decrease in excess of 30 percent was related to delivery system transformation and enhancements according to the objective criteria developed pursuant to this subparagraph, the participating FQHC site shall be required to refund the applicable payment amount to the participating principal health plan or subcontracting payer pursuant to subparagraph (B).
(B)The total amount refunded by the participating FQHC site to the principal health plan or subcontracting payer shall be limited to an amount calculated as follows:
(i)The actual total utilization, expressed as traditional encounters, for the applicable year shall be determined.
(ii)The projected total utilization contained in the clinic-specific PMPMs for the actual APM enrollees for the applicable year shall be determined and multiplied by 70 percent.
(iii)The amount in clause (i) shall be subtracted from the amount in clause (ii).
(iv)The amount in clause (iii) shall be multiplied by the participating FQHC sites per-visit rate that was determined pursuant to Section 14132.100, yielding the maximum amount of the refund to be made by the participating FQHC site. The refund shall be paid in one aggregate payment.
(C)Any adjustment made pursuant to this paragraph shall be requested by a principal health plan, subcontracting payer, or FQHC, no later than 90 days after that determination by the department pursuant to subparagraph (A).
14138.18.(a)The department, in consultation with interested FQHCs and principal health plans, may modify any methodology, process, or provision specified in this article to the extent necessary to comply with federal law or to obtain any necessary federal approvals.
(b)This article shall be implemented only to the extent that federal financial participation is available and any necessary federal approvals have been obtained.
(c)In the event of a conflict between a provision in this article and the terms of a federally approved APM, the terms of the federally approved APM shall control.
14138.19.In the event of an epidemic, or similar catastrophic occurrence that the department determines is likely to result in at least a 30 percent increase in actual utilization per member per month within the APM scope of services for one or more APM aid categories at a participating FQHC site, the department may adjust, or require the adjustment of, payments made pursuant to this article as it deems necessary to account for the utilization increase at the affected participating FQHC site. The department shall make the determination described in this section upon written request of a participating FQHC site.
14138.20.14138.21.Nothing in this article shall be deemed to affect the amounts paid or the reimbursement methodology applicable to FQHCs for dental services that are provided outside the scope of a contract between the department and an applicable principal health plan that is in effect as of July 1, 2015. (a)
(a)The department shall contract with an independent entity to perform an evaluation of the APM pilot project authorized pursuant to this article. To the extent practicable, the evaluation shall be completed and provided to the appropriate fiscal and policy committees of the Legislature within six months of the conclusion of the pilot project in those counties that are included in the initial pilot project implementation authorized pursuant to paragraph (2) of subdivision (a) of Section 14138.12. The department shall carry out the duty imposed pursuant to this subdivision only if there are sufficient private foundation or nonprofit foundation funds available for this purpose. A report submitted pursuant to this subdivision shall be submitted in compliance with Section 9795 of the Government Code.
(b)The evaluation by the independent entity shall assess and report on whether the APM pilot project produced improvements in access to primary care services, care quality, patient experience, and overall health outcomes for APM enrollees. The evaluation shall include existing FQHC required quality metrics and an assessment of how the changes in financing allowed for alternative types of primary care visits and alternative encounters between the participating FQHC and the patient and how those changes affected volume of same-day visits for mental and physical health conditions. The evaluation shall also assess whether the APM pilot projects efforts to improve primary care resulted in changes to patient service utilization patterns, including the reduced utilization of avoidable high-cost services and services provided outside the FQHC. The evaluation shall also identify any administrative and financial implementation issues for FQHCs that may arise if subsequent legislation makes the pilot program operative statewide.
14138.21.14138.22.(a)Notwithstanding Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, the department may implement, interpret, or make specific this article by means of all-county letters, plan letters, plan or provider bulletins, or similar instructions, without taking regulatory action.
(b)Beginning January 1, 2017, and notwithstanding Section 10231.5 of the Government Code, the department shall provide a status report to the Legislature regarding any instruction issued by the department pursuant to subdivision (a) on a semiannual basis until six months after implementation of the pilot project authorized pursuant to this article.
(c)It is the intent of the Legislature, if the scope of the pilot project authorized by this article is extended, that the department adopt regulations to implement this article.
14138.22.14138.23.For purposes of implementing this article, the department may enter into exclusive or nonexclusive contracts on a bid or negotiated basis, including contracts for the purpose of obtaining subject matter expertise or other technical assistance. Any contract entered into or amended pursuant to this section shall be exempt from Part 2 (commencing with Section 10100) of Division 2 of the Public Contract Code and Chapter 6 (commencing with Section 14825) of Part 5.5 of Division 3 of the Government Code, and shall be exempt from the review or approval of any division of the Department of General Services.
For purposes of this article, the following definitions apply:
(a)Alternative payment methodology (APM) has the same meaning as specified in Section 1396a(bb)(6) of Title 42 of the United States Code.
(b)APM aid category means a Medi-Cal category of aid designated by the department. For all its APM enrollees in an APM aid category, a participating FQHC site shall receive compensation as described under the APM pilot project. The APM aid categories may include, but are not limited to, all of the following categories of aid:
(1)Adults.
(2)Children.
(3)Seniors and persons with disabilities.
(4)The adult expansion population eligible pursuant to Section 14005.60, to the extent the department determines, in consultation with health plans and interested FQHCs, that sufficient data is available to allow for inclusion of this population in the APM pilot project. This paragraph shall not be construed to prohibit inclusion of the adult expansion population in the APM pilot project on a date subsequent to initial authorization pursuant to subdivision (a) of Section 14138.12.
(c)APM enrollee means a member who is assigned by a principal health plan or subcontracting payer to a participating FQHC for primary care services and who is within one of the designated APM aid categories.
(d)APM pilot project means the pilot project authorized by this article.
(e)APM scope of services means the scope of services for a participating FQHC for which its per-visit rate was determined pursuant to Section 14132.100.
(f)APM supplemental capitation means an additional, APM aid category-specific, PMPM amount that is paid by the department to a principal health plan having one or more participating FQHCs in its provider network.
(g)Clinic-specific PMPM means the monthly, per assigned member, capitated amount the principal health plan or subcontracting payer is required to pay to the participating FQHC for the APM scope of services. The clinic-specific PMPM is exclusive of any incentive payments and shall be developed to reflect the amount the participating FQHC would have received under the prospective payment system methodology set forth in Section 14132.100.
(h)FQHC means any community or public federally qualified health center, as defined in Section 1396d(l)(2)(B) of Title 42 of the United States Code and providing services as defined in Section 1396d(a)(2)(C) of Title 42 of the United States Code.
(i)Member means a Medi-Cal beneficiary who is enrolled with a principal health plan or subcontracting payer.
(j)Participating FQHC means an FQHC participating in the APM pilot project at one or more of the FQHCs sites. Participating FQHC also refers to a FQHCs site that is participating in the APM pilot project.
(k)PMPM and per member per month both mean a monthly payment made for providing or arranging health care services for a member and may refer to a payment by the department to a principal health plan, or by a principal health plan to a subcontracting payer, or by a principal health plan or subcontracting payer to an FQHC, or from and to other entities as specified in this article.
(l)Principal health plan means an organization or entity that enters into a contract with the department pursuant to Article 2.7 (commencing with Section 14087.3), Article 2.8 (commencing with Section 14087.5), Article 2.81 (commencing with Section 14087.96), Article 2.82 (commencing with Section 14087.98), Article 2.91 (commencing with Section 14089), or Chapter 8 (commencing with Section 14200), to provide or arrange for the care of Medi-Cal beneficiaries within a county in which the APM pilot project is implemented.
(m)Subcontracting payer means an organization or entity that subcontracts with a principal health plan to provide or arrange for the care of its members and contains one or more participating FQHCs in its provider network.
(n)Traditional encounter means a face-to-face encounter that is recognized as a billable visit, as described in subdivision (g) of Section 14132.100.
(o)Traditional wrap-around payment means the supplemental payments payable to an FQHC in the absence of the APM pilot project with respect to services provided to Medi-Cal managed care enrollees, which are made by the department pursuant to subdivision (e) of Section 14087.325 and subdivision (h) of Section 14132.100.
14138.10.The Legislature finds and declares all of the following:
(a)The federal Patient Protection and Affordable Care Act has made and continues to make significant progress in driving health care delivery system reforms that emphasize health outcomes, efficiency, patient satisfaction, and value.
(b)California has expanded Medi-Cal to cover more than 12 million residents, roughly one-third of the states population. To meet the needs of the states growing patient population, California must continue to explore new strategies to expand access to high quality and cost-effective primary care services.
(c)With such a large portion of the states population receiving health care services through Medi-Cal, it is imperative that patient-centered innovations drive Medi-Cal reforms.
(d)Health care today is more than a face-to-face visit with a provider, but rather a whole-person approach, often including a physician, a care team of other health care providers, technology inside and outside of a health center, and wellness activities including nutrition and exercise classes, all of which are designed to be more easily incorporated into a patients daily life.
(e)Accessible health care in a manner that fits a patients needs is important for improving patient satisfaction, building trust, and ultimately improving health outcomes.
(f)In an attempt to invest up front in health care services that can prevent longer term avoidable high-cost services, the federal Patient Protection and Affordable Care Act made a significant investment in FQHCs.
(g)FQHCs are essential community providers, providing high quality, cost-effective comprehensive primary care services to underserved communities.
(h)Today FQHCs face certain restrictions because the current payment structure reimburses an FQHC only when there is a traditional encounter with a provider. Current law prohibits payment for both a primary care visit and mental health visit on the same day.
(i)A more practical approach financially incentivizes FQHCs to provide the right care at the right time. Restructuring the current visit based, fee-for-service model with a capitated equivalent affords FQHCs the assurance of payment and the flexibility to deliver care in the most appropriate patient-centered manner.
(j)A reformed payment methodology will enable FQHCs to take advantage of alternative encounters. Alternative encounters, such as group visits, same-day mental health services and telephone and email consultations, are effective care delivery methods and contribute to a patients overall health and well-being.
14138.11.It is the intent of the Legislature to test an alternative payment methodology for FQHCs, as permitted by federal law, and to design and implement the APM to do all of the following:
(a)Provide patient-centered care delivery options to Californias expansive Medi-Cal population.
(b)Promote cost efficiencies, and improve population health and patient satisfaction.
(c)Improve the capacity of FQHCs to deliver high-quality care to a population growing in numbers and in complexity of needs.
(d)Transition away from a payment system that rewards volume with a flexible alternative that recognizes the value added when Medi-Cal beneficiaries are able to more easily access the care they need and when providers are able to deliver care in the most appropriate manner to patients.
(e)Track alternative encounters at FQHCs in order to establish a data set from which alternative encounters may be assigned a value that can be used in future ratesetting.
(f)Implement the APM where the FQHC receives at least the same amount of funding it would receive under the current payment system, and in a manner that does not disrupt patient care or threaten FQHC viability.
14138.12.(a)(1)The department shall authorize a payment reform pilot project for FQHCs using an APM in accordance with this article.
(2)Implementation of the APM pilot project shall begin no sooner than July 1, 2016, subject to any necessary federal approvals.
(3)The department shall authorize implementation of an APM pilot project with respect to a county for a period of up to three years.
(4)At least 90 days prior to implementation of an APM pilot project for a participating FQHC site in a county, the department shall notify a principal health plan in writing of the principal health plans specific APM supplemental capitation rate and clinic-specific PMPM rates for the participating FQHC in the county. The notification from the department to the principal health plan shall be based on the rates submitted by the department for final federal approval. If the APM supplemental capitation rates or clinic-specific PMPM rates are modified after the notification to a principal health plan, the department shall notify a principal health plan of the revised rates and, if either the principal health plan or participating FQHC requests, adjust the implementation date of the APM pilot project for a participating FQHC in a county so that it occurs at least 90 days after the revised rate notification.
(5)At least 90 days prior to implementation of an APM pilot project for a participating FQHC site in a county, the department shall notify a principal health plan and the FQHC site in writing of the clinic-specific PMPM rate for the participating FQHC site in the county.
(5)
(6)The APM pilot project for a participating FQHC site in a county shall begin no sooner than the first day of the month following the month in which the department received federal approval of the rates. principal health plans specifie APM supplemental capitation rates.
(b)The APM pilot project shall comply with federal APM requirements and the department shall file a state plan amendment and seek any federal approvals as necessary for the implementation of this article. Nothing in this article shall be construed to authorize the department to seek federal approval to affirmatively waive Section 1396a(bb)(6) of Title 42 of the United States Code.
(c)Nothing in this article shall be construed to limit or eliminate services provided by FQHCs as covered benefits in the Medi-Cal program.
14138.13.(a)The department shall notify every FQHC in the state of the APM pilot project and shall invite any interested FQHC to apply for participation in the APM with respect to one or more of the FQHCs sites. Consistent with federal law, the state plan amendment described in subdivision (b) of Section 14138.12 shall specify that the department and each participating FQHC voluntarily agrees to the APM.
(b)(1)(A)The department shall develop the following, develop, in consultation with interested FQHCs and principal health plans and consistent with federal law:
(B)The selection process that law, the eligibility criteria to be used in evaluating applications from interested FQHCs may apply for participation in the pilot project, which shall include, but need not be limited to, the following:
(i)
(A)The FQHC has the demonstrated ability to collect and submit encounter data in a form and manner that satisfies department requirements.
(ii)
(B)The FQHC is in good standing with the relevant state and federal regulators.
(iii)
(C)The FQHC has the financial and administrative capacity to undertake payment reform.
(2)In addition to the criteria listed in paragraph (1), the department may take into consideration the number of APM enrollees assigned by a plan at each FQHC site as an eligibility requirement for FQHC participation.
(2)
(3)In accordance with the process and criteria developed pursuant to paragraph (1), paragraphs (1) and (2), the department shall approve or deny an interested FQHC site application for participation in the pilot project. The department may limit the number of participating FQHCs in the pilot project and the number of counties in which the pilot project will operate.
(3)
(4)All principal health plans and applicable subcontracting payers are required to participate in the APM pilot project pursuant to this article to the extent that one or more contracted FQHC sites located in the plans county are selected to participate in the pilot project.
(c)The APM shall be applied only with respect to a participating FQHC for services the FQHC provides to its APM enrollees that are within its APM scope of services.
(d)Payment to the participating FQHC shall continue to be governed by the provisions of Sections 14132.100 and 14087.325 for services provided with respect to both of the following categories of patients:
(1)A Medi-Cal beneficiary who receives services from any FQHC to which the beneficiary is not assigned for primary care services under the APM pilot project by a principal health plan or subcontracting payer.
(2)A person who is a Medi-Cal beneficiary, but who is not a Medi-Cal beneficiary within a designated APM aid category.
(e)(1)A participating FQHC, with respect to one or more sites of its choosing, may opt to discontinue its participation in the pilot project subject to a notice requirement of no less than 120 days.
(2)A principal health plan may opt to discontinue its participation in the pilot project, subject to a notice requirement of no less than 120 days if Section 14138.16 is amended at any time while the pilot project is in effect. The department shall place a provision in a plans contract giving the plan the ability to discontinue its participation in the APM pilot project pursuant to this paragraph.
14138.14.(a)A participating FQHC shall be compensated for the APM scope of services provided to its APM enrollees pursuant to this section.
(b)A participating FQHC shall receive from the principal health plan or applicable subcontracting payer reimbursement for each APM enrollee in the form of a clinic-specific PMPM for the applicable APM aid category. The department shall determine the clinic-specific PMPM for each APM aid category taking into account all the following factors:
(1)Historical utilization of FQHC services by assigned members in each APM aid category.
(2)The participating FQHCs prospective payment system rate and applicable adjustments relevant for the fiscal year, such as annual rate adjustments.
(3)Other trend and utilization adjustments as appropriate in order to reflect the level of reimbursement that would have been received by the participating FQHCs in the absence of the APM pilot project.
(c)A participating FQHC and applicable principal health plan or subcontracting payer may enter into arrangements in which the clinic-specific PMPM amount required in subdivision (b) is paid in more than one capitated increment, as long as the total capitation each month received by the participating FQHC is equivalent to the clinic-specific PMPM.
(d)In cases where a subcontracting payer is involved, the principal health plan shall demonstrate and certify to the department that it has contracts or other arrangements in place that provide for meeting the requirements in subdivision (b) and to the extent that the subcontracting payer fails to comply with the applicable requirements in this article, the principal health plan shall then be responsible to ensure the participating FQHC receives all payments due under this article in a timely manner.
(e)The department shall adjust the amounts in subdivision (b) as necessary to account for any change to the prospective payment system rate for participating FQHCs, including changes resulting from a change in the Medicare Economic Index pursuant to subdivision (d) of Section 14132.100, and any changes in the FQHCs scope of services pursuant to subdivision (e) of Section 14132.100.
(f)An FQHC site participating in the APM pilot project shall not receive traditional wrap-around payments pursuant to Sections 14132.100 and 14087.325 for visits within the APM scope of services it provides to its APM enrollees.
14138.15.(a)A principal health plan shall be compensated by the department for the services provided to its APM enrollees pursuant to this section.
(b)For each principal health plan that contains at least one participating FQHC in its provider network, the department shall determine an APM supplemental capitation amount for each APM aid category to be paid by the department to the principal health plan, which shall be expressed as a PMPM amount. This supplemental capitation amount will be in addition to the funding for the APM scope of services already contained in the principal health plans capitated rates paid by the department and shall be actuarially sound. The department shall determine the APM supplemental capitation amount for each APM aid category, taking into account all of the following factors:
(1)The clinic-specific PMPM amounts for each APM aid category for each participating FQHC in the plans network.
(2)The funding for the APM scope of services already contained in the principal health plans capitated rates.
(3)The historical wrap-around payments paid by the department for participating FQHCs for assigned members in each APM aid category.
(4)As applicable, the likely distribution of members among multiple participating FQHCs.
(c)The principal health plan shall report to the department, in a form to be determined by the department in consultation with the principal health plan, the number of APM enrollees for each APM aid category in the plan each month.
(d)The department shall pay each principal health plan its applicable APM supplemental capitation amount for the number of APM enrollees for each APM aid category reported by the principal health plan pursuant to subdivision (c).
(e)The department, in consultation with the principal health plans, shall develop methods to verify the information reported pursuant to subdivision (c), and may adjust the payments made pursuant to subdivision (d) as appropriate to reflect the verified number of APM enrollees for each APM aid category.
(f)The department shall adjust the amounts in subdivision (b) as necessary to account for any change to the prospective payment system rate for participating FQHCs, including changes resulting from a change in the Medicare Economic Index pursuant to subdivision (d) of Section 14132.100, and any changes in the FQHCs scope of services pursuant to subdivision (e) of Section 14132.100.
14138.16.(a)For the duration of the APM pilot project, the department shall establish a risk corridor structure for the principal health plans relating only to the APM supplemental capitation payments pursuant to Section 14138.15, to the extent consistent with principals of actuarial soundness.
(b)The risk sharing of the costs under this section shall be constructed by the department so that it is symmetrical with respect to risk and profit, and so that all of the following apply:
(1)The principal health plan is fully responsible for all costs up to one-half of 1 percent in excess of the APM supplemental capitation amounts up to one-half of one percent. amounts.
(2)The principal health plan shall fully retain the revenues paid through the APM supplemental capitation amounts in excess of the costs incurred up to one-half of 1 percent below the APM supplemental capitation amounts.
(3)The principal health plan and the department shall share equally in the responsibility for costs in excess of the APM supplemental capitation amounts that are greater than one-half of 1 percent but less than 1 percent above the APM supplemental capitation amounts.
(4)The principal health plan and the department shall share equally the benefit of the revenues paid through the APM supplemental capitation amounts in excess of the costs incurred that are greater than one-half of 1 percent but less than 1 percent below the APM supplemental capitation amounts.
(5)The department shall be fully responsible for all costs in excess of the APM supplemental capitation amounts that are more than 1 percent above the APM supplemental capitation amounts.
(6)The department shall fully retain the revenues paid through the APM supplemental capitation amounts in excess of the costs incurred greater than 1 percent below the supplemental capitation amounts.
(c)The department shall develop specific contract language to implement the requirements of this section that shall be incorporated into the contracts of each affected principal health plan.
(d)This section shall be implemented only to the extent that any necessary federal approvals or waivers are obtained.
14138.17.(a)In order to ensure participating FQHCs have an incentive to manage visits and costs, while at the same time exercising a reasonable amount of flexibility to deliver care in the most efficient and quality driven manner, for the duration of the APM pilot project the department shall, in accordance with this subdivision, establish a payment adjustment structure. The payment adjustment structure shall be developed with stakeholder input and shall meet the requirements of Section 1396a(bb)(6) of Title 42 of the United States Code.
(b)The payment adjustment structure shall be applicable on a site-specific basis.
(c)The payment adjustment structure shall permit an aggregate adjustment to the payments received when actual utilization of services for a participating FQHCs site exceeds or falls below expectations that were reflected within the calculation of the rates developed pursuant to Sections 14138.14 and 14138.15. For purposes of this payment adjustment structure, both actual and expected utilization shall be expressed as the total number of traditional encounters that would be recognized pursuant to subdivision (g) of Section 14132.100 for the APM enrollees of the participating FQHCs site across all APM aid categories and averaged on a per member per year basis.
(d)An adjustment pursuant to this section shall occur no more than once per year per participating FQHCs site during the APM pilot project and shall be subject to approval by the department.
(1)An adjustment to payments in the case of higher than expected utilization shall be triggered when utilization exceeds projections by more than 5 percent for the first year, 71/2 percent for the second year, and 10 percent for the third year. If the trigger level is reached in a given year, the participating FQHC site shall receive an aggregate payment adjustment from the principal health plan or applicable subcontracting payer that is based upon the difference between its actual utilization for the year and 105 percent of projected utilization for the first year, the difference between actual utilization and 1071/2 percent of projected utilization for the second year, and the difference between actual utilization and 110 percent of projected utilization for the third year. The payment adjustment in each instance shall be calculated as follows:
(A)The actual total utilization, expressed as traditional encounters, for the applicable year shall be determined.
(B)The projected total utilization contained in the clinic-specific PMPMs for the actual APM enrollees for the applicable year shall be determined.
(C)The amount in subparagraph (B) shall be adjusted to reflect the applicable comparison utilization for the year as follows:
(i)Multiplied by 1.05 for year one.
(ii)Multiplied by 1.075 for year two.
(ii)
(iii)Multiplied by 1.1 for year three.
(D)The amount in subparagraph (C) shall be subtracted from the amount in subparagraph (A).
(E)The amount in subparagraph (D) shall be multiplied by the per-visit rate that was determined pursuant to Section 14132.100 for the participating FQHC site yielding the payment adjustment for the participating FQHC site. The payment adjustment shall be paid to the participating FQHC site by the principal health plan, or subcontracting payer, as applicable, in one aggregate payment.
(2)(A)To incentivize care delivery in ways that may vary from traditional delivery of care, participating FQHCs shall have the flexibility to experience a lower than expected visit utilization of up to 30 percent of projected utilization. If an FQHC sites actual utilization is at a level that is more than 30 percent lower than the projected utilization, the department shall review, in consultation with the principal health plan, or subcontracting payer, as applicable, the FQHC sites relevant data to identify the cause or causes of the difference, including, but not limited to, its volume of alternative encounters. If the department is able to determine that all or part of the lower than expected utilization was due to objective factors developed by the department in consultation with the principal health plans and FQHCs that are related to delivery system transformation and enhancements, such as alternative encounters, the department shall allow the participating FQHC site to retain all or a portion of the payments attributable to the utilization decrease that exceeds 30 percent lower than the projected utilization. If the department is unable to determine that all or a portion of the utilization decrease in excess of 30 percent was related to delivery system transformation and enhancements according to the objective criteria developed pursuant to this subparagraph, the participating FQHC site shall be required to refund the applicable payment amount to the participating health plan or subcontracting payer pursuant to subparagraph (B).
(B)The total amount refunded by the participating FQHCs FQHC site to the principal health plan or subcontracting payer shall be limited to an amount calculated as follows:
(i)The actual total utilization, expressed as traditional encounters, for the applicable year shall be determined.
(ii)The projected total utilization contained in the clinic-specific PMPMs for the actual APM enrollees for the applicable year shall be determined and multiplied by 70 percent.
(iii)The amount in clause (i) shall be subtracted from the amount in clause (ii).
(iv)The amount in clause (i) (iii) shall be multiplied by the participating FQHC sites per visit rate that was determined pursuant to Section 14132.100, yielding the maximum amount of the refund to be made by the participating FQHC site. The refund shall be paid in one aggregate payment.
(C)Any adjustment made pursuant to this paragraph shall be requested by a principal health plan, subcontracting payer, or FQHC, no later than 90 days after that determination by the department pursuant to subparagraph (A).
14138.18.(a)The department, in consultation with interested FQHCs and principal health plans, may modify any methodology or process methodology, process, or provision specified in this article to the extent necessary to comply with federal law or to obtain any necessary federal approvals.
(b)This article shall be implemented only to the extent that federal financial participation is available and any necessary federal approvals have been obtained.
(c)In the event of a conflict between a provision in this article and the terms of a federally approved APM, the terms of the federally approved APM shall control.
14138.19.In the event of an epidemic, or similar catastrophic occurrence that the department determines is likely to result in at least a 40 30 percent increase in actual utilization per member per month within the APM scope of services for one or more APM aid categories at a participating FQHC site, the department may adjust, or require the adjustment of, payments made pursuant to this article as it deems necessary to account for the utilization increase at the affected participating FQHC site. The department shall make the determination described in this section upon written request of a participating FQHC site.
14138.20.(a)(1)Within six months of the conclusion of pilot project, an evaluation shall be completed by an independent entity. This independent entity shall report its findings to the department and the Legislature. The evaluation shall be contingent on the availability of nonstate General Fund moneys for this purpose, and the availability of private foundation or nonprofit foundation money for this purpose.
(2)A report submitted pursuant to this subdivision shall be submitted in compliance with Section 9795 of the Government Code.
14138.20.(a)The department shall contract with an independent entity to perform an evaluation of the APM pilot project authorized pursuant to this article. To the extent practicable, the evaluation shall be completed and provided to the appropriate fiscal and policy committees of the Legislature within six months of the conclusion of the pilot project in those counties that are included in the initial pilot project implementation authorized pursuant to paragraph (2) of subdivision (a) of Section 14138.12. The department shall carry out the duty imposed pursuant to this subdivision only if there are sufficient private foundation or nonprofit foundation funds available for this purpose. A report submitted pursuant to this subdivision shall be submitted in compliance with Section 9795 of the Government Code.
(b)The evaluation shall assess by the independent entity shall assess and report on whether the APM pilot project produced improvements in access to primary care services, care quality, patient experience, and overall health outcomes for APM enrollees. The evaluation shall include existing FQHC required quality metrics and an assessment of how the changes in financing allowed for alternative types of primary care visits and alternative encounters between the participating FQHC and the patient and how those changes affected volume of same-day visits for mental and physical health conditions. The evaluation shall also assess whether the APM pilot projects efforts to improve primary care resulted in changes to patient service utilization patterns, including the reduced utilization of avoidable high-cost services and services provided outside the FQHC.
14138.21.(a)Notwithstanding Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, the department may implement, interpret, or make specific this article by means of all-county letters, plan letters, plan or provider bulletins, or similar instructions, without taking regulatory action.
(b)Beginning January 1, 2017, and notwithstanding Section 10231.5 of the Government Code, the department shall provide a status report to the Legislature regarding any instruction issued by the department pursuant to subdivision (a) on a semiannual basis until six months after implementation of the pilot project authorized pursuant to this article.
(c)It is the intent of the Legislature, if the scope of the pilot project authorized by this article is extended, that the department adopt regulations to implement this article.
14138.22.For purposes of implementing this article, the department may enter into exclusive or nonexclusive contracts on a bid or negotiated basis, including contracts for the purpose of obtaining subject matter expertise or other technical assistance. Any contract entered into or amended pursuant to this section shall be exempt from Part 2 (commencing with Section 10100) of Division 2 of the Public Contract Code and Chapter 6 (commencing with Section 14825) of Part 5.5 of Division 3 of the Government Code, and shall be exempt from the review or approval of any division of the Department of General Services.
For purposes of this article, the following definitions apply:
(a)Alternative payment methodology (APM) has the same meaning as specified in Section 1396a(bb)(6) of Title 42 of the United States Code.
(b)APM aid category means a Medi-Cal category of aid designated by the department. For all its APM enrollees in an APM aid category, a participating FQHC site shall receive compensation as described under the APM pilot project. The APM aid categories may include, but are not limited to, all of the following categories of aid:
(1)Adults.
(2)Children.
(3)Seniors and persons with disabilities.
(4)The adult expansion population eligible pursuant to Section 14005.60. 14005.60, to the extent the department determines, in consultation with health plans and interested FQHCs, that sufficient data is available to allow for inclusion of this population in the APM pilot project. This paragraph shall not be construed to prohibit inclusion of the adult expansion population in the APM pilot project on a date subsequent to initial authorization pursuant to subdivision (a) of Section 14138.12.
(c)APM enrollee means a member who is assigned by a principal health plan or secondary subcontracting payer to a participating FQHC for primary care services and who is within one of the designated APM aid categories.
(d)APM enrollee true-up means the process by which payments are adjusted to reflect changes in the number of APM enrollees, by APM aid category, for participating FQHCs.
(e)
(d)APM pilot project means the pilot project authorized by this article.
(f)
(e)APM scope of services means the scope of services for a participating FQHC for which its per-visit rate was determined pursuant to Section 14132.100.
(g)
(f)APM supplemental capitation means an additional, APM aid category-specific, PMPM amount that is paid by the department to a principal health plan having one or more participating FQHCs in its provider network.
(h)Base payment means the amount paid by a principal health plan and any secondary payer, as applicable, to an FQHC for patient services in the APM scope of services with respect to APM enrollees of the FQHC pursuant to its contract, exclusive of any incentive payments. Base payments do not include traditional wrap-around payments or wrap-cap payment amounts.
(g)Clinic-specific PMPM means the monthly, per assigned member, capitated amount the principal health plan or subcontracting payer is required to pay to the participating FQHC for the APM scope of services. The clinic-specific PMPM is exclusive of any incentive payments and shall be developed to reflect the amount the participating FQHC would have received under the prospective payment system methodology set forth in Section 14132.100.
(i)
(h)FQHC means any community or public federally qualified health center, as defined in Section 1396d(l)(2)(B) of Title 42 of the United States Code and providing services as defined in Section 1396d(a)(2)(C) of Title 42 of the United States Code.
(j)
(i)Member means a Medi-Cal beneficiary who is enrolled with a principal health plan or secondary subcontracting payer.
(k)
(j)Participating FQHC means a an FQHC participating in the APM pilot project at one or more of the FQHCs sites. Participating FQHC also refers to a FQHCs site that is participating in the APM pilot project.
(l)
(k)PMPM and per member per month both mean a monthly payment made for providing or arranging health care services for a member and may refer to a payment by the department to a principal health plan, or by a principal health plan to a secondary subcontracting payer, or by a principal health plan or secondary subcontracting payer to an FQHC, or from and to other entities as specified in this article.
(m)
(l)Principal health plan means an organization or entity that enters into a contract with the department pursuant to Article 2.7 (commencing with Section 14087.3), Article 2.8 (commencing with Section 14087.5), Article 2.81 (commencing with Section 14087.96), Article 2.82 (commencing with Section 14087.98), Article 2.91 (commencing with Section 14089), or Chapter 8 (commencing with Section 14200), to provide or arrange for the care of Medi-Cal beneficiaries within a county in which the APM pilot project is implemented.
(n)Secondary
(m)Subcontracting payer means an organization or entity that subcontracts with a principal health plan to provide or arrange for the care of its members and contains one or more participating FQHCs in its provider network.
(n)Traditional encounter means a face-to-face encounter that is recognized as a billable visit, as described in subdivision (g) of Section 14132.100.
(o)Traditional wrap-around payment means the supplemental payments payable to an FQHC in the absence of the APM pilot project with respect to services provided to Medi-Cal managed care enrollees, which are made by the department pursuant to subdivision (e) of Section 14087.325 and subdivision (h) of Section 14132.100.
(p)Wrap-cap means a prospective PMPM amount that is determined by APM aid category for each participating FQHC site, and is paid monthly by a principal health plan or secondary payer to the participating FQHC with respect to its APM enrollees in each APM aid category in lieu of a traditional wraparound payment.
14138.10.The Legislature finds and declares all of the following:
(a)The federal Patient Protection and Affordable Care Act has made and continues to make significant progress in driving health care delivery system reforms that emphasize health outcomes, efficiency, patient satisfaction satisfaction, and value.
(b)California has expanded Medi-Cal to cover more than 12 million residents, roughly one-third of the states population. To meet the needs of the states growing patient population, California must continue to explore new strategies to expand access to high quality and cost-effective primary care services.
(c)With such a large portion of the states population receiving health care services through Medi-Cal, it is imperative that patient-centered innovations drive Medi-Cal reforms.
(d)Health care today is more than a face-to-face visit with a provider, but rather a whole-person approach, often including a physician, a care team of other health care providers, technology inside and outside of a health center, and wellness activities including nutrition and exercise classes, all of which are designed to be more easily incorporated into a patients daily life.
(e)Accessible health care in a manner that fits a patients needs is important for improving patient satisfaction, building trust, and ultimately improving health outcomes.
(f)In an attempt to invest up front in health care services that can prevent longer term avoidable high-cost services, the federal Patient Protection and Affordable Care Act made a significant investment in FQHCs.
(g)FQHCs are essential community providers, providing high quality, cost-effective comprehensive primary care services to underserved communities.
(h)Today FQHCs face restrictions, however, certain restrictions because the current payment structure reimburses an FQHC only when there is a face-to-face visittraditional encounter with a provider. Current law prohibits payment for both a primary care visit and mental health visit on the same day, a restriction that inhibits coordination and efficiency. day.
(i)A more practical approach financially incentivizes FQHCs to provide the right care at the right time. Restructuring the current visit based, fee-for-service model with a capitated equivalent affords FQHCs the assurance of payment and the flexibility to deliver care in the most appropriate patient-centered manner.
(j)A reformed payment methodology will enable FQHCs to take advantage of alternative touches. Alternative touches, such as encounters. Alternative encounters, such as group visits, same-day mental health services and phone telephone and email consultations, are effective care delivery methods and contribute to a patients overall health and well-being.
14138.11.It is the intent of the Legislature to test an alternative payment methodology for FQHCs, as permitted by federal law, and to design and implement the APM to do all of the following:
(a)Provide patient-centered care delivery options to Californias expansive Medi-Cal population.
(b)Promote cost efficiencies, and improve population health and patient satisfaction.
(c)Improve the capacity of FQHCs to deliver high-quality care to a population growing in numbers and in complexity of needs.
(d)Transition away from a payment system that rewards volume with a flexible alternative that recognizes the value added when Medi-Cal beneficiaries are able to more easily access the care they need and when providers are able to deliver care in the most appropriate manner to patients.
(e)Track alternative touches encounters at FQHCs in order to establish a data set from which alternative touches encounters may be assigned a value that can be used in future ratesetting.
(f)Implement the APM where the FQHC receives at least the same amount of funding it would receive under the current payment system, and in a manner that does not disrupt patient care or threaten FQHC viability.
14138.12.(a)(1)The department shall authorize a three-year payment reform pilot project for FQHCs using an APM in accordance with this article. Implementation
(2)Implementation of the APM pilot project shall begin no sooner than July 1, 2016, subject to any necessary federal approval. approvals.
(3)The department shall authorize implementation of an APM pilot project with respect to a county for a period of up to three years.
(4)At least 90 days prior to implementation of an APM pilot project for a participating FQHC site in a county, the department shall notify a principal health plan in writing of the principal health plans specific APM supplemental capitation rate and clinic-specific PMPM rates for the participating FQHC in the county. The notification from the department to the principal health plan shall be based on the rates submitted by the department for final approval. If the APM supplemental capitation rates or clinic-specific PMPM rates are modified after the notification to a principal health plan, the department shall notify a principal health plan of the revised rates and, if either the principal health plan or participating FQHC requests, adjust the implementation date of the APM pilot project for a participating FQHC in a county so that it occurs at least 90 days after the revised rate notification.
(5)The APM pilot project for a participating FQHC site in a county shall begin no sooner than the first day of the month following the month in which the department received federal approval of the rates.
(b)The APM pilot project shall comply with federal APM requirements and the department shall file a state plan amendment and seek any federal approvals as necessary for the implementation of this article. Nothing in this article shall be construed to authorize the department to seek federal approval to affirmatively waive Section 1396a(bb)(6) of Title 42 of the United States Code.
(c)Nothing in this article shall be construed to limit or eliminate services provided by FQHCs as covered benefits in the Medi-Cal program.
14138.13.(a)To implement this article, the The department shall notify every FQHC in the state of the APM pilot project and shall invite any interested FQHC to notify the department that the FQHC agrees to participate apply for participation in the APM with respect to one or more of the FQHCs sites. Consistent with federal law, the state plan amendment described in subdivision (b) of Section 14138.12 shall specify that the department and each participating FQHCs agree FQHC voluntarily agrees to the APM.
(b)(1)(A)The department shall develop the following, in consultation with interested FQHCs and principal health plans and consistent with federal law:
(B)The selection process that interested FQHCs may apply for participation in the pilot project, which shall include, but need not be limited to, the following:
(i)The FQHC has the demonstrated ability to collect and submit encounter data in a form and manner that satisfies department requirements.
(ii)The FQHC is in good standing with the relevant state and federal regulators.
(iii)The FQHC has the financial and administrative capacity to undertake payment reform.
(2)In accordance with the process and criteria developed pursuant to paragraph (1), the department shall approve or deny an interested FQHC site application for participation in the pilot project. The department may limit the number of participating FQHCs in the pilot project and the number of counties in which the pilot project will operate.
(3)All principal health plans and applicable subcontracting payers are required to participate in the APM pilot project pursuant to this article to the extent that one or more contracted FQHC sites located in the plans county are selected to participate in the pilot project.
(b)
(c)The APM shall be applied only with respect to a participating FQHC for services the FQHC provides to its APM enrollees that are within its APM scope of services.
(c)
(d)Payment to the participating FQHC shall continue to be governed by the provisions of Sections 14132.100 and 14087.325 for services provided with respect to both of the following categories of patients:
(1)A Medi-Cal beneficiary who receives services from any FQHC to which the beneficiary is not assigned for primary care services under the APM pilot project by a principal health plan or secondary subcontracting payer.
(2)A person who is a Medi-Cal beneficiary, but who is not a Medi-Cal beneficiary within a designated APM aid category.
(d)
(e)(1)A participating FQHC, with respect to one or more sites of its choosing, may opt to discontinue its participation in the pilot project subject to a notice requirement of no less than 30 days and no greater than 45 days, as established by the department. 120 days.
(2)A principal health plan may opt to discontinue its participation in the pilot project, subject to a notice requirement of no less than 30 days and no greater than 45 days, as established by the department, if subdivision (f) of Section 14138.14 120 days if Section 14138.16 is amended at any time while the pilot project is in effect. The department shall place a provision in a plans contract giving the plan the ability to discontinue its participation in the APM pilot project pursuant to this paragraph.
14138.14.(a)A participating FQHC shall be compensated for the APM scope of services provided to its APM enrollees pursuant to this section.
(b)(1)A participating FQHC shall, in addition to its base payment, and any applicable incentive payment, receive a PMPM wrap-cap payment for each of its APM enrollees as described in subdivision (c). The department shall determine the wrap-cap amount specific to each participating FQHC, and for each APM aid category. For this purpose, the department shall, in consultation with each participating FQHC and health plan, use the best available data for a recent agreed-upon time period that reflects the audit and reconciliation payment adjustments for the participating FQHC, which may be composite data from different or multiple periods. The determinations shall, at a minimum, take into account the following factors:
(A)An estimation of the amount of traditional wrap-around payments that would have been paid to the participating FQHC with respect to APM enrollees for the APM scope of services in the absence of the APM pilot project. For each APM aid category, the estimation shall be no less than the participating FQHCs historical utilization for assigned members for a 12-month period reflected in the data being used, multiplied by its prospective payment system rate, as determined pursuant to Section 14132.100, less any payments for the APM scope of services, exclusive of incentive payments, that were received from principal health plans and any secondary payers for the relevant period for assigned members, and shall be calculated on a PMPM basis.
(B)An estimation of service utilization for each APM aid category in the absence of the APM pilot project, including estimates of the utilization of services to be provided, and utilization and types of services not previously provided, reflected or identifiable in the prior period data.
(2)The wrap-cap payments shall not be decreased for the first three years of the APM pilot project, unless agreed to by the department and the applicable participating FQHC.
(c)Notwithstanding any other law, each principal health plan shall pay a participating FQHC that is in the plan provider network the wrap-cap amounts determined in subdivision (b) for each APM enrollee of that FQHC, or, in cases where a secondary payer is involved, provide the necessary amounts to the secondary payer and require that secondary payer to make the required wrap-cap payments to the FQHC. The principal health plan, secondary payer, as applicable, and the participating FQHC may choose the manner in which the wrap-cap payments are made, provided the resulting payment is equal to the full amount of the wrap-cap payments to which the participating FQHC is entitled, taking into account, among others, changes in the number of APM enrollees within the APM aid categories. In cases where a secondary payer is involved, the principal health plan shall demonstrate and certify to the department that it has contracts or other arrangements in place that provide for meeting the requirements herein and to the extent that the secondary payer fails to comply with the applicable requirements in this article, the principal health plan shall then be responsible to ensure the participating FQHC receives all payments due under this article in a timely manner.
(d)The department shall adjust the amounts in subdivision (b) at least annually for any change to the prospective payment system rate for participating FQHCs, including changes resulting from a change in the Medicare Economic Index pursuant to subdivision (d) of Section 14132.100, and any changes in the FQHCs scope of services pursuant to subdivision (e) of Section 14132.100.
(e)An FQHC site participating in the APM pilot project shall not receive traditional wrap-around payments pursuant to Sections 14132.100 and 14087.325 for visits within the APM scope of services it provides to its APM enrollees.
14138.15.(a)A principal health plan shall be compensated by the department for the services provided to its APM enrollees pursuant to this section.
(b)(1)For each principal health plan that contains at least one participating FQHC in its provider network, the department shall determine an APM supplemental capitation amount for each APM aid category to be paid by the department to the principal health plan, which shall be expressed as a PMPM amount. The APM supplemental capitation amount shall be a weighted average of the aggregate wrap-cap amounts determined in subdivision (b) of Section 14138.14, that at a minimum takes into account an estimation of the distribution of APM enrollees among the participating FQHCs for each APM aid category.
(2)The APM supplemental capitation amounts shall not be decreased for the first three years of the APM pilot project, unless agreed to by the department and the principal health plan.
(c)The total APM supplemental capitation amounts paid to principal health plans shall be adjusted by the department as necessary to take into account adjustments to the number of APM enrollees by APM aid category no later than the 10th day of each month.
(d)The department shall adjust the amounts in subdivision (b) at least annually for any change to the prospective payment system rate for participating FQHCs, including changes resulting from a change in the Medicare Economic Index pursuant to subdivision (d) of Section 14132.100, and any changes in the FQHCs scope of services pursuant to subdivision (e) of Section 14132.100.
14138.16.During the duration of the APM pilot project, the department shall establish a risk corridor structure for the principal health plans relating to the payment requirement of Section 14138.15, designed within the following parameters:
(a)(1)The principal health plan is fully responsible for the total aggregate costs of the wrap-cap payments for all APM aid categories to participating FQHCs in its network in excess of the total aggregate APM supplemental capitation amount for all APM aid categories up to one-half of 1 percent.
(2)The principal health plan shall fully retain the aggregate APM supplemental capitation amount in excess of the total aggregate costs of the wrap-cap payments for all APM aid categories incurred up to one-half of 1 percent.
(b)(1)The principal health plan and the department shall share responsibility for the total aggregate costs of the wrap-cap payments for all APM aid categories to participating FQHCs in the principal health plans network that are between one-half of 1 percent above and up to one percent above the total aggregate APM supplemental capitation amount for all APM aid categories.
(2)The principal health plan and the department shall share the benefit of the aggregate APM supplemental capitation amount in excess of the total aggregate costs of the wrap-cap payments for all APM aid categories incurred that are between one-half of 1 percent and up to one percent below the total aggregate APM supplemental capitation amount.
(c)(1)The department shall be fully responsible for the total aggregate costs of the wrap-cap payments for all APM aid categories to participating FQHCs in the principal health plans network that are more than one percent in excess of the principal health plans total aggregate APM supplemental capitation amount for all APM aid categories.
(2)The department shall fully retain the aggregate APM supplemental capitation amount in excess of the total aggregate costs of the wrap-cap payments for all APM aid categories to participating FQHCs in the principal health plans network that are greater than one percent below the total aggregate APM supplemental capitation amount.
14138.14.(a)A participating FQHC shall be compensated for the APM scope of services provided to its APM enrollees pursuant to this section.
(b)A participating FQHC shall receive from the principal health plan or applicable subcontracting payer reimbursement for each APM enrollee in the form of a clinic-specific PMPM for the applicable APM aid category. The department shall determine the clinic-specific PMPM for each APM aid category taking into account all the following factors:
(1)Historical utilization of FQHC services by assigned members in each APM aid category.
(2)The participating FQHCs prospective payment system rate and applicable adjustments relevant for the fiscal year, such as annual rate adjustments.
(3)Other trend and utilization adjustments as appropriate in order to reflect the level of reimbursement that would have been received by the participating FQHCs in the absence of the APM pilot project.
(c)A participating FQHC and applicable principal health plan or subcontracting payer may enter into arrangements in which the clinic-specific PMPM amount required in subdivision (b) is paid in more than one capitated increment, as long as the total capitation each month received by the participating FQHC is equivalent to the clinic-specific PMPM.
(d)In cases where a subcontracting payer is involved, the principal health plan shall demonstrate and certify to the department that it has contracts or other arrangements in place that provide for meeting the requirements in subdivision (b) and to the extent that the subcontracting payer fails to comply with the applicable requirements in this article, the principal health plan shall then be responsible to ensure the participating FQHC receives all payments due under this article in a timely manner.
(e)The department shall adjust the amounts in subdivision (b) as necessary to account for any change to the prospective payment system rate for participating FQHCs, including changes resulting from a change in the Medicare Economic Index pursuant to subdivision (d) of Section 14132.100, and any changes in the FQHCs scope of services pursuant to subdivision (e) of Section 14132.100.
(f)An FQHC site participating in the APM pilot project shall not receive traditional wrap-around payments pursuant to Sections 14132.100 and 14087.325 for visits within the APM scope of services it provides to its APM enrollees.
14138.15.(a)A principal health plan shall be compensated by the department for the services provided to its APM enrollees pursuant to this section.
(b)For each principal health plan that contains at least one participating FQHC in its provider network, the department shall determine an APM supplemental capitation amount for each APM aid category to be paid by the department to the principal health plan, which shall be expressed as a PMPM amount. This supplemental capitation amount will be in addition to the funding for the APM scope of services already contained in the principal health plans capitated rates paid by the department and shall be actuarially sound. The department shall determine the APM supplemental capitation amount for each APM aid category, taking into account all of the following factors:
(1)The clinic-specific PMPM amounts for each APM aid category for each participating FQHC in the plans network.
(2)The funding for the APM scope of services already contained in the principal health plans capitated rates.
(3)The historical wrap-around payments paid by the department for participating FQHCs for assigned members in each APM aid category.
(4)As applicable, the likely distribution of members among multiple participating FQHCs.
(c)The principal health plan shall report to the department, in a form to be determined by the department in consultation with the principal health plan, the number of APM enrollees for each APM aid category in the plan each month.
(d)The department shall pay each principal health plan its applicable APM supplemental capitation amount for the number of APM enrollees for each APM aid category reported by the principal health plan pursuant to subdivision (c).
(e)The department, in consultation with the principal health plans, shall develop methods to verify the information reported pursuant to subdivision (c), and may adjust the payments made pursuant to subdivision (d) as appropriate to reflect the verified number of APM enrollees for each APM aid category.
(f)The department shall adjust the amounts in subdivision (b) as necessary to account for any change to the prospective payment system rate for participating FQHCs, including changes resulting from a change in the Medicare Economic Index pursuant to subdivision (d) of Section 14132.100, and any changes in the FQHCs scope of services pursuant to subdivision (e) of Section 14132.100.
14138.16.(a)For the duration of the APM pilot project, the department shall establish a risk corridor structure for the principal health plans relating only to the APM supplemental capitation payments pursuant to Section 14138.15, to the extent consistent with principals of actuarial soundness.
(b)The risk sharing of the costs under this section shall be constructed by the department so that it is symmetrical with respect to risk and profit, and so that all of the following apply:
(1)The principal health plan is fully responsible for all costs in excess of the APM supplemental capitation amounts up to one-half of one percent.
(2)The principal health plan shall fully retain the revenues paid through the APM supplemental capitation amounts in excess of the costs incurred up to one-half of 1 percent below the APM supplemental capitation amounts.
(3)The principal health plan and the department shall share equally in the responsibility for costs in excess of the APM supplemental capitation amounts that are greater than one-half of 1 percent but less than 1 percent above the APM supplemental capitation amounts.
(4)The principal health plan and the department shall share equally the benefit of the revenues paid through the APM supplemental capitation amounts in excess of the costs incurred that are greater than one-half of 1 percent but less than 1 percent below the APM supplemental capitation amounts.
(5)The department shall be fully responsible for all costs in excess of the APM supplemental capitation amounts that are more than 1 percent above the APM supplemental capitation amounts.
(6)The department shall fully retain the revenues paid through the APM supplemental capitation amounts in excess of the costs incurred greater than 1 percent below the supplemental capitation amounts.
(c)The department shall develop specific contract language to implement the requirements of this section that shall be incorporated into the contracts of each affected principal health plan.
(d)This section shall be implemented only to the extent that any necessary federal approvals or waivers are obtained.
14138.17.(a)In order to ensure participating FQHCs have an incentive to manage visits and costs, while at the same time exercising a reasonable amount of flexibility to deliver care in the most efficient and quality driven manner, during for the duration of the APM pilot project the department shall, in accordance with this subdivision, establish a rate payment adjustment structure. The rate payment adjustment structure shall be developed with stakeholder input and shall meet the requirements of Section 1396a(bb)(6)(B) 1396a(bb)(6) of Title 42 of the United States Code.
(b)The rate payment adjustment structure shall be applicable on a site-specific basis.
(c)The rate payment adjustment structure shall permit an aggregate adjustment to the wrap-cap payments received when actual utilization of services for a participating FQHCs site exceeds or falls below expectations that were reflected within the calculation of the rates developed pursuant to Sections 14138.14 and 14138.15. For purposes of this rate payment adjustment structure, both actual and expected utilization shall be expressed as the total number of visits traditional encounters that would be recognized pursuant to subdivision (g) of Section 14132.100 for the APM enrollees of the participating FQHCs site across all APM aid categories and averaged on a per member per year basis.
(d)An adjustment pursuant to this section shall occur no more than once per year per participating FQHCs site during the three years of the APM pilot project and shall be subject to approval by the department.
(1)An adjustment to the wrap-cap payments in the case of higher than expected utilization shall be triggered when utilization exceeds projections by more than 5 percent for the first year, 71/2 percent for the second year, and 10 percent for the third year. If the trigger level is reached, the affected FQHCs reached in a given year, the participating FQHC site shall receive an aggregate payment adjustment from the principal health plan or applicable subcontracting payer that is based upon the difference between its actual utilization for the year and 105 percent of projected utilization for the first year, the difference between actual utilization and 1071/2 percent of projected utilization for the second year, and the difference between actual utilization and 110 percent of projected utilization for the third year. The payment adjustment in each instance shall be calculated as follows:
(A)The difference in the applicable utilization levels shall be multiplied by the per-visit rate that was determined pursuant to Section 14132.100 for the participating FQHCs site.
(B)The total number of member months for the APM enrollees of the participating FQHCs site for the year shall be divided by 12.
(C)The amount in subparagraph (A) shall be multiplied by the amount in subparagraph (B), yielding the aggregate wrap-cap payment adjustment for the participating FQHCs site. The rate adjustment shall be paid to the participating FQHC site by the principal health plan, or secondary payer as applicable, in one aggregate payment.
(2)(A)To incentivize care delivery in ways that may vary from traditional delivery of care, participating FQHCs shall have the flexibility to experience a lower than expected visit utilization of up to 30 percent of projected utilization. If an FQHC sites actual utilization is at a level that is more than 30 percent lower than the projected utilization, the principal health plan, or secondary payer as applicable, shall review the FQHC sites relevant data to identify the cause or causes of the difference. If the principal health plan or secondary payer determines that the lower than expected utilization was due to factors unrelated to delivery system transformation and enhancements, it may require the FQHCs site to refund a portion of the wrap-cap payments.
(B)The total amount refunded by the participating FQHCs site to the principal health plan or secondary payer shall be limited to an amount calculated as follows:
(i)The difference between the participating FQHC sites actual utilization and 70 percent of the projected utilization shall be multiplied by the sites per-visit rate that was determined pursuant to Section 14132.100.
(ii)The total number of member months for the APM enrollees of the participating FQHCs site for the year shall be divided by 12.
(iii)The amount in clause (i) shall be multiplied by the amount in clause (ii), yielding the maximum amount of the refund to be made by the participating FQHCs site. The refund shall be paid in one aggregate payment.
(A)The actual total utilization, expressed as traditional encounters, for the applicable year shall be determined.
(B)The projected total utilization contained in the clinic-specific PMPMs for the actual APM enrollees for the applicable year shall be determined.
(C)The amount in subparagraph (B) shall be adjusted to reflect the applicable comparison utilization for the year as follows:
(i)Multiplied by 1.05 for year one.
(ii)Multiplied by 1.075 for year two.
(ii)Multiplied by 1.1 for year three.
(D)The amount in subparagraph (C) shall be subtracted from the amount in subparagraph (A).
(E)The amount in subparagraph (D) shall be multiplied by the per-visit rate that was determined pursuant to Section 14132.100 for the participating FQHC yielding the payment adjustment for the participating FQHC site. The payment adjustment shall be paid to the participating FQHC site by the principal health plan, or subcontracting payer, as applicable, in one aggregate payment.
(2)(A)To incentivize care delivery in ways that may vary from traditional delivery of care, participating FQHCs shall have the flexibility to experience a lower than expected visit utilization of up to 30 percent of projected utilization. If an FQHC sites actual utilization is at a level that is more than 30 percent lower than the projected utilization, the department shall review, in consultation with the principal health plan, or subcontracting payer, as applicable, the FQHC sites relevant data to identify the cause or causes of the difference, including, but not limited to, its volume of alternative encounters. If the department is able to determine that all or part of the lower than expected utilization was due to objective factors developed by the department in consultation with the principal health plans and FQHCs that are related to delivery system transformation and enhancements, such as alternative encounters, the department shall allow the participating FQHC site to retain all or a portion of the payments attributable to the utilization decrease that exceeds 30 percent lower than the projected utilization. If the department is unable to determine that all or a portion of the utilization decrease in excess of 30 percent was related to delivery system transformation and enhancements according to the objective criteria developed pursuant to this subparagraph, the participating FQHC site shall be required to refund the applicable payment amount to the participating health plan or subcontracting payer pursuant to subparagraph (B).
(B)The total amount refunded by the participating FQHCs site to the principal health plan or subcontracting payer shall be limited to an amount calculated as follows:
(i)The actual total utilization, expressed as traditional encounters, for the applicable year shall be determined.
(ii)The projected total utilization contained in the clinic-specific PMPMs for the actual APM enrollees for the applicable year shall be determined and multiplied by 70 percent.
(iii)The amount in clause (i) shall be subtracted from the amount in clause (ii).
(iv)The amount in clause (i) shall be multiplied by the participating FQHC sites per visit rate that was determined pursuant to Section 14132.100, yielding the maximum amount of the refund to be made by the participating FQHC site. The refund shall be paid in one aggregate payment.
(C)Any adjustment made pursuant to this paragraph shall be requested by a principal health plan, secondary subcontracting payer, or FQHC, no later than 90 days after the last day of the fiscal year for which the adjustment is sought. that determination by the department pursuant to subparagraph (A).
14138.18.The department, in consultation with FQHCs and principal health plans interested in participating in the APM pilot project, may modify the adjustment process or methodology specified in Sections 14138.14, 14138.15, 14138.16, and 14138.17 to the extent necessary to comply with federal law and obtain federal approval of necessary amendments to the Medi-Cal state plan.
14138.19.A participating FQHC or principal health plan or the department may request an APM enrollee true-up to assure the total amount of the APM supplemental capitation or wrap-cap payments, as applicable, are adjusted to accurately reflect the number of applicable APM enrollees.
14138.18.(a)The department, in consultation with interested FQHCs and principal health plans, may modify any methodology or process specified in this article to the extent necessary to comply with federal law or to obtain any necessary federal approvals.
(b)This article shall be implemented only to the extent that federal financial participation is available and any necessary federal approvals have been obtained.
(c)In the event of a conflict between a provision in this article and the terms of a federally approved APM, the terms of the federally approved APM shall control.
14138.19.In the event of an epidemic, or similar catastrophic occurrence that the department determines is likely to result in at least a 40 percent increase in actual utilization per member per month within the APM scope of services for one or more APM aid categories at a participating FQHC site, the department may adjust, or require the adjustment of, payments made pursuant to this article as it deems necessary to account for the utilization increase at the affected participating FQHC site.
14138.20.(a)(1)Within six months of the conclusion of pilot project, an evaluation shall be completed by an independent entity. This independent entity shall report its findings to the department and the Legislature. The evaluation shall be contingent on the availability of nonstate General Fund moneys for this purpose. purpose, and the availability of private foundation or nonprofit foundation money for this purpose.
(2)A report submitted pursuant to this subdivision shall be submitted in compliance with Section 9795 of the Government Code.
(b)The evaluation shall assess whether the APM pilot project produced improvements in access to primary care services, care quality, patient experience, and overall health outcomes for APM enrollees. The evaluation shall include existing FQHC required quality metrics and an assessment of how the changes in financing allowed for alternative types of primary care visits and alternative touches encounters between the participating FQHC and the patient. patient and how those changes affected volume of same-day visits for mental and physical health conditions. The evaluation shall also assess whether the APM pilot projects efforts to improve primary care resulted in changes to patient service utilization patterns, including the reduced utilization of avoidable high-cost services. services and services provided outside the FQHC.
14138.21.Notwithstanding Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, the department may implement, interpret, or make specific this article by means of all-county letters, plan letters, plan or provider bulletins, or similar instructions, without taking regulatory action.
14138.22.For purposes of implementing this article, the department may enter into exclusive or nonexclusive contracts on a bid or negotiated basis, including contracts for the purpose of obtaining subject matter expertise or other technical assistance. Any contract entered into or amended pursuant to this section shall be exempt from Part 2 (commencing with Section 10100) of Division 2 of the Public Contract Code and Chapter 6 (commencing with Section 14825) of Part 5.5 of Division 3 of the Government Code, and shall be exempt from the review or approval of any division of the Department of General Services.
For purposes of this article, the following definitions apply:
(a)Alternative payment methodology (APM) has the same meaning as specified in Section 1396a(bb)(6) of Title 42 of the United States Code.
(b)APM aid category means a Medi-Cal category of aid designated by the department. For all its APM enrollees in an APM aid category, a participating FQHC site shall receive compensation as described under the APM pilot project. The APM aid categories may include, but are not limited to, all of the following categories of aid:
(1)Adults.
(2)Children.
(3)Seniors and persons with disabilities.
(4)The adult expansion population eligible pursuant to Section 14005.60.
(c)APM enrollee means a member who is assigned by a principal health plan or secondary payer to a participating FQHC for primary care services and who is within one of the designated APM aid categories.
(d)APM enrollee true-up means the process by which payments are adjusted to reflect changes in the number of APM enrollees, by APM aid category, for participating FQHCs.
(e)APM pilot project means the pilot project authorized by this article.
(f)APM scope of services means the scope of services for a participating FQHC for which its per-visit rate was determined pursuant to Section 14132.100.
(g)APM supplemental capitation means an additional, APM aid category-specific, PMPM amount that is paid by the department to a principal health plan having one or more participating FQHCs in its provider network.
(h)Base payment means the amount that would have been paid, in the absence of the APM pilot project, amount paid by a principal health plan and any secondary payer, as applicable, to an FQHC for patient services in the APM scope of services with respect to APM enrollees of the FQHC pursuant to its contract, exclusive of any incentive payments. Base payments do not include traditional wrap-around payments or wrap-cap payment amounts.
(i)FQHC means any community or public federally qualified health center, as defined in Section 1396d(l)(2)(B) of Title 42 of the United States Code and providing services as defined in Section 1396d(a)(2)(C) of Title 42 of the United States Code.
(j)Member means a Medi-Cal beneficiary who is enrolled with a principal health plan or secondary payer.
(k)Participating FQHC means a FQHC participating in the APM pilot project at one or more of the FQHCs sites.
(l)PMPM and per member per month both mean a monthly payment made for providing or arranging health care services for a member and may refer to a payment by the department to a principal health plan, or by a principal health plan to a secondary payer, or by a principal health plan or secondary payer to an FQHC, or from and to other entities as specified in this article.
(m)Principal health plan means an organization or entity that enters into a contract with the department pursuant to Article 2.7 (commencing with Section 14087.3), Article 2.8 (commencing with Section 14087.5), Article 2.81 (commencing with Section 14087.96), Article 2.82 (commencing with Section 14087.98), Article 2.91 (commencing with Section 14089), or Chapter 8 (commencing with Section 14200), to provide or arrange for the care of Medi-Cal beneficiaries within a county in which the APM pilot project is implemented.
(n)Secondary payer means an organization or entity that subcontracts with a principal health plan to provide or arrange for the care of its members and contains one or more participating FQHCs in its provider network.
(o)Traditional wrap-around payment means the supplemental payments payable to an FQHC in the absence of the APM pilot project with respect to services provided to Medi-Cal managed care enrollees, which are made by the department pursuant to subdivision (e) of Section 14087.325 and subdivision (h) of Section 14132.100.
(p)Wrap-cap means a prospective PMPM amount that is determined by APM aid category for each participating FQHC site, and is paid monthly by a principal health plan or secondary payer to the participating FQHC with respect to its APM enrollees in each APM aid category in lieu of a traditional wraparound payment.
14138.10.The Legislature finds and declares all of the following:
(a)The federal Affordable Care Act has made and continues to make significant progress in driving health care delivery system reforms that emphasize health outcomes, efficiency, patient satisfaction and value.
(b)California has expanded Medi-Cal to cover more than 12 million residents, roughly one-third of the states population. To meet the needs of the states growing patient population, California must continue to explore new strategies to expand access to high quality and cost-effective primary care services.
(c)With such a large portion of the states population receiving health care services through Medi-Cal, it is imperative that patient-centered innovations drive Medi-Cal reforms.
(d)Health care today is more than a face-to-face visit with a provider, but rather a whole-person approach, often including a physician, a care team of other health care providers, technology inside and outside of a health center, and wellness activities including nutrition and exercise classes, all of which are designed to be more easily incorporated into a patients daily life.
(e)Accessible health care in a manner that fits a patients needs is important for improving patient satisfaction, building trust, and ultimately improving health outcomes.
(f)In an attempt to invest up front in health care services that can prevent longer term avoidable high-cost services, the Affordable Care Act made a significant investment in FQHCs.
(g)FQHCs are essential community providers, providing high quality, cost-effective comprehensive primary care services to underserved communities.
(h)Today FQHCs face restrictions, however, because the current payment structure reimburses an FQHC only when there is a face-to-face visit with a provider. Current law prohibits payment for a primary care visit and mental health visit on the same day, a restriction that inhibits coordination and efficiency.
(i)A more practical approach financially incentivizes FQHCs to provide the right care at the right time. Restructuring the current visit based, fee-for-service model with a capitated equivalent affords FQHCs the assurance of payment and the flexibility to deliver care in the most appropriate patient-centered manner.
(j)A reformed payment methodology will enable FQHCs to take advantage of alternative touches. Alternative touches, such as same-day mental health services and phone and email consultations, are effective care delivery methods and contribute to a patients overall health and well-being.
14138.11.It is the intent of the Legislature to test an alternative payment methodology for FQHCs, as permitted by federal law, and to design and implement the APM to do all of the following:
(a)Provide patient-centered care delivery options to Californias expansive Medi-Cal population.
(b)Promote cost efficiencies, and improve population health and patient satisfaction.
(c)Improve the capacity of FQHCs to deliver high-quality care to a population growing in numbers and in complexity of needs.
(d)Transition away from a payment system that rewards volume with a flexible alternative that recognizes the value added when Medi-Cal beneficiaries are able to more easily access the care they need and when providers are able to deliver care in the most appropriate manner to patients.
(e)Track alternative touches at FQHCs in order to establish a data set from which alternative touches may be assigned a value that can be used in future ratesetting.
(f)Implement the APM where the FQHC receives at least the same amount of funding it would receive under the current payment system, and in a manner that does not disrupt patient care or threaten FQHC viability.
14138.12.(a)The department shall authorize a three-year payment reform pilot project for FQHCs using an APM in accordance with this article. Implementation of the APM pilot project shall begin no sooner than July 1, 2016, subject to federal approval.
(b)The APM pilot project shall comply with federal APM requirements and the department shall file a state plan amendment as necessary for the implementation of this article.
(c)Nothing in this article shall be construed to limit or eliminate services provided by FQHCs as covered benefits in the Medi-Cal program.
14138.13.(a)To implement this article, the department shall notify every FQHC of the APM pilot project and shall invite any interested FQHC to notify the department that the FQHC agrees to participate with respect to one or more of the FQHCs sites. Consistent with federal law, the state plan amendment described in subdivision (b) of Section 14138.12 shall specify that the department and participating FQHCs agree to the APM.
(b)The APM shall be applied only with respect to a participating FQHC for services the FQHC provides to its APM enrollees that are within its APM scope of services.
(c)Payment to the participating FQHC shall continue to be governed by the provisions of Sections 14132.100 and 14087.325 for services provided with respect to both of the following categories of patients:
(1)A Medi-Cal beneficiary who receives services from any FQHC to which the beneficiary is not assigned for primary care services under the APM pilot project by a principal health plan or secondary payer.
(2)A person who is a Medi-Cal beneficiary, but who is not a Medi-Cal beneficiary within a designated APM aid category.
(d)(1)A participating FQHC, with respect to one or more sites of its choosing, may opt to discontinue its participation in the pilot project subject to a notice requirement of no less than 30 days and no greater than 45 days, as established by the department.
(2)A principal health plan may opt to discontinue its participation in the pilot project, subject to a notice requirement of no less than 30 days and no greater than 45 days, as established by the department, if subdivision (f) of Section 14138.14 is amended at any time while the pilot project is in effect. The department shall place a provision in a plans contract giving the plan the ability to discontinue its participation in the APM pilot project pursuant to this paragraph.
14138.14.(a)A participating FQHC shall be compensated for the APM scope of services provided to its APM enrollees pursuant to this section.
(b)(1)A participating FQHC shall, in addition to its base payment, and any applicable incentive payment, receive a PMPM wrap-cap payment for each of its APM enrollees as described in subdivision (d) (c). The department shall determine the wrap-cap amount specific to each participating FQHC, and for each APM aid category. For this purpose, the department shall, in consultation with each participating FQHC and health plan, use the best available data for a recent agreed-upon time period that reflects the audit and reconciliation payment adjustments for the participating FQHC, which may be composite data from different or multiple periods. The determinations shall, at a minimum, take into account the following factors:
(A)An estimation of the amount of traditional wrap-around payments that would have been paid to the participating FQHC with respect to APM enrollees for the APM scope of services in the absence of the APM pilot project. For each APM aid category, the estimation shall be no less than the participating FQHCs historical utilization for assigned members for a 12-month period reflected in the data being used, multiplied by its prospective payment system rate, as determined pursuant to Section 14132.100, less any payments for the APM scope of services, exclusive of incentive payments, that were received from principal health plans and any secondary payers for the relevant period for assigned members, and shall be calculated on a PMPM basis.
(B)An estimation of service utilization for each APM aid category in the absence of the APM pilot project, including estimates of the utilization of services to be provided, and utilization and types of services not previously provided, reflected or identifiable in the prior period data.
(2)The wrap-cap payments shall not be decreased for the first three years of the APM pilot project, unless agreed to by the department and the applicable participating FQHC.
(c)(1)For each principal health plan that contains at least one participating FQHC in its provider network, the department shall determine an APM supplemental capitation amount for each APM aid category to be paid by the department to the principal health plan, which shall be expressed as a PMPM amount. The APM supplemental capitation amount shall be a weighted average of the aggregate wrap-cap amounts determined in subdivision (b), that at a minimum takes into account an estimation of the distribution of APM enrollees among the participating FQHCs for each APM aid category.
(2)The APM supplemental capitation amounts shall not be decreased for the first three years of the APM pilot project, unless agreed to by the department and the principal health plan.
(d)
(c)Notwithstanding any other law, each principal health plan shall pay a participating FQHC that is in the plan provider network the wrap-cap amounts determined in subdivision (b) for each APM enrollee of that FQHC, or, in cases where a secondary payer is involved, provide the necessary amounts to the secondary payer and require that secondary payer to make the required wrap-cap payments to the FQHC. The principal health plan, secondary payer, as applicable, and the participating FQHC may choose the manner in which the wrap-cap payments are made, provided the resulting payment is equal to the full amount of the wrap-cap payments to which the participating FQHC is entitled, taking into account, among others, changes in the number of APM enrollees within the APM aid categories. In cases where a secondary payer is involved, the principal health plan shall demonstrate and certify to the department that it has contracts or other arrangements in place that provide for meeting the requirements herein and to the extent that the secondary payer fails to comply with the applicable requirements in this article, the principal health plan shall then be responsible to ensure the participating FQHC receives all payments due under this article in a timely manner.
(e)
(d)The department shall adjust the amounts in subdivisions subdivision (b) and (c) at least annually for any change to the prospective payment system rate for participating FQHCs, including changes resulting from a change in the Medicare Economic Index pursuant to subdivision (d) of Section 14132.100, and any changes in the FQHCs scope of services pursuant to subdivision (e) of Section 14132.100.
(f)During the duration of the APM pilot project, the department shall establish a risk corridor structure for the principal health plans relating to the payment requirement of subdivision (d), designed within the following parameters:
(1)(A)The principal health plan is fully responsible for the total aggregate costs of the wrap-cap payments for all APM aid categories to participating FQHCs in its network in excess of the total aggregate APM supplemental capitation amount for all APM aid categories up to one half of one percent.
(B)The principal health plan shall fully retain the aggregate APM supplemental capitation amount in excess of the total aggregate costs of the wrap-cap payments for all APM aid categories incurred up to one half of one percent.
(2)(A)The principal health plan and the department shall share responsibility for the total aggregate costs of the wrap-cap payments for all APM aid categories to participating FQHCs in the principal health plans network that are between one half of one percent above and up to one percent above the total aggregate APM supplemental capitation amount for all APM aid categories.
(B)The principal health plan and the department shall share the benefit of the aggregate APM supplemental capitation amount in excess of the total aggregate costs of the wrap-cap payments for all APM aid categories incurred that are between one half of one percent and up to one percent below the total aggregate APM supplemental capitation amount.
(3)(A)The department shall be fully responsible for the total aggregate costs of the wrap-cap payments for all APM aid categories to participating FQHCs in the principal health plans network that are more than one percent in excess of the principal health plans total aggregate APM supplemental capitation amount for all APM aid categories.
(B)The department shall fully retain the aggregate APM supplemental capitation amount in excess of the total aggregate costs of the wrap-cap payments for all APM aid categories to participating FQHCs in the principal health plans network that are greater than one percent below the total aggregate APM supplemental capitation amount.
(g)In order to ensure participating FQHCs have an incentive to manage visits and costs, while at the same time exercising a reasonable amount of flexibility to deliver care in the most efficient and quality driven manner, during the duration of the APM pilot project the department shall, in accordance with this subdivision, establish a rate adjustment structure. The rate adjustment structure shall be developed with stakeholder input and shall meet the requirements of Section 1396a(bb)(6)(B) of title 42 of the United States Code.
(1)The rate adjustment structure shall be applicable on a site-specific basis.
(2)The rate adjustment structure shall permit an aggregate adjustment to the wrap-cap when actual utilization of services for a participating FQHCs site exceeds or falls below expectations that were reflected within the calculation of the rates developed pursuant to subdivisions (b), (c), and (d). For purposes of this rate adjustment structure, both actual and expected utilization shall be expressed as the total number of visits that would be recognized pursuant to subdivision (g) of Section 14132.100 for the APM enrollees of the participating FQHCs site across all APM aid categories and averaged on a per member per year basis.
(3)An adjustment pursuant to this subdivision shall occur no more than once per year per participating FQHCs site during the three years of the APM pilot project and shall be subject to approval by the department.
(A)An adjustment to the wrap-cap payments in the case of higher than expected utilization shall be triggered when utilization exceeds projections by more than five percent for the first year, seven and one-half percent for the second year, and ten percent for the third year. If the trigger level is reached, the affected FQHCs site shall receive an aggregate payment adjustment that is based upon the difference between its actual utilization for the year and one hundred five percent of projected utilization for the first year, the difference between actual utilization and one hundred seven and one-half percent of projected utilization for the second year, and the difference between actual utilization and one hundred ten percent of projected utilization for the third year. The payment adjustment in each instance shall be calculated as follows:
(i)The difference in the applicable utilization levels shall be multiplied by the per-visit rate that was determined pursuant to Section 14132.100 for the participating FQHCs site.
(ii)The total number of member months for the APM enrollees of the participating FQHCs site for the year shall be divided by twelve.
(iii)The amount in clause (i) shall be multiplied by the amount in clause (ii), yielding the aggregate wrap-cap payment adjustment for the participating FQHCs site. The rate adjustment shall be paid to the participating FQHC site by the principal health plan, or secondary payer as applicable, in one aggregate payment.
(B)(i)To incentivize care delivery in ways that may vary from traditional delivery of care, participating FQHCs shall have the flexibility to experience a lower than expected visit utilization of up to thirty percent of projected utilization. If an FQHC sites actual utilization is at a level that is more than thirty percent lower than the projected utilization, the principal health plan, or secondary payer as applicable, shall review the FQHC sites relevant data to identify the cause or causes of the difference. If the principal health plan or secondary payer determines that the lower than expected utilization was due to factors unrelated to delivery system transformation and enhancements, it may require the FQHCs site to refund a portion of the wrap-cap payments.
(ii)The total amount refunded by the participating FQHCs site to the principal health plan or secondary payer shall be limited to an amount calculated as follows:
(I)The difference between the participating FQHC sites actual utilization and seventy percent of the projected utilization shall be multiplied by the sites per-visit rate that was determined pursuant to Section 14132.100.
(II)The total number of member months for the APM enrollees of the participating FQHCs site for the year shall be divided by twelve.
(III)The amount in subclause (I) shall be multiplied by the amount in subclause (II), yielding the maximum amount of the refund to be made by the participating FQHCs site. The refund shall be paid in one aggregate payment.
(iii)Any adjustment made pursuant to this subparagraph shall be requested by a principal health plan, secondary payer, or FQHC, no later than 90 days after the last day of the fiscal year for which the adjustment is sought.
(4)The department, in consultation with FQHCs and principal health plans interested in participating in the APM pilot project, may modify the adjustment process or methodology specified in this section to the extent necessary to comply with federal law and obtain federal approval of necessary amendments to the Medi-Cal state plan.
(h)The total APM supplemental capitation amounts paid to principal health plans shall be adjusted by the department as necessary to take into account adjustments to the number of APM enrollees by APM aid category no later than the 10th day of each month.
(i)A participating FQHC or principal health plan or the department may request an APM enrollee true-up to assure the total amount of the APM supplemental capitation or wrap-cap payments, as applicable, are adjusted to accurately reflect the number of applicable APM enrollees.
(j)
(e)An FQHC site participating in the APM pilot project shall not receive traditional wrap-around payments pursuant to Sections 14132.100 and 14087.325 for visits within the APM scope of services it provides to its APM enrollees.
14138.15.(a)A principal health plan shall be compensated by the department for the services provided to its APM enrollees pursuant to this section.
(b)(1)For each principal health plan that contains at least one participating FQHC in its provider network, the department shall determine an APM supplemental capitation amount for each APM aid category to be paid by the department to the principal health plan, which shall be expressed as a PMPM amount. The APM supplemental capitation amount shall be a weighted average of the aggregate wrap-cap amounts determined in subdivision (b) of Section 14138.14, that at a minimum takes into account an estimation of the distribution of APM enrollees among the participating FQHCs for each APM aid category.
(2)The APM supplemental capitation amounts shall not be decreased for the first three years of the APM pilot project, unless agreed to by the department and the principal health plan.
(c)The total APM supplemental capitation amounts paid to principal health plans shall be adjusted by the department as necessary to take into account adjustments to the number of APM enrollees by APM aid category no later than the 10th day of each month.
(d)The department shall adjust the amounts in subdivision (b) at least annually for any change to the prospective payment system rate for participating FQHCs, including changes resulting from a change in the Medicare Economic Index pursuant to subdivision (d) of Section 14132.100, and any changes in the FQHCs scope of services pursuant to subdivision (e) of Section 14132.100.
14138.16.During the duration of the APM pilot project, the department shall establish a risk corridor structure for the principal health plans relating to the payment requirement of Section 14138.15, designed within the following parameters:
(a)(1)The principal health plan is fully responsible for the total aggregate costs of the wrap-cap payments for all APM aid categories to participating FQHCs in its network in excess of the total aggregate APM supplemental capitation amount for all APM aid categories up to one-half of 1 percent.
(2)The principal health plan shall fully retain the aggregate APM supplemental capitation amount in excess of the total aggregate costs of the wrap-cap payments for all APM aid categories incurred up to one-half of 1 percent.
(b)(1)The principal health plan and the department shall share responsibility for the total aggregate costs of the wrap-cap payments for all APM aid categories to participating FQHCs in the principal health plans network that are between one-half of 1 percent above and up to one percent above the total aggregate APM supplemental capitation amount for all APM aid categories.
(2)The principal health plan and the department shall share the benefit of the aggregate APM supplemental capitation amount in excess of the total aggregate costs of the wrap-cap payments for all APM aid categories incurred that are between one-half of 1 percent and up to one percent below the total aggregate APM supplemental capitation amount.
(c)(1)The department shall be fully responsible for the total aggregate costs of the wrap-cap payments for all APM aid categories to participating FQHCs in the principal health plans network that are more than one percent in excess of the principal health plans total aggregate APM supplemental capitation amount for all APM aid categories.
(2)The department shall fully retain the aggregate APM supplemental capitation amount in excess of the total aggregate costs of the wrap-cap payments for all APM aid categories to participating FQHCs in the principal health plans network that are greater than one percent below the total aggregate APM supplemental capitation amount.
14138.17.(a)In order to ensure participating FQHCs have an incentive to manage visits and costs, while at the same time exercising a reasonable amount of flexibility to deliver care in the most efficient and quality driven manner, during the duration of the APM pilot project the department shall, in accordance with this subdivision, establish a rate adjustment structure. The rate adjustment structure shall be developed with stakeholder input and shall meet the requirements of Section 1396a(bb)(6)(B) of Title 42 of the United States Code.
(b)The rate adjustment structure shall be applicable on a site-specific basis.
(c)The rate adjustment structure shall permit an aggregate adjustment to the wrap-cap when actual utilization of services for a participating FQHCs site exceeds or falls below expectations that were reflected within the calculation of the rates developed pursuant to Sections 14138.14 and 14138.15. For purposes of this rate adjustment structure, both actual and expected utilization shall be expressed as the total number of visits that would be recognized pursuant to subdivision (g) of Section 14132.100 for the APM enrollees of the participating FQHCs site across all APM aid categories and averaged on a per member per year basis.
(d)An adjustment pursuant to this section shall occur no more than once per year per participating FQHCs site during the three years of the APM pilot project and shall be subject to approval by the department.
(1)An adjustment to the wrap-cap payments in the case of higher than expected utilization shall be triggered when utilization exceeds projections by more than 5 percent for the first year, 71/2 percent for the second year, and 10 percent for the third year. If the trigger level is reached, the affected FQHCs site shall receive an aggregate payment adjustment that is based upon the difference between its actual utilization for the year and 105 percent of projected utilization for the first year, the difference between actual utilization and 1071/2 percent of projected utilization for the second year, and the difference between actual utilization and 110 percent of projected utilization for the third year. The payment adjustment in each instance shall be calculated as follows:
(A)The difference in the applicable utilization levels shall be multiplied by the per-visit rate that was determined pursuant to Section 14132.100 for the participating FQHCs site.
(B)The total number of member months for the APM enrollees of the participating FQHCs site for the year shall be divided by 12.
(C)The amount in subparagraph (A) shall be multiplied by the amount in subparagraph (B), yielding the aggregate wrap-cap payment adjustment for the participating FQHCs site. The rate adjustment shall be paid to the participating FQHC site by the principal health plan, or secondary payer as applicable, in one aggregate payment.
(2)(A)To incentivize care delivery in ways that may vary from traditional delivery of care, participating FQHCs shall have the flexibility to experience a lower than expected visit utilization of up to 30 percent of projected utilization. If an FQHC sites actual utilization is at a level that is more than 30 percent lower than the projected utilization, the principal health plan, or secondary payer as applicable, shall review the FQHC sites relevant data to identify the cause or causes of the difference. If the principal health plan or secondary payer determines that the lower than expected utilization was due to factors unrelated to delivery system transformation and enhancements, it may require the FQHCs site to refund a portion of the wrap-cap payments.
(B)The total amount refunded by the participating FQHCs site to the principal health plan or secondary payer shall be limited to an amount calculated as follows:
(i)The difference between the participating FQHC sites actual utilization and 70 percent of the projected utilization shall be multiplied by the sites per-visit rate that was determined pursuant to Section 14132.100.
(ii)The total number of member months for the APM enrollees of the participating FQHCs site for the year shall be divided by 12.
(iii)The amount in clause (i) shall be multiplied by the amount in clause (ii), yielding the maximum amount of the refund to be made by the participating FQHCs site. The refund shall be paid in one aggregate payment.
(C)Any adjustment made pursuant to this paragraph shall be requested by a principal health plan, secondary payer, or FQHC, no later than 90 days after the last day of the fiscal year for which the adjustment is sought.
14138.18.The department, in consultation with FQHCs and principal health plans interested in participating in the APM pilot project, may modify the adjustment process or methodology specified in Sections 14138.14, 14138.15, 14138.16, and 14138.17 to the extent necessary to comply with federal law and obtain federal approval of necessary amendments to the Medi-Cal state plan.
14138.19.A participating FQHC or principal health plan or the department may request an APM enrollee true-up to assure the total amount of the APM supplemental capitation or wrap-cap payments, as applicable, are adjusted to accurately reflect the number of applicable APM enrollees.
14138.15.14138.20.(a)(1)Within six months of the conclusion of pilot project, an evaluation shall be completed by an independent entity. This independent entity shall report its findings to the department and the Legislature. The evaluation shall be contingent on the availability of nonstate General Fund moneys for this purpose.
(2)A report submitted pursuant to this subdivision shall be submitted in compliance with Section 9795 of the Government Code.
(b)The evaluation shall assess whether the APM pilot project produced improvements in access to primary care services, care quality, patient experience, and overall health outcomes for APM enrollees. The evaluation shall include existing FQHC required quality metrics and an assessment of how the changes in financing allowed for alternative types of primary care visits and alternative touches between the participating FQHC and the patient. The evaluation shall also assess whether the APM pilot projects efforts to improve primary care resulted in changes to patient service utilization patterns, including the reduced utilization of avoidable high-cost services.
For purposes of this article, the following definitions apply:
(a)Alternative payment methodology (APM) has the same meaning as specified in Section 1396a(bb)(6) of Title 42 of the United States Code.
(b)APM aid category means a Medi-Cal category of aid designated by the department. For all its APM enrollees in an APM aid category, a participating FQHC site shall receive compensation as described under the APM pilot project. The APM aid categories may include, but are not limited to, all of the following categories of aid:
(1)Adults.
(2)Children.
(3)Seniors and persons with disabilities.
(4)The adult expansion population eligible pursuant to Section 14005.60.
(c)APM enrollee means a member who is assigned by a principal health plan or secondary payer to a participating FQHC for primary care services and who is within one of the designated APM aid categories.
(d)APM enrollee true-up means the process by which payments are adjusted to reflect changes in the number of APM enrollees, by APM aid category, for participating FQHCs.
(e)APM pilot project means the pilot project authorized by this article.
(f)APM scope of services means the scope of services for a participating FQHC for which its per-visit rate was determined pursuant to Section 14132.100.
(g)APM supplemental capitation means an additional, APM aid category-specific, PMPM amount that is paid by the department to a principal health plan having one or more participating FQHCs in its provider network.
(h)Base payment means the amount that would have been paid, in the absence of the APM pilot project, by a principal health plan and any secondary payer, as applicable, to an FQHC for patient services in the APM scope of services with respect to APM enrollees of the FQHC pursuant to its contract, exclusive of any incentive payments.
(i)FQHC means any community or public federally qualified health center, as defined in Section 1396d(l)(2)(B) of Title 42 of the United States Code and providing services as defined in Section 1396d(a)(2)(C) of Title 42 of the United States Code.
(j)Member means a Medi-Cal beneficiary who is enrolled with a principal health plan or secondary payer.
(k)Participating FQHC means a FQHC participating in the APM pilot project at one or more of the FQHCs sites.
(l)PMPM and per member per month both mean a monthly payment made for providing or arranging health care services for a member and may refer to a payment by the department to a principal health plan, or by a principal health plan to a secondary payer, or by a principal health plan or secondary payer to an FQHC, or from and to other entities as specified in this article.
(m)Principal health plan means an organization or entity that enters into a contract with the department pursuant to Article 2.7 (commencing with Section 14087.3), Article 2.8 (commencing with Section 14087.5), Article 2.81 (commencing with Section 14087.96), Article 2.82 (commencing with Section 14087.98), Article 2.91 (commencing with Section 14089), or Chapter 8 (commencing with Section 14200), to provide or arrange for the care of Medi-Cal beneficiaries within a county in which the APM pilot project is implemented.
(n)Secondary payer means an organization or entity that subcontracts with a principal health plan to provide or arrange for the care of its members and contains one or more participating FQHCs in its provider network.
(o)Traditional wrap-around payment means the supplemental payments payable to an FQHC in the absence of the APM pilot project with respect to services provided to Medi-Cal managed care enrollees, which are made by the department pursuant to subdivision (e) of Section 14087.325 and subdivision (h) of Section 14132.100.
(p)Wrap-cap means a prospective PMPM amount that is determined by APM aid category for each participating FQHC site, and is paid monthly by a principal health plan or secondary payer to the participating FQHC with respect to its APM enrollees in each APM aid category in lieu of a traditional wraparound payment.
14138.10.The Legislature finds and declares all of the following :
(a)The federal Affordable Care Act has made and continues to make significant progress in driving health care delivery system reforms that emphasize health outcomes, efficiency, patient satisfaction and value.
(b)California has expanded Medi-Cal to cover more than 12 million residents, roughly one-third of the states population. To meet the needs of the states growing patient population, California must continue to explore new strategies to expand access to high quality and cost effective primary care services.
(c)With such a large portion of the states population receiving health care services through Medi-Cal, it is imperative that patient-centered innovations drive Medi-Cal reforms.
(d)Health care today is more than a face to face visit with a provider, but rather a whole-person approach, often including a physician, a care team of other health care providers, technology inside and outside of a health center, and wellness activities including nutrition and exercise classes, all of which are designed to be more easily incorporated into a patients daily life.
(e)Accessible health care in a manner that fits a patients needs is important for improving patient satisfaction, building trust, and ultimately improving health outcomes.
(f)In an attempt to invest up-front in health care services that can prevent longer-term avoidable high cost services, the Affordable Care Act made a significant investment in FQHCs.
(g)FQHCs are essential community providers, providing high quality, cost-effective comprehensive primary care services to underserved communities.
(h)Today FQHCs face restrictions, however, because the current payment structure reimburses an FQHC only when there is a face-to-face visit with a provider. Current law prohibits payment for a primary care visit and mental health visit on the same day, a restriction that inhibits coordination and efficiency.
(i)A more practical approach financially incentivizes FQHCs to provide the right care at the right time. Restructuring the current visit based, fee-for-service model with a capitated equivalent affords FQHCs the assurance of payment and the flexibility to deliver care in the most appropriate patient-centered manner.
(j)A reformed payment methodology will enable FQHCs to take advantage of alternative touches. Alternative touches, such as same-day mental health services and phone and email consultations, are effective care delivery methods and contribute to a patients overall health and well-being.
14138.11.It is the intent of the Legislature to test an alternative payment methodology for FQHCs, as permitted by federal law, and to design and implement the APM to do all of the following:
(a)Provide patient centered care delivery options to Californias expansive Medi-Cal population.
(b)Promote cost efficiencies, and improve population health and patient satisfaction.
(c)Improve the capacity of FQHCs to deliver high quality care to a population growing in numbers and in complexity of needs.
(d)Transition away from a payment system that rewards volume with a flexible alternative that recognizes the value added when Medi-Cal beneficiaries are able to more easily access the care they need and when providers are able to deliver care in the most appropriate manner to patients.
(e)Track alternative touches at FQHCs in order to establish a data set from which alternative touches may be assigned a value that can be used in future rate setting.
(f)Implement the APM where the FQHC receives at least the same amount of funding it would receive under the current payment system, and in a manner that does not disrupt patient care or threaten FQHC viability.
14138.12.(a)The department shall authorize a three-year payment reform pilot project for FQHCs using an APM in accordance with this article. Implementation of the APM pilot project shall begin no sooner than July 1, 2016, subject to federal approval.
(b)The APM pilot project shall comply with federal APM requirements and the department shall file a state plan amendment as necessary for the implementation of this article.
(c)Nothing in this article shall be construed to limit or eliminate services provided by FQHCs as covered benefits in the Medi-Cal program.
14138.13.(a)To implement this article, the department shall notify every FQHC of the APM pilot project and shall invite any interested FQHC to notify the department that the FQHC agrees to participate with respect to one or more of the FQHCs sites. Consistent with federal law, the state plan amendment described in subdivision (b) of Section 14138.12 shall specify that the department and participating FQHCs agree to the APM.
(b)The APM shall be applied only with respect to a participating FQHC for services the FQHC provides to its APM enrollees that are within its APM scope of services.
(c)Payment to the participating FQHC shall continue to be governed by the provisions of Sections 14132.100 and 14087.325 for services provided with respect to both of the following categories of patients:
(1)A beneficiary who receives services from any FQHC to which the beneficiary is not assigned for primary care services under the APM pilot project by a principal health plan or secondary payer.
(2)A person who is not a Medi-Cal beneficiary within a designated APM aid category.
(d)(1)A participating FQHC, with respect to one or more sites of its choosing, may opt to discontinue its participation in the pilot project subject to a notice requirement of no less than 30 days and no greater than 45 days, as established by the department.
(2)A principal health plan may opt to discontinue its participation in the pilot project, subject to a notice requirement of no less than 30 days and no greater than 45 days, as established by the department, if subdivision (f) of Section 14138.14 is amended at any time while the pilot project is in effect. The department shall place a provision in a plan's contract giving the plan the ability to discontinue its participation in the APM pilot project pursuant to this paragraph.
14138.14.(a)A participating FQHC shall be compensated for the APM scope of services provided to its APM enrollees pursuant to this section.
(b)(1)A participating FQHC shall, in addition to its base payment, and any applicable incentive payment, receive a PMPM wrap-cap payment for each of its APM enrollees as described in subdivision (d). The department shall determine the wrap-cap amount specific to each participating FQHC, and for each APM aid category. For this purpose, the department shall, in consultation with each participating FQHC and health plan, use the best available data for a recent agreed-upon time period that reflects the audit and reconciliation payment adjustments for the participating FQHC, which may be composite data from different or multiple periods. The determinations shall, at a minimum, take into account the following factors:
(A)An estimation of the amount of traditional wrap-around payments that would have been paid to the participating FQHC with respect to APM enrollees for the APM scope of services in the absence of the APM pilot project. For each APM aid category, the estimation shall be no less than the participating FQHCs historical utilization for assigned members for a 12 month period reflected in the data being used, multiplied by its prospective payment system rate, as determined pursuant to Section 14132.100, less any payments for the APM scope of services, exclusive of incentive payments, that were received from principal health plans and any secondary payers for the relevant period for assigned members, and shall be calculated on a PMPM basis.
(B)An estimation of service utilization for each APM aid category in the absence of the APM pilot project, including estimates of the utilization of services to be provided, and utilization and types of services not previously provided, reflected or identifiable in the prior period data.
(2)The wrap-cap payments shall not be decreased for the first three years of the APM pilot project, unless agreed to by the department and the applicable participating FQHC.
(c)(1)For each principal health plan that contains at least one participating FQHC in its provider network, the department shall determine an APM supplemental capitation amount for each APM aid category to be paid by the department to the principal health plan, which shall be expressed as a PMPM amount. The APM supplemental capitation amount shall be a weighted average of the aggregate wrap-cap amounts determined in subdivision (b), that at a minimum takes into account an estimation of the distribution of APM enrollees among the participating FQHCs for each APM aid category.
(2)The APM supplemental capitation amounts shall not be decreased for the first three years of the APM pilot project, unless agreed to by the department and the principal health plan.
(d)Notwithstanding any other law, each principal health plan shall pay a participating FQHC that is in the plan provider network the wrap-cap amounts determined in subdivision (b) for each APM enrollee of that FQHC, or, in cases where a secondary payer is involved, provide the necessary amounts to the secondary payer and require that secondary payer to make the required wrap-cap payments to the FQHC. The principal health plan, secondary payer, as applicable, and the participating FQHC may choose the manner in which the wrap-cap payments are made, provided the resulting payment is equal to the full amount of the wrap-cap payments to which the participating FQHC is entitled, taking into account, among others, changes in the number of APM enrollees within the APM aid categories. In cases where a secondary payer is involved, the principal health plan shall demonstrate and certify to the department that it has contracts or other arrangements in place that provide for meeting the requirements herein and to the extent that the secondary payer fails to comply with the applicable requirements in this article, the principal health plan shall then be responsible to ensure the participating FQHC receives all payments due under this article in a timely manner.
(e)The department shall adjust the amounts in subdivisions (b) and (c) at least annually for any change to the prospective payment system rate for participating FQHCs, including changes resulting from a change in the Medicare Economic Index pursuant to subdivision (d) of Section 14132.100, and any changes in the FQHCs scope of services pursuant to subdivision (e) of Section 14132.100.
(f)During the duration of the APM pilot project, the department shall establish a risk corridor structure for the principal health plans relating to the payment requirement of subdivision (d), designed within the following parameters:
(1)(A)The principal health plan is fully responsible for the total aggregate costs of the wrap-cap payments for all APM aid categories to participating FQHCs in its network in excess of the total aggregate APM supplemental capitation amount for all APM aid categories up to one half of one percent.
(B)The principal health plan shall fully retain the aggregate APM supplemental capitation amount in excess of the total aggregate costs of the wrap-cap payments for all APM aid categories incurred up to one half of one percent.
(2)(A)The principal health plan and the department shall share responsibility for the total aggregate costs of the wrap-cap payments for all APM aid categories to participating FQHCs in the principal health plans network that are between one half of one percent above and up to one percent above the total aggregate APM supplemental capitation amount for all APM aid categories.
(B)The principal health plan and the department shall share the benefit of the aggregate APM supplemental capitation amount in excess of the total aggregate costs of the wrap-cap payments for all APM aid categories incurred that are between one half of one percent and up to one percent below the total aggregate APM supplemental capitation amount.
(3)(A)The department shall be fully responsible for the total aggregate costs of the wrap-cap payments for all APM aid categories to participating FQHCs in the principal health plans network that are more than one percent in excess of the principal health plans total aggregate APM supplemental capitation amount for all APM aid categories.
(B)The department shall fully retain the aggregate APM supplemental capitation amount in excess of the total aggregate costs of the wrap-cap payments for all APM aid categories to participating FQHCs in the principal health plans network that are greater than one percent below the total aggregate APM supplemental capitation amount.
(g)In order to ensure participating FQHCs have an incentive to manage visits and costs, while at the same time exercising a reasonable amount of flexibility to deliver care in the most efficient and quality driven manner, during the duration of the APM pilot project the department shall, in accordance with this subdivision, establish a rate adjustment structure. The rate adjustment structure shall be developed with stakeholder input and shall meet the requirements of Section 1396a(bb)(6)(B) of title 42 of the United States Code.
(1)The rate adjustment structure shall be applicable on a site-specific basis.
(2)The rate adjustment structure shall permit an aggregate adjustment to the wrap-cap when actual utilization of services for a participating FQHCs site exceeds or falls below expectations that were reflected within the calculation of the rates developed pursuant to subdivisions (b), (c), and (d). For purposes of this rate adjustment structure, both actual and expected utilization shall be expressed as the total number of visits that would be recognized pursuant to subdivision (g) of Section 14132.100 for the APM enrollees of the participating FQHCs site across all APM aid categories and averaged on a per member per year basis.
(3)An adjustment pursuant to this subdivision shall occur no more than once per year per participating FQHCs site during the three years of the APM pilot project and shall be subject to approval by the department.
(A)An adjustment to the wrap-cap payments in the case of higher than expected utilization shall be triggered when utilization exceeds projections by more than five percent for the first year, seven and one-half percent for the second year, and ten percent for the third year. If the trigger level is reached, the affected FQHCs site shall receive an aggregate payment adjustment that is based upon the difference between its actual utilization for the year and one hundred five percent of projected utilization for the first year, the difference between actual utilization and one hundred seven and one-half percent of projected utilization for the second year, and the difference between actual utilization and one hundred ten percent of projected utilization for the third year. The payment adjustment in each instance shall be calculated as follows:
(i)The difference in the applicable utilization levels shall be multiplied by the per-visit rate that was determined pursuant to Section 14132.100 for the participating FQHCs site.
(ii)The total number of member months for the APM enrollees of the participating FQHCs site for the year shall be divided by twelve.
(iii)The amount in clause (i) shall be multiplied by the amount in clause (ii), yielding the aggregate wrap-cap payment adjustment for the participating FQHCs site. The rate adjustment shall be paid to the participating FQHC site by the principal health plan, or secondary payer as applicable, in one aggregate payment.
(B)(i)To incentivize care delivery in ways that may vary from traditional delivery of care, participating FQHCs shall have the flexibility to experience a lower than expected visit utilization of up to thirty percent of projected utilization. If an FQHC sites actual utilization is at a level that is more than thirty percent lower than the projected utilization, the principal health plan, or secondary payer as applicable, shall review the FQHC sites relevant data to identify the cause or causes of the difference. If the principal health plan or secondary payer determines that the lower than expected utilization was due to factors unrelated to delivery system transformation and enhancements, it may require the FQHCs site to refund a portion of the wrap-cap payments.
(ii)The total amount refunded by the participating FQHCs site to the principal health plan or secondary payer shall be limited to an amount calculated as follows:
(I)The difference between the participating FQHC sites actual utilization and seventy percent of the projected utilization shall be multiplied by the sites per-visit rate that was determined pursuant to Section 14132.100.
(II)The total number of member months for the APM enrollees of the participating FQHCs site for the year shall be divided by twelve.
(III)The amount in subclause (I) shall be multiplied by the amount in subclause (II), yielding the maximum amount of the refund to be made by the participating FQHCs site. The refund shall be paid in one aggregate payment.
(iii)Any adjustment made pursuant to this subparagraph shall be requested by a principal health plan, secondary payer, or FQHC, no later than 90 days after the last day of the fiscal year for which the adjustment is sought.
(4)The department, in consultation with FQHCs and principal health plans interested in participating in the APM pilot project, may modify the adjustment process or methodology specified in this section to the extent necessary to comply with federal law and obtain federal approval of necessary amendments to the Medi-Cal state plan.
(h)The total APM supplemental capitation amounts paid to principal health plans shall be adjusted by the department as necessary to take into account adjustments to the number of APM enrollees by APM aid category no later than the 10th day of each month.
(i)A participating FQHC or principal health plan or the department may request an APM enrollee true-up to assure the total amount of the APM supplemental capitation or wrap-cap payments, as applicable, are adjusted to accurately reflect the number of applicable APM enrollees.
(j)An FQHC site participating in the APM pilot project shall not receive traditional wrap-around payments pursuant to Sections 14132.100 and 14087.325 for visits within the APM scope of services it provides to its APM enrollees.
14138.15.(a)(1)Within six months of the conclusion of pilot project, an evaluation shall be completed by an independent entity. This independent entity shall report its findings to the department and the Legislature. The evaluation shall be contingent on the availability of nonstate General Fund moneys for this purpose.
(2)A report submitted pursuant to this subdivision shall be submitted in compliance with Section 9795 of the Government Code.
(b)The evaluation shall assess whether the APM pilot project produced improvements in access to primary care services, care quality, patient experience, and overall health outcomes for APM enrollees. The evaluation shall include existing FQHC required quality metrics and an assessment of how the changes in financing allowed for alternative types of primary care visits and alternative touches between the participating FQHC and the patient. The evaluation shall also assess whether the APM pilot projects efforts to improve primary care resulted in changes to patient service utilization patterns, including the reduced utilization of avoidable high cost services.
SECTION 1.Section 14132.103 is added to the Welfare and Institutions Code, to read:14132.103.(a)Notwithstanding any other law, the department shall authorize a three-year alternative payment methodology (APM) pilot project for federally qualified health centers (FQHCs) in accordance with this section.
(b)The APM shall be implemented in any county and FQHC willing to participate.
(c)Under the APM pilot project, participating FQHCs shall receive capitated monthly payments for each Medi-Cal managed care enrollee assigned to the FQHC in place of the wrap-around, fee-for-service per-visit payments from the department.
(d)The APM shall include all necessary protections and safeguards, for both the FQHCs and the health plans, to ensure that neither are financially harmed by the implementation of the APM in relation to both rates and number of enrollees assigned.
(e)(1)Within six months after the APM pilot project is completed, an evaluation of the pilot project shall be conducted by an independent entity that takes into consideration payment adequacy, delivery system transformation, and quality measures. The independent entity shall report its findings to the department and the Legislature. An evaluation pursuant to this subdivision shall be completed only if there are nonstate General Fund moneys available for this purpose.
(2)A report submitted pursuant to this subdivision shall be submitted in compliance with Section 9795 of the Government Code.
(f)The department shall seek any federal approvals necessary for the implementation of this section.
(a)Notwithstanding any other law, the department shall authorize a three-year alternative payment methodology (APM) pilot project for federally qualified health centers (FQHCs) in accordance with this section.
(b)The APM shall be implemented in any county and FQHC willing to participate.
(c)Under the APM pilot project, participating FQHCs shall receive capitated monthly payments for each Medi-Cal managed care enrollee assigned to the FQHC in place of the wrap-around, fee-for-service per-visit payments from the department.
(d)The APM shall include all necessary protections and safeguards, for both the FQHCs and the health plans, to ensure that neither are financially harmed by the implementation of the APM in relation to both rates and number of enrollees assigned.
(e)(1)Within six months after the APM pilot project is completed, an evaluation of the pilot project shall be conducted by an independent entity that takes into consideration payment adequacy, delivery system transformation, and quality measures. The independent entity shall report its findings to the department and the Legislature. An evaluation pursuant to this subdivision shall be completed only if there are nonstate General Fund moneys available for this purpose.
(2)A report submitted pursuant to this subdivision shall be submitted in compliance with Section 9795 of the Government Code.
(f)The department shall seek any federal approvals necessary for the implementation of this section.
|
Date
|
Status
|
|---|---|
| Sep 2, 2015 | In Senate. Concurrence in Assembly amendments pending. |
| Jul 7, 2015 | July 7 set for second hearing canceled at the request of author. |
| Jul 8, 2015 | From committee with author's amendments. Read second time and amended. Re-referred to Com. on HEALTH. |
| Jul 15, 2015 | From committee: Do pass and re-refer to Com. on APPR. (Ayes 18. Noes 0.) (July 14). Re-referred to Com. on APPR. |
| Aug 17, 2015 | From committee with author's amendments. Read second time and amended. Re-referred to Com. on APPR. |
| Aug 19, 2015 | August 19 set for first hearing. Placed on APPR. suspense file. |
| Aug 31, 2015 | From committee: Do pass as amended. (Ayes 17. Noes 0.) (August 27). |
| Aug 31, 2015 | Read second time and amended. Ordered to second reading. |
| Sep 1, 2015 | Read second time. Ordered to third reading. |
| Jun 30, 2015 | June 30 set for first hearing canceled at the request of author. |
| Sep 2, 2015 | Read third time. Passed. Ordered to the Senate. |
| Sep 2, 2015 | Read third time. Passed. (Ayes 80. Noes 0. Page 2790.) Ordered to the Senate. |
| Sep 10, 2015 | Assembly amendments concurred in. (Ayes 38. Noes 0.) Ordered to engrossing and enrolling. |
| Sep 10, 2015 | Assembly amendments concurred in. (Ayes 39. Noes 0. Page 2658.) Ordered to engrossing and enrolling. |
| Sep 10, 2015 | Assembly amendments concurred in. (Ayes 39. Noes 0.) Ordered to engrossing and enrolling. |
| Sep 11, 2015 | Enrolled and presented to the Governor at 10:45 p.m. |
| Oct 10, 2015 | Approved by the Governor. |
| Oct 10, 2015 | Chaptered by Secretary of State. Chapter 760, Statutes of 2015. |
| May 23, 2015 | Set for hearing May 28. |
| Jan 29, 2015 | From printer. May be acted upon on or after February 28. |
| Feb 19, 2015 | Referred to Com. on HEALTH. |
| Apr 7, 2015 | From committee with author's amendments. Read second time and amended. Re-referred to Com. on HEALTH. |
| Apr 7, 2015 | Set for hearing April 15. |
| Apr 20, 2015 | From committee: Do pass as amended and re-refer to Com. on APPR. (Ayes 9. Noes 0. Page 650.) (April 15). |
| Apr 21, 2015 | Read second time and amended. Re-referred to Com. on APPR. |
| Apr 24, 2015 | Set for hearing May 4. |
| May 4, 2015 | May 4 hearing: Placed on APPR. suspense file. |
| Jan 28, 2015 | Introduced. Read first time. To Com. on RLS. for assignment. To print. |
| May 28, 2015 | From committee: Do pass. (Ayes 7. Noes 0. Page 1148.) (May 28). |
| May 28, 2015 | From committee: Do pass. (Ayes 7. Noes 0.) (May 28). |
| May 28, 2015 | Read second time. Ordered to third reading. |
| Jun 1, 2015 | Read third time. Passed. (Ayes 40. Noes 0. Page 1197.) Ordered to the Assembly. |
| Jun 1, 2015 | Read third time. Passed. (Ayes 40. Noes 0.) Ordered to the Assembly. |
| Jun 2, 2015 | In Assembly. Read first time. Held at Desk. |
| Jun 11, 2015 | Referred to Com. on HEALTH. |
|
Date
|
Description
|
Location
|
Votes
|
|
|---|---|---|---|---|
| Sep 10, 2015 | Unfinished Business SB147 Hernandez Concurrence | Senate Floor |
Passed |
|
| Sep 2, 2015 | SB 147 Hernandez Senate Third Reading By WOOD | Assembly Floor |
Passed |
|
| Aug 27, 2015 | Do pass as amended. | Assembly Standing Committee on Appropriations |
Passed |
|
| Jul 14, 2015 | Do pass and be re-referred to the Committee on [Appropriations] | Assembly Standing Committee on Health |
Passed |
|
| Jun 1, 2015 | Senate 3rd Reading SB147 Hernandez | Senate Floor |
Passed |
|
| May 28, 2015 | Do pass | Senate Standing Committee on Appropriations |
Passed |
|
| May 4, 2015 | Placed on suspense file | Senate Standing Committee on Appropriations |
Passed |
|
| Apr 15, 2015 | Do pass as amended, but first amend, and re-refer to the Committee on [Appropriations] | Senate Standing Committee on Health |
Passed |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
|
Organization
|
Position
|
Date
|
|---|---|---|
| Altamed Health Services Corporation | ** Support | Jul 14, 2015 |
| American Federation Of State, County, And Municipal Employees, Afl-Cio | ** Support | Jul 14, 2015 |
| Arroyo Vista Family Health Center | ** Support | Jun 1, 2015 |
| Asian Health Services | ** Support | Jul 14, 2015 |
| California Association Of Health Plans | * Support | Jul 14, 2015 |
| California Association Of Physician Groups | ** Support | Jul 14, 2015 |
| California Association Of Public Hospitals And Health Systems | * Support | Jul 14, 2015 |
| California Primary Care Association | * Support | Jul 14, 2015 |
| Central California Alliance For Health | ** Support | Jul 14, 2015 |
| Clinica Monsenor Oscar A. Romero | ** Support | Jun 1, 2015 |
| Clxednica Monsexf1or Oscar A. Romero | ** Support | Jul 14, 2015 |
| Community Clinic Association of Los Angeles County | ** Support | Jul 14, 2015 |
| Council of Community Clinics | ** Support | Jul 14, 2015 |
| Golden Valley Health Centers | ** Support | Jul 14, 2015 |
| L.A. Care Health Plan | * Support | Jul 14, 2015 |
| La Maestra Community Health Centers | ** Support | Jul 14, 2015 |
| Lifelong Medical Care | ** Support | Jul 14, 2015 |
| National Association Of Social Workers, California Chapter | * Support | Jul 14, 2015 |
| Northeast Valley Health Corporation | ** Support | Jul 14, 2015 |
| Saban Community Clinic | ** Support | Jul 14, 2015 |
| St. John's Well Child &Family Center | ** Support | Jul 14, 2015 |
| Tiburcio Vxe1squez Health Center, Inc. | ** Support | Jul 14, 2015 |
SB 147
Page 3
SENATE THIRD READING
SB 147
(Hernandez)
As Amended August 31, 2015
Majority vote
SENATE VOTE: 40-0
Committee |
Votes |
Ayes |
Noes |
Health |
18-0 |
Bonta, Maienschein, Bonilla, Burke, Chávez, Chiu, Gomez, Gonzalez, Roger Hernández, Lackey, Nazarian, Ridley-Thomas, Rodriguez, Santiago, Steinorth, Thurmond, Waldron, Wood |
|
Appropriations |
17-0 |
Gomez, Bigelow, Bloom, Bonta, Calderon, Chang, Nazarian, Eggman, Gallagher, Eduardo Garcia, Holden, Jones, Quirk, Rendon, Wagner, Weber, Wood |
|
SUMMARY: Requires the Department of Health Care Services (DHCS) to authorize a three-year payment reform pilot project for federally qualified health centers (FQHCs). Specifically, this bill:
Requires DHCS to authorize an alternative payment methodology (APM) pilot for participating clinics by no sooner than July 1, 2016, subject to federal approvals. Allows DHCS to limit participation in the pilot, as specified.
Specifies participation in the APM pilot is voluntary for a clinic and mandatory for a health plan that contracts with a clinic.
Describes in detail the fiscal methodology to create a capitated, per member per month payment, in place of a clinic's existing per-visit "prospective payment system" (PPS) rate.
Requires an independent evaluation be conducted, provided foundation funds are available. Also requires DHCS to report regularly to the Legislature on implementation.
Conditions implementation on federal approval, allows DHCS flexibility to modify the program if necessary for federal approval, and allows DHCS to implement through their standards communications, without adopting regulations.
FISCAL EFFECT: According to the Assembly Appropriations Committee:
Likely costs of $450,000 per year for one to two years to develop the pilot project and apply for federal approval of the pilot project (General Fund/federal/potential private funds).
One-time costs of $150,000 to $300,000 to prepare an evaluation of the pilot project (private funds). At least one foundation has expressed an expectation in writing that they will continue to provide financial support to the state for this APM effort, including for an evaluation and technical assistance to clinics.
Although DHCS intends the pilot be cost-neutral, there is the potential for unknown costs or savings for Medi-Cal health care services provided by participating clinics. Because the opportunity for both costs and savings exists, on balance, there is not likely to be a significant net cost to changing the payment methodology for participating clinics.
Implementation of an APM has the potential to change patterns of health care services utilization and health care practice at clinics. This bill outlines "risk corridors" that limit the fiscal risk and benefit for clinics and plans. Certain scenarios may result in the department making additional payments, or retaining additional savings, from what is projected. Since the projected costs based on the APM are supposed to equate to what the department would pay using traditional per-visit methodology, differences from this projection mean additional costs or savings as compared to the status quo. It is difficult or impossible to quantify these effects. Over the long term, it is hopeful that the new methodology would result in either cost savings from increased efficiency, or, more likely based on how clinic's rates are currently constructed, a higher level of service for the same costs.
COMMENTS:
Purpose. According to the author, the APM pilot project established by this bill would require DHCS to authorize a three-year health reform demonstration project that would replace the existing per visit Medi-Cal payment methodology with a capitated system through Medi-Cal managed care plans using the APM option authorized under federal law. The capitated payment would provide greater flexibility in health care delivery for the FQHC by enabling the FQHC to provide different types of health care services without having to meet the per visit billing requirement to generate Medi-Cal revenue.
Background on FQHCs. FQHCs are public or tax-exempt entities which receive a direct grant from the federal government under the Public Health Service Act Section 330, or are determined by the federal Department of Health and Human Services to meet the requirements for receiving grants. Federal law provides special payment provisions to ensure that they would be reimbursed for 100% of their reasonable costs associated with furnishing these services. In December 2000, Congress required states to change their FQHC payment methodology from a retrospective to a PPS. Under PPS, State Medicaid agencies are required to pay centers their PPS per-visit rate for each face-to-face encounter between a Medicaid beneficiary and one of the FQHC’s billable providers for a covered service.
Support. This bill is jointly sponsored by the California Primary Care Association, the California Association of Public Hospitals and Health Systems and Los Angeles Care Health Plan. Supporters state the APM pilot project will enable FQHCs to deliver care differently by converting the per visit rate FQHCs receive today to a capitation payment. The capitated payment would afford the FQHC with greater flexibility as they no longer will have to meet the per visit billing requirements.
There is no known opposition to this bill.
Analysis Prepared by: Roger Dunstan / HEALTH / (916) 319-2097 FN: 0001712
SB 147
Page 6
|
Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 |
UNFINISHED BUSINESS
Bill No: SB 147
Amended: 8/31/15
SENATE HEALTH COMMITTEE: 9-0, 4/15/15
AYES: Hernandez, Nguyen, Hall, Mitchell, Monning, Nielsen, Pan, Roth, Wolk
SENATE APPROPRIATIONS COMMITTEE: 7-0, 5/28/15
AYES: Lara, Bates, Beall, Hill, Leyva, Mendoza, Nielsen
SENATE FLOOR: 40-0, 6/1/15
AYES: Allen, Anderson, Bates, Beall, Berryhill, Block, Cannella, De León, Fuller, Gaines, Galgiani, Glazer, Hall, Hancock, Hernandez, Hertzberg, Hill, Hueso, Huff, Jackson, Lara, Leno, Leyva, Liu, McGuire, Mendoza, Mitchell, Monning, Moorlach, Morrell, Nguyen, Nielsen, Pan, Pavley, Roth, Runner, Stone, Vidak, Wieckowski, Wolk
ASSEMBLY FLOOR: 80-0, 9/2/15 - See last page for vote
SUBJECT: Federally qualified health centers
SOURCE: California Association of Public Hospitals
California Primary Care Association
L.A. Care Health Plan
DIGEST: This bill requires the Department of Health Care Services (DHCS) to authorize a three-year payment reform pilot project for federally qualified health centers (FQHCs) using an alternative payment methodology (APM) authorized under federal Medicaid law. This bill requires an FQHC participating in the pilot to receive a per member per month (PMPM) payment for each of its APM enrollees from a Medi-Cal managed care health plan, instead of the wrap around payment FQHCs currently receive from DHCS.
Assembly Amendments delete the prohibition against Medi-Cal rate reductions for health plans and FQHCs; clarify the duration of the pilot program as three years in each county; require DHCS to develop eligibility criteria for evaluating FQHC applications for participation in the pilot project; allow DHCS to adjust payments to FQHCs in the event of an epidemic, or similar catastrophic occurrence that is likely to result in at least a 30 percent increase in actual utilization at a participating FQHC site; and provide DHCS with additional flexibility in implementing the provisions of this bill.
Existing law:
Establishes the Medi-Cal program as California’s Medicaid program, administered by DHCS, which provides comprehensive health care coverage for low-income individuals. FQHC services are covered benefits under the Medi-Cal program.
Requires FQHCs to be reimbursed on a per-visit basis. Defines a “visit” as a face-to-face encounter between an FQHC patient and specified health care providers.
Authorizes, under federal Medicaid law, states to provide for payment to an FQHC in an amount which is determined under an APM that is:
Agreed to by the state and the FQHC; and,
Results in payment to the FQHC of an amount which is at least equal to the amount otherwise required to be paid to the FQHC.
This bill:
Requires DHCS to authorize a payment reform pilot project for FQHCs using an APM, beginning no sooner than July 1, 2016, subject to any necessary federal approvals. Requires DHCS to authorize implementation of the
pilot project in a county for a period of up to three years.
Requires the APM pilot project to comply with federal APM requirements, and requires DHCS to file a state plan amendment as necessary for the implementation of this bill.
Requires DHCS to determine the FQHC-specific per member PMPM for each APM aid category, taking into account all specified factors.
Requires DHCS to determine an APM supplemental capitation amount for each APM aid category to be paid by DHCS to each Medi-Cal principal health plan (expressed as a PMPM amount) that contains at least one participating FQHC in its provider network.
Requires each participating FQHC to receive from the principal health plan or applicable subcontracting payer reimbursement a clinic-specific PMPM payment for the applicable APM aid category (the APM aid categories are adults, children, seniors and persons with disabilities and the adult expansion category if sufficient data is available). This PMPM payment would be in lieu of the traditional wrap-around payment made by DHCS to the FQHC.
Requires DHCS to adjust the FQHC payment amounts as necessary to account for any change to the prospective payment system rate for participating FQHCs, including changes resulting from a change in the Medicare Economic Index and any changes in the FQHC’s scope of services.
Requires DHCS to establish a risk corridor structure for principal health plans relating to the APM supplemental capitation payments pursuant that limits the profit and loss that could be incurred or gained by a plan participating in the pilot.
Requires DHCS to establish a payment adjustment structure that permits an aggregate adjustment to the PMPM payments received when actual utilization of services for a participating FQHC site exceeds or falls below expectations that were reflected within the calculation of the rates.
Permits DHCS, in consultation with interested FQHCs and principal health plans, to modify any methodology, process, or provision specified in this bill to the extent necessary to comply with federal law or to obtain any necessary federal approvals.
Requires DHCS to contract with an independent entity to perform an evaluation of the APM pilot project, which would assess and report on whether the APM pilot project produced improvements in access to primary care services, care quality, patient experience, and overall health outcomes for APM enrollees.
Allow DHCS to use provider bulletins instead of regulations in implementing this bill, and allow DHCS to enter into exclusive or nonexclusive contracts on a bid or negotiated basis, including contracts for the purpose of obtaining subject matter expertise or other technical assistance
Comments
Author’s statement. According to the author, “[T]he APM pilot project established by this bill would require DHCS to establish a three-year health reform pilot project that would dramatically alter the way FQHCs deliver primary care and are reimbursed by Medi-Cal. In participating counties, this bill would replace the existing per visit Medi-Cal payment methodology with a capitated system through Medi-Cal managed care plans using the APM option authorized under federal law. The capitated payment would provide greater flexibility in health care delivery for the FQHC by enabling the FQHC to provide different types of health care services without having to meet the per visit billing requirement to generate Medi-Cal revenue. For example, an FQHC could use the capitation payment to provide a patient with different services on the same day (an FQHC cannot bill separately for a primary care visit and a mental health care appointment that occur on the same day under current DHCS policy), or to provide health care services through different means (such as phone consultation and email consultation) or through different providers types (such as dieticians).”
Current Medi-Cal Reimbursement to FQHCs. Federal Medicaid payment to FQHCs are governed by state (Medi-Cal in California) and federal law. In December 2000, Congress required states to change their FQHC payment methodology from a retrospective to a prospective payment system (PPS). Under PPS, State Medicaid agencies are required to pay centers their PPS per-visit rate (or an APM, discussed below) for each face-to-face encounter between a Medicaid beneficiary and one of the FQHC’s billable providers for a covered service.
For Medi-Cal managed care plan patients, DHCS is required to reimburse an FQHC 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 established to comply with federal and state regulation requirement to reimburse a provider for the difference between their PPS rate and their Medi-Cal managed care reimbursement. This bill calls for a pilot program using an APM where FQHCs would receive PMPM payments from the health plan, and would no longer receive a “wrap around” payment from DHCS.
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No
According to the Assembly Appropriations Committee:
Likely costs of $450,000 per year for one to two years to develop the pilot project and apply for federal approval of the pilot project (GF/federal/potential private funds).
One-time costs of $150,000 to $300,000 to prepare an evaluation of the pilot project (private funds). At least one foundation has expressed an expectation in writing that they will continue to provide financial support to the state for this APM effort, including for an evaluation and technical assistance to clinics.
Although DHCS intends the pilot be cost-neutral, there is the potential for unknown costs or savings for Medi-Cal health care services provided by participating clinics. Because the opportunity for both costs and savings exists, on balance, there is not likely to be a significant net cost to changing the payment methodology for participating clinics.
Implementation of an APM has the potential to change patterns of health care services utilization and health care practice at clinics. This bill outlines "risk corridors" that limit the fiscal risk and benefit for clinics and plans. Certain scenarios may result in DHCS making additional payments, or retaining additional savings, from what is projected. Since the projected costs based on the APM are supposed to equate to what DHCS would pay using traditional per-visit methodology, differences from this projection mean additional costs or savings as compared to the status quo. It is difficult or impossible to quantify these effects. Over the long term, it is hopeful that the new methodology would result in either cost savings from increased efficiency, or, more likely based on how clinic's rates are currently constructed, a higher level of service for the same costs.
California Association of Public Hospitals (co-source)
California Primary Care Association (co-source)
L.A. Care Health Plan (co-source)
AltaMed Health Services Corporation
American Federation of State, County and Municipal Employees, AFL-CIO
Arroyo Vista Family Health Center
California Association of Physician Groups
Clinica Monsenor Oscar A. Romero
Community Clinic Association of Los Angeles County
National Association of Social Workers – California Chapter
Northeast Valley Health Corporation
OPPOSITION: (Verified 8/30/15)
None received
ARGUMENTS IN SUPPORT: This bill is jointly sponsored by the California Primary Care Association, the California Association of Public Hospitals and Health Systems and L.A. Care Health Plan. The sponsors argue the APM pilot project established by this bill will enable FQHCs to deliver care differently by converting the per visit rate FQHCs receive to a capitation payment. Under the proposal, the capitated payment would afford the FQHC with greater flexibility in health care delivery as they no longer will have to meet the face-to-face per visit billing requirements. Under the pilot, an FQHC could use the monthly capitation payment to provide health care services in new ways, such as phone consultation or to answer patient questions via email. In addition, the FQHC could provide mental health and physical health services on the same day, thus better integrating behavioral health and primary care. FQHCs could also utilize a more diverse array of qualified professionals, such as dieticians, clinical pharmacists, dieticians, community health workers, and nurses, to improve care management and provide team-based care.
ASSEMBLY FLOOR: 80-0, 9/2/15
AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Perea, Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Atkins
Prepared by: Scott Bain / HEALTH /
9/2/15 18:10:52
**** END ****
Date of Hearing: August 19, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
SB 147
(Hernandez) – As Amended August 17, 2015
Policy Committee: |
Health |
Vote: |
18 - 0 |
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Urgency: No State Mandated Local Program: No Reimbursable: No
SUMMARY:
This bill requires the Department of Health Care Services (DHCS) to authorize a three-year payment reform pilot project for federally qualified health centers (FQHCs, or clinics). Specifically, this bill:
Requires DHCS to authorize an alternative payment methodology (APM) pilot for participating clinics by no sooner than July 1, 2015. Allows DHCS to limit participation in the pilot, as specified.
Specifies participation in the APM pilot is voluntary for a clinic and mandatory for a health plan that contracts with a clinic.
Describes in detail the fiscal methodology to create a capitated, per member per month (PMPM) payment, in place of a clinic's existing per-visit "prospective payment system" (PPS) rate.
Requires an independent evaluation be conducted, and that DHCS report regularly to the Legislature on implementation.
Conditions implementation on federal approval, allows DHCS flexibility to modify the program if necessary for federal approval, and allows DHCS to implement without taking regulatory action.
FISCAL EFFECT:
Likely costs of $450,000 per year for one to two years to develop the pilot project and apply for federal approval of the pilot project (GF/federal/potential private funds).
One-time costs of $150,000 to $300,000 to prepare an evaluation of the pilot project (private funds). At least one foundation has expressed an expectation in writing that they will continue to provide financial support to the state for this APM effort, including for an evaluation and technical assistance to clinics.
Although DHCS intends the pilot be cost-neutral, there is the potential for unknown costs or savings for Medi-Cal health care services provided by participating clinics. Because the opportunity for both costs and savings exists, on balance, there is not likely to be a significant net cost to changing the payment methodology for participating clinics.
Implementation of an APM has the potential to change patterns of health care services utilization and health care practice at clinics. The bill outlines "risk corridors" that limit the fiscal risk and benefit for clinics and plans. Certain scenarios may result in the department making additional payments, or retaining additional savings, from what is projected. Since the projected costs based on the APM are supposed to equate to what the department would pay using traditional per-visit methodology, differences from this projection mean additional costs or savings as compared to the status quo. It is difficult or impossible to quantify these effects. Over the long term, it is hopeful that the new methodology would result in either cost savings from increased efficiency, or, more likely based on how clinic's rates are currently constructed, a higher level of service for the same costs.
COMMENTS:
Purpose. This bill authorizes an alternative way to pay clinics for care delivered to Medi-Cal beneficiaries. Currently, clinics are paid per visit according to strict rules on what constitutes a billable visit. According to the author, moving from visit-based reimbursement to a model based on capitation– a fixed reimbursement amount per assigned member, per month (PMPM) regardless of number of visits—affords clinics the assurance of payment and the flexibility to deliver care in the most appropriate patient-centered manner.
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.
This bill calls for a pilot program using an APM where clinics would receive capitation, or PMPM, payments from the health plan, and would no longer receive a wrap-around payment from DHCS. The total capitation payments would approximate what the clinic would have received based on the previous methodology, but would depend on number of assigned members instead of visits. This would allow the clinic to deliver care using email, telehealth, different types of providers, or other innovative means without fear of losing reimbursement.
Staff Comments. An alternative payment methodology for clinics based on capitation is consistent with state goals, as well as private-sector efforts, to move away from volume-based payment and toward incentivizing good health outcomes and high-quality care. In that context, this bill is a step forward for payment reform, and represents an effort with significant stakeholder input. Comments on two narrow aspects of the bill are noted below.
What will evaluation of the pilot tell us? Participation by clinics is voluntary and limited to clinics with sufficient financial and administrative capacity to undertake payment reform. Piloting an APM methodology has merit and will certainly allow some administrative issues to be worked out before statewide implementation; however, evaluating how an APM works in large, sophisticated, and financially sound clinics will not necessarily indicate whether the methodology will be viable in other, less-resourced clinics. These clinics will likely need significant technical assistance to achieve the goals of the APM if it is rolled out more widely, even if the pilot proves successful for clinics that are better-resourced. The evaluation should take this into account when making recommendations for a statewide APM rollout.
Technical drafting issues. As noted above, the bill establishes risk corridors that limit the fiscal risk and benefit. Specifically, Section 14138.16 describes the risk-sharing mechanism between the department and the plans. This section would benefit from greater specificity and clarification of the intent. For example, it is unclear whether the department has to reconcile and settle up with plans based on their overall portfolio of participating clinics, or on the basis of each participating clinic for which excess costs or savings is experienced. The author should consider further specifying this.
The section could also benefit from improved technical clarity. For example, instead of, "The principal health plan is fully responsible for all costs up to one-half of one percent in excess of the APM supplemental capitation amounts," it should read, "The principal health plan is fully responsible for all costs in excess of total APM supplemental capitation amount, up to a maximum of one-half of one percent of the total APM supplemental capitation amount."
Analysis Prepared by: Lisa Murawski / APPR. / (916) 319-2081
SB 147
Page 8
Date of Hearing: July 14, 2015
ASSEMBLY COMMITTEE ON HEALTH
Rob Bonta, Chair
SB 147
(Ed Hernandez) – As Amended July 8, 2015
SENATE VOTE: 40-0
SUBJECT: Federally qualified health centers.
SUMMARY: Requires the Department of Health Care Services (DHCS) to authorize a three-year payment reform pilot project for federally qualified health centers (FQHCs). Specifically, this bill:
Pilot Program Administration
Requires DHCS to authorize a three-year payment reform pilot project for FQHCs using an alternative payment methodology (APM). Requires implementation of the APM pilot project to begin no sooner than July 1, 2016, subject to federal approval.
Requires the APM pilot project to comply with federal APM requirements. Directs DHCS to file a state plan amendment (SPA), and seek any federal approvals necessary for the implementation of this bill.
Requires DHCS to notify every FQHC of the APM pilot project and to invite any interested FQHC to notify DHCS that the FQHC agrees to participate with respect to one or more of the FQHC’s sites. Requires the SPA, consistent with federal law, to specify that DHCS and participating FQHCs agree to the APM.
Requires DHCS to develop a selection process for interested FQHCs to follow. Requires the selection process be developed in consultation with interested FQHCs and principal health plans.
Authorizes DHCS to approve or deny and FQHC application and allows DHCS to limit the number of FQHCs participating in the pilot project.
Prohibits an FQHC site participating in the APM pilot project from receiving traditional wrap-around payments for visits within the APM scope of services it provides to its APM enrollees.
Requires the APM to be applied only with respect to a participating FQHC for services the FQHC provides to its APM enrollees that are within its APM scope of services.
Requires payments to participating FQHCs for services provided to patients not assigned for services under the APM pilot, and persons not designated within an APM aid category, to continue to be governed under the reimbursement provisions of current law.
Allows a FQHC to discontinue its participation from the pilot project with a 120 day notice. Provides a process for principal health plans to discontinue participation, as specified.
Allows DHCS to implement this pilot through specified means without taking regulatory action, a provision which exempts DHCS from the Administrative Procedures Act.
Allows DHCS to enter into contracts that will be exempt from specified provisions of the Public Contract Code and Government Code.
Allows DHCS in consultation with interested FHQCs and principal health plans to modify any methodology or process specified in this bill to the extent necessary to comply with federal laws or to obtain any necessary approval.
Conditions implementation of the bill on receiving federal financial participation.
Provides that implementation of the APM pilot project in a county shall not begin at an FQHC site until at least 90 days after a Medi-Cal managed care (MCMC) plan has been notified in writing by DHCS of the specific APM rate. Specifies the rate in the notice shall be based on the rate submitted to the Centers for Medicare and Medicaid Services (CMS) for approval.
Specifies that nothing in the bill is to be construed to limit or eliminate services provided by FQHCs as covered benefits in the Medi-Cal program.
Plan and Clinic Payments
Requires DHCS to determine the clinic specific per member per month (PMPM) for each APM aid category taking into account specified factors.
Requires DHCS to determine an APM supplemental capitation amount for each APM aid category to be paid by DHCS to the health plan, expressed as a PMPM amount, and provides DHCS shall consider certain factors in determining the supplemental capitation amount.
Requires DHCS to adjust the amounts paid to health plans and FQHCs in the pilot at least annually for any change to the prospective payment system rate for participating FQHCs, including changes resulting from a change in the MEI and any changes in the FQHC’s scope of services.
Provides that implementation of the APM pilot project in a county shall not begin at an FQHC site until at least 90 days, but no more than 120 days after an MCMC plan has been notified in writing by DHCS of the specific APM rate. Specifies the rate in the notice shall be based on the rate submitted to CMS for approval.
Risk Corridor, Rate Adjustment, and True Up in Pilot
Requires DHCS, during the duration of the APM pilot project, to establish a risk corridor structure for the health plans relating to the payment requirement, designed within specified parameters.
Establishes a statutory scheme for sharing risk between DHCS, the principal health plan and the participating FQHC in the event actual costs vary from estimated costs.
Requires DHCS, with stakeholder input, to establish a rate adjustment structure on a FQHC site-specific basis that permits an aggregate adjustment to payments when actual utilization of services at a participating FQHC’s site exceeds or falls below expectations that were reflected within the calculation of the rates.
Allows DHCS, in consultation with FQHCs and health plans interested in participating in the APM pilot project, to modify the adjustment process or methodology to comply with federal law and obtain federal approval of necessary amendments to the Medi-Cal state plan.
Evaluation of Pilot
Requires, within six months of the conclusion of pilot project, an evaluation to be completed by an independent entity, which is required to report its findings to DHCS and the Legislature. Makes the evaluation be contingent on the availability of non-state General Fund moneys for this purpose. Requires the evaluation to:
Assess whether the APM pilot project produced improvements in access to primary care services, care quality, patient experience, and overall health outcomes for APM enrollees;
Include existing FQHC-required quality metrics and an assessment of how the changes in financing allowed for alternative types of primary care visits and alternative encounters between the participating FQHC and the patient; and,
Assess whether the APM pilot project’s efforts to improve primary care resulted in changes to patient service utilization patterns, including the reduced utilization of avoidable high cost services.
EXISTING LAW:
Establishes the Medi-Cal program as California’s Medicaid program, administered by DHCS, which provides comprehensive health care coverage for low-income individuals. FQHC services are covered benefits under the Medi-Cal program.
Authorizes, under federal law, state plans to provide for payment to FQHCs in an amount which is determined under an alternative payment methodology that:
Is agreed to by the state and the FQHC; and,
Results in payment to the FQHC of an amount which is at least equal to the amount otherwise required to be paid to the FQHC.
Requires plans to reimburse FQHCs in a manner that is not less than the level and amount of payment that the plan would make for the same scope of services if the services were furnished by a provider that is not an FQHC.
Requires DHCS to administer a program through which FQHCs contracting with managed care plans shall seek supplemental reimbursement from DHCS for the difference between the payment the FQHC received from the managed care plan and an interim rate established by DHCS or the FQHC's prospective payment rate.
Requires DHCS, within six months of the end of the FQHC's fiscal year, to perform an annual reconciliation to reasonable costs, and based on the reconciliation, make payments to, or obtain payments from the FQHC.
Requires FQHCs to be reimbursed on a per-visit basis. Defines a “visit” as a face-to-face encounter between an FQHC patient and the following health care providers: a physician, physician assistant, nurse practitioner, certified nurse midwife, clinical psychologist, licensed clinical social worker, visiting nurse, podiatrist, dentist, optometrist, chiropractor, comprehensive perinatal services practitioner 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 visit.
Requires FQHC per-visit rates to be increased by the Medicare Economic Index (MEI) applicable to primary care services in the manner provided for in federal law.
Permits an FQHC to apply for an adjustment to its per-visit rate based on a change in the scope of services provided by the FQHC. Requires rate changes based on a change in the scope of services provided by an FQHC to be evaluated in accordance with Medicare reasonable cost principles.
Authorizes, under federal Medicaid law, states to provide for payment to an FQHC in an amount which is determined under an APM that is:
Agreed to by the state and the FQHC; and,
Results in payment to the FQHC of an amount which is at least equal to the amount otherwise required to be paid to the FQHC.
FISCAL EFFECT: According to the Senate Appropriations Committee, this bill results in:
Likely costs of $450,000 per year for one to two years to develop the pilot project and apply for federal approval of the pilot project (General Fund and federal funds).
One-time costs of $150,000 to $300,000 to prepare an evaluation of the pilot project (private funds).
Unknown potential additional tax revenues to the state (General Fund). The state imposes a tax on MCMC organizations. To the extent that payments for services provided in federally qualified health centers shift from direct payments from DHCS to capitated payments made to managed care plans (who would then provide capitated payments to centers), this bill will increase managed care plan revenues and subsequent tax revenues. The size of this impact will depend on the scale of the pilot project.
COMMENTS:
PURPOSE OF THIS BILL. According to the author, the APM pilot project established by this bill would require DHCS to authorize a three-year health reform demonstration project that would alter the way FQHCs deliver primary care and are reimbursed by Medi-Cal. In participating counties, this bill would replace the existing per visit Medi-Cal payment methodology with a capitated system through MCMC plans using the APM option authorized under federal law. The capitated payment would provide greater flexibility in health care delivery for the FQHC by enabling the FQHC to provide different types of health care services without having to meet the per visit billing requirement to generate Medi-Cal revenue. For example, an FQHC could use the capitation payment to provide a patient with different services on the same day (an FQHC cannot bill separately for a primary care visit and a mental health care appointment that occur on the same day under current DHCS policy), or to provide health care services through different means (such as phone consultation and email consultation), through different providers types (such as dieticians), or outside the “four walls” of the FQHC.
BACKGROUND.
Background on FQHCs. In 1989, the U.S. Congress established FQHCs as a new provider type. FQHCs are public or tax-exempt entities which receive a direct grant from the federal government under Section 330 of the Public Health Service Act, or are determined by the federal Department of Health and Human Services to meet the requirements for receiving such grants. Federal law defines the services to be provided by FQHCs for Medicaid purposes and included special payment provisions to ensure that they would be reimbursed for 100% of their reasonable costs associated with furnishing these services. One of the legislative purposes in doing so was to ensure that federal grant funds are not used to subsidize health center or program services to Medicaid beneficiaries. State Medicaid programs must pay for covered services provided by FQHCs. There are over 820 FQHC locations (FQHCs may have more than one clinic location) in California.
Current Medi-Cal Reimbursement to FQHCs. Federal Medicaid payments to FQHCs are governed by state (Medi-Cal in California) and federal law. In December 2000, Congress required states to change their FQHC payment methodology from a retrospective to a prospective payment system (PPS). This federal law change established (for existing FQHCs) a per-visit baseline payment rate equal to 100% of the center’s average costs per visit incurred during 1999 and 2000 which were reasonable and related to the cost of furnishing such services. States are required to pay FQHCs a per-visit rate, which is equal to the baseline PPS payment rate, increased each year by the MEI, and adjusted to take into account any increase or decrease in the scope of such services furnished by the FQHC during that fiscal year. Under PPS, State Medicaid agencies are required to pay centers their PPS per-visit rate (or an APM, discussed below) for each face-to-face encounter between a Medicaid beneficiary and one of the FQHC’s billable providers for a covered service.
For MCMC plan patients, DHCS is required to reimburse an FQHC 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 MCMC wrap-around rate was established to comply with federal and state regulation to reimburse a provider for the difference between their PPS rate and their MCMC reimbursement.
FQHCs and Rural Health Clinics (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 access to the Medi-Cal population, FQHCs have been exempted from the Medi-Cal rate reductions.
This bill calls for a pilot program using an APM where FQHCs would receive PMPM payments from the health plan, and would no longer receive a “wrap around” payment from DHCS. CMS has indicated a state may accept an FQHC’s written assertion that the amount paid under the APM results in payment that at least equals the amount to which the FQHC is entitled under the PPS. In 2010, approximately 21 states used an APM to pay some or all of their FQHCs, according to a September 2011 report from the National Association of Community Health Centers.
Prior DHCS proposals. In 2012-13, DHCS proposed, as part of the Governor’s budget, to change the Medi-Cal payment methodology for FQHCs and RHCs under an APM. Under DHCS’ proposal, payments made to FQHCs and RHCs participating in MCMC plan contracts would have changed from a cost and volume-based payment to a fixed payment to provide a broad range of services to its enrollees. A waiver of current operating restrictions would allow FQHCs and RHCs to provide group visits, telehealth, and telephonic disease management. The waiver would have also allowed FQHCs to perform multiple services on the same day. DHCS assumed an efficiency savings of 10% and would have removed this amount from the funding provided to MCMC plans. This proposal was rejected by the Legislature.
On April 25, 2014, DHCS released a proposed APM for a pilot program at FQHCs located in urban areas. Under that pilot, the payor of FQHC services would transition from DHCS to MCMC plans. That pilot would ensure FQHCs are reimbursed at no less than the PPS rate, as prescribed under federal regulations, while incentivizing delivery system and practice transformation at FQHCs through flexibilities available under a full capitation payment structure. DHCS’ objective for the pilot is to transition the delivery of care at FQHCs from its current volume-based system to one that better aligns the financing and delivery of health services. The APM payment structure has been the subject of multiple meetings between the sponsors of this bill and DHCS.SUPPORT. This bill is jointly sponsored by the California Primary Care Association (CPCA), the California Association of Public Hospitals and Health Systems (CAPHHS) and L.A. Care Health Plan (LA Care). CPCA states the APM pilot project established by this bill will enable FQHCs to deliver care differently by converting the per visit rate FQHCs receive today to a capitation payment. Under the proposal, the capitated payment would afford the FQHC with greater flexibility in health care delivery as they no longer will have to meet the per visit billing requirements. For example, an FQHC could use the monthly capitation payment to provide health care services in new ways, such as phone consultation or answer patient questions via email. They could also utilize a more diverse array of qualified professionals, such as clinical pharmacists and dieticians.
CAPHHS argues FQHCs have been working to find new, more patient-centered and efficient ways to provide services, in order to meet the needs of a growing Medi-Cal patient population. However, the payment structure for FQHCs reimburses these clinics through a federally mandated bundled PPS based on face-to-face visits with a limited number of health professionals. Recognizing the need to experiment with a payment methodology that ultimately moves away from the volume based PPS structure, this bill would allow FQHCs the flexibility to further invest in team-based care and alternative delivery models that offer more appropriate and cost effective care. Under this pilot program, FQHC providers could better integrate behavioral health and primary care, utilize group visits, email and phone care management, and team care the employs a greater array of ancillary staff, such as community health workers and nurses.
LA Care writes in support that a capitated payment would allow greater flexibility in health care delivery by enabling FQHCs to provide different types of services without having to meet the current per visit billing requirement. For example, the supplemental payment or “wrap cap” payment could be used to provide a patient with different services on the same day or to provide services through phone consultations or communicate with patient on routine issues via email. In addition, this bill would allow FQHCs the ability to provide more services than currently provided by allowing them to use additional provider types such as dieticians and social workers. LA Care concludes that the passage of this bill will allow FQHCs to move toward achieving the Triple Aim goals contained in the Patient Protection and Affordable Care Act by testing new payment methodologies and delivery reforms.
RELATED LEGISLATION.
AB 690 (Wood) adds marriage and family therapists to the list of providers for which FQHCs and rural health clinics are able to bill under PPS for a face-to-face encounter. AB 690 was held on the suspense file of the Assembly Appropriations Committee.
AB 858 (Wood) is substantially similar to AB 690. AB 858 is currently on the suspense file of the Senate Appropriations Committee.
PREVIOUS LEGISLATION.
SB 1081 (Ed Hernandez), of 2014, would have required DHCS to authorize a three-year alternative payment Medi-Cal methodology pilot project for FQHCs under which participating FQHCs would receive capitated monthly payments for each MCMC enrollee assigned to the FQHC in place of the wrap-around, fee-for-service per-visit payments from DHCS. SB 1081 was held in the Senate Appropriations Committee.
SB 1150 (Hueso and Correa), of 2014, would have required Medi-Cal reimbursement to FQHCs and RHCs for two visits taking place on the same day at a single location when the patient suffers illness or injury requiring additional diagnosis or treatment after the first visit, or when the patient has a medical visit and another health visit with a mental health provider or dental provider. SB 1150 was held in the Senate Appropriations Committee.
AB 1445 (Chesbro), of 2009, was substantially similar to SB 1150. AB 1445 was held in the Senate Appropriations Committee.
SB 260 (Steinberg), of 2007, was also similar to SB 1150. SB 260 was vetoed by Governor Schwarzenegger. In his veto message, Governor Schwarzenegger argued SB 260 will increase General Fund pressure at a time of continuing budget challenges, and that allowing separate billing for mental health services would lead to increased costs that the state could not afford.
SB 36 (Chesbro), Chapter 527, Statutes of 2003, established a statutory structure for Medi-Cal payments for services provided by FQHCs and RHCs in compliance with federal law, changing from fee-for-service to a per-visit basis.
REGISTERED SUPPORT / OPPOSITION:
Support
California
Association of Public Hospitals and Health Systems (cosponsor)
California Primary Care Association (cosponsor)
L.A. Care Health Plan (cosponsor)
AltaMed Health Services Corporation
American Federation of State, County, and Municipal Employees, AFL-CIO
Asian Health Services
California Association of Physician Groups
Central California Alliance for Health
Clínica Monseñor Oscar A. Romero
Community Clinic Association of Los Angeles County
Council of Community Clinics
Golden Valley Health Centers
La Maestra Community Health Centers
LifeLong Medical Care
National Association of Social Workers, California Chapter
Northeast Valley Health Corporation
Partnership Health Plan of California
Saban Community Clinic
St. John's Well Child &Family Center
Tiburcio Vásquez Health Center, Inc.
Opposition
None on file.
Analysis Prepared by: Roger Dunstan / HEALTH / (916) 319-2097
SB 147
Page 7
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Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 |
THIRD READING
Bill No: SB 147
Amended: 4/21/15
SENATE HEALTH COMMITTEE: 9-0, 4/15/15
AYES: Hernandez, Nguyen, Hall, Mitchell, Monning, Nielsen, Pan, Roth, Wolk
SENATE APPROPRIATIONS COMMITTEE: 7-0, 5/28/15
AYES: Lara, Bates, Beall, Hill, Leyva, Mendoza, Nielsen
SUBJECT: Federally qualified health centers
SOURCE: California Association of Public Hospitals
California Primary Care Association
L.A. Care Health Plan
DIGEST: This bill requires the Department of Health Care Services (DHCS) to authorize a three-year payment reform pilot project for federally qualified health centers (FQHCs) using an alternative payment methodology (APM) authorized under federal Medicaid law. This bill requires an FQHC participating in the pilot to receive a per member per month (PMPM) wrap-cap payment for each of its APM enrollees from a Medi-Cal managed care health plan, instead of the wrap around payment FQHCs currently receive from DHCS.
Existing law:
Establishes the Medi-Cal program as California’s Medicaid program, administered by DHCS, which provides comprehensive health care coverage for low-income individuals. FQHC services are covered benefits under the Medi-Cal program.
Requires FQHCs to be reimbursed on a per-visit basis. Defines a “visit” as a face-to-face encounter between an FQHC patient and specified health care providers.
Authorizes, under federal Medicaid law, states to provide for payment to an FQHC in an amount which is determined under an APM that is:
Agreed to by the state and the FQHC; and,
Results in payment to the FQHC of an amount which is at least equal to the amount otherwise required to be paid to the FQHC.
This bill:
Requires DHCS to authorize a three-year payment reform pilot project for FQHCs using an APM. Requires implementation of the APM pilot project to begin no sooner than July 1, 2016, subject to federal approval. Requires the APM pilot project to comply with federal APM requirements, and requires DHCS to file a state plan amendment as necessary for the implementation of this bill.
Requires an FQHC participating in the pilot, in addition to its base payment, and any applicable incentive payment, to receive a PMPM wrap-cap payment from the health plan or its secondary payor (such as a medical group or independent practice association) for each of its APM enrollees.
Requires DHCS to determine the wrap-cap amount specific to each participating FQHC, and for each APM aid category. Defines the APM aid categories for purposes of the pilot as adults, children, seniors and persons with disabilities, and the adult Medicaid expansion population.
Requires each health plan to pay a participating FQHC that is in the plan provider network the wrap-cap amounts for each APM enrollee of that FQHC, or, in cases where a secondary payer is involved, provide the necessary amounts to the secondary payer and require that secondary payer to make the required wrap-cap payments to the FQHC.
Requires DHCS to determine an APM supplemental capitation amount for each APM aid category to be paid by DHCS to the health plan, expressed as a PMPM amount. Requires the APM supplemental capitation amount to be a weighted average of the aggregate wrap-cap amounts determined, that at a minimum takes into account an estimation of the distribution of APM enrollees among the participating FQHCs for each APM aid category.
Prohibits the APM supplemental capitation amounts to health plans from being decreased for the first three years of the APM pilot project, unless agreed to by DHCS and the health plan, and prohibits the wrap-cap payments to FQHCs from being decreased for the first three years of the APM pilot project, unless agreed to by DHCS and the applicable participating FQHC.
Requires DHCS to adjust the amounts paid to health plans and FQHCs in the pilot at least annually for any change to the prospective payment system rate for participating FQHCs, including changes resulting from a change in the Medicare Economic Index and any changes in the FQHC’s scope of services.
Requires the total APM supplemental capitation amounts paid to health plans to be adjusted by DHCS as necessary to take into account adjustments to the number of APM enrollees by APM aid category no later than the 10th day of each month.
Requires DHCS, during the duration of the APM pilot project, to establish a risk corridor structure for the health plans relating to the payment requirement, designed within specified parameters.
Requires DHCS, with stakeholder input, to establish a rate adjustment structure on a FQHC site-specific basis that permits an aggregate adjustment to the wrap-cap when actual utilization of services at a participating FQHC’s site exceeds or falls below expectations that were reflected within the calculation of the rates.
Allows DHCS, in consultation with FQHCs and health plans interested in participating in the APM pilot project, to modify the adjustment process or methodology to comply with federal law and obtain federal approval of necessary amendments to the Medi-Cal state plan.
Permits a participating FQHC, a health plan or DHCS to request an APM enrollee true-up to assure the total amount of the APM supplemental capitation or wrap-cap payments, as applicable, are adjusted to accurately reflect the number of applicable APM enrollees.
Allows a participating FQHC, with respect to one or more sites of its choosing, to opt to discontinue its participation in the pilot project subject to a notice requirement of no less than 30 days and no greater than 45 days, as established by DHCS.
Allows a health plan to opt to discontinue its participation in the pilot project, subject to a notice requirement of no less than 30 days and no greater than 45 days, as established by the DHCS if the risk corridor structure in this bill is amended at any time while the pilot project is in effect. Requires DHCS to place a provision in a plan's contract giving the plan the ability to discontinue its participation in the APM pilot project under this provision.
Requires, within six months of the conclusion of pilot project, an evaluation to be completed by an independent entity, which is required to report its findings to DHCS and the Legislature. Makes the evaluation be contingent on the availability of non-state General Fund moneys for this purpose.
Comments
Author’s statement. According to the author, “[T]he APM pilot project established by this bill would require DHCS to establish a three-year health reform pilot project that would dramatically alter the way FQHCs deliver primary care and are reimbursed by Medi-Cal. In participating counties, this bill would replace the existing per visit Medi-Cal payment methodology with a capitated system through Medi-Cal managed care plans using the APM option authorized under federal law. The capitated payment would provide greater flexibility in health care delivery for the FQHC by enabling the FQHC to provide different types of health care services without having to meet the per visit billing requirement to generate Medi-Cal revenue. For example, an FQHC could use the capitation payment to provide a patient with different services on the same day (an FQHC cannot bill separately for a primary care visit and a mental health care appointment that occur on the same day under current DHCS policy), or to provide health care services through different means (such as phone consultation and email consultation) or through different providers types (such as dieticians).”
Current Medi-Cal Reimbursement to FQHCs. Federal Medicaid payment to FQHCs are governed by state (Medi-Cal in California) and federal law. In December 2000, Congress required states to change their FQHC payment methodology from a retrospective to a prospective payment system (PPS). Under PPS, State Medicaid agencies are required to pay centers their PPS per-visit rate (or an APM, discussed below) for each face-to-face encounter between a Medicaid beneficiary and one of the FQHC’s billable providers for a covered service.
For Medi-Cal managed care plan patients, DHCS is required to reimburse an FQHC 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 established to comply with federal and state regulation to reimburse a provider for the difference between their PPS rate and their Medi-Cal managed care reimbursement. This bill calls for a pilot program using an APM where FQHCs would receive PMPM payments from the health plan, and would no longer receive a “wrap around” payment from DHCS.
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No
According to the Senate Appropriations Committee:
Likely costs of $450,000 per year for one to two years to develop the pilot project and apply for federal approval of the pilot project (General Fund and federal funds).
One-time costs of $150,000 to $300,000 to prepare an evaluation of the pilot project (private funds).
Unknown potential additional tax revenues to the state (General Fund). The state imposes a tax on Medi-Cal managed care organizations. To the extent that payments for services provided in federally qualified health centers shift from direct payments from DHCS to capitated payments made to managed care plans (who would then provide capitated payments to centers), this bill will increase managed care plan revenues and subsequent tax revenues. The size of this impact will depend on the scale of the pilot project.
California Association of Public Hospitals and Health Systems (co-source)
California Primary Care Association (co-source)
L.A. Care Health Plan (co-source)
AltaMed Health Services Corporation
American Federation of State, County and Municipal Employees, AFL-CIO
Arroyo Vista Family Health Center
California Association of Physician Groups
Clinica Monsenor Oscar A. Romero
Community Clinic Association of Los Angeles County
National Association of Social Workers – California Chapter
Northeast Valley Health Corporation
OPPOSITION: (Verified 5/28/15)
None received
ARGUMENTS IN SUPPORT: This bill is jointly sponsored by the California Primary Care Association (CPCA), the California Association of Public Hospitals and Health Systems (CAPHHS) and L.A. Care Health Plan (LA Care). CPCA states the APM pilot project established by this bill will enable FQHCs to deliver care differently by converting the per visit rate FQHCs receive today to a capitation payment. Under the proposal, the capitated payment would afford the FQHC with greater flexibility in health care delivery as they no longer will have to meet the per visit billing requirements. For example, an FQHC could use the monthly capitation payment to provide health care services in new ways, such as phone consultation or answer patient questions via email. They could also utilize a more diverse array of qualified professionals, such as clinical pharmacists and dieticians.
CAPHHS argues FQHCs have been working to find new, more patient-centered and efficient ways to provide services, in order to meet the needs of a growing Medi-Cal patient population. However, the payment structure for FQHCs reimburses these clinics through a federally mandated bundled PPS based on face-to-face visits with a limited number of health professionals. Recognizing the need to experiment with a payment methodology that ultimately moves away from the volume based PPS structure, this bill allows FQHCs the flexibility to further invest in team-based care and alternative delivery models that offer more appropriate and cost effective care. Under this pilot program, FQHC providers could better integrate behavioral health and primary care, utilize group visits, email and phone care management, and team care the employs a greater array of ancillary staff, such as community health workers and nurses.
LA Care writes in support that a capitated payment would allow greater flexibility in health care delivery by enabling FQHCs to provide different types of services without having to meet the current per visit billing requirement. For example, the wrap cap payment could be used to provide a patient with different services on the same day or to provide services through phone consultations or communicate with patient on routine issues via email. In addition, this bill allows FQHCs the ability to provide more services than currently provided by allowing them to use additional provider types such as dieticians and social workers. LA Care concludes that the passage of this bill will allow FQHCs to move toward achieving the Triple Aim goals contained in the Affordable Care Act by testing new payment methodologies and delivery reforms.
Prepared by: Scott Bain / HEALTH /
5/30/15 17:08:14
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SB 147 (Hernandez) Page 3 of 3
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
SB 147 (Hernandez) - Federally qualified health centers
|
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Version: April 21, 2015 |
Policy Vote: HEALTH 9 - 0 |
Urgency: No |
Mandate: No |
Hearing Date: May 4, 2015 |
Consultant: Brendan McCarthy |
This bill meets the criteria for referral to the Suspense File.
Bill Summary:
SB 147 would require the Department of Health Care Services to authorize a three-year pilot project, under which federally qualified health centers would receive capitated monthly payments from Medi-Cal managed care plans in lieu of wrap-around payments from Medi-Cal for individual visits.
Fiscal Impact:
Likely costs of $450,000 per year for one to two years to develop the pilot project and apply for federal approval of the pilot project (General Fund and federal funds).
One-time costs of $150,000 to $300,000 to prepare an evaluation of the pilot project (private funds).
Unknown potential additional tax revenues to the state (General Fund). The state imposes a tax on Medi-Cal managed care organizations. To the extent that payments for services provided in federally qualified health centers shift from direct payments from the Department of Health Care Services to capitated payments made to managed care plans (who would then provide capitated payments to centers), the bill will increase managed care plan revenues and subsequent tax revenues. The size of this impact will depend on the scale of the pilot project.
Background:
Under current law, the Medi-Cal program provides health care coverage for certain low income and disabled individuals.
In the Medi-Cal fee-for-service system, federally qualified health centers are paid a per-visit payment known as the prospective payment system (PPS). The PPS rate is based on a baseline rate that reflects a federally qualified health center’s costs to provide services in 1999-2000, adjusted for inflation. When a Medi-Cal beneficiary in the managed care system receives care from a federally qualified health center, the managed care plan makes a per-visit payment to the center. Because the rates paid by managed care plans are significantly below the PPS rate, the state makes a supplemental “wrap-around” payment to the federally qualified health center to bring the total payment up to the PPS rate.
In the 2012-13 Governor’s Budget Proposal, the administration proposed a new method to make payments to federally qualified health centers, based on a capitated payment structure. The proposal would have also given greater flexibility to federally qualified health centers to provide services in new ways. The Legislature rejected that proposal.
Proposed Law:
SB 147 would require the Department of Health Care Services to authorize a three-year pilot project, under which federally qualified health centers would receive capitated monthly payments from Medi-Cal managed care plans in lieu of wrap-around payments from Medi-Cal for individual visits.
Specific provisions of the bill would:
Require the Department of Health Care Services to develop an alternate payment methodology pilot project for federally qualified health centers, beginning no sooner than July 1, 2016;
Require the pilot to be implemented in any county and any federally qualified health center willing to participate;
Require any participating federally qualified health center to receive capitated monthly payments from Medi-Cal managed care plans for Medi-Cal enrollees whose care is covered by the pilot program, in lieu of wrap-around payments from the Department;
Require the pilot to include financial protections for both the participating federally qualified health centers and managed care plans;
Require an evaluation of the pilot, to be funded with non-state funds;
Require the Department to seek all necessary federal approvals.
Related Legislation:
AB 690 (Wood) would add marriage and family therapists to the list of providers for which FQHCs and RHCs can bill Medi-Cal. That bill will be heard in the Assembly Appropriations Committee.
AB 858 (Wood) would require Medi-Cal reimbursement to FQHCs and RHCs for two visits taking place on the same day, under certain circumstances. That bill will be heard in the Assembly Appropriations Committee.
SB 1081 (Hernandez, 2014) was substantially similar to this bill. That bill was held on this committee’s Suspense File.
Staff Comments:
Under current law, the state imposes a 3.9% tax on Medi-Cal managed care plans, which is used to draw down federal funding and support the Medi-Cal program. Recent federal guidance indicates that the state’s existing tax on Medi-Cal managed care plans is not allowed under federal rules, because it does not apply to managed care plans in general. The Governor has proposed to replace the existing tax with a tax on all managed care plans. By spreading the tax burden across all managed care plans, which the federal guidance would require to some degree, any revised managed care tax would likely generate less tax revenue from Medi-Cal managed care plans than is currently the case.
-- END --
SB 147 (Hernandez) Page 8 of 8
SENATE COMMITTEE ON HEALTH
Senator Ed Hernandez, O.D., Chair
BILL NO: SB 147
AUTHOR: |
Hernandez |
||
VERSION: |
April 7, 2015 |
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HEARING DATE: |
April 15, 2015 |
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CONSULTANT: |
Scott Bain |
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SUBJECT: Federally qualified health centers.
SUMMARY:
Requires the Department of Health Care Services (DHCS) to authorize a three-year payment reform pilot project for federally qualified health centers (FQHCs) using an alternative payment methodology (APM) authorized under federal Medicaid law. Requires a FQHC participating in the pilot to receive a per member per month wrap-cap payment for each of its APM enrollees from a Medi-Cal managed care health plan, instead of the wrap around payment FQHCs currently receive from DHCS.
Existing law:
Establishes the Medi-Cal program as California’s Medicaid program, administered by the Department of Health Care Services (DHCS), which provides comprehensive health care coverage for low-income individuals. FQHC services are covered benefits under the Medi-Cal program.
Requires FQHCs to be reimbursed on a per-visit basis. Defines a “visit” as a face-to-face encounter between an FQHC patient and the following health care providers: a physician, physician assistant, nurse practitioner, certified nurse midwife, clinical psychologist, licensed clinical social worker, visiting nurse, podiatrist, dentist, optometrist, chiropractor, comprehensive perinatal services practitioner 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 visit.
Requires FQHC per-visit rates to be increased by the Medicare Economic Index (MEI) applicable to primary care services in the manner provided for in federal law.
Permits an FQHC to apply for an adjustment to its per-visit rate based on a change in the scope of services provided by the FQHC. Requires rate changes based on a change in the scope of services provided by an FQHC to be evaluated in accordance with Medicare reasonable cost principles.
Authorizes, under federal Medicaid law, states to provide for payment to an FQHC in an amount which is determined under an APM that is:
Agreed to by the state and the FQHC; and,
Results in payment to the FQHC of an amount which is at least equal to the amount otherwise required to be paid to the FQHC.
This bill:
Requires DHCS to authorize a three-year payment reform pilot project for FQHCs using an APM. Requires implementation of the APM pilot project to begin no sooner than July 1, 2016, subject to federal approval. Requires the APM pilot project to comply with federal APM requirements, and requires DHCS to file a state plan amendment (SPA) as necessary for the implementation of this bill.
Requires DHCS to notify every FQHC of the APM pilot project and to invite any interested FQHC to notify DHCS that the FQHC agrees to participate with respect to one or more of the FQHC’s sites. Requires the SPA, consistent with federal law, to specify that DHCS and participating FQHCs agree to the APM.
Prohibits an FQHC site participating in the APM pilot project from receiving traditional wrap-around payments for visits within the APM scope of services it provides to its APM enrollees.
Payments from Health Plans to FQHCs in Pilot
Requires an FQHC participating in the pilot, in addition to its base payment, and any applicable incentive payment, to receive a per member per month (PMPM) wrap-cap payment from the health plan or its secondary payor (such as a medical group or independent practice association) for each of its APM enrollees.
Requires DHCS to determine the wrap-cap amount specific to each participating FQHC, and for each APM aid category. Defines the APM aid categories for purposes of the pilot as adults, children, seniors and persons with disabilities, and the adult Medicaid expansion population.
Requires each health plan to pay a participating FQHC that is in the plan provider network the wrap-cap amounts for each APM enrollee of that FQHC, or, in cases where a secondary payer is involved, provide the necessary amounts to the secondary payer and require that secondary payer to make the required wrap-cap payments to the FQHC.
Permits the health plan, the secondary payer, as applicable, and the participating FQHC to choose the manner in which the wrap-cap payments are made, provided the resulting payment is equal to the full amount of the wrap-cap payments to which the participating FQHC is entitled, taking into account, among other provisions, changes in the number of APM enrollees within the APM aid categories. Requires the health plan, in cases where a secondary payer is involved, to demonstrate and certify to DHCS that it has contracts or other arrangements in place that provide for meeting the requirements, and if secondary payer fails to comply with the applicable requirements, makes the health plan be responsible to ensure the participating FQHC receives all payments due under this bill in a timely manner.
Requires DHCS, in consultation with each participating FQHC and health plan, to use the best available data for a recent agreed-upon time period that reflects the audit and reconciliation payment adjustments for the pilot participating FQHCs. Requires the determinations to take into account specified factors.
Prohibits the wrap-cap payments to FQHCs from being decreased for the first three years of the APM pilot project, unless agreed to by DHCS and the applicable participating FQHC.
Payments
from DHCS to Health Plans in Pilot
Requires DHCS to determine an APM supplemental capitation amount for each APM aid category to be paid by DHCS to the health plan, expressed as a PMPM amount. Requires the APM supplemental capitation amount to be a weighted average of the aggregate wrap-cap amounts determined, that at a minimum takes into account an estimation of the distribution of APM enrollees among the participating FQHCs for each APM aid category.
Prohibits the APM supplemental capitation amounts to health plans from being decreased for the first three years of the APM pilot project, unless agreed to by DHCS and the health plan.
Requires DHCS to adjust the amounts paid to health plans and FQHCs in the pilot at least annually for any change to the prospective payment system rate for participating FQHCs, including changes resulting from a change in the MEI and any changes in the FQHC’s scope of services.
Requires the total APM supplemental capitation amounts paid to health plans to be adjusted by DHCS as necessary to take into account adjustments to the number of APM enrollees by APM aid category no later than the 10th day of each month.
Risk Corridor, Rate Adjustment and True Up in Pilot
Requires DHCS, during the duration of the APM pilot project, to establish a risk corridor structure for the health plans relating to the payment requirement, designed within specified parameters.
Requires DHCS, with stakeholder input, to establish a rate adjustment structure on a FQHC site-specific basis that permits an aggregate adjustment to the wrap-cap when actual utilization of services at a participating FQHC’s site exceeds or falls below expectations that were reflected within the calculation of the rates.
Allows DHCS, in consultation with FQHCs and health plans interested in participating in the APM pilot project, to modify the adjustment process or methodology to comply with federal law and obtain federal approval of necessary amendments to the Medi-Cal state plan.
Permits a participating FQHC, a health plan or DHCS to request an APM enrollee true-up to assure the total amount of the APM supplemental capitation or wrap-cap payments, as applicable, are adjusted to accurately reflect the number of applicable APM enrollees.
Opting Out of Pilot
Allows a participating FQHC, with respect to one or more sites of its choosing, to opt to discontinue its participation in the pilot project subject to a notice requirement of no less than 30 days and no greater than 45 days, as established by DHCS.
Allows a health plan to opt to discontinue its participation in the pilot project, subject to a notice requirement of no less than 30 days and no greater than 45 days, as established by the DHCS if the risk corridor structure in this bill is amended at any time while the pilot project is in effect. Requires DHCS to place a provision in a plan's contract giving the plan the ability to discontinue its participation in the APM pilot project under this provision.
Evaluation of Pilot
Requires, within six months of the conclusion of pilot project, an evaluation to be completed by an independent entity, which is required to report its findings to DHCS and the Legislature. Makes the evaluation be contingent on the availability of non-state General Fund moneys for this purpose. Requires the evaluation to:
Assess whether the APM pilot project produced improvements in access to primary care services, care quality, patient experience, and overall health outcomes for APM enrollees;
Include existing FQHC-required quality metrics and an assessment of how the changes in financing allowed for alternative types of primary care visits and alternative touches between the participating FQHC and the patient; and,
Assess whether the APM pilot project’s efforts to improve primary care resulted in changes to patient service utilization patterns, including the reduced utilization of avoidable high cost services.
FISCAL EFFECT:
This bill has not been analyzed by a fiscal committee.
COMMENTS:
Author’s statement. According to the author, the APM pilot project established by this bill would require DHCS to establish a three-year health reform pilot project that would dramatically alter the way FQHCs deliver primary care and are reimbursed by Medi-Cal. In participating counties, this bill would replace the existing per visit Medi-Cal payment methodology with a capitated system through Medi-Cal managed care plans using the APM option authorized under federal law. The capitated payment would provide greater flexibility in health care delivery for the FQHC by enabling the FQHC to provide different types of health care services without having to meet the per visit billing requirement to generate Medi-Cal revenue. For example, an FQHC could use the capitation payment to provide a patient with different services on the same day (an FQHC cannot bill separately for a primary care visit and a mental health care appointment that occur on the same day under current DHCS policy), or to provide health care services through different means (such as phone consultation and email consultation) or through different providers types (such as dieticians).
Background on FQHCs. In 1989, Congress established FQHCs as a new provider type. FQHCs are public or tax-exempt entities which receive a direct grant from the federal government under Section 330 of the Public Health Service Act, or are determined by the federal Department of Health and Human Services to meet the requirements for receiving such grants. Federal law defines the services to be provided by FQHCs for Medicaid purposes and included special payment provisions to ensure that they would be reimbursed for 100 percent of their reasonable costs associated with furnishing these services. One of the legislative purposes in doing so was to ensure that federal grant funds are not used to subsidize health center or program services to Medicaid beneficiaries. State Medicaid programs must pay for covered services provided by FQHCs. There are over 820 FQHC locations (FQHCs may have more than one clinic location) in California.
Current Medi-Cal Reimbursement to FQHCs. Federal Medicaid payment to FQHCs are governed by state (Medi-Cal in California) and federal law. In December 2000, Congress required states to change their FQHC payment methodology from a retrospective to a prospective payment system (PPS). This federal law change established (for existing FQHCs) a per-visit baseline payment rate equal to 100 percent of the center’s average costs per visit incurred during 1999 and 2000 which were reasonable and related to the cost of furnishing such services. States are required to pay FQHCs a per-visit rate, which is equal to the baseline PPS payment rate, increased each year by the MEI, and adjusted to take into account any increase or decrease in the scope of such services furnished by the FQHC during that fiscal year. Under PPS, State Medicaid agencies are required to pay centers their PPS per-visit rate (or an APM, discussed below) for each face-to-face encounter between a Medicaid beneficiary and one of the FQHC’s billable providers for a covered service.
For Medi-Cal managed care
plan patients, DHCS is required to reimburse an FQHC 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 established to comply with
federal and state regulation to reimburse a provider for the
difference between their PPS rate and their Medi-Cal managed care
reimbursement.
FQHCs and Rural Health Clinics (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 access to
the Medi-Cal population, FQHCs have been exempted from the Medi-Cal
rate reductions.
This bill calls for a pilot program using an APM where FQHCs would receive PMPM payments from the health plan, and would no longer receive a “wrap around” payment from DHCS. CMS has indicated a state may accept an FQHC’s written assertion that the amount paid under the APM results in payment that at least equals the amount to which the FQHC is entitled under the PPS. In 2010, approximately 21 states used an APM to pay some or all of their FQHCs, according to a September 2011 report from the National Association of Community Health Centers.
Financial protections in bill for FQHCs and health plans. This bill establishes an annual rate adjustment process if actual “traditional” visit utilization exceeds or drops below the baseline PMPM utilization projections used for rate setting purposes. Under this language, a decrease in traditional FQHC utilization that exceeds 30 percent would trigger a process that potentially results in a pilot FQHC paying back a portion of its revenue to the health plan. An increase in FQHC utilization of 5 percent in year one, 7.5 percent in year two, and 10 percent in year three would trigger a rate adjustment process resulting in the health plan making a rate adjustment payment to the FQHC.
In addition, this bill establishes a “risk corridor” structure for the wrap cap payments required under the pilot program. Under a risk corridor, the DHCS and the health plan would share in a portion of a limited amount of a demonstration plan’s profit or loss relative to the plan’s wrap-cap payments. Under the risk corridor structure, for costs in excess of the wrap-cap payments:
The health plan is fully responsible for the costs of the wrap-cap payments in excess of the total APM supplemental capitation amounts up to .5 percent;
The health plan and DHCS share responsibility for the costs of the wrap-cap payments to participating FQHCs that are between .5 percent and up to one percent above the total APM supplemental capitation amount; and,
DHCS is fully responsible for the total costs of the wrap-cap payments that are more than one percent in excess of the health plan’s total APM supplemental capitation amount.
For revenue in excess of total aggregate costs (savings):
The health plan retains the APM supplemental capitation amount in excess of the total costs of the wrap-cap payments up to .5 percent;
The health plan and DHCS share the benefit of the APM supplemental capitation amount in excess of the total costs of the wrap-cap payments that are between .5 and up to one percent below the total APM supplemental capitation amount; and,
DHCS fully retains the APM supplemental capitation amount in excess of the total costs of the wrap-cap payments that are greater than one percent below the total APM supplemental capitation amount.
An example of how the risk corridors would work is if the APM costs for a plan are $1,000, the plan is at risk for costs between $1,000 to $1,005, DHCS and the plan would split costs between $1,005 and $1,010, and DHCS would be responsible for costs above $1,010. Similarly, the plans can capture the savings of revenue above costs between $995 to $1,000, share savings with DHCS for savings between $990 and $995 and the state retains savings below $990. The risk corridor limits the financial risk for health plans by protecting them financially for amounts above the percentage thresholds. The language also protects the FQHCs as it prevents plans from assigning all enrollees to lowest cost FQHC because the plan that was paid too much would not retain excess revenue.
Locations participating in pilot program. This bill does not specify the FQHC and counties that will participate in the proposed pilot as bill proponents believe doing so in statute would require a federal waiver of the “statewideness” Medicaid requirement. The FQHCs that have expressed interest in participating in the pilot are identified in two phases. The first phase consists of 22 FQHCs with over 60 locations in 10 counties, and the second phase is 16 FQHCs with over 40 locations in seven counties.
Prior DHCS proposals. In 2012-13, DHCS proposed, as part of the Governor’s budget, to change the Medi-Cal payment methodology for FQHCs and RHCs under an APM. Under DHCS’ proposal, payments made to FQHCs and RHCs participating in Medi-Cal managed care plan contracts would have changed from a cost and volume-based payment to a fixed payment to provide a broad range of services to its enrollees. A waiver of current operating restrictions would allow FQHCs and RHCs to provide group visits, telehealth, and telephonic disease management. The waiver would have also allowed FQHCs to perform multiple services on the same day. DHCS assumed an efficiency savings of ten percent and would have removed this amount from the funding provided to Medi-Cal managed care plans. This proposal was rejected by the Legislature.
On April 25, 2014, DHCS released a proposed APM for a pilot program at FQHCs located in urban areas. Under the pilot, the payor of FQHC services would transition from DHCS to Medi-Cal managed care plans. The pilot would ensure FQHCs are reimbursed at no less than the PPS rate, as prescribed under federal regulations, while incentivizing delivery system and practice transformation at FQHCs through flexibilities available under a full capitation payment structure. DHCS’ objective for the pilot is to transition the delivery of care at FQHCs from its current volume-based system to one that better aligns the financing and delivery of health services. The APM payment structure has been the subject of multiple meetings between the sponsors of this bill and DHCS.
Related legislation. AB 690 (Wood), would add marriage and family therapists to the list of providers for which FQHCs and RHCs are able to bill under PPS for a face-to-face encounter. AB 690 passed out of the Assembly Health on April 7, 2015 on an 18-0 vote.
AB 858 (Wood), requires
Medi-Cal reimbursement to FQHCs and RHCs for two visits taking place
on the same day at a single location when the patient suffers illness
or injury requiring additional diagnosis or treatment after the first
visit, or when the patient has a medical visit and another health
visit with a mental health provider or dental provider. AB
858 is currently scheduled for hearing in the Assembly Health
Committee on April 14, 2015.
Prior legislation.
SB 1081 (Hernandez), of 2014, would have required DHCS to authorize a three-year alternative payment Medi-Cal methodology pilot project for FQHCs under which participating FQHCs would receive capitated monthly payments for each Medi-Cal managed care enrollee assigned to the FQHC in place of the wrap-around, fee-for-service per-visit payments from DHCS. SB 1081 was held on the Senate Appropriations suspense file.
SB 1150 (Hueso and Correa),
would have required Medi-Cal
reimbursement to FQHCs and RHCs for two visits taking place on the
same day at a single location when the patient suffers illness or
injury requiring additional diagnosis or treatment after the first
visit, or when the patient has a medical visit and another health
visit with a mental health provider or dental provider. SB
1150 was held on the Senate Appropriations suspense file.
AB
1445 (Chesbro), of 2009-10, was substantially similar to SB 1150. AB
1445 was held on the Senate Appropriations suspense file.
SB
260 (Steinberg), of 2007, was also similar to SB 1150. SB
260 was vetoed by Governor Schwarzenegger. In his veto message,
Governor Schwarzenegger argued the bill will increase General Fund
pressure at a time of continuing budget challenges, and that allowing
separate billing for mental health services would lead to increased
costs that the state could not afford.
SB 36 (Chesbro), Chapter 527,
Statutes of 2003, established a statutory structure for Medi-Cal
payments for services provided by FQHCs and RHCs in compliance with
federal law, changing from fee-for-service to a per-visit basis.
Support. This bill is jointly sponsored by the California Primary Care Association (CPCA), the California Association of Public Hospitals and Health Systems (CAPHHS) and L.A. Care Health Plan (LA Care). CPCA states the APM pilot project established by this bill will enable FQHCs to deliver care differently by converting the per visit rate FQHCs receive today to a capitation payment. Under the proposal, the capitated payment would afford the FQHC with greater flexibility in health care delivery as they no longer will have to meet the per visit billing requirements. For example, an FQHC could use the monthly capitation payment to provide health care services in new ways, such as phone consultation or answer patient questions via email. They could also utilize a more diverse array of qualified professionals, such as clinical pharmacists and dieticians.
CAPHHS argues FQHCs have been
working to find new, more patient-centered and efficient ways to
provide services, in order to meet the needs of a growing Medi-Cal
patient population. However, the payment structure for FQHCs
reimburses these clinics through a federally mandated bundled PPS
based on face-to-face visits with a limited number of health
professionals. Recognizing the need to experiment with a payment
methodology that ultimately moves away from the volume based PPS
structure, this bill would allow FQHCs the flexibility to further
invest in team-based care and alternative delivery models that offer
more appropriate and cost effective care. Under this pilot program,
FQHC providers could better integrate behavioral health and primary
care, utilize group visits, email and phone care management, and team
care the employs a greater array of ancillary staff, such as
community health workers and nurses.
LA Care writes in support that a capitated payment would allow greater flexibility in health care delivery by enabling FQHCs to provide different types of services without having to meet the current per visit billing requirement. For example, the wrap cap payment could be used to provide a patient with different services on the same day or to provide services through phone consultations or communicate with patient on routine issues via email. In addition, this bill would allow FQHCs the ability to provide more services than currently provided by allowing them to use additional provider types such as dieticians and social workers. LA Care concludes that the passage of this bill will allow FQHCs to move toward achieving the Triple Aim goals contained in the Affordable Care Act by testing new payment methodologies and delivery reforms.
Amendments. Staff recommends clarifying amendments as to their applicability to the pilot versus traditional payments.
SUPPORT AND OPPOSITION:
Support: California
Association of Public Hospitals and Health Systems (co-sponsor)
California Primary Care Association (co-sponsor)
L.A. Care Health Plan (co-sponsor)
American Federation of State, County, and Municipal Employees, AFL-CIO
California Association of Physician Groups
California Chapter National Association of Social Workers
Oppose: None received
-- END --
Discussed in Hearing
1MIN
Senate Floor
1MIN
Assembly Floor
7MIN
Assembly Standing Committee on Health
2MIN
Senate Floor
Bill Author
Bill Co-Author(s):