SB 610: Medi-Cal: federally qualified health centers: rural health clinics: managed care contracts.
- Session Year: 2015-2016
- House: Senate
- Latest Version Date: 2015-09-15
Existing law provides for the Medi-Cal program, which is administered by the State Department of Health Care Services and under which qualified low-income persons receive health care benefits. The Medi-Cal program is, in part, governed and funded by federal Medicaid provisions. Existing law provides that federally qualified health center (FQHC) services and rural health clinic (RHC) services, as defined, are covered benefits under the Medi-Cal program to be reimbursed, to the extent that federal financial participation is obtained, to providers on a per-visit basis.
Existing law authorizes an FQHC or RHC to apply for an adjustment to its per-visit rate, based on a change in the scope of services provided, as prescribed. Existing law establishes alternative ratesetting procedures with respect to a new entity that first qualifies as an FQHC or RHC in the year 2001 or later, a newly licensed facility at a new location added to an existing FQHC or RHC or an existing FQHC or RHC that is relocated. Two of the procedures are referred to as comparability approaches, based on the rates of 3 similarly situated FQHCs and RHCs. The 3rd procedure requires, at a new entitys one-time election, that the department establish the reimbursement rate, calculated on a per-visit basis, that equals 100% of the projected allowable costs to the FQHC or RHC of furnishing services during its first 12 months of operation as an FQHC or RHC.
This bill would require the department to finalize a new rate within 1 year after an FQHCs or RHCs submission of a scope-of-service rate change. With respect to a new FQHC or RHC that has elected for the department to establish its reimbursement rate based on projected allowable costs as described above, this bill would require the department to finalize that rate within 1 year after the submission of the actual cost report from the first full 12 months of operation, as specified.
This bill would revise the departments responsibilities with respect to a new entity or a relocated FQHC or RHC that selects either of the comparability approaches. The bill would require the department to review the comparable facilities to determine if any of them do not meet the comparability threshold and, if so, to notify the new entity, and request a supplemental submission, as prescribed. The bill would require the department to conduct an initial review of a scope-of-service rate change request within 30 days after submission by the FQHC or RHC, and notify the FQHC or RHC by the 31st day after submission if the department determines that additional information is necessary, as prescribed. The bill would require the department to finalize the FQHCs or RHCs rate within 1 year after receiving a submission the department determines to be complete.
This bill would require the department to correct erroneous payments at least quarterly to reprocess past claims and ensure all claims are reimbursed at the appropriate finalized new rate.
Existing law requires the department to administer a program to ensure that total payments to FQHCs and RHCs operating as managed care subcontractors comply with applicable federal law regarding payment for services provided by FQHCs and RHCs. Under the departments program, existing law requires FQHCs and RHCs subcontracting with specified managed care plans to seek supplemental reimbursement from the department through a per visit fee-for-service billing system. To be reimbursed under these provisions, existing law requires each FQHC and RHC to submit to the department for approval a rate differential based on the FQHCs or RHCs reasonable cost or the prospective payment rate. Within 6 months of the end of the FQHCs or RHCs fiscal year, existing law requires, to the extent feasible, the department to perform an annual reconciliation to reasonable cost, and make payments to, or obtain recovery from, the FQHC or RHC.
This bill would impose various requirements on the department regarding the reconciliation process described above. The bill would require the department to complete the final reconciliation review and pay to the center or clinic any remaining amount owed within 18 months after the last date of the fiscal year for which the department is conducting the review.
This bill would incorporate additional changes to Section 14132.100 of the Welfare and Institutions Code made by this bill and AB 858 to take effect if both bills are chaptered and this bill is chaptered last.
Existing law provides for the Medi-Cal program, which is administered by the State Department of Health Care Services and under which qualified low-income persons receive health care benefits. The Medi-Cal program is, in part, governed and funded by federal Medicaid provisions. Existing law provides that federally qualified health center (FQHC) services and rural health clinic (RHC) services, as defined, are covered benefits under the Medi-Cal program to be reimbursed, to the extent that federal financial participation is obtained, to providers on a per-visit basis.
Existing law authorizes an FQHC or RHC to apply for an adjustment to its per-visit rate, based on a change in the scope of services provided, as prescribed. Existing law establishes alternative ratesetting procedures with respect to a new entity that first qualifies as an FQHC or RHC in the year 2001 or later, a newly licensed facility at a new location added to an existing FQHC or RHC or an existing FQHC or RHC that is relocated. Two of the procedures are referred to as comparability approaches, based on the rates of 3 similarly situated FQHCs and RHCs. The 3rd procedure requires, at a new entitys one-time election, that the department establish the reimbursement rate, calculated on a per-visit basis, that equals 100% of the projected allowable costs to the FQHC or RHC of furnishing services during its first 12 months of operation as an FQHC or RHC.
This bill would require the department to finalize a new rate within 1 year after an FQHCs or RHCs submission of a scope-of-service rate change. With respect to a new FQHC or RHC that has elected for the department to establish its reimbursement rate based on projected allowable costs as described above, this bill would require the department to finalize that rate within 1 year after the submission of the actual cost report from the first full 12 months of operation, as specified.
This bill would revise the departments responsibilities with respect to a new entity or a relocated FQHC or RHC that selects either of the comparability approaches. The bill would require the department to review the comparable facilities to determine if any of them do not meet the comparability threshold and, if so, to notify the new entity, and request a supplemental submission, as prescribed. The bill would require the department to conduct an initial review of a scope-of-service rate change request within 30 days after submission by the FQHC or RHC, and notify the FQHC or RHC by the 31st day after submission if the department determines that additional information is necessary, as prescribed. The bill would require the department to finalize the FQHCs or RHCs rate within 1 year after receiving a submission the department determines to be complete.
This bill would require the department to correct erroneous payments at least quarterly to reprocess past claims and ensure all claims are reimbursed at the appropriate finalized new rate.
Existing law requires the department to administer a program to ensure that total payments to FQHCs and RHCs operating as managed care subcontractors comply with applicable federal law regarding payment for services provided by FQHCs and RHCs. Under the departments program, existing law requires FQHCs and RHCs subcontracting with specified managed care plans to seek supplemental reimbursement from the department through a per visit fee-for-service billing system. To be reimbursed under these provisions, existing law requires each FQHC and RHC to submit to the department for approval a rate differential based on the FQHCs or RHCs reasonable cost or the prospective payment rate. Within 6 months of the end of the FQHCs or RHCs fiscal year, existing law requires, to the extent feasible, the department to perform an annual reconciliation to reasonable cost, and make payments to, or obtain recovery from, the FQHC or RHC.
This bill would impose various requirements on the department regarding the reconciliation process described above. The bill would require the department to complete the final reconciliation review and pay to the center or clinic any remaining amount owed within 18 months after the last date of the fiscal year for which the department is conducting the review.
This bill would incorporate additional changes to Section 14132.100 of the Welfare and Institutions Code made by this bill and AB 858 to take effect if both bills are chaptered and this bill is chaptered last.
Existing law provides for the Medi-Cal program, which is administered by the State Department of Health Care Services and under which qualified low-income persons receive health care benefits. The Medi-Cal program is, in part, governed and funded by federal Medicaid provisions. Existing law provides that federally qualified health center (FQHC) services and rural health clinic (RHC) services, as defined, are covered benefits under the Medi-Cal program to be reimbursed, to the extent that federal financial participation is obtained, to providers on a per-visit basis.
Existing law authorizes an FQHC or RHC to apply for an adjustment to its per-visit rate, based on a change in the scope of services provided, as prescribed. Existing law establishes alternative ratesetting procedures with respect to a new entity that first qualifies as an FQHC or RHC in the year 2001 or later, a newly licensed facility at a new location added to an existing FQHC or RHC or an existing FQHC or RHC that is relocated. Two of the procedures are referred to as comparability approaches, based on the rates of 3 similarly situated FQHCs and RHCs. The 3rd procedure requires, at a new entitys one-time election, that the department establish the reimbursement rate, calculated on a per-visit basis, that equals 100% of the projected allowable costs to the FQHC or RHC of furnishing services during its first 12 months of operation as an FQHC or RHC.
This bill would require the department to finalize a new rate within 90 days 1 year after an FQHCs or RHCs submission of a scope-of-service rate change. With respect to a new FQHC or RHC that has elected for the department to establish its reimbursement rate based on projected allowable costs as described above, this bill would require the department to finalize that rate within 90 days 1 year after the submission of the actual cost report from the first full 12 months of operation, as specified.
This bill would revise the departments responsibilities with respect to a new entity or a relocated FQHC or RHC that selects either of the comparability approaches. The bill would require the department to review the comparable facilities to determine if any of them do not meet the comparability threshold and, if so, to notify the new entity, and request a supplemental submission, as prescribed. The bill would require the department to conduct an initial review of a scope-of-service rate change request within 30 days after submission by the FQHC or RHC, and notify the FQHC or RHC by the 31st day after submission if the department determines that additional information is necessary, as prescribed. The bill would require the department to finalize the FQHCs or RHCs rate within 90 days 1 year after receiving a submission the department determines to be complete.
This bill would require the department to correct erroneous payments at least quarterly to reprocess past claims and ensure all claims are reimbursed at the appropriate finalized new rate.
Existing law requires the department to administer a program to ensure that total payments to FQHCs and RHCs operating as managed care subcontractors comply with applicable federal law regarding payment for services provided by FQHCs and RHCs. Under the departments program, existing law requires FQHCs and RHCs subcontracting with specified managed care plans to seek supplemental reimbursement from the department through a per visit fee-for-service billing system. To be reimbursed under these provisions, existing law requires each FQHC and RHC to submit to the department for approval a rate differential based on the FQHCs or RHCs reasonable cost or the prospective payment rate. Within 6 months of the end of the FQHCs or RHCs fiscal year, existing law requires, to the extent feasible, the department to perform an annual reconciliation to reasonable cost, and make payments to, or obtain recovery from, the FQHC or RHC.
This bill would impose various requirements on the department regarding the reconciliation process described above. The bill would require the department to complete the final reconciliation review and pay to the center or clinic any remaining amount owed within 15 months of 18 months after the last date of the fiscal year for which the department is conducting the review.
Existing law provides for the Medi-Cal program, which is administered by the State Department of Health Care Services and under which qualified low-income persons receive health care benefits. The Medi-Cal program is, in part, governed and funded by federal Medicaid provisions. Existing law provides that federally qualified health center (FQHC) services and rural health clinic (RHC) services, as defined, are covered benefits under the Medi-Cal program to be reimbursed, to the extent that federal financial participation is obtained, to providers on a per-visit basis.
Existing law authorizes an FQHC or RHC to apply for an adjustment to its per-visit rate, based on a change in the scope of services provided, as prescribed. Existing law establishes alternative ratesetting procedures with respect to a new entity that first qualifies as an FQHC or RHC in the year 2001 or later, a newly licensed facility at a new location added to an existing FQHC or RHC or an existing FQHC or RHC that is relocated. Two of the procedures are referred to as comparability approaches, based on the rates of 3 similarly situated FQHCs and RHCs. The 3rd procedure requires, at a new entitys one-time election, that the department establish the reimbursement rate, calculated on a per-visit basis, that equals 100% of the projected allowable costs to the FQHC or RHC of furnishing services during its first 12 months of operation as an FQHC or RHC.
This bill would require the department to finalize a new rate within 90 days after an FQHCs or RHCs submission of a scope-of-service rate change. With respect to a new FQHC or RHC that has elected for the department to establish its reimbursement rate based on projected allowable costs as described above, this bill would require the department to finalize that rate within 90 days after the submission of the actual cost report from the first full 12 months of operation, as specified.
This bill would revise the departments responsibilities with respect to a new entity or a relocated FQHC or RHC that selects either of the comparability approaches. The bill would require the department to review the comparable facilities to determine if any of them do not meet the comparability threshold and, if so, to notify the new entity, and request a supplemental submission, as prescribed. The bill would require the department to conduct an initial review of a scope-of-service rate change request within 30 days after submission by the FQHC or RHC, and notify the FQHC or RHC by the 31st day after submission if the department determines that additional information is necessary, as prescribed. The bill would require the department to finalize the FQHCs or RHCs rate within 90 days after receiving a submission the department determines to be complete.
This bill would require the department to correct erroneous payments at least quarterly to reprocess past claims and ensure all claims are reimbursed at the appropriate finalized new rate.
Existing law requires the department to administer a program to ensure that total payments to FQHCs and RHCs operating as managed care subcontractors comply with applicable federal law regarding payment for services provided by FQHCs and RHCs. Under the departments program, existing law requires FQHCs and RHCs subcontracting with specified managed care plans to seek supplemental reimbursement from the department through a per visit fee-for-service billing system. To be reimbursed under these provisions, existing law requires each FQHC and RHC to submit to the department for approval a rate differential based on the FQHCs or RHCs reasonable cost or the prospective payment rate. Within 6 months of the end of the FQHCs or RHCs fiscal year, existing law requires, to the extent feasible, the department to perform an annual reconciliation to reasonable cost, and make payments to, or obtain recovery from, the FQHC or RHC.
This bill would impose various requirements on the department regarding the reconciliation process described above. The bill would require the department to complete the final reconciliation review and pay to the center or clinic any remaining amount owed within 15 months of the last date of the fiscal year for which the department is conducting the review.
Existing law provides for the Medi-Cal program, which is administered by the State Department of Health Care Services and under which qualified low-income persons receive health care benefits. The Medi-Cal program is, in part, governed and funded by federal Medicaid provisions. Existing law provides that federally qualified health center (FQHC) services and rural health clinic (RHC) services, as defined, are covered benefits under the Medi-Cal program to be reimbursed, to the extent that federal financial participation is obtained, to providers on a per-visit basis.
Existing law authorizes an FQHC or RHC to apply for an adjustment to its per-visit rate, based on a change in the scope of services provided, as prescribed. Existing law establishes alternative ratesetting procedures with respect to a new entity that first qualifies as an FQHC or RHC in the year 2001 or later, a newly licensed facility at a new location added to an existing FQHC or RHC or an existing FQHC or RHC that is relocated. Two of the procedures are referred to as comparability approaches, based on the rates of 3 similarly situated FQHCs and RHCs. The 3rd procedure requires, at a new entitys one-time election, that the department establish the reimbursement rate, calculated on a per-visit basis, that equals 100% of the projected allowable costs to the FQHC or RHC of furnishing services during its first 12 months of operation as an FQHC or RHC.
This bill would require the department to finalize a new rate within 90 days after an FQHCs or RHCs submission of a scope-of-service rate change. With respect to a new FQHC or RHC that has elected for the department to establish its reimbursement rate based on projected allowable costs as described above, this bill would require the department to finalize that rate within 90 days after the submission of the actual cost report from the first full 12 months of operation, as specified.
This bill would revise the departments responsibilities with respect to a new entity or a relocated FQHC or RHC that selects either of the comparability approaches. The bill would require the department to review the comparable facilities to determine if any of them do not meet the comparability threshold and, if so, to notify the new entity, and request a supplemental submission, as prescribed. The bill would require the department to conduct an initial review of a scope-of-service rate change request within 30 days after submission by the FQHC or RHC, and notify the FQHC or RHC by the 31st day after submission if the department determines that additional information is necessary, as prescribed. The bill would require the department to finalize a new entitys the FQHCs or RHCs rate within 90 days after receiving a submission the department determines to be comparable. complete.
This bill would require the department to correct erroneous payments at least quarterly to reprocess past claims and ensure all claims are reimbursed at the appropriate finalized new rate.
Existing law requires the department to administer a program to ensure that total payments to FQHCs and RHCs operating as managed care subcontractors comply with applicable federal law regarding payment for services provided by FQHCs and RHCs. Under the departments program, existing law requires FQHCs and RHCs subcontracting with specified managed care plans to seek supplemental reimbursement from the department through a per visit fee-for-service billing system. To be reimbursed under these provisions, existing law requires each FQHC and RHC to submit to the department for approval a rate differential based on the FQHCs or RHCs reasonable cost or the prospective payment rate. Within 6 months of the end of the FQHCs or RHCs fiscal year, existing law requires, to the extent feasible, the department to perform an annual reconciliation to reasonable cost, and make payments to, or obtain recovery from, the FQHC or RHC.
This bill would impose various requirements on the department regarding the reconciliation process described above. The bill would require the department to complete the final reconciliation review and pay to the center or clinic any remaining amount owed within 15 months of the last date of the fiscal year for which the department is conducting the review.
Existing law provides for the Medi-Cal program, which is administered by the State Department of Health Care Services and under which qualified low-income persons receive health care benefits. The Medi-Cal program is, in part, governed and funded by federal Medicaid provisions. Existing law provides that federally qualified health center (FQHC) services and rural health clinic (RHC) services, as defined, are covered benefits under the Medi-Cal program to be reimbursed, to the extent that federal financial participation is obtained, to providers on a per-visit basis.
Existing law authorizes an FQHC or RHC to apply for an adjustment to its per-visit rate, based on a change in the scope of services provided, as prescribed. Existing law establishes alternative ratesetting procedures with respect to a new entity that first qualifies as an FQHC or RHC in the year 2001 or later, a newly licensed facility at a new location added to an existing FQHC or RHC or an existing FQHC or RHC that is relocated. Two of the procedures are referred to as comparability approaches, based on the rates of 3 similarly situated FQHCs and RHCs. The 3rd procedure requires, at a new entitys one-time election, that the department establish the reimbursement rate, calculated on a per-visit basis, that equals 100% of the projected allowable costs to the FQHC or RHC of furnishing services during its first 12 months of operation as an FQHC or RHC.
This bill would require the department to finalize a new rate within 90 days after an FQHCs or RHCs submission of a scope-of-service rate change. With respect to a new FQHC or RHC that has elected for the department to establish its reimbursement rate based on projected allowable costs as described above, this bill would require the department to finalize that rate within 90 days after the submission of the actual cost report from the first full 12 months of operation, as specified.
This bill would revise the departments responsibilities with respect to a new entity or a relocated FQHC or RHC that selects either of the comparability approaches. The bill would require the department to review the comparable facilities to determine if any of them do not meet the comparability threshold and, if so, to notify the new entity, and request a supplemental submission, as prescribed. The bill would require the department to finalize a new entitys rate within 90 days after receiving a submission the department determines to be comparable.
This bill would require the department to correct erroneous payments at least quarterly to reprocess past claims and ensure all claims are reimbursed at the appropriate finalized new rate.
Existing law requires the department to administer a program to ensure that total payments to FQHCs and RHCs operating as managed care subcontractors comply with applicable federal law regarding payment for services provided by FQHCs and RHCs. Under the departments program, existing law requires FQHCs and RHCs subcontracting with specified managed care plans to seek supplemental reimbursement from the department through a per visit fee-for-service billing system. To be reimbursed under these provisions, existing law requires each FQHC and RHC to submit to the department for approval a rate differential based on the FQHCs or RHCs reasonable cost or the prospective payment rate. Within 6 months of the end of the FQHCs or RHCs fiscal year, existing law requires, to the extent feasible, the department to perform an annual reconciliation to reasonable cost, and make payments to, or obtain recovery from, the FQHC or RHC.
This bill would impose various requirements on the department regarding the reconciliation process described above. The bill would require the department to complete the final reconciliation review and pay to the center or clinic any remaining amount owed within 15 months of the last date of the fiscal year for which the department is conducting the review.
(a)The department shall require, as a condition of obtaining a contract with the department, that any local initiative, as defined in Section 53810 of Title 22 of the California Code of Regulations, offer a subcontract to any entity defined in Section 1396d(l)(2)(B) of Title 42 of the United States Code providing services as defined in Section 1396d(a)(2)(C) of Title 42 of the United States Code and operating in the service area covered by the local initiatives contract with the department. These entities are also known as federally qualified health centers.
(b)Except as otherwise provided in this section, managed care subcontracts offered to a federally qualified health center or a rural health clinic, as defined in Section 1396d(l)(1) of Title 42 of the United States Code, by a local initiative, county organized health system, as defined in Section 12693.05 of the Insurance Code, commercial plan, as defined in Section 53810 of Title 22 of the California Code of Regulations, or a health plan contracting with a geographic managed care program, as defined in subdivision (g) of Section 53902 of Title 22 of the California Code of Regulations, shall be on the same terms and conditions offered to other subcontractors providing a similar scope of service. Any beneficiary, subscriber, or enrollee of a program or plan who affirmatively selects, or is assigned by default to, a federally qualified health center or rural health clinic under the terms of a contract between a plan, government program, or any subcontractor of a plan or program, and a federally qualified health center or rural health clinic, shall be assigned directly to the federally qualified health center or rural health clinic, and not to any individual provider performing services on behalf of the federally qualified health center or rural health clinic.
(c)The department shall provide incentives in the competitive application process described in paragraph (1) of subdivision (b) of Section 53800 of Title 22 of the California Code of Regulations, to encourage potential commercial plans as defined in Section 53810 of Title 22 of the California Code of Regulations to offer subcontracts to these federally qualified health centers.
(d)Reimbursement to federally qualified health centers and rural health centers for services provided pursuant to a subcontract with a local initiative, a commercial plan, geographic managed care program health plan, or a county organized health system, shall be paid 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 a federally qualified health center or rural health clinic.
(e)The department shall administer a program to ensure that total payments to federally qualified health centers and rural health clinics operating as managed care subcontractors pursuant to subdivision (d) comply with applicable federal law pursuant to Sections 1902(bb) and 1903(m)(2)(A)(ix) of the Social Security Act (42 U.S.C. Secs. 1396a(bb) and 1396b(m)(2)(A)(ix)). Under the departments program, federally qualified health centers and rural health clinics subcontracting with local initiatives, commercial plans, county organized health systems, and geographic managed care program health plans shall seek supplemental reimbursement from the department through a per visit fee-for-service billing system utilizing the states Medi-Cal fee-for-service claims processing system contractor. To carry out this per visit payment process, each federally qualified health system and rural health clinic shall submit to the department for approval a rate differential calculated to reflect the amount necessary to reimburse the federally qualified health center or rural health clinic for the difference between the payment the center or clinic received from the managed care health plan and either the interim rate established by the department based on the centers or clinics reasonable cost or the centers or clinics prospective payment rate. The department shall adjust the computed rate differential as it deems necessary to minimize the difference between the centers or clinics revenue from the plan and the centers or clinics cost-based reimbursement or the centers or clinics prospective payment rate.
(1)In addition, the department shall perform an annual reconciliation to reasonable cost, and make payments to, or obtain a recovery from, the center or clinic.
(2)The department shall perform an initial review of the reconciliation filing within 30 days after receipt. If the department determines during the initial review that a payment is owed to the center or clinic, the department shall pay to the center or clinic at least 80 percent of the amount owed within 30 days after completion of the initial review or in any event within 60 days after receipt of the reconciliation filing.
(3)The department shall complete the final reconciliation review and shall pay to the center or clinic the remaining amount owed within 18 months after the last date of the fiscal year for which the department is conducting the review.
(f)In calculating the capitation rates to be paid to local initiatives, commercial plans, geographic managed care program health plans, and county organized health systems, the department shall not include the additional dollar amount applicable to cost-based reimbursement that would otherwise be paid, absent cost-based reimbursement, to federally qualified health centers and rural health clinics in the Medi-Cal fee-for-service program.
(g)On or before September 30, 2002, the director shall conduct a study of the actual and projected impact of the transition from a cost-based reimbursement system to a prospective payment system for federally qualified health centers and rural health clinics. In conducting the study, the director shall evaluate the extent to which the prospective payment system stimulates expansion of services, including new facilities to expand capacity of the centers, and the extent to which actual and estimated prospective payment rates of federally qualified health centers and rural health clinics for the first five years of the prospective payment system are reflective of the cost of providing services to Medi-Cal beneficiaries. Clinics may submit cost reporting information to the department to provide data for the study.
(h)The department shall approve all contracts between federally qualified health centers or rural health clinics and any local initiative, commercial plan, geographic managed care program health plan, or county organized health system in order to ensure compliance with this section.
(i)This section shall not preclude the department from establishing pilot programs pursuant to Section 14087.329.
SEC. 2.Section 14132.100 of the Welfare and Institutions Code is amended to read:14132.100.(a)The federally qualified health center services described in Section 1396d(a)(2)(C) of Title 42 of the United States Code are covered benefits.
(b)The rural health clinic services described in Section 1396d(a)(2)(B) of Title 42 of the United States Code are covered benefits.
(c)Federally qualified health center services and rural health clinic services shall be reimbursed on a per-visit basis in accordance with the definition of visit set forth in subdivision (g).
(d)Effective October 1, 2004, and on each October 1 thereafter, until no longer required by federal law, federally qualified health center (FQHC) and rural health clinic (RHC) per-visit rates shall be increased by the Medicare Economic Index applicable to primary care services in the manner provided for in Section 1396a(bb)(3)(A) of Title 42 of the United States Code. Prior to January 1, 2004, FQHC and RHC per-visit rates shall be adjusted by the Medicare Economic Index in accordance with the methodology set forth in the state plan in effect on October 1, 2001.
(e)(1)An FQHC or RHC may apply for an adjustment to its per-visit rate based on a change in the scope of services provided by the FQHC or RHC. Rate changes based on a change in the scope of services provided by an FQHC or RHC shall be evaluated in accordance with Medicare reasonable cost principles, as set forth in Part 413 (commencing with Section 413.1) of Title 42 of the Code of Federal Regulations, or its successor.
(2)Subject to the conditions set forth in subparagraphs (A) to (D), inclusive, of paragraph (3), a change in scope of service means any of the following:
(A)The addition of a new FQHC or RHC service that is not incorporated in the baseline prospective payment system (PPS) rate, or a deletion of an FQHC or RHC service that is incorporated in the baseline PPS rate.
(B)A change in service due to amended regulatory requirements or rules.
(C)A change in service resulting from relocating or remodeling an FQHC or RHC.
(D)A change in types of services due to a change in applicable technology and medical practice utilized by the center or clinic.
(E)An increase in service intensity attributable to changes in the types of patients served, including, but not limited to, populations with HIV or AIDS, or other chronic diseases, or homeless, elderly, migrant, or other special populations.
(F)Any changes in any of the services described in subdivision (a) or (b), or in the provider mix of an FQHC or RHC or one of its sites.
(G)Changes in operating costs attributable to capital expenditures associated with a modification of the scope of any of the services described in subdivision (a) or (b), including new or expanded service facilities, regulatory compliance, or changes in technology or medical practices at the center or clinic.
(H)Indirect medical education adjustments and a direct graduate medical education payment that reflects the costs of providing teaching services to interns and residents.
(I)Any changes in the scope of a project approved by the federal Health Resources and Service Administration (HRSA).
(3)No change in costs shall, in and of itself, be considered a scope-of-service change unless all of the following apply:
(A)The increase or decrease in cost is attributable to an increase or decrease in the scope of services defined in subdivisions (a) and (b), as applicable.
(B)The cost is allowable under Medicare reasonable cost principles set forth in Part 413 (commencing with Section 413) of Subchapter B of Chapter 4 of Title 42 of the Code of Federal Regulations, or its successor.
(C)The change in the scope of services is a change in the type, intensity, duration, or amount of services, or any combination thereof.
(D)The net change in the FQHCs or RHCs rate equals or exceeds 1.75 percent for the affected FQHC or RHC site. For FQHCs and RHCs that filed consolidated cost reports for multiple sites to establish the initial prospective payment reimbursement rate, the 1.75-percent threshold shall be applied to the average per-visit rate of all sites for the purposes of calculating the cost associated with a scope-of-service change. Net change means the per-visit rate change attributable to the cumulative effect of all increases and decreases for a particular fiscal year.
(4)An FQHC or RHC may submit requests for scope-of-service changes once per fiscal year, only within 90 days following the beginning of the FQHCs or RHCs fiscal year. Any approved increase or decrease in the providers rate shall be retroactive to the beginning of the FQHCs or RHCs fiscal year in which the request is submitted.
(5)An FQHC or RHC shall submit a scope-of-service rate change request within 90 days after the beginning of any FQHC or RHC fiscal year occurring after the effective date of this section, if, during the FQHCs or RHCs prior fiscal year, the FQHC or RHC experienced a decrease in the scope of services provided that the FQHC or RHC either knew or should have known would have resulted in a significantly lower per-visit rate. If an FQHC or RHC discontinues providing onsite pharmacy or dental services, it shall submit a scope-of-service rate change request within 90 days after the beginning of the following fiscal year. The rate change shall be effective as provided for in paragraph (4). As used in this paragraph, significantly lower means an average per-visit rate decrease in excess of 2.5 percent.
(6)(A)The department shall conduct an initial review of a scope-of-service rate change request within 30 days after submission by an FQHC or RHC.
(B) If the department determines that additional information is necessary to finalize a new rate, the department shall notify the FQHC or RHC, no later than the 31st day after submission. The notification shall state the reason or reasons the submitted information is insufficient and shall request submission of supplemental information from the FQHC or RHC.
(C)Within one year after receiving a submission that it determines to be complete, the department shall finalize the FQHCs or RHCs rate and shall update the provider master file within 10 business days.
(7)Notwithstanding paragraph (4), if the approved scope-of-service change or changes were initially implemented on or after the first day of an FQHCs or RHCs fiscal year ending in calendar year 2001, but before the adoption and issuance of written instructions for applying for a scope-of-service change, the adjusted reimbursement rate for that scope-of-service change shall be made retroactive to the date the scope-of-service change was initially implemented. Scope-of-service changes under this paragraph shall be required to be submitted within the later of 150 days after the adoption and issuance of the written instructions by the department, or 150 days after the end of the FQHCs or RHCs fiscal year ending in 2003.
(8)All references in this subdivision to fiscal year shall be construed to be references to the fiscal year of the individual FQHC or RHC, as the case may be.
(f)(1)An FQHC or RHC may request a supplemental payment if extraordinary circumstances beyond the control of the FQHC or RHC occur after December 31, 2001, and PPS payments are insufficient due to these extraordinary circumstances. Supplemental payments arising from extraordinary circumstances under this subdivision shall be solely and exclusively within the discretion of the department and shall not be subject to subdivision (l). These supplemental payments shall be determined separately from the scope-of-service adjustments described in subdivision (e). Extraordinary circumstances include, but are not limited to, acts of nature, changes in applicable requirements in the Health and Safety Code, changes in applicable licensure requirements, and changes in applicable rules or regulations. Mere inflation of costs alone, absent extraordinary circumstances, shall not be grounds for supplemental payment. If an FQHCs or RHCs PPS rate is sufficient to cover its overall costs, including those associated with the extraordinary circumstances, then a supplemental payment is not warranted.
(2)The department shall accept requests for supplemental payment at any time throughout the prospective payment rate year.
(3)Requests for supplemental payments shall be submitted in writing to the department and shall set forth the reasons for the request. Each request shall be accompanied by sufficient documentation to enable the department to act upon the request. Documentation shall include the data necessary to demonstrate that the circumstances for which supplemental payment is requested meet the requirements set forth in this section. Documentation shall include all of the following:
(A)A presentation of data to demonstrate reasons for the FQHCs or RHCs request for a supplemental payment.
(B)Documentation showing the cost implications. The cost impact shall be material and significant, two hundred thousand dollars ($200,000) or 1 percent of a facilitys total costs, whichever is less.
(4)A request shall be submitted for each affected year.
(5)Amounts granted for supplemental payment requests shall be paid as lump-sum amounts for those years and not as revised PPS rates, and shall be repaid by the FQHC or RHC to the extent that it is not expended for the specified purposes.
(6)The department shall notify the provider of the departments discretionary decision in writing.
(g)(1)An FQHC or RHC visit means a face-to-face encounter between an FQHC or RHC patient and a physician, physician assistant, nurse practitioner, certified nurse-midwife, clinical psychologist, licensed clinical social worker, or a visiting nurse. For purposes of this section, physician shall be interpreted in a manner consistent with the federal Centers for Medicare and Medicaid Services Medicare Rural Health Clinic and Federally Qualified Health Center Manual (Publication 27), or its successor, only to the extent that it defines the professionals whose services are reimbursable on a per-visit basis and not as to the types of services that these professionals may render during these visits and shall include a physician and surgeon, podiatrist, dentist, optometrist, and chiropractor. A visit shall also include a face-to-face encounter between an FQHC or RHC patient and a comprehensive perinatal services practitioner, as defined in Section 51179.1 of Title 22 of the California Code of Regulations, providing comprehensive perinatal services, a four-hour day of attendance at an adult day health care center, and any other provider identified in the state plans definition of an FQHC or RHC visit.
(2)(A)A visit shall also include a face-to-face encounter between an FQHC or RHC patient and a dental hygienist or a dental hygienist in alternative practice.
(B)Notwithstanding subdivision (e), an FQHC or RHC that currently includes the cost of the services of a dental hygienist in alternative practice for the purposes of establishing its FQHC or RHC rate shall apply for an adjustment to its per-visit rate, and, after the rate adjustment has been approved by the department, shall bill these services as a separate visit. However, multiple encounters with dental professionals that take place on the same day shall constitute a single visit. The department shall develop the appropriate forms to determine which FQHCs or RHCs rates shall be adjusted and to facilitate the calculation of the adjusted rates. An FQHCs or RHCs application for, or the departments approval of, a rate adjustment pursuant to this subparagraph shall not constitute a change in scope of service within the meaning of subdivision (e). An FQHC or RHC that applies for an adjustment to its rate pursuant to this subparagraph may continue to bill for all other FQHC or RHC visits at its existing per-visit rate, subject to reconciliation, until the rate adjustment for visits between an FQHC or RHC patient and a dental hygienist or a dental hygienist in alternative practice has been approved. Any approved increase or decrease in the providers rate shall be made within six months after the date of receipt of the departments rate adjustment forms pursuant to this subparagraph and shall be retroactive to the beginning of the fiscal year in which the FQHC or RHC submits the request, but in no case shall the effective date be earlier than January 1, 2008.
(C)An FQHC or RHC that does not provide dental hygienist or dental hygienist in alternative practice services, and later elects to add these services, shall process the addition of these services as a change in scope of service pursuant to subdivision (e).
(h)If FQHC or RHC services are partially reimbursed by a third-party payer, such as a managed care entity (as defined in Section 1396u-2(a)(1)(B) of Title 42 of the United States Code), the Medicare Program, or the Child Health and Disability Prevention (CHDP) program, the department shall reimburse an FQHC or RHC for the difference between its per-visit PPS rate and receipts from other plans or programs on a contract-by-contract basis and not in the aggregate, and may not include managed care financial incentive payments that are required by federal law to be excluded from the calculation.
(i)(1)An entity that first qualifies as an FQHC or RHC in the year 2001 or later, a newly licensed facility at a new location added to an existing FQHC or RHC, and any entity that is an existing FQHC or RHC that is relocated to a new site shall each have its reimbursement rate established in accordance with one of the following methods, as selected by the FQHC or RHC:
(A)The rate may be calculated on a per-visit basis in an amount that is equal to the average of the per-visit rates of three comparable FQHCs or RHCs located in the same or adjacent area with a similar caseload.
(B)In the absence of three comparable FQHCs or RHCs with a similar caseload, the rate may be calculated on a per-visit basis in an amount that is equal to the average of the per-visit rates of three comparable FQHCs or RHCs located in the same or an adjacent service area, or in a reasonably similar geographic area with respect to relevant social, health care, and economic characteristics.
(C)At a new entitys one-time election, the department shall establish a reimbursement rate, calculated on a per-visit basis, that is equal to 100 percent of the projected allowable costs to the FQHC or RHC of furnishing FQHC or RHC services during the first 12 months of operation as an FQHC or RHC. After the first 12-month period, the projected per-visit rate shall be increased by the Medicare Economic Index (MEI) then in effect. The projected allowable costs for the first 12 months shall be cost settled and the prospective payment reimbursement rate shall be adjusted based on actual and allowable cost per visit. The department shall finalize a new rate within one year after the submission of the actual cost report from the first full 12 months of operation and shall update the department provider master file within 10 business days after finalizing the rate.
(D)The department may adopt any further and additional methods of setting reimbursement rates for newly qualified FQHCs or RHCs as are consistent with Section 1396a(bb)(4) of Title 42 of the United States Code.
(2)(A)In order for an FQHC or RHC to establish the comparability of its caseload, the department shall require that the FQHC or RHC submit its most recent annual utilization report as submitted to the Office of Statewide Health Planning and Development, unless the FQHC or RHC was not required to file an annual utilization report. FQHCs or RHCs that have experienced changes in their services or caseload subsequent to the filing of the annual utilization report may submit to the department a completed report in the format applicable to the prior calendar year. FQHCs or RHCs that have not previously submitted an annual utilization report shall submit to the department a completed report in the format applicable to the prior calendar year. The FQHC or RHC shall not be required to submit the annual utilization report for the comparable FQHCs or RHCs to the department, but shall be required to identify the comparable FQHCs or RHCs. This paragraph shall apply only to a facility that selects the comparability approach described in subparagraph (A) or (B) of paragraph (1).
(B)The department shall conduct an initial review of the three FQHCs or RHCs for the purpose of determining comparability within 30 days after submission by the new entity. If the department determines one or more of the submitted centers or clinics do not meet the comparability threshold, the department shall notify the new entity no later than the 31st day after submission.
(C)The notification shall state the reason or reasons for the finding of noncomparability and shall request a supplemental submission from the new entity. The request shall clearly state whether the new entity shall submit data from one, two, or three FQHCs or RHCs to meet the comparability threshold. Once the new entity submits its supplemental information, the initial review process described in subparagraph (B) shall apply.
(D)Within one year after receiving a submission determined by the department to be comparable, the department shall finalize the new entitys rate and shall update the provider master file within 10 business days.
(3)The rate for any newly qualified entity set forth under this subdivision shall be effective retroactively to the later of the date that the entity was first qualified by the applicable federal agency as an FQHC or RHC, the date a new facility at a new location was added to an existing FQHC or RHC, or the date on which an existing FQHC or RHC was relocated to a new site. The FQHC or RHC shall be permitted to continue billing for Medi-Cal covered benefits on a fee-for-service basis until it is informed of its enrollment as an FQHC or RHC, and the department shall reconcile the difference between the fee-for-service payments and the FQHCs or RHCs prospective payment rate at that time.
(j)Visits occurring at an intermittent clinic site, as defined in subdivision (h) of Section 1206 of the Health and Safety Code, of an existing FQHC or RHC, or in a mobile unit as defined by paragraph (2) of subdivision (b) of Section 1765.105 of the Health and Safety Code, shall be billed by and reimbursed at the same rate as the FQHC or RHC establishing the intermittent clinic site or the mobile unit, subject to the right of the FQHC or RHC to request a scope-of-service adjustment to the rate.
(k)An FQHC or RHC may elect to have pharmacy or dental services reimbursed on a fee-for-service basis, utilizing the current fee schedules established for those services. These costs shall be adjusted out of the FQHCs or RHCs clinic base rate as scope-of-service changes. An FQHC or RHC that reverses its election under this subdivision shall revert to its prior rate, subject to an increase to account for all MEI increases occurring during the intervening time period, and subject to any increase or decrease associated with applicable scope-of-services adjustments as provided in subdivision (e).
(l)FQHCs and RHCs may appeal a grievance or complaint concerning ratesetting, scope-of-service changes, and settlement of cost report audits, in the manner prescribed by Section 14171. The rights and remedies provided under this subdivision are cumulative to the rights and remedies available under all other provisions of law of this state.
(m)The department shall, by no later than March 30, 2008, promptly seek all necessary federal approvals in order to implement this section, including any amendments to the state plan. To the extent that any element or requirement of this section is not approved, the department shall submit a request to the federal Centers for Medicare and Medicaid Services for any waivers that would be necessary to implement this section.
(n)The department shall implement this section only to the extent that federal financial participation is obtained.
(o)The department shall correct erroneous payments at least quarterly to reprocess past claims and ensure all claims are reimbursed at the finalized new rate determined pursuant to either subdivision (e) or (i).
SEC. 2.1.Section 14132.100 of the Welfare and Institutions Code is amended to read:14132.100.(a)The federally qualified health center services described in Section 1396d(a)(2)(C) of Title 42 of the United States Code are covered benefits.
(b)The rural health clinic services described in Section 1396d(a)(2)(B) of Title 42 of the United States Code are covered benefits.
(c)Federally qualified health center services and rural health clinic services shall be reimbursed on a per-visit basis in accordance with the definition of visit set forth in subdivision (g).
(d)Effective October 1, 2004, and on each October 1 thereafter, until no longer required by federal law, federally qualified health center (FQHC) and rural health clinic (RHC) per-visit rates shall be increased by the Medicare Economic Index applicable to primary care services in the manner provided for in Section 1396a(bb)(3)(A) of Title 42 of the United States Code. Prior to January 1, 2004, FQHC and RHC per-visit rates shall be adjusted by the Medicare Economic Index in accordance with the methodology set forth in the state plan in effect on October 1, 2001.
(e)(1)An FQHC or RHC may apply for an adjustment to its per-visit rate based on a change in the scope of services provided by the FQHC or RHC. Rate changes based on a change in the scope of services provided by an FQHC or RHC shall be evaluated in accordance with Medicare reasonable cost principles, as set forth in Part 413 (commencing with Section 413.1) of Title 42 of the Code of Federal Regulations, or its successor.
(2)Subject to the conditions set forth in subparagraphs (A) to (D), inclusive, of paragraph (3), a change in scope of service means any of the following:
(A)The addition of a new FQHC or RHC service that is not incorporated in the baseline prospective payment system (PPS) rate, or a deletion of an FQHC or RHC service that is incorporated in the baseline PPS rate.
(B)A change in service due to amended regulatory requirements or rules.
(C)A change in service resulting from relocating or remodeling an FQHC or RHC.
(D)A change in types of services due to a change in applicable technology and medical practice utilized by the center or clinic.
(E)An increase in service intensity attributable to changes in the types of patients served, including, but not limited to, populations with HIV or AIDS, or other chronic diseases, or homeless, elderly, migrant, or other special populations.
(F)Any changes in any of the services described in subdivision (a) or (b), or in the provider mix of an FQHC or RHC or one of its sites.
(G)Changes in operating costs attributable to capital expenditures associated with a modification of the scope of any of the services described in subdivision (a) or (b), including new or expanded service facilities, regulatory compliance, or changes in technology or medical practices at the center or clinic.
(H)Indirect medical education adjustments and a direct graduate medical education payment that reflects the costs of providing teaching services to interns and residents.
(I)Any changes in the scope of a project approved by the federal Health Resources and Services Administration (HRSA).
(3)No change in costs shall, in and of itself, be considered a scope-of-service change unless all of the following apply:
(A)The increase or decrease in cost is attributable to an increase or decrease in the scope of services defined in subdivisions (a) and (b), as applicable.
(B)The cost is allowable under Medicare reasonable cost principles set forth in Part 413 (commencing with Section 413) of Subchapter B of Chapter 4 of Title 42 of the Code of Federal Regulations, or its successor.
(C)The change in the scope of services is a change in the type, intensity, duration, or amount of services, or any combination thereof.
(D)The net change in the FQHCs or RHCs rate equals or exceeds 1.75 percent for the affected FQHC or RHC site. For FQHCs and RHCs that filed consolidated cost reports for multiple sites to establish the initial prospective payment reimbursement rate, the 1.75-percent threshold shall be applied to the average per-visit rate of all sites for the purposes of calculating the cost associated with a scope-of-service change. Net change means the per-visit rate change attributable to the cumulative effect of all increases and decreases for a particular fiscal year.
(4)An FQHC or RHC may submit requests for scope-of-service changes once per fiscal year, only within 90 days following the beginning of the FQHCs or RHCs fiscal year. Any approved increase or decrease in the providers rate shall be retroactive to the beginning of the FQHCs or RHCs fiscal year in which the request is submitted.
(5)An FQHC or RHC shall submit a scope-of-service rate change request within 90 days after the beginning of any FQHC or RHC fiscal year occurring after the effective date of this section, if, during the FQHCs or RHCs prior fiscal year, the FQHC or RHC experienced a decrease in the scope of services provided that the FQHC or RHC either knew or should have known would have resulted in a significantly lower per-visit rate. If an FQHC or RHC discontinues providing onsite pharmacy or dental services, it shall submit a scope-of-service rate change request within 90 days after the beginning of the following fiscal year. The rate change shall be effective as provided for in paragraph (4). As used in this paragraph, significantly lower means an average per-visit rate decrease in excess of 2.5 percent.
(6)(A) The department shall conduct an initial review of a scope-of-service rate change request within 30 days after submission by an FQHC or RHC.
(B)If the department determines that additional information is necessary to finalize a new rate, the department shall notify the FQHC or RHC, no later than the 31st day after submission. The notification shall state the reason or reasons the submitted information is insufficient and shall request submission of supplemental information from the FQHC or RHC.
(C)Within one year after receiving a submission that it determines to be complete, the department shall finalize the FQHCs or RHCs rate and shall update the provider master file within 10 business days.
(7)Notwithstanding paragraph (4), if the approved scope-of-service change or changes were initially implemented on or after the first day of an FQHCs or RHCs fiscal year ending in calendar year 2001, but before the adoption and issuance of written instructions for applying for a scope-of-service change, the adjusted reimbursement rate for that scope-of-service change shall be made retroactive to the date the scope-of-service change was initially implemented. Scope-of-service changes under this paragraph shall be required to be submitted within the later of 150 days after the adoption and issuance of the written instructions by the department, or 150 days after the end of the FQHCs or RHCs fiscal year ending in 2003.
(8)All references in this subdivision to fiscal year shall be construed to be references to the fiscal year of the individual FQHC or RHC, as the case may be.
(f)(1)An FQHC or RHC may request a supplemental payment if extraordinary circumstances beyond the control of the FQHC or RHC occur after December 31, 2001, and PPS payments are insufficient due to these extraordinary circumstances. Supplemental payments arising from extraordinary circumstances under this subdivision shall be solely and exclusively within the discretion of the department and shall not be subject to subdivision (l). These supplemental payments shall be determined separately from the scope-of-service adjustments described in subdivision (e). Extraordinary circumstances include, but are not limited to, acts of nature, changes in applicable requirements in the Health and Safety Code, changes in applicable licensure requirements, and changes in applicable rules or regulations. Mere inflation of costs alone, absent extraordinary circumstances, shall not be grounds for supplemental payment. If an FQHCs or RHCs PPS rate is sufficient to cover its overall costs, including those associated with the extraordinary circumstances, then a supplemental payment is not warranted.
(2)The department shall accept requests for supplemental payment at any time throughout the prospective payment rate year.
(3)Requests for supplemental payments shall be submitted in writing to the department and shall set forth the reasons for the request. Each request shall be accompanied by sufficient documentation to enable the department to act upon the request. Documentation shall include the data necessary to demonstrate that the circumstances for which supplemental payment is requested meet the requirements set forth in this section. Documentation shall include all of the following:
(A)A presentation of data to demonstrate reasons for the FQHCs or RHCs request for a supplemental payment.
(B)Documentation showing the cost implications. The cost impact shall be material and significant, two hundred thousand dollars ($200,000) or 1 percent of a facilitys total costs, whichever is less.
(4)A request shall be submitted for each affected year.
(5)Amounts granted for supplemental payment requests shall be paid as lump-sum amounts for those years and not as revised PPS rates, and shall be repaid by the FQHC or RHC to the extent that it is not expended for the specified purposes.
(6)The department shall notify the provider of the departments discretionary decision in writing.
(g)(1)An FQHC or RHC visit means a face-to-face encounter between an FQHC or RHC patient and a physician, physician assistant, nurse practitioner, certified nurse-midwife, clinical psychologist, licensed clinical social worker, or a visiting nurse. For purposes of this section, physician shall be interpreted in a manner consistent with the federal Centers for Medicare and Medicaid Services Medicare Rural Health Clinic and Federally Qualified Health Center Manual (Publication 27), or its successor, only to the extent that it defines the professionals whose services are reimbursable on a per-visit basis and not as to the types of services that these professionals may render during these visits and shall include a medical doctor, osteopath, podiatrist, dentist, optometrist, and chiropractor. A visit shall also include a face-to-face encounter between an FQHC or RHC patient and a comprehensive perinatal practitioner, as defined in Section 51179.7 of Title 22 of the California Code of Regulations, providing comprehensive perinatal services, a four-hour day of attendance at an adult day health care center, and any other provider identified in the state plans definition of an FQHC or RHC visit.
(2)(A)A visit shall also include a face-to-face encounter between an FQHC or RHC patient and a dental hygienist, a dental hygienist in alternative practice, or a marriage and family therapist.
(B)Notwithstanding subdivision (e), an FQHC or RHC that currently includes the cost of the services of a dental hygienist in alternative practice, or a marriage and family therapist, for the purposes of establishing its FQHC or RHC rate shall apply for an adjustment to its per-visit rate, and, after the rate adjustment has been approved by the department, shall bill these services as a separate visit. However, multiple encounters with dental professionals or marriage and family therapists that take place on the same day shall constitute a single visit. The department shall develop the appropriate forms to determine which FQHCs or RHCs rates shall be adjusted and to facilitate the calculation of the adjusted rates. An FQHCs or RHCs application for, or the departments approval of, a rate adjustment pursuant to this subparagraph shall not constitute a change in scope of service within the meaning of subdivision (e). An FQHC or RHC that applies for an adjustment to its rate pursuant to this subparagraph may continue to bill for all other FQHC or RHC visits at its existing per-visit rate, subject to reconciliation, until the rate adjustment for visits between an FQHC or RHC patient and a dental hygienist, a dental hygienist in alternative practice, or a marriage and family therapist has been approved. Any approved increase or decrease in the providers rate shall be made within six months after the date of receipt of the departments rate adjustment forms pursuant to this subparagraph and shall be retroactive to the beginning of the fiscal year in which the FQHC or RHC submits the request, but in no case shall the effective date be earlier than January 1, 2008.
(C)An FQHC or RHC that does not provide dental hygienist, dental hygienist in alternative practice, or marriage and family therapist services, and later elects to add these services, shall process the addition of these services as a change in scope of service pursuant to subdivision (e).
(h)If FQHC or RHC services are partially reimbursed by a third-party payer, such as a managed care entity (as defined in Section 1396u-2(a)(1)(B) of Title 42 of the United States Code), the Medicare Program, or the Child Health and Disability Prevention (CHDP) program, the department shall reimburse an FQHC or RHC for the difference between its per-visit PPS rate and receipts from other plans or programs on a contract-by-contract basis and not in the aggregate, and may not include managed care financial incentive payments that are required by federal law to be excluded from the calculation.
(i)(1)An entity that first qualifies as an FQHC or RHC in the year 2001 or later, a newly licensed facility at a new location added to an existing FQHC or RHC, and any entity that is an existing FQHC or RHC that is relocated to a new site shall each have its reimbursement rate established in accordance with one of the following methods, as selected by the FQHC or RHC:
(A)The rate may be calculated on a per-visit basis in an amount that is equal to the average of the per-visit rates of three comparable FQHCs or RHCs located in the same or adjacent area with a similar caseload.
(B)In the absence of three comparable FQHCs or RHCs with a similar caseload, the rate may be calculated on a per-visit basis in an amount that is equal to the average of the per-visit rates of three comparable FQHCs or RHCs located in the same or an adjacent service area, or in a reasonably similar geographic area with respect to relevant social, health care, and economic characteristics.
(C)At a new entitys one-time election, the department shall establish a reimbursement rate, calculated on a per-visit basis, that is equal to 100 percent of the projected allowable costs to the FQHC or RHC of furnishing FQHC or RHC services during the first 12 months of operation as an FQHC or RHC. After the first 12-month period, the projected per-visit rate shall be increased by the Medicare Economic Index (MEI) then in effect. The projected allowable costs for the first 12 months shall be cost settled and the prospective payment reimbursement rate shall be adjusted based on actual and allowable cost per visit. The department shall finalize a new rate within one year after the submission of the actual cost report from the first full 12 months of operation and shall update the department provider master file within 10 business days after finalizing the rate.
(D)The department may adopt any further and additional methods of setting reimbursement rates for newly qualified FQHCs or RHCs as are consistent with Section 1396a(bb)(4) of Title 42 of the United States Code.
(2)(A)In order for an FQHC or RHC to establish the comparability of its caseload, the department shall require that the FQHC or RHC submit its most recent annual utilization report as submitted to the Office of Statewide Health Planning and Development, unless the FQHC or RHC was not required to file an annual utilization report. FQHCs or RHCs that have experienced changes in their services or caseload subsequent to the filing of the annual utilization report may submit to the department a completed report in the format applicable to the prior calendar year. FQHCs or RHCs that have not previously submitted an annual utilization report shall submit to the department a completed report in the format applicable to the prior calendar year. The FQHC or RHC shall not be required to submit the annual utilization report for the comparable FQHCs or RHCs to the department, but shall be required to identify the comparable FQHCs or RHCs. This paragraph shall apply only to a facility that selects the comparability approach described in subparagraph (A) or (B) of paragraph (1).
(B)The department shall conduct an initial review of the three FQHCs or RHCs for the purpose of determining comparability within 30 days after submission by the new entity. If the department determines one or more of the submitted centers or clinics do not meet the comparability threshold, the department shall notify the new entity no later than the 31st day after submission.
(C)The notification shall state the reason or reasons for the finding of noncomparability and shall request a supplemental submission from the new entity. The request shall clearly state whether the new entity shall submit data from one, two, or three FQHCs or RHCs to meet the comparability threshold. Once the new entity submits its supplemental information, the initial review process described in subparagraph (B) shall apply.
(D)Within one year after receiving a submission determined by the department to be comparable, the department shall finalize the new entitys rate and shall update the provider master file within 10 business days.
(3)The rate for any newly qualified entity set forth under this subdivision shall be effective retroactively to the later of the date that the entity was first qualified by the applicable federal agency as an FQHC or RHC, the date a new facility at a new location was added to an existing FQHC or RHC, or the date on which an existing FQHC or RHC was relocated to a new site. The FQHC or RHC shall be permitted to continue billing for Medi-Cal covered benefits on a fee-for-service basis under its existing provider number, until it is informed of its FQHC or RHC enrollment approval, and the department shall reconcile the difference between the fee-for-service payments and the FQHCs or RHCs prospective payment rate at that time.
(j)Visits occurring at an intermittent clinic site, as defined in subdivision (h) of Section 1206 of the Health and Safety Code, of an existing FQHC or RHC, or in a mobile unit as defined by paragraph (2) of subdivision (b) of Section 1765.105 of the Health and Safety Code, shall be billed by and reimbursed at the same rate as the FQHC or RHC establishing the intermittent clinic site or the mobile unit, subject to the right of the FQHC or RHC to request a scope-of-service adjustment to the rate.
(k)An FQHC or RHC may elect to have pharmacy or dental services reimbursed on a fee-for-service basis, utilizing the current fee schedules established for those services. These costs shall be adjusted out of the FQHCs or RHCs clinic base rate as scope-of-service changes. An FQHC or RHC that reverses its election under this subdivision shall revert to its prior rate, subject to an increase to account for all Medicare Economic Index increases occurring during the intervening time period, and subject to any increase or decrease associated with applicable scope-of-service adjustments as provided in subdivision (e).
(l)FQHCs and RHCs may appeal a grievance or complaint concerning ratesetting, scope-of-service changes, and settlement of cost report audits, in the manner prescribed by Section 14171. The rights and remedies provided under this subdivision are cumulative to the rights and remedies available under all other provisions of law of this state.
(m)The department shall, no later than March 30, 2008, promptly seek all necessary federal approvals in order to implement this section, including any amendments to the state plan. To the extent that any element or requirement of this section is not approved, the department shall submit a request to the federal Centers for Medicare and Medicaid Services for any waivers that would be necessary to implement this section.
(n)The department shall implement this section only to the extent that federal financial participation is obtained.
(o) The department shall correct erroneous payments at least quarterly to reprocess past claims and ensure all claims are reimbursed at the finalized new rate determined pursuant to either subdivision (e) or (i).
SEC. 3.Section 2.1 of this bill incorporates amendments to Section 14132.100 of the Welfare and Institutions Code proposed by both this bill and Assembly Bill 858. It shall only become operative if (1) both bills are enacted and become effective on or before January 1, 2016, (2) each bill amends Section 14132.100 of the Welfare and Institutions Code, and (3) this bill is enacted after Assembly Bill 858, in which case Section 2 of this bill shall not become operative.
(a)The department shall require, as a condition of obtaining a contract with the department, that any local initiative, as defined in Section 53810 of Title 22 of the California Code of Regulations, offer a subcontract to any entity defined in Section 1396d(l)(2)(B) of Title 42 of the United States Code providing services as defined in Section 1396d(a)(2)(C) of Title 42 of the United States Code and operating in the service area covered by the local initiatives contract with the department. These entities are also known as federally qualified health centers.
(b)Except as otherwise provided in this section, managed care subcontracts offered to a federally qualified health center or a rural health clinic, as defined in Section 1396d(l)(1) of Title 42 of the United States Code, by a local initiative, county organized health system, as defined in Section 12693.05 of the Insurance Code, commercial plan, as defined in Section 53810 of Title 22 of the California Code of Regulations, or a health plan contracting with a geographic managed care program, as defined in subdivision (g) of Section 53902 of Title 22 of the California Code of Regulations, shall be on the same terms and conditions offered to other subcontractors providing a similar scope of service. Any beneficiary, subscriber, or enrollee of a program or plan who affirmatively selects, or is assigned by default to, a federally qualified health center or rural health clinic under the terms of a contract between a plan, government program, or any subcontractor of a plan or program, and a federally qualified health center or rural health clinic, shall be assigned directly to the federally qualified health center or rural health clinic, and not to any individual provider performing services on behalf of the federally qualified health center or rural health clinic.
(c)The department shall provide incentives in the competitive application process described in paragraph (1) of subdivision (b) of Section 53800 of Title 22 of the California Code of Regulations, to encourage potential commercial plans as defined in Section 53810 of Title 22 of the California Code of Regulations to offer subcontracts to these federally qualified health centers.
(d)Reimbursement to federally qualified health centers and rural health centers for services provided pursuant to a subcontract with a local initiative, a commercial plan, geographic managed care program health plan, or a county organized health system, shall be paid 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 a federally qualified health center or rural health clinic.
(e)The department shall administer a program to ensure that total payments to federally qualified health centers and rural health clinics operating as managed care subcontractors pursuant to subdivision (d) comply with applicable federal law pursuant to Sections 1902(bb) and 1903(m)(2)(A)(ix) of the Social Security Act (42 U.S.C. Secs. 1396a(bb) and 1396b(m)(2)(A)(ix)). Under the departments program, federally qualified health centers and rural health clinics subcontracting with local initiatives, commercial plans, county organized health systems, and geographic managed care program health plans shall seek supplemental reimbursement from the department through a per visit fee-for-service billing system utilizing the states Medi-Cal fee-for-service claims processing system contractor. To carry out this per visit payment process, each federally qualified health system and rural health clinic shall submit to the department for approval a rate differential calculated to reflect the amount necessary to reimburse the federally qualified health center or rural health clinic for the difference between the payment the center or clinic received from the managed care health plan and either the interim rate established by the department based on the centers or clinics reasonable cost or the centers or clinics prospective payment rate. The department shall adjust the computed rate differential as it deems necessary to minimize the difference between the centers or clinics revenue from the plan and the centers or clinics cost-based reimbursement or the centers or clinics prospective payment rate.
(1)In addition, the department shall perform an annual reconciliation to reasonable cost, and make payments to, or obtain a recovery from, the center or clinic.
(2)The department shall perform an initial review of the reconciliation filing within 30 days after receipt. If the department determines during the initial review that a payment is owed to the center or clinic, the department shall pay to the center or clinic at least 80 percent of the amount owed within 30 days after completion of the initial review or in any event within 60 days after receipt of the reconciliation filing.
(3)The department shall complete the final reconciliation review and shall pay to the center or clinic the remaining amount owed within 18 months after the last date of the fiscal year for which the department is conducting the review.
(f)In calculating the capitation rates to be paid to local initiatives, commercial plans, geographic managed care program health plans, and county organized health systems, the department shall not include the additional dollar amount applicable to cost-based reimbursement that would otherwise be paid, absent cost-based reimbursement, to federally qualified health centers and rural health clinics in the Medi-Cal fee-for-service program.
(g)On or before September 30, 2002, the director shall conduct a study of the actual and projected impact of the transition from a cost-based reimbursement system to a prospective payment system for federally qualified health centers and rural health clinics. In conducting the study, the director shall evaluate the extent to which the prospective payment system stimulates expansion of services, including new facilities to expand capacity of the centers, and the extent to which actual and estimated prospective payment rates of federally qualified health centers and rural health clinics for the first five years of the prospective payment system are reflective of the cost of providing services to Medi-Cal beneficiaries. Clinics may submit cost reporting information to the department to provide data for the study.
(h)The department shall approve all contracts between federally qualified health centers or rural health clinics and any local initiative, commercial plan, geographic managed care program health plan, or county organized health system in order to ensure compliance with this section.
(i)This section shall not preclude the department from establishing pilot programs pursuant to Section 14087.329.
SEC. 2.Section 14132.100 of the Welfare and Institutions Code is amended to read:14132.100.(a)The federally qualified health center services described in Section 1396d(a)(2)(C) of Title 42 of the United States Code are covered benefits.
(b)The rural health clinic services described in Section 1396d(a)(2)(B) of Title 42 of the United States Code are covered benefits.
(c)Federally qualified health center services and rural health clinic services shall be reimbursed on a per-visit basis in accordance with the definition of visit set forth in subdivision (g).
(d)Effective October 1, 2004, and on each October 1 thereafter, until no longer required by federal law, federally qualified health center (FQHC) and rural health clinic (RHC) per-visit rates shall be increased by the Medicare Economic Index applicable to primary care services in the manner provided for in Section 1396a(bb)(3)(A) of Title 42 of the United States Code. Prior to January 1, 2004, FQHC and RHC per-visit rates shall be adjusted by the Medicare Economic Index in accordance with the methodology set forth in the state plan in effect on October 1, 2001.
(e)(1)An FQHC or RHC may apply for an adjustment to its per-visit rate based on a change in the scope of services provided by the FQHC or RHC. Rate changes based on a change in the scope of services provided by an FQHC or RHC shall be evaluated in accordance with Medicare reasonable cost principles, as set forth in Part 413 (commencing with Section 413.1) of Title 42 of the Code of Federal Regulations, or its successor.
(2)Subject to the conditions set forth in subparagraphs (A) to (D), inclusive, of paragraph (3), a change in scope of service means any of the following:
(A)The addition of a new FQHC or RHC service that is not incorporated in the baseline prospective payment system (PPS) rate, or a deletion of an FQHC or RHC service that is incorporated in the baseline PPS rate.
(B)A change in service due to amended regulatory requirements or rules.
(C)A change in service resulting from relocating or remodeling an FQHC or RHC.
(D)A change in types of services due to a change in applicable technology and medical practice utilized by the center or clinic.
(E)An increase in service intensity attributable to changes in the types of patients served, including, but not limited to, populations with HIV or AIDS, or other chronic diseases, or homeless, elderly, migrant, or other special populations.
(F)Any changes in any of the services described in subdivision (a) or (b), or in the provider mix of an FQHC or RHC or one of its sites.
(G)Changes in operating costs attributable to capital expenditures associated with a modification of the scope of any of the services described in subdivision (a) or (b), including new or expanded service facilities, regulatory compliance, or changes in technology or medical practices at the center or clinic.
(H)Indirect medical education adjustments and a direct graduate medical education payment that reflects the costs of providing teaching services to interns and residents.
(I)Any changes in the scope of a project approved by the federal Health Resources and Service Administration (HRSA).
(3)No change in costs shall, in and of itself, be considered a scope-of-service change unless all of the following apply:
(A)The increase or decrease in cost is attributable to an increase or decrease in the scope of services defined in subdivisions (a) and (b), as applicable.
(B)The cost is allowable under Medicare reasonable cost principles set forth in Part 413 (commencing with Section 413) of Subchapter B of Chapter 4 of Title 42 of the Code of Federal Regulations, or its successor.
(C)The change in the scope of services is a change in the type, intensity, duration, or amount of services, or any combination thereof.
(D)The net change in the FQHCs or RHCs rate equals or exceeds 1.75 percent for the affected FQHC or RHC site. For FQHCs and RHCs that filed consolidated cost reports for multiple sites to establish the initial prospective payment reimbursement rate, the 1.75-percent threshold shall be applied to the average per-visit rate of all sites for the purposes of calculating the cost associated with a scope-of-service change. Net change means the per-visit rate change attributable to the cumulative effect of all increases and decreases for a particular fiscal year.
(4)An FQHC or RHC may submit requests for scope-of-service changes once per fiscal year, only within 90 days following the beginning of the FQHCs or RHCs fiscal year. Any approved increase or decrease in the providers rate shall be retroactive to the beginning of the FQHCs or RHCs fiscal year in which the request is submitted.
(5)An FQHC or RHC shall submit a scope-of-service rate change request within 90 days after the beginning of any FQHC or RHC fiscal year occurring after the effective date of this section, if, during the FQHCs or RHCs prior fiscal year, the FQHC or RHC experienced a decrease in the scope of services provided that the FQHC or RHC either knew or should have known would have resulted in a significantly lower per-visit rate. If an FQHC or RHC discontinues providing onsite pharmacy or dental services, it shall submit a scope-of-service rate change request within 90 days after the beginning of the following fiscal year. The rate change shall be effective as provided for in paragraph (4). As used in this paragraph, significantly lower means an average per-visit rate decrease in excess of 2.5 percent.
(6)(A)The department shall conduct an initial review of a scope-of-service rate change request within 30 days after submission by an FQHC or RHC.
(B) If the department determines that additional information is necessary to finalize a new rate, the department shall notify the FQHC or RHC, no later than the 31st day after submission. The notification shall state the reason or reasons the submitted information is insufficient and shall request submission of supplemental information from the FQHC or RHC.
(C)Within one year after receiving a submission that it determines to be complete, the department shall finalize the FQHCs or RHCs rate and shall update the provider master file within 10 business days.
(7)Notwithstanding paragraph (4), if the approved scope-of-service change or changes were initially implemented on or after the first day of an FQHCs or RHCs fiscal year ending in calendar year 2001, but before the adoption and issuance of written instructions for applying for a scope-of-service change, the adjusted reimbursement rate for that scope-of-service change shall be made retroactive to the date the scope-of-service change was initially implemented. Scope-of-service changes under this paragraph shall be required to be submitted within the later of 150 days after the adoption and issuance of the written instructions by the department, or 150 days after the end of the FQHCs or RHCs fiscal year ending in 2003.
(8)All references in this subdivision to fiscal year shall be construed to be references to the fiscal year of the individual FQHC or RHC, as the case may be.
(f)(1)An FQHC or RHC may request a supplemental payment if extraordinary circumstances beyond the control of the FQHC or RHC occur after December 31, 2001, and PPS payments are insufficient due to these extraordinary circumstances. Supplemental payments arising from extraordinary circumstances under this subdivision shall be solely and exclusively within the discretion of the department and shall not be subject to subdivision (l). These supplemental payments shall be determined separately from the scope-of-service adjustments described in subdivision (e). Extraordinary circumstances include, but are not limited to, acts of nature, changes in applicable requirements in the Health and Safety Code, changes in applicable licensure requirements, and changes in applicable rules or regulations. Mere inflation of costs alone, absent extraordinary circumstances, shall not be grounds for supplemental payment. If an FQHCs or RHCs PPS rate is sufficient to cover its overall costs, including those associated with the extraordinary circumstances, then a supplemental payment is not warranted.
(2)The department shall accept requests for supplemental payment at any time throughout the prospective payment rate year.
(3)Requests for supplemental payments shall be submitted in writing to the department and shall set forth the reasons for the request. Each request shall be accompanied by sufficient documentation to enable the department to act upon the request. Documentation shall include the data necessary to demonstrate that the circumstances for which supplemental payment is requested meet the requirements set forth in this section. Documentation shall include all of the following:
(A)A presentation of data to demonstrate reasons for the FQHCs or RHCs request for a supplemental payment.
(B)Documentation showing the cost implications. The cost impact shall be material and significant, two hundred thousand dollars ($200,000) or 1 percent of a facilitys total costs, whichever is less.
(4)A request shall be submitted for each affected year.
(5)Amounts granted for supplemental payment requests shall be paid as lump-sum amounts for those years and not as revised PPS rates, and shall be repaid by the FQHC or RHC to the extent that it is not expended for the specified purposes.
(6)The department shall notify the provider of the departments discretionary decision in writing.
(g)(1)An FQHC or RHC visit means a face-to-face encounter between an FQHC or RHC patient and a physician, physician assistant, nurse practitioner, certified nurse-midwife, clinical psychologist, licensed clinical social worker, or a visiting nurse. For purposes of this section, physician shall be interpreted in a manner consistent with the federal Centers for Medicare and Medicaid Services Medicare Rural Health Clinic and Federally Qualified Health Center Manual (Publication 27), or its successor, only to the extent that it defines the professionals whose services are reimbursable on a per-visit basis and not as to the types of services that these professionals may render during these visits and shall include a physician and surgeon, podiatrist, dentist, optometrist, and chiropractor. A visit shall also include a face-to-face encounter between an FQHC or RHC patient and a comprehensive perinatal services practitioner, as defined in Section 51179.1 of Title 22 of the California Code of Regulations, providing comprehensive perinatal services, a four-hour day of attendance at an adult day health care center, and any other provider identified in the state plans definition of an FQHC or RHC visit.
(2)(A)A visit shall also include a face-to-face encounter between an FQHC or RHC patient and a dental hygienist or a dental hygienist in alternative practice.
(B)Notwithstanding subdivision (e), an FQHC or RHC that currently includes the cost of the services of a dental hygienist in alternative practice for the purposes of establishing its FQHC or RHC rate shall apply for an adjustment to its per-visit rate, and, after the rate adjustment has been approved by the department, shall bill these services as a separate visit. However, multiple encounters with dental professionals that take place on the same day shall constitute a single visit. The department shall develop the appropriate forms to determine which FQHCs or RHCs rates shall be adjusted and to facilitate the calculation of the adjusted rates. An FQHCs or RHCs application for, or the departments approval of, a rate adjustment pursuant to this subparagraph shall not constitute a change in scope of service within the meaning of subdivision (e). An FQHC or RHC that applies for an adjustment to its rate pursuant to this subparagraph may continue to bill for all other FQHC or RHC visits at its existing per-visit rate, subject to reconciliation, until the rate adjustment for visits between an FQHC or RHC patient and a dental hygienist or a dental hygienist in alternative practice has been approved. Any approved increase or decrease in the providers rate shall be made within six months after the date of receipt of the departments rate adjustment forms pursuant to this subparagraph and shall be retroactive to the beginning of the fiscal year in which the FQHC or RHC submits the request, but in no case shall the effective date be earlier than January 1, 2008.
(C)An FQHC or RHC that does not provide dental hygienist or dental hygienist in alternative practice services, and later elects to add these services, shall process the addition of these services as a change in scope of service pursuant to subdivision (e).
(h)If FQHC or RHC services are partially reimbursed by a third-party payer, such as a managed care entity (as defined in Section 1396u-2(a)(1)(B) of Title 42 of the United States Code), the Medicare Program, or the Child Health and Disability Prevention (CHDP) program, the department shall reimburse an FQHC or RHC for the difference between its per-visit PPS rate and receipts from other plans or programs on a contract-by-contract basis and not in the aggregate, and may not include managed care financial incentive payments that are required by federal law to be excluded from the calculation.
(i)(1)An entity that first qualifies as an FQHC or RHC in the year 2001 or later, a newly licensed facility at a new location added to an existing FQHC or RHC, and any entity that is an existing FQHC or RHC that is relocated to a new site shall each have its reimbursement rate established in accordance with one of the following methods, as selected by the FQHC or RHC:
(A)The rate may be calculated on a per-visit basis in an amount that is equal to the average of the per-visit rates of three comparable FQHCs or RHCs located in the same or adjacent area with a similar caseload.
(B)In the absence of three comparable FQHCs or RHCs with a similar caseload, the rate may be calculated on a per-visit basis in an amount that is equal to the average of the per-visit rates of three comparable FQHCs or RHCs located in the same or an adjacent service area, or in a reasonably similar geographic area with respect to relevant social, health care, and economic characteristics.
(C)At a new entitys one-time election, the department shall establish a reimbursement rate, calculated on a per-visit basis, that is equal to 100 percent of the projected allowable costs to the FQHC or RHC of furnishing FQHC or RHC services during the first 12 months of operation as an FQHC or RHC. After the first 12-month period, the projected per-visit rate shall be increased by the Medicare Economic Index (MEI) then in effect. The projected allowable costs for the first 12 months shall be cost settled and the prospective payment reimbursement rate shall be adjusted based on actual and allowable cost per visit. The department shall finalize a new rate within one year after the submission of the actual cost report from the first full 12 months of operation and shall update the department provider master file within 10 business days after finalizing the rate.
(D)The department may adopt any further and additional methods of setting reimbursement rates for newly qualified FQHCs or RHCs as are consistent with Section 1396a(bb)(4) of Title 42 of the United States Code.
(2)(A)In order for an FQHC or RHC to establish the comparability of its caseload, the department shall require that the FQHC or RHC submit its most recent annual utilization report as submitted to the Office of Statewide Health Planning and Development, unless the FQHC or RHC was not required to file an annual utilization report. FQHCs or RHCs that have experienced changes in their services or caseload subsequent to the filing of the annual utilization report may submit to the department a completed report in the format applicable to the prior calendar year. FQHCs or RHCs that have not previously submitted an annual utilization report shall submit to the department a completed report in the format applicable to the prior calendar year. The FQHC or RHC shall not be required to submit the annual utilization report for the comparable FQHCs or RHCs to the department, but shall be required to identify the comparable FQHCs or RHCs. This paragraph shall apply only to a facility that selects the comparability approach described in subparagraph (A) or (B) of paragraph (1).
(B)The department shall conduct an initial review of the three FQHCs or RHCs for the purpose of determining comparability within 30 days after submission by the new entity. If the department determines one or more of the submitted centers or clinics do not meet the comparability threshold, the department shall notify the new entity no later than the 31st day after submission.
(C)The notification shall state the reason or reasons for the finding of noncomparability and shall request a supplemental submission from the new entity. The request shall clearly state whether the new entity shall submit data from one, two, or three FQHCs or RHCs to meet the comparability threshold. Once the new entity submits its supplemental information, the initial review process described in subparagraph (B) shall apply.
(D)Within one year after receiving a submission determined by the department to be comparable, the department shall finalize the new entitys rate and shall update the provider master file within 10 business days.
(3)The rate for any newly qualified entity set forth under this subdivision shall be effective retroactively to the later of the date that the entity was first qualified by the applicable federal agency as an FQHC or RHC, the date a new facility at a new location was added to an existing FQHC or RHC, or the date on which an existing FQHC or RHC was relocated to a new site. The FQHC or RHC shall be permitted to continue billing for Medi-Cal covered benefits on a fee-for-service basis until it is informed of its enrollment as an FQHC or RHC, and the department shall reconcile the difference between the fee-for-service payments and the FQHCs or RHCs prospective payment rate at that time.
(j)Visits occurring at an intermittent clinic site, as defined in subdivision (h) of Section 1206 of the Health and Safety Code, of an existing FQHC or RHC, or in a mobile unit as defined by paragraph (2) of subdivision (b) of Section 1765.105 of the Health and Safety Code, shall be billed by and reimbursed at the same rate as the FQHC or RHC establishing the intermittent clinic site or the mobile unit, subject to the right of the FQHC or RHC to request a scope-of-service adjustment to the rate.
(k)An FQHC or RHC may elect to have pharmacy or dental services reimbursed on a fee-for-service basis, utilizing the current fee schedules established for those services. These costs shall be adjusted out of the FQHCs or RHCs clinic base rate as scope-of-service changes. An FQHC or RHC that reverses its election under this subdivision shall revert to its prior rate, subject to an increase to account for all MEI increases occurring during the intervening time period, and subject to any increase or decrease associated with applicable scope-of-services adjustments as provided in subdivision (e).
(l)FQHCs and RHCs may appeal a grievance or complaint concerning ratesetting, scope-of-service changes, and settlement of cost report audits, in the manner prescribed by Section 14171. The rights and remedies provided under this subdivision are cumulative to the rights and remedies available under all other provisions of law of this state.
(m)The department shall, by no later than March 30, 2008, promptly seek all necessary federal approvals in order to implement this section, including any amendments to the state plan. To the extent that any element or requirement of this section is not approved, the department shall submit a request to the federal Centers for Medicare and Medicaid Services for any waivers that would be necessary to implement this section.
(n)The department shall implement this section only to the extent that federal financial participation is obtained.
(o)The department shall correct erroneous payments at least quarterly to reprocess past claims and ensure all claims are reimbursed at the finalized new rate determined pursuant to either subdivision (e) or (i).
SEC. 2.1.Section 14132.100 of the Welfare and Institutions Code is amended to read:14132.100.(a)The federally qualified health center services described in Section 1396d(a)(2)(C) of Title 42 of the United States Code are covered benefits.
(b)The rural health clinic services described in Section 1396d(a)(2)(B) of Title 42 of the United States Code are covered benefits.
(c)Federally qualified health center services and rural health clinic services shall be reimbursed on a per-visit basis in accordance with the definition of visit set forth in subdivision (g).
(d)Effective October 1, 2004, and on each October 1, 1 thereafter, until no longer required by federal law, federally qualified health center (FQHC) and rural health clinic (RHC) per-visit rates shall be increased by the Medicare Economic Index applicable to primary care services in the manner provided for in Section 1396a(bb)(3)(A) of Title 42 of the United States Code. Prior to January 1, 2004, FQHC and RHC per-visit rates shall be adjusted by the Medicare Economic Index in accordance with the methodology set forth in the state plan in effect on October 1, 2001.
(e)(1)An FQHC or RHC may apply for an adjustment to its per-visit rate based on a change in the scope of services provided by the FQHC or RHC. Rate changes based on a change in the scope of services provided by an FQHC or RHC shall be evaluated in accordance with Medicare reasonable cost principles, as set forth in Part 413 (commencing with Section 413.1) of Title 42 of the Code of Federal Regulations, or its successor.
(2)Subject to the conditions set forth in subparagraphs (A) to (D), inclusive, of paragraph (3), a change in scope of service means any of the following:
(A)The addition of a new FQHC or RHC service that is not incorporated in the baseline prospective payment system (PPS) rate, or a deletion of an FQHC or RHC service that is incorporated in the baseline PPS rate.
(B)A change in service due to amended regulatory requirements or rules.
(C)A change in service resulting from relocating or remodeling an FQHC or RHC.
(D)A change in types of services due to a change in applicable technology and medical practice utilized by the center or clinic.
(E)An increase in service intensity attributable to changes in the types of patients served, including, but not limited to, populations with HIV or AIDS, or other chronic diseases, or homeless, elderly, migrant, or other special populations.
(F)Any changes in any of the services described in subdivision (a) or (b), or in the provider mix of an FQHC or RHC or one of its sites.
(G)Changes in operating costs attributable to capital expenditures associated with a modification of the scope of any of the services described in subdivision (a) or (b), including new or expanded service facilities, regulatory compliance, or changes in technology or medical practices at the center or clinic.
(H)Indirect medical education adjustments and a direct graduate medical education payment that reflects the costs of providing teaching services to interns and residents.
(I)Any changes in the scope of a project approved by the federal Health Resources and Service Services Administration (HRSA).
(3)No change in costs shall, in and of itself, be considered a scope-of-service change unless all of the following apply:
(A)The increase or decrease in cost is attributable to an increase or decrease in the scope of services defined in subdivisions (a) and (b), as applicable.
(B)The cost is allowable under Medicare reasonable cost principles set forth in Part 413 (commencing with Section 413) of Subchapter B of Chapter 4 of Title 42 of the Code of Federal Regulations, or its successor.
(C)The change in the scope of services is a change in the type, intensity, duration, or amount of services, or any combination thereof.
(D)The net change in the FQHCs or RHCs rate equals or exceeds 1.75 percent for the affected FQHC or RHC site. For FQHCs and RHCs that filed consolidated cost reports for multiple sites to establish the initial prospective payment reimbursement rate, the 1.75-percent threshold shall be applied to the average per-visit rate of all sites for the purposes of calculating the cost associated with a scope-of-service change. Net change means the per-visit rate change attributable to the cumulative effect of all increases and decreases for a particular fiscal year.
(4)An FQHC or RHC may submit requests for scope-of-service changes once per fiscal year, only within 90 days following the beginning of the FQHCs or RHCs fiscal year. Any approved increase or decrease in the providers rate shall be retroactive to the beginning of the FQHCs or RHCs fiscal year in which the request is submitted.
(5)An FQHC or RHC shall submit a scope-of-service rate change request within 90 days of after the beginning of any FQHC or RHC fiscal year occurring after the effective date of this section, if, during the FQHCs or RHCs prior fiscal year, the FQHC or RHC experienced a decrease in the scope of services provided that the FQHC or RHC either knew or should have known would have resulted in a significantly lower per-visit rate. If an FQHC or RHC discontinues providing onsite pharmacy or dental services, it shall submit a scope-of-service rate change request within 90 days of after the beginning of the following fiscal year. The rate change shall be effective as provided for in paragraph (4). As used in this paragraph, significantly lower means an average per-visit rate decrease in excess of 2.5 percent.
(6)(A) The department shall conduct an initial review of a scope-of-service rate change request within 30 days after submission by an FQHC or RHC.
(B)If the department determines that additional information is necessary to finalize a new rate, the department shall notify the FQHC or RHC, no later than the 31st day after submission. The notification shall state the reason or reasons the submitted information is insufficient and shall request submission of supplemental information from the FQHC or RHC.
(C)Within one year after receiving a submission that it determines to be complete, the department shall finalize the FQHCs or RHCs rate and shall update the provider master file within 10 business days.
(6)
(7)Notwithstanding paragraph (4), if the approved scope-of-service change or changes were initially implemented on or after the first day of an FQHCs or RHCs fiscal year ending in calendar year 2001, but before the adoption and issuance of written instructions for applying for a scope-of-service change, the adjusted reimbursement rate for that scope-of-service change shall be made retroactive to the date the scope-of-service change was initially implemented. Scope-of-service changes under this paragraph shall be required to be submitted within the later of 150 days after the adoption and issuance of the written instructions by the department, or 150 days after the end of the FQHCs or RHCs fiscal year ending in 2003.
(7)
(8)All references in this subdivision to fiscal year shall be construed to be references to the fiscal year of the individual FQHC or RHC, as the case may be.
(f)(1)An FQHC or RHC may request a supplemental payment if extraordinary circumstances beyond the control of the FQHC or RHC occur after December 31, 2001, and PPS payments are insufficient due to these extraordinary circumstances. Supplemental payments arising from extraordinary circumstances under this subdivision shall be solely and exclusively within the discretion of the department and shall not be subject to subdivision (l). These supplemental payments shall be determined separately from the scope-of-service adjustments described in subdivision (e). Extraordinary circumstances include, but are not limited to, acts of nature, changes in applicable requirements in the Health and Safety Code, changes in applicable licensure requirements, and changes in applicable rules or regulations. Mere inflation of costs alone, absent extraordinary circumstances, shall not be grounds for supplemental payment. If an FQHCs or RHCs PPS rate is sufficient to cover its overall costs, including those associated with the extraordinary circumstances, then a supplemental payment is not warranted.
(2)The department shall accept requests for supplemental payment at any time throughout the prospective payment rate year.
(3)Requests for supplemental payments shall be submitted in writing to the department and shall set forth the reasons for the request. Each request shall be accompanied by sufficient documentation to enable the department to act upon the request. Documentation shall include the data necessary to demonstrate that the circumstances for which supplemental payment is requested meet the requirements set forth in this section. Documentation shall include all of the following:
(A)A presentation of data to demonstrate reasons for the FQHCs or RHCs request for a supplemental payment.
(B)Documentation showing the cost implications. The cost impact shall be material and significant, two hundred thousand dollars ($200,000) or 1 percent of a facilitys total costs, whichever is less.
(4)A request shall be submitted for each affected year.
(5)Amounts granted for supplemental payment requests shall be paid as lump-sum amounts for those years and not as revised PPS rates, and shall be repaid by the FQHC or RHC to the extent that it is not expended for the specified purposes.
(6)The department shall notify the provider of the departments discretionary decision in writing.
(g)(1)An FQHC or RHC visit means a face-to-face encounter between an FQHC or RHC patient and a physician, physician assistant, nurse practitioner, certified nurse-midwife, clinical psychologist, licensed clinical social worker, or a visiting nurse. For purposes of this section, physician shall be interpreted in a manner consistent with the federal Centers for Medicare and Medicaid Services Medicare Rural Health Clinic and Federally Qualified Health Center Manual (Publication 27), or its successor, only to the extent that it defines the professionals whose services are reimbursable on a per-visit basis and not as to the types of services that these professionals may render during these visits and shall include a physician and surgeon, medical doctor, osteopath, podiatrist, dentist, optometrist, and chiropractor. A visit shall also include a face-to-face encounter between an FQHC or RHC patient and a comprehensive perinatal services practitioner, as defined in Section 51179.1 51179.7 of Title 22 of the California Code of Regulations, providing comprehensive perinatal services, a four-hour day of attendance at an adult day health care center, and any other provider identified in the state plans definition of an FQHC or RHC visit.
(2)(A)A visit shall also include a face-to-face encounter between an FQHC or RHC patient and a dental hygienist or hygienist, a dental hygienist in alternative practice. practice, or a marriage and family therapist.
(B)Notwithstanding subdivision (e), an FQHC or RHC that currently includes the cost of the services of a dental hygienist in alternative practice practice, or a marriage and family therapist, for the purposes of establishing its FQHC or RHC rate shall apply for an adjustment to its per-visit rate, and, after the rate adjustment has been approved by the department, shall bill these services as a separate visit. However, multiple encounters with dental professionals or marriage and family therapists that take place on the same day shall constitute a single visit. The department shall develop the appropriate forms to determine which FQHCs or RHC RHCs rates shall be adjusted and to facilitate the calculation of the adjusted rates. An FQHCs or RHCs application for, or the departments approval of, a rate adjustment pursuant to this subparagraph shall not constitute a change in scope of service within the meaning of subdivision (e). An FQHC or RHC that applies for an adjustment to its rate pursuant to this subparagraph may continue to bill for all other FQHC or RHC visits at its existing per-visit rate, subject to reconciliation, until the rate adjustment for visits between an FQHC or RHC patient and a dental hygienist or hygienist, a dental hygienist in alternative practice practice, or a marriage and family therapist has been approved. Any approved increase or decrease in the providers rate shall be made within six months after the date of receipt of the departments rate adjustment forms pursuant to this subparagraph and shall be retroactive to the beginning of the fiscal year in which the FQHC or RHC submits the request, but in no case shall the effective date be earlier than January 1, 2008.
(C)An FQHC or RHC that does not provide dental hygienist or hygienist, dental hygienist in alternative practice practice, or marriage and family therapist services, and later elects to add these services, shall process the addition of these services as a change in scope of service pursuant to subdivision (e).
(h)If FQHC or RHC services are partially reimbursed by a third-party payer, such as a managed care entity (as defined in Section 1396u-2(a)(1)(B) of Title 42 of the United States Code), the Medicare Program, program, or the Child Health and Disability Prevention (CHDP) program, the department shall reimburse an FQHC or RHC for the difference between its per-visit PPS rate and receipts from other plans or programs on a contract-by-contract basis and not in the aggregate, and may not include managed care financial incentive payments that are required by federal law to be excluded from the calculation.
(i)(1)An entity that first qualifies as an FQHC or RHC in the year 2001 or later, a newly licensed facility at a new location added to an existing FQHC or RHC, and any entity that is an existing FQHC or RHC that is relocated to a new site shall each have its reimbursement rate established in accordance with one of the following methods, as selected by the FQHC or RHC:
(A)The rate may be calculated on a per-visit basis in an amount that is equal to the average of the per-visit rates of three comparable FQHCs or RHCs located in the same or adjacent area with a similar caseload.
(B)In the absence of three comparable FQHCs or RHCs with a similar caseload, the rate may be calculated on a per-visit basis in an amount that is equal to the average of the per-visit rates of three comparable FQHCs or RHCs located in the same or an adjacent service area, or in a reasonably similar geographic area with respect to relevant social, health care, and economic characteristics.
(C)At a new entitys one-time election, the department shall establish a reimbursement rate, calculated on a per-visit basis, that is equal to 100 percent of the projected allowable costs to the FQHC or RHC of furnishing FQHC or RHC services during the first 12 months of operation as an FQHC or RHC. After the first 12-month period, the projected per-visit rate shall be increased by the Medicare Economic Index (MEI) then in effect. The projected allowable costs for the first 12 months shall be cost settled and the prospective payment reimbursement rate shall be adjusted based on actual and allowable cost per visit. The department shall finalize a new rate within one year after the submission of the actual cost report from the first full 12 months of operation and shall update the department provider master file within 10 business days after finalizing the rate.
(D)The department may adopt any further and additional methods of setting reimbursement rates for newly qualified FQHCs or RHCs as are consistent with Section 1396a(bb)(4) of Title 42 of the United States Code.
(2)(A)In order for an FQHC or RHC to establish the comparability of its caseload for purposes of subparagraph (A) or (B) of paragraph (1), caseload, the department shall require that the FQHC or RHC submit its most recent annual utilization report as submitted to the Office of Statewide Health Planning and Development, unless the FQHC or RHC was not required to file an annual utilization report. FQHCs or RHCs that have experienced changes in their services or caseload subsequent to the filing of the annual utilization report may submit to the department a completed report in the format applicable to the prior calendar year. FQHCs or RHCs that have not previously submitted an annual utilization report shall submit to the department a completed report in the format applicable to the prior calendar year. The FQHC or RHC shall not be required to submit the annual utilization report for the comparable FQHCs or RHCs to the department, but shall be required to identify the comparable FQHCs or RHCs. This paragraph shall apply only to a facility that selects the comparability approach described in subparagraph (A) or (B) of paragraph (1).
(B)The department shall conduct an initial review of the three FQHCs or RHCs for the purpose of determining comparability within 30 days after submission by the new entity. If the department determines one or more of the submitted centers or clinics do not meet the comparability threshold, the department shall notify the new entity no later than the 31st day after submission.
(C)The notification shall state the reason or reasons for the finding of noncomparability and shall request a supplemental submission from the new entity. The request shall clearly state whether the new entity shall submit data from one, two, or three FQHCs or RHCs to meet the comparability threshold. Once the new entity submits its supplemental information, the initial review process described in subparagraph (B) shall apply.
(D)Within one year after receiving a submission determined by the department to be comparable, the department shall finalize the new entitys rate and shall update the provider master file within 10 business days.
(3)The rate for any newly qualified entity set forth under this subdivision shall be effective retroactively to the later of the date that the entity was first qualified by the applicable federal agency as an FQHC or RHC, the date a new facility at a new location was added to an existing FQHC or RHC, or the date on which an existing FQHC or RHC was relocated to a new site. The FQHC or RHC shall be permitted to continue billing for Medi-Cal covered benefits on a fee-for-service basis under its existing provider number, until it is informed of its enrollment as an FQHC or RHC, RHC enrollment approval, and the department shall reconcile the difference between the fee-for-service payments and the FQHCs or RHCs prospective payment rate at that time.
(j)Visits occurring at an intermittent clinic site, as defined in subdivision (h) of Section 1206 of the Health and Safety Code, of an existing FQHC or RHC, or in a mobile unit as defined by paragraph (2) of subdivision (b) of Section 1765.105 of the Health and Safety Code, shall be billed by and reimbursed at the same rate as the FQHC or RHC establishing the intermittent clinic site or the mobile unit, subject to the right of the FQHC or RHC to request a scope-of-service adjustment to the rate.
(k)An FQHC or RHC may elect to have pharmacy or dental services reimbursed on a fee-for-service basis, utilizing the current fee schedules established for those services. These costs shall be adjusted out of the FQHCs or RHCs clinic base rate as scope-of-service changes. An FQHC or RHC that reverses its election under this subdivision shall revert to its prior rate, subject to an increase to account for all MEI Medicare Economic Index increases occurring during the intervening time period, and subject to any increase or decrease associated with applicable scope-of-services scope-of-service adjustments as provided in subdivision (e).
(l)FQHCs and RHCs may appeal a grievance or complaint concerning ratesetting, scope-of-service changes, and settlement of cost report audits, in the manner prescribed by Section 14171. The rights and remedies provided under this subdivision are cumulative to the rights and remedies available under all other provisions of law of this state.
(m)The department shall, by no later than March 30, 2008, promptly seek all necessary federal approvals in order to implement this section, including any amendments to the state plan. To the extent that any element or requirement of this section is not approved, the department shall submit a request to the federal Centers for Medicare and Medicaid Services for any waivers that would be necessary to implement this section.
(n)The department shall implement this section only to the extent that federal financial participation is obtained.
(o) The department shall correct erroneous payments at least quarterly to reprocess past claims and ensure all claims are reimbursed at the finalized new rate determined pursuant to either subdivision (e) or (i).
SEC. 3.Section 2.1 of this bill incorporates amendments to Section 14132.100 of the Welfare and Institutions Code proposed by both this bill and Assembly Bill 858. It shall only become operative if (1) both bills are enacted and become effective on or before January 1, 2016, (2) each bill amends Section 14132.100 of the Welfare and Institutions Code, and (3) this bill is enacted after Assembly Bill 858, in which case Section 2 of this bill shall not become operative.
(a)The department shall require, as a condition of obtaining a contract with the department, that any local initiative, as defined in Section 53810 of Title 22 of the California Code of Regulations, offer a subcontract to any entity defined in Section 1396d(l)(2)(B) of Title 42 of the United States Code providing services as defined in Section 1396d(a)(2)(C) of Title 42 of the United States Code and operating in the service area covered by the local initiatives contract with the department. These entities are also known as federally qualified health centers.
(b)Except as otherwise provided in this section, managed care subcontracts offered to a federally qualified health center or a rural health clinic, as defined in Section 1396d(l)(1) of Title 42 of the United States Code, by a local initiative, county organized health system, as defined in Section 12693.05 of the Insurance Code, commercial plan, as defined in Section 53810 of Title 22 of the California Code of Regulations, or a health plan contracting with a geographic managed care program, as defined in subdivision (g) of Section 53902 of Title 22 of the California Code of Regulations, shall be on the same terms and conditions offered to other subcontractors providing a similar scope of service. Any beneficiary, subscriber, or enrollee of a program or plan who affirmatively selects, or is assigned by default to, a federally qualified health center or rural health clinic under the terms of a contract between a plan, government program, or any subcontractor of a plan or program, and a federally qualified health center or rural health clinic, shall be assigned directly to the federally qualified health center or rural health clinic, and not to any individual provider performing services on behalf of the federally qualified health center or rural health clinic.
(c)The department shall provide incentives in the competitive application process described in paragraph (1) of subdivision (b) of Section 53800 of Title 22 of the California Code of Regulations, to encourage potential commercial plans as defined in Section 53810 of Title 22 of the California Code of Regulations to offer subcontracts to these federally qualified health centers.
(d)Reimbursement to federally qualified health centers and rural health centers for services provided pursuant to a subcontract with a local initiative, a commercial plan, geographic managed care program health plan, or a county organized health system, shall be paid 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 a federally qualified health center or rural health clinic.
(e)(1)The department shall administer a program to ensure that total payments to federally qualified health centers and rural health clinics operating as managed care subcontractors pursuant to subdivision (d) comply with applicable federal law pursuant to Sections 1902(bb) and 1903(m)(2)(A)(ix) of the Social Security Act (42 U.S.C. Secs. 1396a(bb) and 1396b(m)(2)(A)(ix)). Under the departments program, federally qualified health centers and rural health clinics subcontracting with local initiatives, commercial plans, county organized health systems, and geographic managed care program health plans shall seek supplemental reimbursement from the department through a per visit fee-for-service billing system utilizing the states Medi-Cal fee-for-service claims processing system contractor. To carry out this per visit payment process, each federally qualified health system and rural health clinic shall submit to the department for approval a rate differential calculated to reflect the amount necessary to reimburse the federally qualified health center or rural health clinic for the difference between the payment the center or clinic received from the managed care health plan and either the interim rate established by the department based on the centers or clinics reasonable cost or the centers or clinics prospective payment rate. The department shall adjust the computed rate differential as it deems necessary to minimize the difference between the centers or clinics revenue from the plan and the centers or clinics cost-based reimbursement or the centers or clinics prospective payment rate.
(A)
(1)In addition, the department shall perform an annual reconciliation to reasonable cost, and make payments to, or obtain a recovery from, the center or clinic.
(B)
(2)The department shall perform an initial review of the reconciliation filing within 30 days of after receipt. If the department determines during the initial review that a payment is owed to the center or clinic, the department shall pay to the center or clinic at least 80 percent of the amount owed within 30 days of after completion of the initial review or in any event within 60 days of after receipt of the reconciliation filing.
(C)
(3)The department shall complete the final reconciliation review and shall pay to the center or clinic the remaining amount owed within 15 months of 18 months after the last date of the fiscal year for which the department is conducting the review.
(f)In calculating the capitation rates to be paid to local initiatives, commercial plans, geographic managed care program health plans, and county organized health systems, the department shall not include the additional dollar amount applicable to cost-based reimbursement that would otherwise be paid, absent cost-based reimbursement, to federally qualified health centers and rural health clinics in the Medi-Cal fee-for-service program.
(g)On or before September 30, 2002, the director shall conduct a study of the actual and projected impact of the transition from a cost-based reimbursement system to a prospective payment system for federally qualified health centers and rural health clinics. In conducting the study, the director shall evaluate the extent to which the prospective payment system stimulates expansion of services, including new facilities to expand capacity of the centers, and the extent to which actual and estimated prospective payment rates of federally qualified health centers and rural health clinics for the first five years of the prospective payment system are reflective of the cost of providing services to Medi-Cal beneficiaries. Clinics may submit cost reporting information to the department to provide data for the study.
(h)The department shall approve all contracts between federally qualified health centers or rural health clinics and any local initiative, commercial plan, geographic managed care program health plan, or county organized health system in order to ensure compliance with this section.
(i)This section shall not preclude the department from establishing pilot programs pursuant to Section 14087.329.
SEC. 2.Section 14132.100 of the Welfare and Institutions Code is amended to read:14132.100.(a)The federally qualified health center services described in Section 1396d(a)(2)(C) of Title 42 of the United States Code are covered benefits.
(b)The rural health clinic services described in Section 1396d(a)(2)(B) of Title 42 of the United States Code are covered benefits.
(c)Federally qualified health center services and rural health clinic services shall be reimbursed on a per-visit basis in accordance with the definition of visit set forth in subdivision (g).
(d)Effective October 1, 2004, and on each October 1, 1 thereafter, until no longer required by federal law, federally qualified health center (FQHC) and rural health clinic (RHC) per-visit rates shall be increased by the Medicare Economic Index applicable to primary care services in the manner provided for in Section 1396a(bb)(3)(A) of Title 42 of the United States Code. Prior to January 1, 2004, FQHC and RHC per-visit rates shall be adjusted by the Medicare Economic Index in accordance with the methodology set forth in the state plan in effect on October 1, 2001.
(e)(1)An FQHC or RHC may apply for an adjustment to its per-visit rate based on a change in the scope of services provided by the FQHC or RHC. Rate changes based on a change in the scope of services provided by an FQHC or RHC shall be evaluated in accordance with Medicare reasonable cost principles, as set forth in Part 413 (commencing with Section 413.1) of Title 42 of the Code of Federal Regulations, or its successor.
(2)Subject to the conditions set forth in subparagraphs (A) to (D), inclusive, of paragraph (3), a change in scope of service means any of the following:
(A)The addition of a new FQHC or RHC service that is not incorporated in the baseline prospective payment system (PPS) rate, or a deletion of an FQHC or RHC service that is incorporated in the baseline PPS rate.
(B)A change in service due to amended regulatory requirements or rules.
(C)A change in service resulting from relocating or remodeling an FQHC or RHC.
(D)A change in types of services due to a change in applicable technology and medical practice utilized by the center or clinic.
(E)An increase in service intensity attributable to changes in the types of patients served, including, but not limited to, populations with HIV or AIDS, or other chronic diseases, or homeless, elderly, migrant, or other special populations.
(F)Any changes in any of the services described in subdivision (a) or (b), or in the provider mix of an FQHC or RHC or one of its sites.
(G)Changes in operating costs attributable to capital expenditures associated with a modification of the scope of any of the services described in subdivision (a) or (b), including new or expanded service facilities, regulatory compliance, or changes in technology or medical practices at the center or clinic.
(H)Indirect medical education adjustments and a direct graduate medical education payment that reflects the costs of providing teaching services to interns and residents.
(I)Any changes in the scope of a project approved by the federal Health Resources and Service Administration (HRSA).
(3)No change in costs shall, in and of itself, be considered a scope-of-service change unless all of the following apply:
(A)The increase or decrease in cost is attributable to an increase or decrease in the scope of services defined in subdivisions (a) and (b), as applicable.
(B)The cost is allowable under Medicare reasonable cost principles set forth in Part 413 (commencing with Section 413) of Subchapter B of Chapter 4 of Title 42 of the Code of Federal Regulations, or its successor.
(C)The change in the scope of services is a change in the type, intensity, duration, or amount of services, or any combination thereof.
(D)The net change in the FQHCs or RHCs rate equals or exceeds 1.75 percent for the affected FQHC or RHC site. For FQHCs and RHCs that filed consolidated cost reports for multiple sites to establish the initial prospective payment reimbursement rate, the 1.75-percent threshold shall be applied to the average per-visit rate of all sites for the purposes of calculating the cost associated with a scope-of-service change. Net change means the per-visit rate change attributable to the cumulative effect of all increases and decreases for a particular fiscal year.
(4)An FQHC or RHC may submit requests for scope-of-service changes once per fiscal year, only within 90 days following the beginning of the FQHCs or RHCs fiscal year. Any approved increase or decrease in the providers rate shall be retroactive to the beginning of the FQHCs or RHCs fiscal year in which the request is submitted.
(5)An FQHC or RHC shall submit a scope-of-service rate change request within 90 days after the beginning of any FQHC or RHC fiscal year occurring after the effective date of this section, if, during the FQHCs or RHCs prior fiscal year, the FQHC or RHC experienced a decrease in the scope of services provided that the FQHC or RHC either knew or should have known would have resulted in a significantly lower per-visit rate. If an FQHC or RHC discontinues providing onsite pharmacy or dental services, it shall submit a scope-of-service rate change request within 90 days after the beginning of the following fiscal year. The rate change shall be effective as provided for in paragraph (4). As used in this paragraph, significantly lower means an average per-visit rate decrease in excess of 2.5 percent.
(6)(A)The department shall conduct an initial review of a scope-of-service rate change request within 30 days after submission by an FQHC or RHC.
(B) If the department determines that additional information is necessary to finalize a new rate, the department shall notify the FQHC or RHC, no later than the 31st day after submission. The notification shall state the reason or reasons the submitted information is insufficient and shall request submission of supplemental information from the FQHC or RHC.
(C)Within 90 days one year after receiving a submission that it determines to be complete, the department shall finalize the FQHCs or RHCs rate and shall update the provider master file within 10 business days.
(7)Notwithstanding paragraph (4), if the approved scope-of-service change or changes were initially implemented on or after the first day of an FQHCs or RHCs fiscal year ending in calendar year 2001, but before the adoption and issuance of written instructions for applying for a scope-of-service change, the adjusted reimbursement rate for that scope-of-service change shall be made retroactive to the date the scope-of-service change was initially implemented. Scope-of-service changes under this paragraph shall be required to be submitted within the later of 150 days after the adoption and issuance of the written instructions by the department, or 150 days after the end of the FQHCs or RHCs fiscal year ending in 2003.
(8)All references in this subdivision to fiscal year shall be construed to be references to the fiscal year of the individual FQHC or RHC, as the case may be.
(f)(1)An FQHC or RHC may request a supplemental payment if extraordinary circumstances beyond the control of the FQHC or RHC occur after December 31, 2001, and PPS payments are insufficient due to these extraordinary circumstances. Supplemental payments arising from extraordinary circumstances under this subdivision shall be solely and exclusively within the discretion of the department and shall not be subject to subdivision (l). These supplemental payments shall be determined separately from the scope-of-service adjustments described in subdivision (e). Extraordinary circumstances include, but are not limited to, acts of nature, changes in applicable requirements in the Health and Safety Code, changes in applicable licensure requirements, and changes in applicable rules or regulations. Mere inflation of costs alone, absent extraordinary circumstances, shall not be grounds for supplemental payment. If an FQHCs or RHCs PPS rate is sufficient to cover its overall costs, including those associated with the extraordinary circumstances, then a supplemental payment is not warranted.
(2)The department shall accept requests for supplemental payment at any time throughout the prospective payment rate year.
(3)Requests for supplemental payments shall be submitted in writing to the department and shall set forth the reasons for the request. Each request shall be accompanied by sufficient documentation to enable the department to act upon the request. Documentation shall include the data necessary to demonstrate that the circumstances for which supplemental payment is requested meet the requirements set forth in this section. Documentation shall include all of the following:
(A)A presentation of data to demonstrate reasons for the FQHCs or RHCs request for a supplemental payment.
(B)Documentation showing the cost implications. The cost impact shall be material and significant, two hundred thousand dollars ($200,000) or 1 percent of a facilitys total costs, whichever is less.
(4)A request shall be submitted for each affected year.
(5)Amounts granted for supplemental payment requests shall be paid as lump-sum amounts for those years and not as revised PPS rates, and shall be repaid by the FQHC or RHC to the extent that it is not expended for the specified purposes.
(6)The department shall notify the provider of the departments discretionary decision in writing.
(g)(1)An FQHC or RHC visit means a face-to-face encounter between an FQHC or RHC patient and a physician, physician assistant, nurse practitioner, certified nurse-midwife, clinical psychologist, licensed clinical social worker, or a visiting nurse. For purposes of this section, physician shall be interpreted in a manner consistent with the federal Centers for Medicare and Medicaid Services Medicare Rural Health Clinic and Federally Qualified Health Center Manual (Publication 27), or its successor, only to the extent that it defines the professionals whose services are reimbursable on a per-visit basis and not as to the types of services that these professionals may render during these visits and shall include a physician and surgeon, podiatrist, dentist, optometrist, and chiropractor. A visit shall also include a face-to-face encounter between an FQHC or RHC patient and a comprehensive perinatal services practitioner, as defined in Section 51179.1 of Title 22 of the California Code of Regulations, providing comprehensive perinatal services, a four-hour day of attendance at an adult day health care center, and any other provider identified in the state plans definition of an FQHC or RHC visit.
(2)(A)A visit shall also include a face-to-face encounter between an FQHC or RHC patient and a dental hygienist or a dental hygienist in alternative practice.
(B)Notwithstanding subdivision (e), an FQHC or RHC that currently includes the cost of the services of a dental hygienist in alternative practice for the purposes of establishing its FQHC or RHC rate shall apply for an adjustment to its per-visit rate, and, after the rate adjustment has been approved by the department, shall bill these services as a separate visit. However, multiple encounters with dental professionals that take place on the same day shall constitute a single visit. The department shall develop the appropriate forms to determine which FQHCs or RHC RHCs rates shall be adjusted and to facilitate the calculation of the adjusted rates. An FQHCs or RHCs application for, or the departments approval of, a rate adjustment pursuant to this subparagraph shall not constitute a change in scope of service within the meaning of subdivision (e). An FQHC or RHC that applies for an adjustment to its rate pursuant to this subparagraph may continue to bill for all other FQHC or RHC visits at its existing per-visit rate, subject to reconciliation, until the rate adjustment for visits between an FQHC or RHC patient and a dental hygienist or a dental hygienist in alternative practice has been approved. Any approved increase or decrease in the providers rate shall be made within six months after the date of receipt of the departments rate adjustment forms pursuant to this subparagraph and shall be retroactive to the beginning of the fiscal year in which the FQHC or RHC submits the request, but in no case shall the effective date be earlier than January 1, 2008.
(C)An FQHC or RHC that does not provide dental hygienist or dental hygienist in alternative practice services, and later elects to add these services, shall process the addition of these services as a change in scope of service pursuant to subdivision (e).
(h)If FQHC or RHC services are partially reimbursed by a third-party payer, such as a managed care entity (as defined in Section 1396u-2(a)(1)(B) of Title 42 of the United States Code), the Medicare Program, or the Child Health and Disability Prevention (CHDP) program, the department shall reimburse an FQHC or RHC for the difference between its per-visit PPS rate and receipts from other plans or programs on a contract-by-contract basis and not in the aggregate, and may not include managed care financial incentive payments that are required by federal law to be excluded from the calculation.
(i)(1)An entity that first qualifies as an FQHC or RHC in the year 2001 or later, a newly licensed facility at a new location added to an existing FQHC or RHC, and any entity that is an existing FQHC or RHC that is relocated to a new site shall each have its reimbursement rate established in accordance with one of the following methods, as selected by the FQHC or RHC:
(A)The rate may be calculated on a per-visit basis in an amount that is equal to the average of the per-visit rates of three comparable FQHCs or RHCs located in the same or adjacent area with a similar caseload.
(B)In the absence of three comparable FQHCs or RHCs with a similar caseload, the rate may be calculated on a per-visit basis in an amount that is equal to the average of the per-visit rates of three comparable FQHCs or RHCs located in the same or an adjacent service area, or in a reasonably similar geographic area with respect to relevant social, health care, and economic characteristics.
(C)At a new entitys one-time election, the department shall establish a reimbursement rate, calculated on a per-visit basis, that is equal to 100 percent of the projected allowable costs to the FQHC or RHC of furnishing FQHC or RHC services during the first 12 months of operation as an FQHC or RHC. After the first 12-month period, the projected per-visit rate shall be increased by the Medicare Economic Index (MEI) then in effect. The projected allowable costs for the first 12 months shall be cost settled and the prospective payment reimbursement rate shall be adjusted based on actual and allowable cost per visit. The department shall finalize a new rate within 90 days one year after the submission of the actual cost report from the first full 12 months of operation and shall update the department provider master file within 10 business days of after finalizing the rate.
(D)The department may adopt any further and additional methods of setting reimbursement rates for newly qualified FQHCs or RHCs as are consistent with Section 1396a(bb)(4) of Title 42 of the United States Code.
(2)(A)In order for an FQHC or RHC to establish the comparability of its caseload, the department shall require that the FQHC or RHC submit its most recent annual utilization report as submitted to the Office of Statewide Health Planning and Development, unless the FQHC or RHC was not required to file an annual utilization report. FQHCs or RHCs that have experienced changes in their services or caseload subsequent to the filing of the annual utilization report may submit to the department a completed report in the format applicable to the prior calendar year. FQHCs or RHCs that have not previously submitted an annual utilization report shall submit to the department a completed report in the format applicable to the prior calendar year. The FQHC or RHC shall not be required to submit the annual utilization report for the comparable FQHCs or RHCs to the department, but shall be required to identify the comparable FQHCs or RHCs. This paragraph shall apply only to a facility that selects the comparability approach described in subparagraph (A) or (B) of paragraph (1).
(B)The department shall conduct an initial review of the three FQHCs or RHCs for the purpose of determining comparability within 30 days of after submission by the new entity. If the department determines one or more of the submitted centers or clinics do not meet the comparability threshold, the department shall notify the new entity no later than the 31st day after submission.
(C)The notification shall state the reason or reasons for the finding of noncomparability and shall request a supplemental submission from the new entity. The request shall clearly state whether the new entity shall submit data from one, two, or three FQHCs or RHCs to meet the comparability threshold. Once the new entity submits its supplemental information, the initial review process described in subparagraph (B) shall apply.
(D)Within 90 days one year after receiving a submission determined by the department to be comparable, the department shall finalize the new entitys rate and shall update the provider master file within 10 business days.
(3)The rate for any newly qualified entity set forth under this subdivision shall be effective retroactively to the later of the date that the entity was first qualified by the applicable federal agency as an FQHC or RHC, the date a new facility at a new location was added to an existing FQHC or RHC, or the date on which an existing FQHC or RHC was relocated to a new site. The FQHC or RHC shall be permitted to continue billing for Medi-Cal covered benefits on a fee-for-service basis until it is informed of its enrollment as an FQHC or RHC, and the department shall reconcile the difference between the fee-for-service payments and the FQHCs or RHCs prospective payment rate at that time.
(j)Visits occurring at an intermittent clinic site, as defined in subdivision (h) of Section 1206 of the Health and Safety Code, of an existing FQHC or RHC, or in a mobile unit as defined by paragraph (2) of subdivision (b) of Section 1765.105 of the Health and Safety Code, shall be billed by and reimbursed at the same rate as the FQHC or RHC establishing the intermittent clinic site or the mobile unit, subject to the right of the FQHC or RHC to request a scope-of-service adjustment to the rate.
(k)An FQHC or RHC may elect to have pharmacy or dental services reimbursed on a fee-for-service basis, utilizing the current fee schedules established for those services. These costs shall be adjusted out of the FQHCs or RHCs clinic base rate as scope-of-service changes. An FQHC or RHC that reverses its election under this subdivision shall revert to its prior rate, subject to an increase to account for all MEI increases occurring during the intervening time period, and subject to any increase or decrease associated with applicable scope-of-services adjustments as provided in subdivision (e).
(l)FQHCs and RHCs may appeal a grievance or complaint concerning ratesetting, scope-of-service changes, and settlement of cost report audits, in the manner prescribed by Section 14171. The rights and remedies provided under this subdivision are cumulative to the rights and remedies available under all other provisions of law of this state.
(m)The department shall, by no later than March 30, 2008, promptly seek all necessary federal approvals in order to implement this section, including any amendments to the state plan. To the extent that any element or requirement of this section is not approved, the department shall submit a request to the federal Centers for Medicare and Medicaid Services for any waivers that would be necessary to implement this section.
(n)The department shall implement this section only to the extent that federal financial participation is obtained.
(o)The department shall correct erroneous payments at least quarterly to reprocess past claims and ensure all claims are reimbursed at the finalized new rate determined pursuant to either subdivision (e) or (i).
(a)The department shall require, as a condition of obtaining a contract with the department, that any local initiative, as defined in Section 53810 of Title 22 of the California Code of Regulations, offer a subcontract to any entity defined in Section 1396d(l)(2)(B) of Title 42 of the United States Code providing services as defined in Section 1396d(a)(2)(C) of Title 42 of the United States Code and operating in the service area covered by the local initiatives contract with the department. These entities are also known as federally qualified health centers.
(b)Except as otherwise provided in this section, managed care subcontracts offered to a federally qualified health center or a rural health clinic, as defined in Section 1396d(l)(1) of Title 42 of the United States Code, by a local initiative, county organized health system, as defined in Section 12693.05 of the Insurance Code, commercial plan, as defined in Section 53810 of Title 22 of the California Code of Regulations, or a health plan contracting with a geographic managed care program, as defined in subdivision (g) of Section 53902 of Title 22 of the California Code of Regulations, shall be on the same terms and conditions offered to other subcontractors providing a similar scope of service. Any beneficiary, subscriber, or enrollee of a program or plan who affirmatively selects, or is assigned by default to, a federally qualified health center or rural health clinic under the terms of a contract between a plan, government program, or any subcontractor of a plan or program, and a federally qualified health center or rural health clinic, shall be assigned directly to the federally qualified health center or rural health clinic, and not to any individual provider performing services on behalf of the federally qualified health center or rural health clinic.
(c)The department shall provide incentives in the competitive application process described in paragraph (1) of subdivision (b) of Section 53800 of Title 22 of the California Code of Regulations, to encourage potential commercial plans as defined in Section 53810 of Title 22 of the California Code of Regulations to offer subcontracts to these federally qualified health centers.
(d)Reimbursement to federally qualified health centers and rural health centers for services provided pursuant to a subcontract with a local initiative, a commercial plan, geographic managed care program health plan, or a county organized health system, shall be paid 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 a federally qualified health center or rural health clinic.
(e)(1)The department shall administer a program to ensure that total payments to federally qualified health centers and rural health clinics operating as managed care subcontractors pursuant to subdivision (d) comply with applicable federal law pursuant to Sections 1902(bb) and 1903(m)(2)(A)(ix) of the Social Security Act (42 U.S.C. Secs. 1396a(bb) and 1396b(m)(2)(A)(ix)). Under the departments program, federally qualified health centers and rural health clinics subcontracting with local initiatives, commercial plans, county organized health systems, and geographic managed care program health plans shall seek supplemental reimbursement from the department through a per visit fee-for-service billing system utilizing the states Medi-Cal fee-for-service claims processing system contractor. To carry out this per visit payment process, each federally qualified health system and rural health clinic shall submit to the department for approval a rate differential calculated to reflect the amount necessary to reimburse the federally qualified health center or rural health clinic for the difference between the payment the center or clinic received from the managed care health plan and either the interim rate established by the department based on the centers or clinics reasonable cost or the centers or clinics prospective payment rate. The department shall adjust the computed rate differential as it deems necessary to minimize the difference between the centers or clinics revenue from the plan and the centers or clinics cost-based reimbursement or the centers or clinics prospective payment rate.
(2)
(A)In addition, to the extent feasible, within six months of the end of the centers or clinics fiscal year, the department shall perform an annual reconciliation to reasonable cost, and make payments to, or obtain a recovery from, the center or clinic. Reconciliation shall be based upon the reconciliation filing submitted to the department by the center or clinic. The
(B)The department shall perform an initial review of the reconciliation filing within 30 days of receipt. If the department determines during the initial review that a payment is owed to the center or clinic, the department shall pay to the center or clinic at least 80 percent of the amount owed within 30 days of completion of the initial review or in any event within 60 days of receipt of the reconciliation filing. The
(C)The department shall complete the final reconciliation review and shall pay to the center or clinic the remaining amount owed within 15 months of the last date of the fiscal year for which the department is conducting the review.
(f)In calculating the capitation rates to be paid to local initiatives, commercial plans, geographic managed care program health plans, and county organized health systems, the department shall not include the additional dollar amount applicable to cost-based reimbursement that would otherwise be paid, absent cost-based reimbursement, to federally qualified health centers and rural health clinics in the Medi-Cal fee-for-service program.
(g)On or before September 30, 2002, the director shall conduct a study of the actual and projected impact of the transition from a cost-based reimbursement system to a prospective payment system for federally qualified health centers and rural health clinics. In conducting the study, the director shall evaluate the extent to which the prospective payment system stimulates expansion of services, including new facilities to expand capacity of the centers, and the extent to which actual and estimated prospective payment rates of federally qualified health centers and rural health clinics for the first five years of the prospective payment system are reflective of the cost of providing services to Medi-Cal beneficiaries. Clinics may submit cost reporting information to the department to provide data for the study.
(h)The department shall approve all contracts between federally qualified health centers or rural health clinics and any local initiative, commercial plan, geographic managed care program health plan, or county organized health system in order to ensure compliance with this section.
(i)This section shall not preclude the department from establishing pilot programs pursuant to Section 14087.329.
SEC. 2.Section 14132.100 of the Welfare and Institutions Code is amended to read:14132.100.(a)The federally qualified health center services described in Section 1396d(a)(2)(C) of Title 42 of the United States Code are covered benefits.
(b)The rural health clinic services described in Section 1396d(a)(2)(B) of Title 42 of the United States Code are covered benefits.
(c)Federally qualified health center services and rural health clinic services shall be reimbursed on a per-visit basis in accordance with the definition of visit set forth in subdivision (g).
(d)Effective October 1, 2004, and on each October 1, thereafter, until no longer required by federal law, federally qualified health center (FQHC) and rural health clinic (RHC) per-visit rates shall be increased by the Medicare Economic Index applicable to primary care services in the manner provided for in Section 1396a(bb)(3)(A) of Title 42 of the United States Code. Prior to January 1, 2004, FQHC and RHC per-visit rates shall be adjusted by the Medicare Economic Index in accordance with the methodology set forth in the state plan in effect on October 1, 2001.
(e)(1)An FQHC or RHC may apply for an adjustment to its per-visit rate based on a change in the scope of services provided by the FQHC or RHC. Rate changes based on a change in the scope of services provided by an FQHC or RHC shall be evaluated in accordance with Medicare reasonable cost principles, as set forth in Part 413 (commencing with Section 413.1) of Title 42 of the Code of Federal Regulations, or its successor.
(2)Subject to the conditions set forth in subparagraphs (A) to (D), inclusive, of paragraph (3), a change in scope of service means any of the following:
(A)The addition of a new FQHC or RHC service that is not incorporated in the baseline prospective payment system (PPS) rate, or a deletion of an FQHC or RHC service that is incorporated in the baseline PPS rate.
(B)A change in service due to amended regulatory requirements or rules.
(C)A change in service resulting from relocating or remodeling an FQHC or RHC.
(D)A change in types of services due to a change in applicable technology and medical practice utilized by the center or clinic.
(E)An increase in service intensity attributable to changes in the types of patients served, including, but not limited to, populations with HIV or AIDS, or other chronic diseases, or homeless, elderly, migrant, or other special populations.
(F)Any changes in any of the services described in subdivision (a) or (b), or in the provider mix of an FQHC or RHC or one of its sites.
(G)Changes in operating costs attributable to capital expenditures associated with a modification of the scope of any of the services described in subdivision (a) or (b), including new or expanded service facilities, regulatory compliance, or changes in technology or medical practices at the center or clinic.
(H)Indirect medical education adjustments and a direct graduate medical education payment that reflects the costs of providing teaching services to interns and residents.
(I)Any changes in the scope of a project approved by the federal Health Resources and Service Administration (HRSA).
(3)No change in costs shall, in and of itself, be considered a scope-of-service change unless all of the following apply:
(A)The increase or decrease in cost is attributable to an increase or decrease in the scope of services defined in subdivisions (a) and (b), as applicable.
(B)The cost is allowable under Medicare reasonable cost principles set forth in Part 413 (commencing with Section 413) of Subchapter B of Chapter 4 of Title 42 of the Code of Federal Regulations, or its successor.
(C)The change in the scope of services is a change in the type, intensity, duration, or amount of services, or any combination thereof.
(D)The net change in the FQHCs or RHCs rate equals or exceeds 1.75 percent for the affected FQHC or RHC site. For FQHCs and RHCs that filed consolidated cost reports for multiple sites to establish the initial prospective payment reimbursement rate, the 1.75-percent threshold shall be applied to the average per-visit rate of all sites for the purposes of calculating the cost associated with a scope-of-service change. Net change means the per-visit rate change attributable to the cumulative effect of all increases and decreases for a particular fiscal year.
(4)An FQHC or RHC may submit requests for scope-of-service changes once per fiscal year, only within 90 days following the beginning of the FQHCs or RHCs fiscal year. Any approved increase or decrease in the providers rate shall be retroactive to the beginning of the FQHCs or RHCs fiscal year in which the request is submitted.
(5)An FQHC or RHC shall submit a scope-of-service rate change request within 90 days after the beginning of any FQHC or RHC fiscal year occurring after the effective date of this section, if, during the FQHCs or RHCs prior fiscal year, the FQHC or RHC experienced a decrease in the scope of services provided that the FQHC or RHC either knew or should have known would have resulted in a significantly lower per-visit rate. If an FQHC or RHC discontinues providing onsite pharmacy or dental services, it shall submit a scope-of-service rate change request within 90 days after the beginning of the following fiscal year. The rate change shall be effective as provided for in paragraph (4). As used in this paragraph, significantly lower means an average per-visit rate decrease in excess of 2.5 percent.
(6)(A)The department shall conduct an initial review of a scope-of-service rate change request within 30 days after submission by an FQHC or RHC.
(B) If the department determines that additional information is necessary to finalize a new rate, the department shall notify the FQHC or RHC, no later than the 31st day after submission. The notification shall state the reason or reasons the submitted information is insufficient and shall request submission of supplemental information from the FQHC or RHC.
(C)Within 90 days after receiving a submission that it determines to be complete, the department shall finalize the FQHCs or RHCs rate and shall update the provider master file within 10 business days.
(7)Notwithstanding paragraph (4), if the approved scope-of-service change or changes were initially implemented on or after the first day of an FQHCs or RHCs fiscal year ending in calendar year 2001, but before the adoption and issuance of written instructions for applying for a scope-of-service change, the adjusted reimbursement rate for that scope-of-service change shall be made retroactive to the date the scope-of-service change was initially implemented. Scope-of-service changes under this paragraph shall be required to be submitted within the later of 150 days after the adoption and issuance of the written instructions by the department, or 150 days after the end of the FQHCs or RHCs fiscal year ending in 2003.
(8)All references in this subdivision to fiscal year shall be construed to be references to the fiscal year of the individual FQHC or RHC, as the case may be.
(f)(1)An FQHC or RHC may request a supplemental payment if extraordinary circumstances beyond the control of the FQHC or RHC occur after December 31, 2001, and PPS payments are insufficient due to these extraordinary circumstances. Supplemental payments arising from extraordinary circumstances under this subdivision shall be solely and exclusively within the discretion of the department and shall not be subject to subdivision (l). These supplemental payments shall be determined separately from the scope-of-service adjustments described in subdivision (e). Extraordinary circumstances include, but are not limited to, acts of nature, changes in applicable requirements in the Health and Safety Code, changes in applicable licensure requirements, and changes in applicable rules or regulations. Mere inflation of costs alone, absent extraordinary circumstances, shall not be grounds for supplemental payment. If an FQHCs or RHCs PPS rate is sufficient to cover its overall costs, including those associated with the extraordinary circumstances, then a supplemental payment is not warranted.
(2)The department shall accept requests for supplemental payment at any time throughout the prospective payment rate year.
(3)Requests for supplemental payments shall be submitted in writing to the department and shall set forth the reasons for the request. Each request shall be accompanied by sufficient documentation to enable the department to act upon the request. Documentation shall include the data necessary to demonstrate that the circumstances for which supplemental payment is requested meet the requirements set forth in this section. Documentation shall include all of the following:
(A)A presentation of data to demonstrate reasons for the FQHCs or RHCs request for a supplemental payment.
(B)Documentation showing the cost implications. The cost impact shall be material and significant, two hundred thousand dollars ($200,000) or 1 percent of a facilitys total costs, whichever is less.
(4)A request shall be submitted for each affected year.
(5)Amounts granted for supplemental payment requests shall be paid as lump-sum amounts for those years and not as revised PPS rates, and shall be repaid by the FQHC or RHC to the extent that it is not expended for the specified purposes.
(6)The department shall notify the provider of the departments discretionary decision in writing.
(g)(1)An FQHC or RHC visit means a face-to-face encounter between an FQHC or RHC patient and a physician, physician assistant, nurse practitioner, certified nurse-midwife, clinical psychologist, licensed clinical social worker, or a visiting nurse. For purposes of this section, physician shall be interpreted in a manner consistent with the Centers for Medicare and Medicaid Services Medicare Rural Health Clinic and Federally Qualified Health Center Manual (Publication 27), or its successor, only to the extent that it defines the professionals whose services are reimbursable on a per-visit basis and not as to the types of services that these professionals may render during these visits and shall include a physician and surgeon, podiatrist, dentist, optometrist, and chiropractor. A visit shall also include a face-to-face encounter between an FQHC or RHC patient and a comprehensive perinatal services practitioner, as defined in Section 51179.1 of Title 22 of the California Code of Regulations, providing comprehensive perinatal services, a four-hour day of attendance at an adult day health care center, and any other provider identified in the state plans definition of an FQHC or RHC visit.
(2)(A)A visit shall also include a face-to-face encounter between an FQHC or RHC patient and a dental hygienist or a dental hygienist in alternative practice.
(B)Notwithstanding subdivision (e), an FQHC or RHC that currently includes the cost of the services of a dental hygienist in alternative practice for the purposes of establishing its FQHC or RHC rate shall apply for an adjustment to its per-visit rate, and, after the rate adjustment has been approved by the department, shall bill these services as a separate visit. However, multiple encounters with dental professionals that take place on the same day shall constitute a single visit. The department shall develop the appropriate forms to determine which FQHCs or RHC rates shall be adjusted and to facilitate the calculation of the adjusted rates. An FQHCs or RHCs application for, or the departments approval of, a rate adjustment pursuant to this subparagraph shall not constitute a change in scope of service within the meaning of subdivision (e). An FQHC or RHC that applies for an adjustment to its rate pursuant to this subparagraph may continue to bill for all other FQHC or RHC visits at its existing per-visit rate, subject to reconciliation, until the rate adjustment for visits between an FQHC or RHC patient and a dental hygienist or a dental hygienist in alternative practice has been approved. Any approved increase or decrease in the providers rate shall be made within six months after the date of receipt of the departments rate adjustment forms pursuant to this subparagraph and shall be retroactive to the beginning of the fiscal year in which the FQHC or RHC submits the request, but in no case shall the effective date be earlier than January 1, 2008.
(C)An FQHC or RHC that does not provide dental hygienist or dental hygienist in alternative practice services, and later elects to add these services, shall process the addition of these services as a change in scope of service pursuant to subdivision (e).
(h)If FQHC or RHC services are partially reimbursed by a third-party payer, such as a managed care entity (as defined in Section 1396u-2(a)(1)(B) of Title 42 of the United States Code), the Medicare Program, or the Child Health and Disability Prevention (CHDP) program, the department shall reimburse an FQHC or RHC for the difference between its per-visit PPS rate and receipts from other plans or programs on a contract-by-contract basis and not in the aggregate, and may not include managed care financial incentive payments that are required by federal law to be excluded from the calculation.
(i)(1)An entity that first qualifies as an FQHC or RHC in the year 2001 or later, a newly licensed facility at a new location added to an existing FQHC or RHC, and any entity that is an existing FQHC or RHC that is relocated to a new site shall each have its reimbursement rate established in accordance with one of the following methods, as selected by the FQHC or RHC:
(A)The rate may be calculated on a per-visit basis in an amount that is equal to the average of the per-visit rates of three comparable FQHCs or RHCs located in the same or adjacent area with a similar caseload.
(B)In the absence of three comparable FQHCs or RHCs with a similar caseload, the rate may be calculated on a per-visit basis in an amount that is equal to the average of the per-visit rates of three comparable FQHCs or RHCs located in the same or an adjacent service area, or in a reasonably similar geographic area with respect to relevant social, health care, and economic characteristics.
(C)At a new entitys one-time election, the department shall establish a reimbursement rate, calculated on a per-visit basis, that is equal to 100 percent of the projected allowable costs to the FQHC or RHC of furnishing FQHC or RHC services during the first 12 months of operation as an FQHC or RHC. After the first 12-month period, the projected per-visit rate shall be increased by the Medicare Economic Index then in effect. The projected allowable costs for the first 12 months shall be cost settled and the prospective payment reimbursement rate shall be adjusted based on actual and allowable cost per visit. The department shall finalize a new rate within 90 days after the submission of the actual cost report from the first full 12 months of operation and shall update the department provider master file within 10 business days of finalizing the rate.
(D)The department may adopt any further and additional methods of setting reimbursement rates for newly qualified FQHCs or RHCs as are consistent with Section 1396a(bb)(4) of Title 42 of the United States Code.
(2)(A)In order for an FQHC or RHC to establish the comparability of its caseload, the department shall require that the FQHC or RHC submit its most recent annual utilization report as submitted to the Office of Statewide Health Planning and Development, unless the FQHC or RHC was not required to file an annual utilization report. FQHCs or RHCs that have experienced changes in their services or caseload subsequent to the filing of the annual utilization report may submit to the department a completed report in the format applicable to the prior calendar year. FQHCs or RHCs that have not previously submitted an annual utilization report shall submit to the department a completed report in the format applicable to the prior calendar year. The FQHC or RHC shall not be required to submit the annual utilization report for the comparable FQHCs or RHCs to the department, but shall be required to identify the comparable FQHCs or RHCs. This paragraph shall apply only to a facility that selects the comparability approach described in subparagraph (A) or (B) of paragraph (1).
(B)The department shall conduct an initial review of the three FQHCs or RHCs for the purpose of determining comparability within 30 days of submission by the new entity. If the department determines one or more of the submitted centers or clinics do not meet the comparability threshold, the department shall notify the new entity no later than the 31st day after submission.
(C)The notification shall state the reason or reasons for the finding of noncomparability and shall request a supplemental submission from the new entity. The request shall clearly state whether the new entity shall submit data from one, two, or three FQHCs or RHCs to meet the comparability threshold. Once the new entity submits its supplemental information, the initial review process described in subparagraph (B) shall apply.
(D)Within 90 days after receiving a submission determined by the department to be comparable, the department shall finalize the new entitys rate and shall update the provider master file within 10 business days.
(3)The rate for any newly qualified entity set forth under this subdivision shall be effective retroactively to the later of the date that the entity was first qualified by the applicable federal agency as an FQHC or RHC, the date a new facility at a new location was added to an existing FQHC or RHC, or the date on which an existing FQHC or RHC was relocated to a new site. The FQHC or RHC shall be permitted to continue billing for Medi-Cal covered benefits on a fee-for-service basis until it is informed of its enrollment as an FQHC or RHC, and the department shall reconcile the difference between the fee-for-service payments and the FQHCs or RHCs prospective payment rate at that time.
(j)Visits occurring at an intermittent clinic site, as defined in subdivision (h) of Section 1206 of the Health and Safety Code, of an existing FQHC or RHC, or in a mobile unit as defined by paragraph (2) of subdivision (b) of Section 1765.105 of the Health and Safety Code, shall be billed by and reimbursed at the same rate as the FQHC or RHC establishing the intermittent clinic site or the mobile unit, subject to the right of the FQHC or RHC to request a scope-of-service adjustment to the rate.
(k)An FQHC or RHC may elect to have pharmacy or dental services reimbursed on a fee-for-service basis, utilizing the current fee schedules established for those services. These costs shall be adjusted out of the FQHCs or RHCs clinic base rate as scope-of-service changes. An FQHC or RHC that reverses its election under this subdivision shall revert to its prior rate, subject to an increase to account for all MEI increases occurring during the intervening time period, and subject to any increase or decrease associated with applicable scope-of-services adjustments as provided in subdivision (e).
(l)FQHCs and RHCs may appeal a grievance or complaint concerning ratesetting, scope-of-service changes, and settlement of cost report audits, in the manner prescribed by Section 14171. The rights and remedies provided under this subdivision are cumulative to the rights and remedies available under all other provisions of law of this state.
(m)The department shall, by no later than March 30, 2008, promptly seek all necessary federal approvals in order to implement this section, including any amendments to the state plan. To the extent that any element or requirement of this section is not approved, the department shall submit a request to the federal Centers for Medicare and Medicaid Services for any waivers that would be necessary to implement this section.
(n)The department shall implement this section only to the extent that federal financial participation is obtained.
(o)The department shall correct erroneous payments at least quarterly to reprocess past claims and ensure all claims are reimbursed at the finalized new rate determined pursuant to either subdivision (e) or (i).
(a)The department shall require, as a condition of obtaining a contract with the department, that any local initiative, as defined in Section 53810 of Title 22 of the California Code of Regulations, offer a subcontract to any entity defined in Section 1396d(l)(2)(B) of Title 42 of the United States Code providing services as defined in Section 1396d(a)(2)(C) of Title 42 of the United States Code and operating in the service area covered by the local initiatives contract with the department. These entities are also known as federally qualified health centers.
(b)Except as otherwise provided in this section, managed care subcontracts offered to a federally qualified health center or a rural health clinic, as defined in Section 1396d(l)(1) of Title 42 of the United States Code, by a local initiative, county organized health system, as defined in Section 12693.05 of the Insurance Code, commercial plan, as defined in Section 53810 of Title 22 of the California Code of Regulations, or a health plan contracting with a geographic managed care program, as defined in subdivision (g) of Section 53902 of Title 22 of the California Code of Regulations, shall be on the same terms and conditions offered to other subcontractors providing a similar scope of service. Any beneficiary, subscriber, or enrollee of a program or plan who affirmatively selects, or is assigned by default to, a federally qualified health center or rural health clinic under the terms of a contract between a plan, government program, or any subcontractor of a plan or program, and a federally qualified health center or rural health clinic, shall be assigned directly to the federally qualified health center or rural health clinic, and not to any individual provider performing services on behalf of the federally qualified health center or rural health clinic.
(c)The department shall provide incentives in the competitive application process described in paragraph (1) of subdivision (b) of Section 53800 of Title 22 of the California Code of Regulations, to encourage potential commercial plans as defined in Section 53810 of Title 22 of the California Code of Regulations to offer subcontracts to these federally qualified health centers.
(d)Reimbursement to federally qualified health centers and rural health centers for services provided pursuant to a subcontract with a local initiative, a commercial plan, geographic managed care program health plan, or a county organized health system, shall be paid 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 a federally qualified health center or rural health clinic.
(e)(1)The department shall administer a program to ensure that total payments to federally qualified health centers and rural health clinics operating as managed care subcontractors pursuant to subdivision (d) comply with applicable federal law pursuant to Sections 1902(bb) and 1903(m)(2)(A)(ix) of the Social Security Act (42 U.S.C. Secs. 1396a(bb) and 1396b(m)(2)(A)(ix)). Under the departments program, federally qualified health centers and rural health clinics subcontracting with local initiatives, commercial plans, county organized health systems, and geographic managed care program health plans shall seek supplemental reimbursement from the department through a per visit fee-for-service billing system utilizing the states Medi-Cal fee-for-service claims processing system contractor. To carry out this per visit payment process, each federally qualified health system and rural health clinic shall submit to the department for approval a rate differential calculated to reflect the amount necessary to reimburse the federally qualified health center or rural health clinic for the difference between the payment the center or clinic received from the managed care health plan and either the interim rate established by the department based on the centers or clinics reasonable cost or the centers or clinics prospective payment rate. The department shall adjust the computed rate differential as it deems necessary to minimize the difference between the centers or clinics revenue from the plan and the centers or clinics cost-based reimbursement or the centers or clinics prospective payment rate.
(2)In addition, to the extent feasible, within six months of the end of the centers or clinics fiscal year, the department shall perform an annual reconciliation to reasonable cost, and make payments to, or obtain a recovery from, the center or clinic. Reconciliation shall be based upon the reconciliation filing submitted to the department by the center or clinic. The department shall perform an initial review of the reconciliation filing within 30 days of receipt. If the department determines during the initial review that a payment is owed to the center or clinic, the department shall pay to the center or clinic at least 80 percent of the amount owed within 30 days of completion of the initial review or in any event within 60 days of receipt of the reconciliation filing. The department shall complete the final reconciliation review and shall pay to the center or clinic the remaining amount owed within 15 months of the last date of the fiscal year for which the department is conducting the review.
(f)In calculating the capitation rates to be paid to local initiatives, commercial plans, geographic managed care program health plans, and county organized health systems, the department shall not include the additional dollar amount applicable to cost-based reimbursement that would otherwise be paid, absent cost-based reimbursement, to federally qualified health centers and rural health clinics in the Medi-Cal fee-for-service program.
(g)On or before September 30, 2002, the director shall conduct a study of the actual and projected impact of the transition from a cost-based reimbursement system to a prospective payment system for federally qualified health centers and rural health clinics. In conducting the study, the director shall evaluate the extent to which the prospective payment system stimulates expansion of services, including new facilities to expand capacity of the centers, and the extent to which actual and estimated prospective payment rates of federally qualified health centers and rural health clinics for the first five years of the prospective payment system are reflective of the cost of providing services to Medi-Cal beneficiaries. Clinics may submit cost reporting information to the department to provide data for the study.
(h)The department shall approve all contracts between federally qualified health centers or rural health clinics and any local initiative, commercial plan, geographic managed care program health plan, or county organized health system in order to ensure compliance with this section.
(i)This section shall not preclude the department from establishing pilot programs pursuant to Section 14087.329.
SEC. 2.Section 14132.100 of the Welfare and Institutions Code is amended to read:14132.100.(a)The federally qualified health center services described in Section 1396d(a)(2)(C) of Title 42 of the United States Code are covered benefits.
(b)The rural health clinic services described in Section 1396d(a)(2)(B) of Title 42 of the United States Code are covered benefits.
(c)Federally qualified health center services and rural health clinic services shall be reimbursed on a per-visit basis in accordance with the definition of visit set forth in subdivision (g).
(d)Effective October 1, 2004, and on each October 1, thereafter, until no longer required by federal law, federally qualified health center (FQHC) and rural health clinic (RHC) per-visit rates shall be increased by the Medicare Economic Index applicable to primary care services in the manner provided for in Section 1396a(bb)(3)(A) of Title 42 of the United States Code. Prior to January 1, 2004, FQHC and RHC per-visit rates shall be adjusted by the Medicare Economic Index in accordance with the methodology set forth in the state plan in effect on October 1, 2001.
(e)(1)An FQHC or RHC may apply for an adjustment to its per-visit rate based on a change in the scope of services provided by the FQHC or RHC. Rate changes based on a change in the scope of services provided by an FQHC or RHC shall be evaluated in accordance with Medicare reasonable cost principles, as set forth in Part 413 (commencing with Section 413.1) of Title 42 of the Code of Federal Regulations, or its successor.
(2)Subject to the conditions set forth in subparagraphs (A) to (D), inclusive, of paragraph (3), a change in scope of service means any of the following:
(A)The addition of a new FQHC or RHC service that is not incorporated in the baseline prospective payment system (PPS) rate, or a deletion of an FQHC or RHC service that is incorporated in the baseline PPS rate.
(B)A change in service due to amended regulatory requirements or rules.
(C)A change in service resulting from relocating or remodeling an FQHC or RHC.
(D)A change in types of services due to a change in applicable technology and medical practice utilized by the center or clinic.
(E)An increase in service intensity attributable to changes in the types of patients served, including, but not limited to, populations with HIV or AIDS, or other chronic diseases, or homeless, elderly, migrant, or other special populations.
(F)Any changes in any of the services described in subdivision (a) or (b), or in the provider mix of an FQHC or RHC or one of its sites.
(G)Changes in operating costs attributable to capital expenditures associated with a modification of the scope of any of the services described in subdivision (a) or (b), including new or expanded service facilities, regulatory compliance, or changes in technology or medical practices at the center or clinic.
(H)Indirect medical education adjustments and a direct graduate medical education payment that reflects the costs of providing teaching services to interns and residents.
(I)Any changes in the scope of a project approved by the federal Health Resources and Service Administration (HRSA).
(3)No change in costs shall, in and of itself, be considered a scope-of-service change unless all of the following apply:
(A)The increase or decrease in cost is attributable to an increase or decrease in the scope of services defined in subdivisions (a) and (b), as applicable.
(B)The cost is allowable under Medicare reasonable cost principles set forth in Part 413 (commencing with Section 413) of Subchapter B of Chapter 4 of Title 42 of the Code of Federal Regulations, or its successor.
(C)The change in the scope of services is a change in the type, intensity, duration, or amount of services, or any combination thereof.
(D)The net change in the FQHCs or RHCs rate equals or exceeds 1.75 percent for the affected FQHC or RHC site. For FQHCs and RHCs that filed consolidated cost reports for multiple sites to establish the initial prospective payment reimbursement rate, the 1.75-percent threshold shall be applied to the average per-visit rate of all sites for the purposes of calculating the cost associated with a scope-of-service change. Net change means the per-visit rate change attributable to the cumulative effect of all increases and decreases for a particular fiscal year.
(4)An FQHC or RHC may submit requests for scope-of-service changes once per fiscal year, only within 90 days following the beginning of the FQHCs or RHCs fiscal year. Any approved increase or decrease in the providers rate shall be retroactive to the beginning of the FQHCs or RHCs fiscal year in which the request is submitted.
(5)An FQHC or RHC shall submit a scope-of-service rate change request within 90 days after the beginning of any FQHC or RHC fiscal year occurring after the effective date of this section, if, during the FQHCs or RHCs prior fiscal year, the FQHC or RHC experienced a decrease in the scope of services provided that the FQHC or RHC either knew or should have known would have resulted in a significantly lower per-visit rate. If an FQHC or RHC discontinues providing onsite pharmacy or dental services, it shall submit a scope-of-service rate change request within 90 days after the beginning of the following fiscal year. The rate change shall be effective as provided for in paragraph (4). As used in this paragraph, significantly lower means an average per-visit rate decrease in excess of 2.5 percent.
(6)The department shall finalize a new rate within 90 days after the submission by an FQHC or RHC of a scope-of-service rate change request and shall update the provider master file within 10 business days of finalizing the rate.
(6)(A)The department shall conduct an initial review of a scope-of-service rate change request within 30 days after submission by an FQHC or RHC.
(B) If the department determines that additional information is necessary to finalize a new rate, the department shall notify the FQHC or RHC, no later than the 31st day after submission. The notification shall state the reason or reasons the submitted information is insufficient and shall request submission of supplemental information from the FQHC or RHC.
(C)Within 90 days after receiving a submission that it determines to be complete, the department shall finalize the FQHCs or RHCs rate and shall update the provider master file within 10 business days.
(7)Notwithstanding paragraph (4), if the approved scope-of-service change or changes were initially implemented on or after the first day of an FQHCs or RHCs fiscal year ending in calendar year 2001, but before the adoption and issuance of written instructions for applying for a scope-of-service change, the adjusted reimbursement rate for that scope-of-service change shall be made retroactive to the date the scope-of-service change was initially implemented. Scope-of-service changes under this paragraph shall be required to be submitted within the later of 150 days after the adoption and issuance of the written instructions by the department, or 150 days after the end of the FQHCs or RHCs fiscal year ending in 2003.
(8)All references in this subdivision to fiscal year shall be construed to be references to the fiscal year of the individual FQHC or RHC, as the case may be.
(f)(1)An FQHC or RHC may request a supplemental payment if extraordinary circumstances beyond the control of the FQHC or RHC occur after December 31, 2001, and PPS payments are insufficient due to these extraordinary circumstances. Supplemental payments arising from extraordinary circumstances under this subdivision shall be solely and exclusively within the discretion of the department and shall not be subject to subdivision (l). These supplemental payments shall be determined separately from the scope-of-service adjustments described in subdivision (e). Extraordinary circumstances include, but are not limited to, acts of nature, changes in applicable requirements in the Health and Safety Code, changes in applicable licensure requirements, and changes in applicable rules or regulations. Mere inflation of costs alone, absent extraordinary circumstances, shall not be grounds for supplemental payment. If an FQHCs or RHCs PPS rate is sufficient to cover its overall costs, including those associated with the extraordinary circumstances, then a supplemental payment is not warranted.
(2)The department shall accept requests for supplemental payment at any time throughout the prospective payment rate year.
(3)Requests for supplemental payments shall be submitted in writing to the department and shall set forth the reasons for the request. Each request shall be accompanied by sufficient documentation to enable the department to act upon the request. Documentation shall include the data necessary to demonstrate that the circumstances for which supplemental payment is requested meet the requirements set forth in this section. Documentation shall include all of the following:
(A)A presentation of data to demonstrate reasons for the FQHCs or RHCs request for a supplemental payment.
(B)Documentation showing the cost implications. The cost impact shall be material and significant, two hundred thousand dollars ($200,000) or 1 percent of a facilitys total costs, whichever is less.
(4)A request shall be submitted for each affected year.
(5)Amounts granted for supplemental payment requests shall be paid as lump-sum amounts for those years and not as revised PPS rates, and shall be repaid by the FQHC or RHC to the extent that it is not expended for the specified purposes.
(6)The department shall notify the provider of the departments discretionary decision in writing.
(g)(1)An FQHC or RHC visit means a face-to-face encounter between an FQHC or RHC patient and a physician, physician assistant, nurse practitioner, certified nurse-midwife, clinical psychologist, licensed clinical social worker, or a visiting nurse. For purposes of this section, physician shall be interpreted in a manner consistent with the Centers for Medicare and Medicaid Services Medicare Rural Health Clinic and Federally Qualified Health Center Manual (Publication 27), or its successor, only to the extent that it defines the professionals whose services are reimbursable on a per-visit basis and not as to the types of services that these professionals may render during these visits and shall include a physician and surgeon, podiatrist, dentist, optometrist, and chiropractor. A visit shall also include a face-to-face encounter between an FQHC or RHC patient and a comprehensive perinatal services practitioner, as defined in Section 51179.1 of Title 22 of the California Code of Regulations, providing comprehensive perinatal services, a four-hour day of attendance at an adult day health care center, and any other provider identified in the state plans definition of an FQHC or RHC visit.
(2)(A)A visit shall also include a face-to-face encounter between an FQHC or RHC patient and a dental hygienist or a dental hygienist in alternative practice.
(B)Notwithstanding subdivision (e), an FQHC or RHC that currently includes the cost of the services of a dental hygienist in alternative practice for the purposes of establishing its FQHC or RHC rate shall apply for an adjustment to its per-visit rate, and, after the rate adjustment has been approved by the department, shall bill these services as a separate visit. However, multiple encounters with dental professionals that take place on the same day shall constitute a single visit. The department shall develop the appropriate forms to determine which FQHCs or RHC rates shall be adjusted and to facilitate the calculation of the adjusted rates. An FQHCs or RHCs application for, or the departments approval of, a rate adjustment pursuant to this subparagraph shall not constitute a change in scope of service within the meaning of subdivision (e). An FQHC or RHC that applies for an adjustment to its rate pursuant to this subparagraph may continue to bill for all other FQHC or RHC visits at its existing per-visit rate, subject to reconciliation, until the rate adjustment for visits between an FQHC or RHC patient and a dental hygienist or a dental hygienist in alternative practice has been approved. Any approved increase or decrease in the providers rate shall be made within six months after the date of receipt of the departments rate adjustment forms pursuant to this subparagraph and shall be retroactive to the beginning of the fiscal year in which the FQHC or RHC submits the request, but in no case shall the effective date be earlier than January 1, 2008.
(C)An FQHC or RHC that does not provide dental hygienist or dental hygienist in alternative practice services, and later elects to add these services, shall process the addition of these services as a change in scope of service pursuant to subdivision (e).
(h)If FQHC or RHC services are partially reimbursed by a third-party payer, such as a managed care entity (as defined in Section 1396u-2(a)(1)(B) of Title 42 of the United States Code), the Medicare Program, or the Child Health and Disability Prevention (CHDP) program, the department shall reimburse an FQHC or RHC for the difference between its per-visit PPS rate and receipts from other plans or programs on a contract-by-contract basis and not in the aggregate, and may not include managed care financial incentive payments that are required by federal law to be excluded from the calculation.
(i)(1)An entity that first qualifies as an FQHC or RHC in the year 2001 or later, a newly licensed facility at a new location added to an existing FQHC or RHC, and any entity that is an existing FQHC or RHC that is relocated to a new site shall each have its reimbursement rate established in accordance with one of the following methods, as selected by the FQHC or RHC:
(A)The rate may be calculated on a per-visit basis in an amount that is equal to the average of the per-visit rates of three comparable FQHCs or RHCs located in the same or adjacent area with a similar caseload.
(B)In the absence of three comparable FQHCs or RHCs with a similar caseload, the rate may be calculated on a per-visit basis in an amount that is equal to the average of the per-visit rates of three comparable FQHCs or RHCs located in the same or an adjacent service area, or in a reasonably similar geographic area with respect to relevant social, health care, and economic characteristics.
(C)At a new entitys one-time election, the department shall establish a reimbursement rate, calculated on a per-visit basis, that is equal to 100 percent of the projected allowable costs to the FQHC or RHC of furnishing FQHC or RHC services during the first 12 months of operation as an FQHC or RHC. After the first 12-month period, the projected per-visit rate shall be increased by the Medicare Economic Index then in effect. The projected allowable costs for the first 12 months shall be cost settled and the prospective payment reimbursement rate shall be adjusted based on actual and allowable cost per visit. The department shall finalize a new rate within 90 days after the submission of the actual cost report from the first full 12 months of operation and shall update the department provider master file within 10 business days of finalizing the rate.
(D)The department may adopt any further and additional methods of setting reimbursement rates for newly qualified FQHCs or RHCs as are consistent with Section 1396a(bb)(4) of Title 42 of the United States Code.
(2)(A)In order for an FQHC or RHC to establish the comparability of its caseload, the department shall require that the FQHC or RHC submit its most recent annual utilization report as submitted to the Office of Statewide Health Planning and Development, unless the FQHC or RHC was not required to file an annual utilization report. FQHCs or RHCs that have experienced changes in their services or caseload subsequent to the filing of the annual utilization report may submit to the department a completed report in the format applicable to the prior calendar year. FQHCs or RHCs that have not previously submitted an annual utilization report shall submit to the department a completed report in the format applicable to the prior calendar year. The FQHC or RHC shall not be required to submit the annual utilization report for the comparable FQHCs or RHCs to the department, but shall be required to identify the comparable FQHCs or RHCs. This paragraph shall apply only to a facility that selects the comparability approach described in subparagraph (A) or (B) of paragraph (1).
(B)The department shall conduct an initial review of the three FQHCs or RHCs for the purpose of determining comparability within 30 days of submission by the new entity. If the department determines one or more of the submitted centers or clinics do not meet the comparability threshold, the department shall notify the new entity no later than the 31st day after submission.
(C)The notification shall state the reason or reasons for the finding of noncomparability and shall request a supplemental submission from the new entity. The request shall clearly state whether the new entity shall submit data from one, two, or three FQHCs or RHCs to meet the comparability threshold. Once the new entity submits its supplemental information, the initial review process described in subparagraph (B) shall apply.
(D)Within 90 days after receiving a submission determined by the department to be comparable, the department shall finalize the new entitys rate and shall update the provider master file within 10 business days.
(3)The rate for any newly qualified entity set forth under this subdivision shall be effective retroactively to the later of the date that the entity was first qualified by the applicable federal agency as an FQHC or RHC, the date a new facility at a new location was added to an existing FQHC or RHC, or the date on which an existing FQHC or RHC was relocated to a new site. The FQHC or RHC shall be permitted to continue billing for Medi-Cal covered benefits on a fee-for-service basis until it is informed of its enrollment as an FQHC or RHC, and the department shall reconcile the difference between the fee-for-service payments and the FQHCs or RHCs prospective payment rate at that time.
(j)Visits occurring at an intermittent clinic site, as defined in subdivision (h) of Section 1206 of the Health and Safety Code, of an existing FQHC or RHC, or in a mobile unit as defined by paragraph (2) of subdivision (b) of Section 1765.105 of the Health and Safety Code, shall be billed by and reimbursed at the same rate as the FQHC or RHC establishing the intermittent clinic site or the mobile unit, subject to the right of the FQHC or RHC to request a scope-of-service adjustment to the rate.
(k)An FQHC or RHC may elect to have pharmacy or dental services reimbursed on a fee-for-service basis, utilizing the current fee schedules established for those services. These costs shall be adjusted out of the FQHCs or RHCs clinic base rate as scope-of-service changes. An FQHC or RHC that reverses its election under this subdivision shall revert to its prior rate, subject to an increase to account for all MEI increases occurring during the intervening time period, and subject to any increase or decrease associated with applicable scope-of-services adjustments as provided in subdivision (e).
(l)FQHCs and RHCs may appeal a grievance or complaint concerning ratesetting, scope-of-service changes, and settlement of cost report audits, in the manner prescribed by Section 14171. The rights and remedies provided under this subdivision are cumulative to the rights and remedies available under all other provisions of law of this state.
(m)The department shall, by no later than March 30, 2008, promptly seek all necessary federal approvals in order to implement this section, including any amendments to the state plan. To the extent that any element or requirement of this section is not approved, the department shall submit a request to the federal Centers for Medicare and Medicaid Services for any waivers that would be necessary to implement this section.
(n)The department shall implement this section only to the extent that federal financial participation is obtained.
(o)The department shall correct erroneous payments at least quarterly to reprocess past claims and ensure all claims are reimbursed at the finalized new rate determined pursuant to either subdivision (e) or (i).
(a)The department shall require, as a condition of obtaining a contract with the department, that any local initiative, as defined in subdivision (v) of Section 53810 of Title 22 of the California Code of Regulations, offer a subcontract to any entity defined in Section 1396d(l)(2)(B) of Title 42 of the United States Code providing services as defined in Section 1396d(a)(2)(C) of Title 42 of the United States Code and operating in the service area covered by the local initiatives contract with the department. These entities are also known as federally qualified health centers.
(b)Except as otherwise provided in this section, managed care subcontracts offered to a federally qualified health center or a rural health clinic, as defined in Section 1396d(l)(1) of Title 42 of the United States Code, by a local initiative, county organized health system, as defined in Section 12693.05 of the Insurance Code, commercial plan, as defined in subdivision (h) of Section 53810 of Title 22 of the California Code of Regulations, or a health plan contracting with a geographic managed care program, as defined in subdivision (g) of Section 53902 of Title 22 of the California Code of Regulations, shall be on the same terms and conditions offered to other subcontractors providing a similar scope of service. Any beneficiary, subscriber, or enrollee of a program or plan who affirmatively selects, or is assigned by default to, a federally qualified health center or rural health clinic under the terms of a contract between a plan, government program, or any subcontractor of a plan or program, and a federally qualified health center or rural health clinic, shall be assigned directly to the federally qualified health center or rural health clinic, and not to any individual provider performing services on behalf of the federally qualified health center or rural health clinic.
(c)The department shall provide incentives in the competitive application process described in paragraph (1) of subdivision (b) of Section 53800 of Title 22 of the California Code of Regulations, to encourage potential commercial plans as defined in subdivision (h) of Section 53810 of Title 22 of the California Code of Regulations to offer subcontracts to these federally qualified health centers.
(d)Reimbursement to federally qualified health centers and rural health centers for services provided pursuant to a subcontract with a local initiative, a commercial plan, geographic managed care program health plan, or a county organized health system, shall be paid 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 a federally qualified health center or rural health clinic.
(e)(1)The department shall administer a program to ensure that total payments to federally qualified health centers and rural health clinics operating as managed care subcontractors pursuant to subdivision (d) comply with applicable federal law pursuant to Sections 1902(aa) 1902(bb) and 1903(m)(2)(A)(ix) of the Social Security Act (42 U.S.C.A. Secs. 1396a(aa) U.S.C. Secs. 1396a (bb) and 1396b(m)(2)(A)(ix)). Under the departments program, federally qualified health centers and rural health clinics subcontracting with local initiatives, commercial plans, county organized health systems, and geographic managed care program health plans shall seek supplemental reimbursement from the department through a per visit fee-for-service billing system utilizing the states Medi-Cal fee-for-service claims processing system contractor. To carry out this per visit payment process, each federally qualified health system and rural health clinic shall submit to the department for approval a rate differential calculated to reflect the amount necessary to reimburse the federally qualified health center or rural health clinic for the difference between the payment the center or clinic received from the managed care health plan and either the interim rate established by the department based on the centers or clinics reasonable cost or the centers or clinics prospective payment rate. The department shall adjust the computed rate differential as it deems necessary to minimize the difference between the centers or clinics revenue from the plan and the centers or clinics cost-based reimbursement or the centers or clinics prospective payment rate.
(2)In addition, to the extent feasible, within six months of the end of the centers or clinics fiscal year, the department shall perform an annual reconciliation to reasonable cost, and make payments to, or obtain a recovery from, the center or clinic. Reconciliation shall be based upon the reconciliation filing submitted to the department by the center or clinic. The department shall perform an initial review of the reconciliation filing within 30 days of receipt. If the department determines during the initial review that a payment is owed to the center or clinic, the department shall pay to the center or clinic at least 80 percent of the amount owed within 30 days of completion of the initial review or in any event within 60 days of receipt of the reconciliation filing. The department shall complete the final reconciliation review and shall pay to the center or clinic the remaining amount owed within 15 months of the last date of the fiscal year for which the department is conducting the review.
(f)In calculating the capitation rates to be paid to local initiatives, commercial plans, geographic managed care program health plans, and county organized health systems, the department shall not include the additional dollar amount applicable to cost-based reimbursement that would otherwise be paid, absent cost-based reimbursement, to federally qualified health centers and rural health clinics in the Medi-Cal fee-for-service program.
(g)On or before September 30, 2002, the director shall conduct a study of the actual and projected impact of the transition from a cost-based reimbursement system to a prospective payment system for federally qualified health centers and rural health clinics. In conducting the study, the director shall evaluate the extent to which the prospective payment system stimulates expansion of services, including new facilities to expand capacity of the centers, and the extent to which actual and estimated prospective payment rates of federally qualified health centers and rural health clinics for the first five years of the prospective payment system are reflective of the cost of providing services to Medi-Cal beneficiaries. Clinics may submit cost reporting information to the department to provide data for the study.
(h)The department shall approve all contracts between federally qualified health centers or rural health clinics and any local initiative, commercial plan, geographic managed care program health plan, or county organized health system in order to ensure compliance with this section.
(i)This section shall not preclude the department from establishing pilot programs pursuant to Section 14087.329.
SEC. 2.Section 14132.100 of the Welfare and Institutions Code is amended to read:14132.100.(a)The federally qualified health center services described in Section 1396d(a)(2)(C) of Title 42 of the United States Code are covered benefits.
(b)The rural health clinic services described in Section 1396d(a)(2)(B) of Title 42 of the United States Code are covered benefits.
(c)Federally qualified health center services and rural health clinic services shall be reimbursed on a per-visit basis in accordance with the definition of visit set forth in subdivision (g).
(d)Effective October 1, 2004, and on each October 1, thereafter, until no longer required by federal law, federally qualified health center (FQHC) and rural health clinic (RHC) per-visit rates shall be increased by the Medicare Economic Index applicable to primary care services in the manner provided for in Section 1396a(bb)(3)(A) of Title 42 of the United States Code. Prior to January 1, 2004, FQHC and RHC per-visit rates shall be adjusted by the Medicare Economic Index in accordance with the methodology set forth in the state plan in effect on October 1, 2001.
(e)(1)An FQHC or RHC may apply for an adjustment to its per-visit rate based on a change in the scope of services provided by the FQHC or RHC. Rate changes based on a change in the scope of services provided by an FQHC or RHC shall be evaluated in accordance with Medicare reasonable cost principles, as set forth in Part 413 (commencing with Section 413.1) of Title 42 of the Code of Federal Regulations, or its successor.
(2)Subject to the conditions set forth in subparagraphs (A) to (D), inclusive, of paragraph (3), a change in scope of service means any of the following:
(A)The addition of a new FQHC or RHC service that is not incorporated in the baseline prospective payment system (PPS) rate, or a deletion of an FQHC or RHC service that is incorporated in the baseline PPS rate.
(B)A change in service due to amended regulatory requirements or rules.
(C)A change in service resulting from relocating or remodeling an FQHC or RHC.
(D)A change in types of services due to a change in applicable technology and medical practice utilized by the center or clinic.
(E)An increase in service intensity attributable to changes in the types of patients served, including, but not limited to, populations with HIV or AIDS, or other chronic diseases, or homeless, elderly, migrant, or other special populations.
(F)Any changes in any of the services described in subdivision (a) or (b), or in the provider mix of an FQHC or RHC or one of its sites.
(G)Changes in operating costs attributable to capital expenditures associated with a modification of the scope of any of the services described in subdivision (a) or (b), including new or expanded service facilities, regulatory compliance, or changes in technology or medical practices at the center or clinic.
(H)Indirect medical education adjustments and a direct graduate medical education payment that reflects the costs of providing teaching services to interns and residents.
(I)Any changes in the scope of a project approved by the federal Health Resources and Service Administration (HRSA).
(3)No change in costs shall, in and of itself, be considered a scope-of-service change unless all of the following apply:
(A)The increase or decrease in cost is attributable to an increase or decrease in the scope of services defined in subdivisions (a) and (b), as applicable.
(B)The cost is allowable under Medicare reasonable cost principles set forth in Part 413 (commencing with Section 413) of Subchapter B of Chapter 4 of Title 42 of the Code of Federal Regulations, or its successor.
(C)The change in the scope of services is a change in the type, intensity, duration, or amount of services, or any combination thereof.
(D)The net change in the FQHCs or RHCs rate equals or exceeds 1.75 percent for the affected FQHC or RHC site. For FQHCs and RHCs that filed consolidated cost reports for multiple sites to establish the initial prospective payment reimbursement rate, the 1.75-percent threshold shall be applied to the average per-visit rate of all sites for the purposes of calculating the cost associated with a scope-of-service change. Net change means the per-visit rate change attributable to the cumulative effect of all increases and decreases for a particular fiscal year.
(4)An FQHC or RHC may submit requests for scope-of-service changes once per fiscal year, only within 90 days following the beginning of the FQHCs or RHCs fiscal year. Any approved increase or decrease in the providers rate shall be retroactive to the beginning of the FQHCs or RHCs fiscal year in which the request is submitted.
(5)An FQHC or RHC shall submit a scope-of-service rate change request within 90 days of after the beginning of any FQHC or RHC fiscal year occurring after the effective date of this section, if, during the FQHCs or RHCs prior fiscal year, the FQHC or RHC experienced a decrease in the scope of services provided that the FQHC or RHC either knew or should have known would have resulted in a significantly lower per-visit rate. If an FQHC or RHC discontinues providing onsite pharmacy or dental services, it shall submit a scope-of-service rate change request within 90 days of after the beginning of the following fiscal year. The rate change shall be effective as provided for in paragraph (4). As used in this paragraph, significantly lower means an average per-visit rate decrease in excess of 2.5 percent.
(6)The department shall finalize a new rate within 90 days after the submission by an FQHC or RHC of a scope-of-service rate change request and shall update the provider master file within 10 business days of finalizing the rate.
(6)
(7)Notwithstanding paragraph (4), if the approved scope-of-service change or changes were initially implemented on or after the first day of an FQHCs or RHCs fiscal year ending in calendar year 2001, but before the adoption and issuance of written instructions for applying for a scope-of-service change, the adjusted reimbursement rate for that scope-of-service change shall be made retroactive to the date the scope-of-service change was initially implemented. Scope-of-service changes under this paragraph shall be required to be submitted within the later of 150 days after the adoption and issuance of the written instructions by the department, or 150 days after the end of the FQHCs or RHCs fiscal year ending in 2003.
(7)
(8)All references in this subdivision to fiscal year shall be construed to be references to the fiscal year of the individual FQHC or RHC, as the case may be.
(f)(1)An FQHC or RHC may request a supplemental payment if extraordinary circumstances beyond the control of the FQHC or RHC occur after December 31, 2001, and PPS payments are insufficient due to these extraordinary circumstances. Supplemental payments arising from extraordinary circumstances under this subdivision shall be solely and exclusively within the discretion of the department and shall not be subject to subdivision (l). These supplemental payments shall be determined separately from the scope-of-service adjustments described in subdivision (e). Extraordinary circumstances include, but are not limited to, acts of nature, changes in applicable requirements in the Health and Safety Code, changes in applicable licensure requirements, and changes in applicable rules or regulations. Mere inflation of costs alone, absent extraordinary circumstances, shall not be grounds for supplemental payment. If an FQHCs or RHCs PPS rate is sufficient to cover its overall costs, including those associated with the extraordinary circumstances, then a supplemental payment is not warranted.
(2)The department shall accept requests for supplemental payment at any time throughout the prospective payment rate year.
(3)Requests for supplemental payments shall be submitted in writing to the department and shall set forth the reasons for the request. Each request shall be accompanied by sufficient documentation to enable the department to act upon the request. Documentation shall include the data necessary to demonstrate that the circumstances for which supplemental payment is requested meet the requirements set forth in this section. Documentation shall include all of the following:
(A)A presentation of data to demonstrate reasons for the FQHCs or RHCs request for a supplemental payment.
(B)Documentation showing the cost implications. The cost impact shall be material and significant, two hundred thousand dollars ($200,000) or 1 percent of a facilitys total costs, whichever is less.
(4)A request shall be submitted for each affected year.
(5)Amounts granted for supplemental payment requests shall be paid as lump-sum amounts for those years and not as revised PPS rates, and shall be repaid by the FQHC or RHC to the extent that it is not expended for the specified purposes.
(6)The department shall notify the provider of the departments discretionary decision in writing.
(g)(1)An FQHC or RHC visit means a face-to-face encounter between an FQHC or RHC patient and a physician, physician assistant, nurse practitioner, certified nurse-midwife, clinical psychologist, licensed clinical social worker, or a visiting nurse. For purposes of this section, physician shall be interpreted in a manner consistent with the Centers for Medicare and Medicaid Services Medicare Rural Health Clinic and Federally Qualified Health Center Manual (Publication 27), or its successor, only to the extent that it defines the professionals whose services are reimbursable on a per-visit basis and not as to the types of services that these professionals may render during these visits and shall include a physician and surgeon, podiatrist, dentist, optometrist, and chiropractor. A visit shall also include a face-to-face encounter between an FQHC or RHC patient and a comprehensive perinatal services practitioner, as defined in Section 51179.1 of Title 22 of the California Code of Regulations, providing comprehensive perinatal services, a four-hour day of attendance at an adult day health care center, and any other provider identified in the state plans definition of an FQHC or RHC visit.
(2)(A)A visit shall also include a face-to-face encounter between an FQHC or RHC patient and a dental hygienist or a dental hygienist in alternative practice.
(B)Notwithstanding subdivision (e), an FQHC or RHC that currently includes the cost of the services of a dental hygienist in alternative practice for the purposes of establishing its FQHC or RHC rate shall apply for an adjustment to its per-visit rate, and, after the rate adjustment has been approved by the department, shall bill these services as a separate visit. However, multiple encounters with dental professionals that take place on the same day shall constitute a single visit. The department shall develop the appropriate forms to determine which FQHCs or RHC rates shall be adjusted and to facilitate the calculation of the adjusted rates. An FQHCs or RHCs application for, or the departments approval of, a rate adjustment pursuant to this subparagraph shall not constitute a change in scope of service within the meaning of subdivision (e). An FQHC or RHC that applies for an adjustment to its rate pursuant to this subparagraph may continue to bill for all other FQHC or RHC visits at its existing per-visit rate, subject to reconciliation, until the rate adjustment for visits between an FQHC or RHC patient and a dental hygienist or a dental hygienist in alternative practice has been approved. Any approved increase or decrease in the providers rate shall be made within six months after the date of receipt of the departments rate adjustment forms pursuant to this subparagraph and shall be retroactive to the beginning of the fiscal year in which the FQHC or RHC submits the request, but in no case shall the effective date be earlier than January 1, 2008.
(C)An FQHC or RHC that does not provide dental hygienist or dental hygienist in alternative practice services, and later elects to add these services, shall process the addition of these services as a change in scope of service pursuant to subdivision (e).
(h)If FQHC or RHC services are partially reimbursed by a third-party payer, such as a managed care entity (as defined in Section 1396u-2(a)(1)(B) of Title 42 of the United States Code), the Medicare Program, or the Child Health and Disability Prevention (CHDP) program, the department shall reimburse an FQHC or RHC for the difference between its per-visit PPS rate and receipts from other plans or programs on a contract-by-contract basis and not in the aggregate, and may not include managed care financial incentive payments that are required by federal law to be excluded from the calculation.
(i)(1)An entity that first qualifies as an FQHC or RHC in the year 2001 or later, a newly licensed facility at a new location added to an existing FQHC or RHC, and any entity that is an existing FQHC or RHC that is relocated to a new site shall each have its reimbursement rate established in accordance with one of the following methods, as selected by the FQHC or RHC:
(A)The rate may be calculated on a per-visit basis in an amount that is equal to the average of the per-visit rates of three comparable FQHCs or RHCs located in the same or adjacent area with a similar caseload.
(B)In the absence of three comparable FQHCs or RHCs with a similar caseload, the rate may be calculated on a per-visit basis in an amount that is equal to the average of the per-visit rates of three comparable FQHCs or RHCs located in the same or an adjacent service area, or in a reasonably similar geographic area with respect to relevant social, health care, and economic characteristics.
(C)At a new entitys one-time election, the department shall establish a reimbursement rate, calculated on a per-visit basis, that is equal to 100 percent of the projected allowable costs to the FQHC or RHC of furnishing FQHC or RHC services during the first 12 months of operation as an FQHC or RHC. After the first 12-month period, the projected per-visit rate shall be increased by the Medicare Economic Index then in effect. The projected allowable costs for the first 12 months shall be cost settled and the prospective payment reimbursement rate shall be adjusted based on actual and allowable cost per visit. The department shall finalize a new rate within 90 days after the submission of the actual cost report from the first full 12 months of operation and shall update the department provider master file within 10 business days of finalizing the rate.
(D)The department may adopt any further and additional methods of setting reimbursement rates for newly qualified FQHCs or RHCs as are consistent with Section 1396a(bb)(4) of Title 42 of the United States Code.
(2)(A)In order for an FQHC or RHC to establish the comparability of its caseload for purposes of subparagraph (A) or (B) of paragraph (1), caseload, the department shall require that the FQHC or RHC submit its most recent annual utilization report as submitted to the Office of Statewide Health Planning and Development, unless the FQHC or RHC was not required to file an annual utilization report. FQHCs or RHCs that have experienced changes in their services or caseload subsequent to the filing of the annual utilization report may submit to the department a completed report in the format applicable to the prior calendar year. FQHCs or RHCs that have not previously submitted an annual utilization report shall submit to the department a completed report in the format applicable to the prior calendar year. The FQHC or RHC shall not be required to submit the annual utilization report for the comparable FQHCs or RHCs to the department, but shall be required to identify the comparable FQHCs or RHCs. This paragraph shall apply only to a facility that selects the comparability approach described in subparagraph (A) or (B) of paragraph (1).
(B)The department shall conduct an initial review of the three FQHCs or RHCs for the purpose of determining comparability within 30 days of submission by the new entity. If the department determines one or more of the submitted centers or clinics do not meet the comparability threshold, the department shall notify the new entity no later than the 31st day after submission.
(C)The notification shall state the reason or reasons for the finding of noncomparability and shall request a supplemental submission from the new entity. The request shall clearly state whether the new entity shall submit data from one, two, or three FQHCs or RHCs to meet the comparability threshold. Once the new entity submits its supplemental information, the initial review process described in subparagraph (B) shall apply.
(D)Within 90 days after receiving a submission determined by the department to be comparable, the department shall finalize the new entitys rate and shall update the provider master file within 10 business days.
(3)The rate for any newly qualified entity set forth under this subdivision shall be effective retroactively to the later of the date that the entity was first qualified by the applicable federal agency as an FQHC or RHC, the date a new facility at a new location was added to an existing FQHC or RHC, or the date on which an existing FQHC or RHC was relocated to a new site. The FQHC or RHC shall be permitted to continue billing for Medi-Cal covered benefits on a fee-for-service basis until it is informed of its enrollment as an FQHC or RHC, and the department shall reconcile the difference between the fee-for-service payments and the FQHCs or RHCs prospective payment rate at that time.
(j)Visits occurring at an intermittent clinic site, as defined in subdivision (h) of Section 1206 of the Health and Safety Code, of an existing FQHC or RHC, or in a mobile unit as defined by paragraph (2) of subdivision (b) of Section 1765.105 of the Health and Safety Code, shall be billed by and reimbursed at the same rate as the FQHC or RHC establishing the intermittent clinic site or the mobile unit, subject to the right of the FQHC or RHC to request a scope-of-service adjustment to the rate.
(k)An FQHC or RHC may elect to have pharmacy or dental services reimbursed on a fee-for-service basis, utilizing the current fee schedules established for those services. These costs shall be adjusted out of the FQHCs or RHCs clinic base rate as scope-of-service changes. An FQHC or RHC that reverses its election under this subdivision shall revert to its prior rate, subject to an increase to account for all MEI increases occurring during the intervening time period, and subject to any increase or decrease associated with applicable scope-of-services adjustments as provided in subdivision (e).
(l)FQHCs and RHCs may appeal a grievance or complaint concerning ratesetting, scope-of-service changes, and settlement of cost report audits, in the manner prescribed by Section 14171. The rights and remedies provided under this subdivision are cumulative to the rights and remedies available under all other provisions of law of this state.
(m)The department shall, by no later than March 30, 2008, promptly seek all necessary federal approvals in order to implement this section, including any amendments to the state plan. To the extent that any element or requirement of this section is not approved, the department shall submit a request to the federal Centers for Medicare and Medicaid Services for any waivers that would be necessary to implement this section.
(n)The department shall implement this section only to the extent that federal financial participation is obtained.
(o)The department shall correct erroneous payments at least quarterly to reprocess past claims and ensure all claims are reimbursed at the finalized new rate determined pursuant to either subdivision (e) or (i).
|
Date
|
Status
|
|---|---|
| Sep 10, 2015 | Read third time. Passed. Ordered to the Senate. |
| Jul 13, 2015 | From committee: Do pass as amended and re-refer to Com. on APPR. (Ayes 18. Noes 0.) (June 30). |
| Jul 14, 2015 | 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 28, 2015 | From committee: Do pass. (Ayes 17. Noes 0.) (August 27). |
| Aug 28, 2015 | Read second time. Ordered to third reading. |
| Sep 4, 2015 | Ordered to third reading. |
| Sep 4, 2015 | Read third time and amended. |
| Sep 10, 2015 | In Senate. Concurrence in Assembly amendments pending. |
| Jun 18, 2015 | Referred to Com. on HEALTH. |
| Sep 10, 2015 | Read third time. Passed. (Ayes 80. Noes 0. Page 3092.) Ordered to the Senate. |
| Sep 11, 2015 | Assembly amendments concurred in. (Ayes 40. Noes 0. Page 2759.) Ordered to engrossing and enrolling. |
| Sep 11, 2015 | Assembly amendments concurred in. (Ayes 40. Noes 0.) Ordered to engrossing and enrolling. |
| Sep 16, 2015 | Enrolled and presented to the Governor at 4:45 p.m. |
| Oct 10, 2015 | In Senate. Consideration of Governor's veto pending. |
| Oct 10, 2015 | Vetoed by the Governor. |
| Apr 25, 2016 | Last day to consider Governors veto pursuant to Joint Rule 58.5. |
| Apr 25, 2016 | Last day to consider Governor’s veto pursuant to Joint Rule 58.5. |
| May 11, 2015 | May 11 hearing: Placed on APPR. suspense file. |
| Mar 2, 2015 | From printer. May be acted upon on or after April 1. |
| Mar 2, 2015 | Read first time. |
| Mar 12, 2015 | Referred to Com. on HEALTH. |
| Apr 6, 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 22. |
| Apr 27, 2015 | From committee: Do pass as amended and re-refer to Com. on APPR. (Ayes 8. Noes 0. Page 758.) (April 22). |
| Apr 28, 2015 | Read second time and amended. Re-referred to Com. on APPR. |
| May 1, 2015 | Set for hearing May 11. |
| Feb 27, 2015 | Introduced. To Com. on RLS. for assignment. To print. |
| May 23, 2015 | Set for hearing May 28. |
| May 28, 2015 | From committee: Do pass. (Ayes 7. Noes 0. Page 1157.) (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 39. Noes 0. Page 1207.) Ordered to the Assembly. |
| Jun 1, 2015 | Read third time. Passed. (Ayes 39. Noes 0.) Ordered to the Assembly. |
| Jun 2, 2015 | In Assembly. Read first time. Held at Desk. |
|
Date
|
Description
|
Location
|
Votes
|
|
|---|---|---|---|---|
| Sep 11, 2015 | Unfinished Business SB610 Pan Concurrence | Senate Floor |
Passed |
|
| Sep 10, 2015 | SB 610 Pan Senate Third Reading By BONTA | Assembly Floor |
Passed |
|
| Aug 27, 2015 | Do pass. | Assembly Standing Committee on Appropriations |
Passed |
|
| Jun 30, 2015 | Do pass as amended and be re-referred to the Committee on [Appropriations] | Assembly Standing Committee on Health |
Passed |
|
| Jun 1, 2015 | Senate 3rd Reading SB610 Pan | Senate Floor |
Passed |
|
| May 28, 2015 | Do pass | Senate Standing Committee on Appropriations |
Passed |
|
| May 11, 2015 | Placed on suspense file | Senate Standing Committee on Appropriations |
Passed |
|
| Apr 22, 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
|
|---|---|---|
| Aids Project Los Angeles | ** Support | Sep 10, 2015 |
| Alameda Health Consortium | ** Support | Sep 10, 2015 |
| AltaMed | ** Support | Sep 10, 2015 |
| American Federation Of State, County And Municipal Employees, Afl-Cio | ** Support | Sep 10, 2015 |
| Asian Health Services | ** Support | Sep 10, 2015 |
| Asian Pacific Health Care Venture, Inc. | ** Support | Sep 10, 2015 |
| Association of California Healthcare Districts | ** Support | Sep 10, 2015 |
| Association Of California Healthcare Districts (Achd) | * Indeterminate | Apr 22, 2015 |
| Bartz-Altadonna Community Health Center | ** Support | Sep 10, 2015 |
| Bienvenidos | ** Support | Sep 10, 2015 |
| Bienvenidos Community Health Center | ** Support | Jun 1, 2015 |
| California Academy Of Family Physicians | ** Support | Jun 1, 2015 |
| California Primary Care Association | ** Support | Sep 10, 2015 |
| CAPG Physician Groups | * Indeterminate | Apr 22, 2015 |
| Community Clinic Association of Los Angeles County | ** Support | Jun 1, 2015 |
| Community Clinic Consortium | ** Support | Sep 10, 2015 |
| Council of Community Clinics | ** Support | Sep 10, 2015 |
| Department Of Finance | ** Against | Sep 10, 2015 |
| El Proyetco Del Barrio | ** Support | Jun 1, 2015 |
| Health and Life Organization, Inc. | ** Support | Sep 10, 2015 |
| La Clxednica | ** Support | Sep 10, 2015 |
| La Maestra Community Health Centers | ** Support | Sep 10, 2015 |
| Lifelong Medical Care | ** Support | Sep 10, 2015 |
| Lifelong Medical Care in the Bay Area | * Indeterminate | Apr 22, 2015 |
| Northeast Valley Health Corporation | ** Support | Sep 10, 2015 |
| Peach Tree Health | ** Support | Sep 10, 2015 |
| Saban Community Clinic | ** Support | Sep 10, 2015 |
| San Ysidro Health Center | * Indeterminate | Apr 22, 2015 |
| St. John's Well Child & Family Center | ** Support | Sep 10, 2015 |
| Tiburcio Vasquez Health Center | * Indeterminate | Apr 22, 2015 |
| Tiburcio Vxe1squez Health Center, Inc. | ** Support | Sep 10, 2015 |
| Valley Community Healthcare | ** Support | Sep 10, 2015 |
| White Memorial Community Health Center | ** Support | Sep 10, 2015 |
SB 610
Page 9
|
Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 |
SB 610 |
VETO
Bill No: SB 610
Amended: 9/4/15
SENATE HEALTH COMMITTEE: 8-0, 4/22/15
AYES: Hernandez, Nguyen, Mitchell, Monning, Nielsen, Pan, Roth, Wolk
NO VOTE RECORDED: Hall
SENATE APPROPRIATIONS COMMITTEE: 7-0, 5/28/15
AYES: Lara, Bates, Beall, Hill, Leyva, Mendoza, Nielsen
SENATE FLOOR: 39-0, 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, Vidak, Wieckowski, Wolk
NO VOTE RECORDED: Stone
SENATE FLOOR: 40-0, 9/11/15
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, 9/10/15 - See last page for vote
SUBJECT: Medi-Cal: federally qualified health centers: rural health clinics: managed care contracts
SOURCE: California Primary Care Association
DIGEST: This bill establishes timeframes for the Department of Health Care Services (DHCS) to review and finalize federally qualified health center (FQHC) and rural health clinic (RHC) Medi-Cal-related scope-of-service changes and reconciliation changes, and requires DHCS to make payments within specified timeframes if reconciliation payments are owed. This bill establishes timeframes for DHCS to finalize rates for new FQHCs and RHCs. This bill requires DHCS to update the provider master file within specified timeframes with the rates for new FQHCs and RHCs and when a scope-of-service change is complete. This bill requires DHCS to correct erroneous payments at least quarterly, and to reprocess past claims and ensure all claims are reimbursed at the finalized new rate.
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 and RHC services are covered benefits under the Medi-Cal program.
Requires FQHCs and RHCs to be reimbursed on a per-visit basis. Defines a “visit” as a face-to-face encounter between an FQHC or RHC patient and specified health care providers.
Permits an FQHC or RHC to apply for an adjustment to its per-visit rate based on a change in the scope of services provided by the FQHC or RHC. Requires rate changes based on a change in the scope of services provided by an FQHC or RHC to be evaluated in accordance with Medicare reasonable cost principles.
Requires FQHCs and RHCs subcontracting with Medi-Cal managed care plans to seek supplemental reimbursement from DHCS through a per visit fee-for-service billing system (referred to as the “wrap around” payment). Requires each FQHC and RHC to submit to DHCS for approval a rate differential calculated to reflect the amount necessary to reimburse the FQHC or RHC for the difference between the payment the FQHC or RHC received from the Medi-Cal managed care health plan and either the interim rate established by DHCS based on the FQHC or RHC’s reasonable cost or the FQHC or RHC’s prospective payment rate.
Requires DHCS to adjust the computed rate differential as it deems necessary to minimize the difference between the FQHC or RHC’s revenue from the Medi-Cal managed care plan and the FQHC’s or RHC’s cost-based reimbursement or the FQHC’s or RHC’s prospective payment rate.
Requires DHCS, to the extent feasible, within six months of the end of the FQHC or RHC’s fiscal year, to perform an annual reconciliation to reasonable cost, and make payments to, or obtain a recovery from, the FQHC or RHC.
Requires that an entity that first qualifies as an FQHC or RHC, a newly licensed facility at a new location added to an existing FQHC or RHC, and any entity that is an existing FQHC or RHC that is relocated to a new site to have its reimbursement rate established in accordance with one of the following methods, as selected by the FQHC or RHC:
The rate may be calculated on a per-visit basis in an amount that is equal to the average of the per-visit rates of three comparable FQHCs or RHCs located in the same or adjacent area with a similar caseload; and,
In the absence of three comparable FQHCs or RHCs with a similar caseload, the rate may be calculated on a per-visit basis in an amount that is equal to the average of the per-visit rates of three comparable FQHCs or RHCs located in the same or an adjacent service area, or in a reasonably similar geographic area with respect to relevant social, health care, and economic characteristics.
At a new entity’s one-time election, DHCS is required to establish a reimbursement rate, calculated on a per-visit basis, that is equal to 100% of the projected allowable costs to the FQHC or RHC of furnishing FQHC or RHC services during the first 12 months of operation as an FQHC or RHC. After the first 12-month period, the projected per-visit rate is required to be increased by the Medicare Economic Index (MEI) then in effect. The projected allowable costs for the first 12 months are required to be cost settled and the prospective payment reimbursement rate is required to be adjusted based on actual and allowable cost per visit.
This bill:
Requires DHCS to perform an initial review of the reconciliation filing within 30 days of receipt.
Requires DHCS to pay to the FQHC or RHC at least 80% of the amount owed within 30 days after completion of the initial review or in any event within 60 days of receipt of the reconciliation filing, if DHCS determines during the initial review that a payment is owed to the FQHC or RHC.
Requires DHCS to complete the final reconciliation review and to pay to the FQHC or RHC the remaining amount owed within 18 months of the last date of the fiscal year for which DHCS is conducting the review.
Requires DHCS to conduct an initial review of a scope-of-service rate change request within 30 days after submission by an FQHC or RHC.
Requires DHCS to notify the FQHC or RHC, no later than the 31st day after submission if DHCS determines that additional information is necessary to finalize a new rate. Requires the notification to state the reason or reasons the submitted information is insufficient and to request submission of supplemental information from the FQHC or RHC.
Requires DHCS to finalize the FQHC’s or RHC’s rate within one year after receiving a submission that it determines to be complete. Requires DHCS to update the provider master file within 10 business days.
Requires DHCS to finalize a new rate within one year after the submission of the actual cost report from the first full 12 months of operation. Requires DHCS to update the DHCS provider master file within 10 business days after finalizing the rate.
Requires DHCS to conduct an initial review of the three FQHCs or RHCs for the purpose of determining comparability within 30 days after submission by the new entity. Requires DHCS to notify the new entity no later than the 31st day after submission if DHCS determines one or more of the submitted FQHCs or RHCs do not meet the comparability threshold.
Requires the notification to state the reason or reasons for the finding of noncomparability and to request a supplemental submission from the new entity. Requires the DHCS request to clearly state whether the new entity must submit data from one, two, or three FQHCs or RHCs to meet the comparability threshold. Requires, once the new entity submits its supplemental information, the initial review process described in #8 above to apply.
Requires DHCS to finalize the new entity’s rate within one year after receiving a submission determined by DHCS to be comparable. Requires DHCS to update the provider master file within 10 business days.
Requires DHCS to correct erroneous payments at least quarterly, and to reprocess past claims and ensure all claims are reimbursed at the finalized new rate determined if there has been a scope-of-service change or if the FQHC or RHC is a new entity.
Comments
Author’s statement. According to the author, with the growing Medi-Cal population and the implementation of the Affordable Care Act, FQHCs and RHCs become an increasingly important provider to maintain access to quality health care. Their ability to provide quality care is currently being jeopardized. A lack of timelines placed on DHCS has blocked clinics from valuable funding that could enable them to better treat their patients or increase services to more patients. This bill is needed because it will ensure access to quality care by making sure clinics get their money in a timely manner. This bill keeps DHCS efficient and accountable for the payments it promised to clinics.
Current Medi-Cal reimbursement to FQHCs and RHCs. Federal Medicaid payment to FQHCs and RHCs 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). States are required to pay FQHCs and RHCs 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 or RHC during that fiscal year. An example of a scope-of-service change would be the addition of a new service, such as dental services or technology or from relocating or remodeling an FQHC or RHC. 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.
Annual reconciliation. 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 Medi-Cal managed care 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 FQHC or RHC for the difference between their PPS rate and their Medi-Cal managed care reimbursement.
Within six months after the end of FQHC or RHC’s fiscal year, DHCS is required, to the extent feasible, to perform an annual reconciliation to reasonable cost and to either make payments to or obtain a recovery from the FQHC or RHC. The annual reconciliation is established to provide additional reimbursement to FQHCs and RHCs for the difference between their interim rate or PPS rate per visit and payments made by the Medi-Cal managed care plans. The annual reconciliation process was developed to ensure that the amounts paid for Medi-Cal managed care visits are equal to the full PPS rate that would apply to those visits. DHCS reconciles the wrap around amounts paid, the PPS rate, and the amounts received from the FQHC’s and RHC’s managed care plan. Clinics submit their annual reconciliation at the end of their fiscal year. DHCS indicates it has three years from the received date to finalize the clinic’s reconciliation. A DHCS auditor reviews reconciliation when it is received to ensure forms are complete, and a 60% tentative settlement is paid to the FQHC or RHC if the amount is due to the FQHC/RHC, at the auditor’s discretion.
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No
According to the Assembly Appropriations Committee:
This bill could be implemented by increasing staff assigned to audits and reconciliations, at a temporary cost in the range of $2.5 million per year for two years (GF/federal). The current staffing level is able to meet the annual demand for audits and reconciliations, and does not have a backlog according to existing timelines. However, as timelines are shortened by this bill, a backlog will be created. Accelerating this workload prospectively, as well as processing past-year workload to catch up, will require more administrative staff on a temporary basis. The long-term ongoing workload impact is unclear. Conservatively, provisions related to more frequent erroneous payment corrections may have some ongoing costs, in the range of $100,000 (GF/federal).
Unknown changes in the timing of payments made to clinics due to changes in the processes and deadlines for making reconciliation payments or correcting erroneous payments (GF/federal). This bill creates new timelines or accelerates existing timelines under which DHCS must make certain payments to clinics. By accelerating payments, the state will incur Medi-Cal costs sooner than would otherwise occur. The Medi-Cal program is budgeted on a cash basis (meaning that the state budget reflects costs as payments are made). To the extent this bill results in payments being made earlier, to some extent this bill will result in shifting of costs between budget years. This bill is not anticipated to increase overall Medi-Cal costs for payments to clinics.
California Primary Care Association (source)
AIDS Project Los
Angeles
Alameda Health Consortium
American Federation of
State, County and Municipal Employees, AFL-CIO
AltaMed
Asian
Health Services
Asian Pacific Health Care Venture, Inc.
Association of
California Healthcare Districts
Bartz-Altadonna Community Health
Center
Bienvenidos
Community Clinic Consortium
Council
of Community Clinics
East Valley Community Health Center, Inc.
El Proyecto del
Barrio, Inc.
Health and Life Organization, Inc.
La
Clínica
La Maestra Community Health Centers
LifeLong
Medical Care
Northeast Valley Health Corporation
Peach Tree
Health
Saban Community
Clinic
St. John’s Well Child & Family Center
Tiburcio
Vásquez Health Center, Inc.
Valley Community
Healthcare
White Memorial Community Health Center
Several
individuals
OPPOSITION: (Verified 9/10/15)
Department of Finance
ARGUMENTS IN SUPPORT: This bill is sponsored by the California Primary Care Association (CPCA), which argues the current lack of timelines has resulted in DHCS taking years to finalize rates and settle outstanding debts. CPCA states health centers are forced to carry enormous debt for services rendered, sometimes up to a million dollars. CPAC states that, considering health centers operate on thin margins, often 2% or less, this significantly impacts their bottom line and ability to effectively deliver services to Medi-Cal beneficiaries. Opening private lines of credit to carry the debt has become common even though the state does not reimburse health centers for interest accrual on that debt. CPCA states it takes DHCS approximately five years to set a new reimbursement rate, and for annual reconciliation, it currently takes approximately three years for FQHCs and RHCs to receive final payment. CPCA argues the timelines will provide health centers with reasonable clarity on reimbursement rates and reconciliation, allowing them to direct more focus and funding toward improving patient care and services, rather than increasing cash reserves to accommodate delays in reimbursement.
ARGUMENTS IN OPPOSITION: The Department of Finance (DOF) writes in opposition that this bill as it is unnecessary and results in ongoing General Fund costs that are not included in the 2015 Budget Act. DOF states that, unlike most other Medi-Cal providers, FQHCs and RHCs are reimbursed their full costs pursuant to federal law. DOF states this reimbursement methodology is more time consuming than traditional Medi-Cal reimbursement because of the time needed to calculate the wrap payments which bring clinics to a reimbursement rate that covers 100 percent of their costs. Because these clinics receive reimbursements based on their actual costs, which are generally higher than many other providers, DOF states this bill is unnecessary, and it is unclear whether these clinics have a particular need for accelerated processing for reconciliations and rate filings.
GOVERNOR'S VETO MESSAGE:
I am returning the following six bills without my signature;
Assembly Bill 50
Assembly Bill 858
Assembly Bill 1162
Assembly Bill 1231
Assembly Bill 1261
Senate Bill 610
These bills unnecessarily codify certain existing health care benefits or require the expansion or development of new benefits and procedures in the Medi-Cal program.
Taken together, these bills would require new spending at a time when there is considerable uncertainty in the funding of this program. Until the fiscal outlook for Medi-Cal is stabilized, I cannot support any of these measures.
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 /
11/4/15 13:34:13
**** END ****
SB 610
Page 8
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Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 |
UNFINISHED BUSINESS
Bill No: SB 610
Amended: 9/4/15
SENATE HEALTH COMMITTEE: 8-0, 4/22/15
AYES: Hernandez, Nguyen, Mitchell, Monning, Nielsen, Pan, Roth, Wolk
NO VOTE RECORDED: Hall
SENATE APPROPRIATIONS COMMITTEE: 7-0, 5/28/15
AYES: Lara, Bates, Beall, Hill, Leyva, Mendoza, Nielsen
SENATE FLOOR: 39-0, 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, Vidak, Wieckowski, Wolk
NO VOTE RECORDED: Stone
ASSEMBLY FLOOR: 80-0, 9/10/15 - See last page for vote
SUBJECT: Medi-Cal: federally qualified health centers: rural health clinics: managed care contracts
SOURCE: California Primary Care Association
DIGEST: This bill establishes timeframes for the Department of Health Care Services (DHCS) to review and finalize federally qualified health center (FQHC) and rural health clinic (RHC) Medi-Cal-related scope-of-service changes and reconciliation changes, and requires DHCS to make payments within specified timeframes if reconciliation payments are owed. This bill establishes timeframes for DHCS to finalize rates for new FQHCs and RHCs. This bill requires DHCS to update the provider master file within specified timeframes with the rates for new FQHCs and RHCs and when a scope-of-service change is complete. This bill requires DHCS to correct erroneous payments at least quarterly, and to reprocess past claims and ensure all claims are reimbursed at the finalized new rate.
Assembly Amendments allow DHCS additional time to finalize a FQHC or RHC’s rate and to pay to the FQHC or RHC specified amounts owed.
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 and RHC services are covered benefits under the Medi-Cal program.
Requires FQHCs and RHCs to be reimbursed on a per-visit basis. Defines a “visit” as a face-to-face encounter between an FQHC or RHC patient and specified health care providers.
Permits an FQHC or RHC to apply for an adjustment to its per-visit rate based on a change in the scope of services provided by the FQHC or RHC. Requires rate changes based on a change in the scope of services provided by an FQHC or RHC to be evaluated in accordance with Medicare reasonable cost principles.
Requires FQHCs and RHCs subcontracting with Medi-Cal managed care plans to seek supplemental reimbursement from DHCS through a per visit fee-for-service billing system (referred to as the “wrap around” payment). Requires each FQHC and RHC to submit to DHCS for approval a rate differential calculated to reflect the amount necessary to reimburse the FQHC or RHC for the difference between the payment the FQHC or RHC received from the Medi-Cal managed care health plan and either the interim rate established by DHCS based on the FQHC or RHC’s reasonable cost or the FQHC or RHC’s prospective payment rate.
Requires DHCS to adjust the computed rate differential as it deems necessary to minimize the difference between the FQHC or RHC’s revenue from the Medi-Cal managed care plan and the FQHC’s or RHC’s cost-based reimbursement or the FQHC’s or RHC’s prospective payment rate.
Requires DHCS, to the extent feasible, within six months of the end of the FQHC or RHC’s fiscal year, to perform an annual reconciliation to reasonable cost, and make payments to, or obtain a recovery from, the FQHC or RHC.
Requires that an entity that first qualifies as an FQHC or RHC, a newly licensed facility at a new location added to an existing FQHC or RHC, and any entity that is an existing FQHC or RHC that is relocated to a new site to have its reimbursement rate established in accordance with one of the following methods, as selected by the FQHC or RHC:
The rate may be calculated on a per-visit basis in an amount that is equal to the average of the per-visit rates of three comparable FQHCs or RHCs located in the same or adjacent area with a similar caseload; and,
In the absence of three comparable FQHCs or RHCs with a similar caseload, the rate may be calculated on a per-visit basis in an amount that is equal to the average of the per-visit rates of three comparable FQHCs or RHCs located in the same or an adjacent service area, or in a reasonably similar geographic area with respect to relevant social, health care, and economic characteristics.
At a new entity’s one-time election, DHCS is required to establish a reimbursement rate, calculated on a per-visit basis, that is equal to 100% of the projected allowable costs to the FQHC or RHC of furnishing FQHC or RHC services during the first 12 months of operation as an FQHC or RHC. After the first 12-month period, the projected per-visit rate is required to be increased by the Medicare Economic Index (MEI) then in effect. The projected allowable costs for the first 12 months are required to be cost settled and the prospective payment reimbursement rate is required to be adjusted based on actual and allowable cost per visit.
This bill:
Requires DHCS to perform an initial review of the reconciliation filing within 30 days of receipt.
Requires DHCS to pay to the FQHC or RHC at least 80% of the amount owed within 30 days after completion of the initial review or in any event within 60 days of receipt of the reconciliation filing, if DHCS determines during the initial review that a payment is owed to the FQHC or RHC.
Requires DHCS to complete the final reconciliation review and to pay to the FQHC or RHC the remaining amount owed within 18 months of the last date of the fiscal year for which DHCS is conducting the review.
Requires DHCS to conduct an initial review of a scope-of-service rate change request within 30 days after submission by an FQHC or RHC.
Requires DHCS to notify the FQHC or RHC, no later than the 31st day after submission if DHCS determines that additional information is necessary to finalize a new rate. Requires the notification to state the reason or reasons the submitted information is insufficient and to request submission of supplemental information from the FQHC or RHC.
Requires DHCS to finalize the FQHC’s or RHC’s rate within one year after receiving a submission that it determines to be complete. Requires DHCS to update the provider master file within 10 business days.
Requires DHCS to finalize a new rate within one year after the submission of the actual cost report from the first full 12 months of operation. Requires DHCS to update the DHCS provider master file within 10 business days after finalizing the rate.
Requires DHCS to conduct an initial review of the three FQHCs or RHCs for the purpose of determining comparability within 30 days after submission by the new entity. Requires DHCS to notify the new entity no later than the 31st day after submission if DHCS determines one or more of the submitted FQHCs or RHCs do not meet the comparability threshold.
Requires the notification to state the reason or reasons for the finding of noncomparability and to request a supplemental submission from the new entity. Requires the DHCS request to clearly state whether the new entity must submit data from one, two, or three FQHCs or RHCs to meet the comparability threshold. Requires, once the new entity submits its supplemental information, the initial review process described in #8 above to apply.
Requires DHCS to finalize the new entity’s rate within one year after receiving a submission determined by DHCS to be comparable. Requires DHCS to update the provider master file within 10 business days.
Requires DHCS to correct erroneous payments at least quarterly, and to reprocess past claims and ensure all claims are reimbursed at the finalized new rate determined if there has been a scope-of-service change or if the FQHC or RHC is a new entity.
Comments
Author’s statement. According to the author, with the growing Medi-Cal population and the implementation of the Affordable Care Act, FQHCs and RHCs become an increasingly important provider to maintain access to quality health care. Their ability to provide quality care is currently being jeopardized. A lack of timelines placed on DHCS has blocked clinics from valuable funding that could enable them to better treat their patients or increase services to more patients. This bill is needed because it will ensure access to quality care by making sure clinics get their money in a timely manner. This bill keeps DHCS efficient and accountable for the payments it promised to clinics.
Current Medi-Cal reimbursement to FQHCs and RHCs. Federal Medicaid payment to FQHCs and RHCs 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). States are required to pay FQHCs and RHCs 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 or RHC during that fiscal year. An example of a scope-of-service change would be the addition of a new service, such as dental services or technology or from relocating or remodeling an FQHC or RHC. 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.
Annual reconciliation. 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 Medi-Cal managed care 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 FQHC or RHC for the difference between their PPS rate and their Medi-Cal managed care reimbursement.
Within six months after the end of FQHC or RHC’s fiscal year, DHCS is required, to the extent feasible, to perform an annual reconciliation to reasonable cost and to either make payments to or obtain a recovery from the FQHC or RHC. The annual reconciliation is established to provide additional reimbursement to FQHCs and RHCs for the difference between their interim rate or PPS rate per visit and payments made by the Medi-Cal managed care plans. The annual reconciliation process was developed to ensure that the amounts paid for Medi-Cal managed care visits are equal to the full PPS rate that would apply to those visits. DHCS reconciles the wrap around amounts paid, the PPS rate, and the amounts received from the FQHC’s and RHC’s managed care plan. Clinics submit their annual reconciliation at the end of their fiscal year. DHCS indicates it has three years from the received date to finalize the clinic’s reconciliation. A DHCS auditor reviews reconciliation when it is received to ensure forms are complete, and a 60% tentative settlement is paid to the FQHC or RHC if the amount is due to the FQHC/RHC, at the auditor’s discretion.
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No
According to the Assembly Appropriations Committee:
This bill could be implemented by increasing staff assigned to audits and reconciliations, at a temporary cost in the range of $2.5 million per year for two years (GF/federal). The current staffing level is able to meet the annual demand for audits and reconciliations, and does not have a backlog according to existing timelines. However, as timelines are shortened by this bill, a backlog will be created. Accelerating this workload prospectively, as well as processing past-year workload to catch up, will require more administrative staff on a temporary basis. The long-term ongoing workload impact is unclear. Conservatively, provisions related to more frequent erroneous payment corrections may have some ongoing costs, in the range of $100,000 (GF/federal).
Unknown changes in the timing of payments made to clinics due to changes in the processes and deadlines for making reconciliation payments or correcting erroneous payments (GF/federal). This bill creates new timelines or accelerates existing timelines under which DHCS must make certain payments to clinics. By accelerating payments, the state will incur Medi-Cal costs sooner than would otherwise occur. The Medi-Cal program is budgeted on a cash basis (meaning that the state budget reflects costs as payments are made). To the extent this bill results in payments being made earlier, to some extent this bill will result in shifting of costs between budget years. This bill is not anticipated to increase overall Medi-Cal costs for payments to clinics.
California Primary Care Association (source)
AIDS Project Los
Angeles
Alameda Health Consortium
American Federation of
State, County and Municipal Employees, AFL-CIO
AltaMed
Asian
Health Services
Asian Pacific Health Care Venture, Inc.
Association of
California Healthcare Districts
Bartz-Altadonna Community Health
Center
Bienvenidos
Community Clinic Consortium
Council
of Community Clinics
East Valley Community Health Center, Inc.
El Proyecto del
Barrio, Inc.
Health and Life Organization, Inc.
La
Clínica
La Maestra Community Health Centers
LifeLong
Medical Care
Northeast Valley Health Corporation
Peach Tree
Health
Saban Community
Clinic
St. John’s Well Child & Family Center
Tiburcio
Vásquez Health Center, Inc.
Valley Community
Healthcare
White Memorial Community Health Center
Several
individuals
OPPOSITION: (Verified 9/10/15)
Department of Finance
ARGUMENTS IN SUPPORT: This bill is sponsored by the California Primary Care Association (CPCA), which argues the current lack of timelines has resulted in DHCS taking years to finalize rates and settle outstanding debts. CPCA states health centers are forced to carry enormous debt for services rendered, sometimes up to a million dollars. CPAC states that, considering health centers operate on thin margins, often 2% or less, this significantly impacts their bottom line and ability to effectively deliver services to Medi-Cal beneficiaries. Opening private lines of credit to carry the debt has become common even though the state does not reimburse health centers for interest accrual on that debt. CPCA states it takes DHCS approximately five years to set a new reimbursement rate, and for annual reconciliation, it currently takes approximately three years for FQHCs and RHCs to receive final payment. CPCA argues the timelines will provide health centers with reasonable clarity on reimbursement rates and reconciliation, allowing them to direct more focus and funding toward improving patient care and services, rather than increasing cash reserves to accommodate delays in reimbursement.
ARGUMENTS IN OPPOSITION: The Department of Finance (DOF) writes in opposition that this bill as it is unnecessary and results in ongoing General Fund costs that are not included in the 2015 Budget Act. DOF states that, unlike most other Medi-Cal providers, FQHCs and RHCs are reimbursed their full costs pursuant to federal law. DOF states this reimbursement methodology is more time consuming than traditional Medi-Cal reimbursement because of the time needed to calculate the wrap payments which bring clinics to a reimbursement rate that covers 100 percent of their costs. Because these clinics receive reimbursements based on their actual costs, which are generally higher than many other providers, DOF states this bill is unnecessary, and it is unclear whether these clinics have a particular need for accelerated processing for reconciliations and rate filings.
ASSEMBLY FLOOR: 80-0, 9/10/15
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 /
9/10/15 23:28:02
**** END ****
SB 610
Page 3
SENATE THIRD READING
SB 610
(Pan)
As Amended September 4, 2015
Majority vote
SENATE VOTE: 39-0
Committee |
Votes |
Ayes |
Noes |
Health |
18-0 |
Bonta, Maienschein, Bonilla, Burke, Chiu, Gomez, Gonzalez, Roger Hernández, Lackey, McCarty, Nazarian, Patterson, Ridley-Thomas, Rodriguez, Steinorth, Thurmond, Waldron, Wood |
|
Appropriations |
17-0 |
Gomez, Bigelow, Bloom, Bonta, Calderon, Chang, Nazarian, Eggman, Gallagher, Eduardo Garcia, Holden, Jones, Quirk, Rendon, Wagner, Weber, Wood |
|
SUMMARY: Establishes timelines for the Department of Health Care Services (DHCS) to review and finalize specified rates and complete annual reconciliations for federally qualified health centers (FQHCs) and rural health clinics (RHCs). Specifically, this bill:
Requires, within 30 days of receipt, DHCS to perform an initial review of reconciliation filings. Also requires DHCS, in the same timeframe, to perform an initial review of annual reimbursements that reconcile the difference between the payment provided to the FQHC or RHC by a managed care health plan and either the rate established by DHCS for the reasonable costs of care or the clinic's prospective payment rate (a per-visit baseline payment rate equal to 100% of the center’s average costs per visit).
Requires, if a payment is owed to the center or clinic, DHCS to pay the clinic or center at least 80% of the amount owed within 30 days of completion of the review or within 60 days of receipt of the reconciliation filing.
Requires DHCS to complete the final reconciliation review and pay the center or clinic any remaining balance within 18 months from the last date of the fiscal year for which DHCS conducted the review.
Requires DHCS to conduct an initial review of a scope-of-service rate change request within 30 days after submission by an FQHC or RHC, and to notify the entity no later than 31 days after submission of the request if additional information is necessary.
Requires DHCS to finalize the scope-of-service rates for existing FQHCs and RHCs within one year of receiving a complete request, as specified, and to update the provider master file within 10 business days.
Requires DHCS to finalize the reimbursement rates for new FQHCs and RHCs within one year of receiving a complete request, as specified, and to update the provider master file within 10 business days.
Requires DHCS to correct erroneous payments at least quarterly, to reprocess past claims, and ensure all claims are reimbursed at the most recently finalized rate.
Makes technical cleanup changes in to references to existing federal law.
Include provisions that address chaptering out conflicts with AB 858 (Wood) of the current legislative session.
FISCAL EFFECT: According to the Assembly Appropriations Committee, this bill could be implemented by increasing staff assigned to audits and reconciliations, at a temporary cost in the range of $2.5 million per year for two years (General Fund (GF)/federal funds). The current staffing level is able to meet the annual demand for audits and reconciliations, and does not have a backlog according to existing timelines. However, as timelines are shortened by this bill, a backlog will be created. Accelerating this workload prospectively, as well as processing past-year workload to catch up, will require more administrative staff on a temporary basis. The long-term ongoing workload impact is unclear. Conservatively, provisions related to more frequent erroneous payment corrections may have some ongoing costs, in the range of $100,000 (GF/federal).
The Assembly Appropriations Committee also states there are unknown changes in the timing of payments made to clinics due to changes in the processes and deadlines for making reconciliation payments or correcting erroneous payments (GF/federal). This bill creates new timelines or accelerates existing timelines under which DHCS must make certain payments to clinics. By accelerating payments, the state will incur Medi-Cal costs sooner than would otherwise occur. The Medi-Cal program is budgeted on a cash basis (meaning that the state budget reflects costs as payments are made). To the extent this bill results in payments being made earlier, to some extent this bill will result in shifting of costs between budget years. This bill is not anticipated to increase overall Medi-Cal costs for payments to clinics.
COMMENTS: The author states that with the growing Medi-Cal population and the implementation of the Patient Protection and Affordable Care Act, FQHCs and RHCs have become increasingly important to maintain access to quality health care, and their ability to provide quality care is currently being jeopardized. The author contends FQHCs and RHCs are being blocked from valuable funding that could enable them to better treat patients and increase services to patients as a result of a lack of timelines from DHCS for reimbursements. The author states DHCS currently takes approximately five years to finalize a new rate; during this time, clinics are only reimbursed for 80% of what they are owed. The author further maintains DHCS currently takes approximately three years to finalize reconciliation payments, which has resulted in the state owing nearly 50 million dollars to the clinics, according to a March 2015 survey cited by the author. The author states this bill is needed to ensure quality care by making sure these clinics receive their money in a timely manner. The author concludes this bill will keep DHCS efficient and accountable for the payments owed to FQHCs and RHCs.
In 2001, federal law required states to phase out cost-based, fee-for-service reimbursement to FQHCs and instead to use an all-inclusive, per-visit, prospective payment system (PPS). For 2001, each state was allowed to set the base rate using each FQHC’s reasonable costs to providing Medi-Cal-covered services in 1999 and 2000, with subsequent years’ payments being adjusted annually using the Medicare Economic Index (MEI) for primary care. Currently, FQHCs and RHCs are paid per patient visit by the Medi-Cal program, rather than by billing for each individual service as is typically done by many other clinics and providers. This system is based on the average of each health center’s reasonable costs per patient visit; thus, each health center has its own payment rate. The rate is adjusted annually for inflation and for any change in scope of services provided.
FQHCs and RHCs are both reimbursed under the PPS system. The average ($178.14) and median ($157.24) PPS rate paid to an FQHC and RHC in 2014-15 is considerably higher than the most common primary care visit reimbursement rates in Medi-Cal, but it also includes additional services not included in a primary care visit. Because FQHCs are required to receive an MEI adjustment to their rates under federal law, and because of their role in providing primary care to the Medi-Cal population, FQHCs have been exempted from the Medi-Cal rate reductions.
DHCS provides additional reimbursement to FQHCs and RHCs for the difference between their PPS rate per visit and payments made by their managed care plans and Medicare. DHCS developed an annual reconciliation process to ensure that the amounts paid for Medi-Cal managed care visits are equal to the full PPS rate that would apply to those visits. DHCS reconciles the amounts paid, the PPS rate, and the amounts received from the FQHC’s and RHC’s managed care plan, Medicare, and third party payers. Each clinic is required to submit their annual reconciliation at the end of their fiscal year. According to DHCS, it has three years from the received date to finalize the FQHC’s or RHC’s reconciliation. During this process, the clinic will receive tentative retroactive adjustment settlements based on the filed data reported on the reconciliation request. The 60% interim settlement may be subjected to change at DHCS’ discretion.
The California Primary Care Association, the sponsor of this bill, states it is currently taking DHCS years to finalize rates and settle outstanding debts due to the lack of current timelines. The sponsor states health centers and clinics are currently being forced to carry enormous debt for services rendered that can cost a single health center over $1 million. The sponsor contends that the establishment of timelines for DHCS will provide health centers with reasonable clarity on reimbursement rates and reconciliation and allow them to direct more focus and funding towards improving patient care and services, rather than increasing cash reserves to accommodate delays in reimbursement. Supporters of this bill state reimbursement delays addressed in this bill are very common and can take up to four or five years, causing serious cash flow challenges for FQHCs and RHCs. Supporters state this bill will ultimately improve the level of care that can be provided by FQHCs and RHCs because they will have more time to focus on patient care rather than on debt management.
There is no known opposition to this bill on file.
Analysis Prepared by: An-Chi Tsou / HEALTH / (916) 319-2097 FN: 0002185
SB 610
Page 3
SENATE THIRD READING
SB 610
(Pan)
As Amended July 14, 2015
Majority vote
SENATE VOTE: 39-0
Committee |
Votes |
Ayes |
Noes |
Health |
18-0 |
Bonta, Maienschein, Bonilla, Burke, Chiu, Gomez, Gonzalez, Roger Hernández, Lackey, McCarty, Nazarian, Patterson, Ridley-Thomas, Rodriguez, Steinorth, Thurmond, Waldron, Wood |
|
Appropriations |
17-0 |
Gomez, Bigelow, Bloom, Bonta, Calderon, Chang, Nazarian, Eggman, Gallagher, Eduardo Garcia, Holden, Jones, Quirk, Rendon, Wagner, Weber, Wood |
|
SUMMARY: Establishes timelines for the Department of Health Care Services (DHCS) to review and finalize specified rates and complete annual reconciliations for federally qualified health centers (FQHCs) and rural health clinics (RHCs). Specifically, this bill:
Requires, within 30 days of receipt, DHCS to perform an initial review of reconciliation filings. Also requires DHCS, in the same timeframe, to perform an initial review of annual reimbursements that reconcile the difference between the payment provided to the FQHC or RHC by a managed care health plan and either the rate established by DHCS for the reasonable costs of care or the clinic's prospective payment rate (a per-visit baseline payment rate equal to 100% of the center’s average costs per visit).
Requires, if a payment is owed to the center or clinic, DHCS to pay the clinic or center at least 80% of the amount owed within 30 days of completion of the review or within 60 days of receipt of the reconciliation filing.
Requires DHCS to complete the final reconciliation review and pay the center or clinic any remaining balance within 18 months from the last date of the fiscal year for which DHCS conducted the review.
Requires DHCS to conduct an initial review of a scope-of-service rate change request within 30 days after submission by an FQHC or RHC, and to notify the entity no later than 31 days after submission of the request if additional information is necessary.
Requires DHCS to finalize the scope-of-service rates for existing FQHCs and RHCs within one year of receiving a complete request, as specified, and to update the provider master file within 10 business days.
Requires DHCS to finalize the reimbursement rates for new FQHCs and RHCs within one year of receiving a complete request, as specified, and to update the provider master file within 10 business days.
Requires DHCS to correct erroneous payments at least quarterly, to reprocess past claims, and ensure all claims are reimbursed at the most recently finalized rate.
Makes technical cleanup changes in to references to existing federal law.
FISCAL EFFECT: According to the Assembly Appropriations Committee, this bill could be implemented by increasing staff assigned to audits and reconciliations, at a temporary cost in the range of $2.5 million per year for two years (General Fund (GF)/federal funds). The current staffing level is able to meet the annual demand for audits and reconciliations, and does not have a backlog according to existing timelines. However, as timelines are shortened by this bill, a backlog will be created. Accelerating this workload prospectively, as well as processing past-year workload to catch up, will require more administrative staff on a temporary basis. The long-term ongoing workload impact is unclear. Conservatively, provisions related to more frequent erroneous payment corrections may have some ongoing costs, in the range of $100,000 (GF/federal).
The Assembly Appropriations Committee also states there are unknown changes in the timing of payments made to clinics due to changes in the processes and deadlines for making reconciliation payments or correcting erroneous payments (GF/federal). This bill creates new timelines or accelerates existing timelines under which DHCS must make certain payments to clinics. By accelerating payments, the state will incur Medi-Cal costs sooner than would otherwise occur. The Medi-Cal program is budgeted on a cash basis (meaning that the state budget reflects costs as payments are made). To the extent this bill results in payments being made earlier, to some extent this bill will result in shifting of costs between budget years. This bill is not anticipated to increase overall Medi-Cal costs for payments to clinics.
COMMENTS: The author states that with the growing Medi-Cal population and the implementation of the Patient Protection and Affordable Care Act, FQHCs and RHCs have become increasingly important to maintain access to quality health care, and their ability to provide quality care is currently being jeopardized. The author contends FQHCs and RHCs are being blocked from valuable funding that could enable them to better treat patients and increase services to patients as a result of a lack of timelines from DHCS for reimbursements. The author states DHCS currently takes approximately five years to finalize a new rate; during this time, clinics are only reimbursed for 80% of what they are owed. The author further maintains DHCS currently takes approximately three years to finalize reconciliation payments, which has resulted in the state owing nearly 50 million dollars to the clinics, according to a March 2015 survey cited by the author. The author states this bill is needed to ensure quality care by making sure these clinics receive their money in a timely manner. The author concludes this bill will keep DHCS efficient and accountable for the payments owed to FQHCs and RHCs.
In 2001, federal law required states to phase out cost-based, fee-for-service reimbursement to FQHCs and instead to use an all-inclusive, per-visit, prospective payment system (PPS). For 2001, each state was allowed to set the base rate using each FQHC’s reasonable costs to providing Medi-Cal-covered services in 1999 and 2000, with subsequent years’ payments being adjusted annually using the Medicare Economic Index (MEI) for primary care. Currently, FQHCs and RHCs are paid per patient visit by the Medi-Cal program, rather than by billing for each individual service as is typically done by many other clinics and providers. This system is based on the average of each health center’s reasonable costs per patient visit; thus, each health center has its own payment rate. The rate is adjusted annually for inflation and for any change in scope of services provided.
FQHCs and RHCs are both reimbursed under the PPS system. The average ($178.14) and median ($157.24) PPS rate paid to an FQHC and RHC in 2014-15 is considerably higher than the most common primary care visit reimbursement rates in Medi-Cal, but it also includes additional services not included in a primary care visit. Because FQHCs are required to receive an MEI adjustment to their rates under federal law, and because of their role in providing primary care to the Medi-Cal population, FQHCs have been exempted from the Medi-Cal rate reductions.
DHCS provides additional reimbursement to FQHCs and RHCs for the difference between their PPS rate per visit and payments made by their managed care plans and Medicare. DHCS developed an annual reconciliation process to ensure that the amounts paid for Medi-Cal managed care visits are equal to the full PPS rate that would apply to those visits. DHCS reconciles the amounts paid, the PPS rate, and the amounts received from the FQHC’s and RHC’s managed care plan, Medicare, and third party payers. Each clinic is required to submit their annual reconciliation at the end of their fiscal year. According to DHCS, it has three years from the received date to finalize the FQHC’s or RHC’s reconciliation. During this process, the clinic will receive tentative retroactive adjustment settlements based on the filed data reported on the reconciliation request. The 60% interim settlement may be subjected to change at DHCS’ discretion.
The California Primary Care Association, the sponsor of this bill, states it is currently taking DHCS years to finalize rates and settle outstanding debts due to the lack of current timelines. The sponsor states health centers and clinics are currently being forced to carry enormous debt for services rendered that can cost a single health center over $1 million. The sponsor contends that the establishment of timelines for DHCS will provide health centers with reasonable clarity on reimbursement rates and reconciliation and allow them to direct more focus and funding towards improving patient care and services, rather than increasing cash reserves to accommodate delays in reimbursement. Supporters of this bill state reimbursement delays addressed in this bill are very common and can take up to four or five years, causing serious cash flow challenges for FQHCs and RHCs. Supporters state this bill will ultimately improve the level of care that can be provided by FQHCs and RHCs because they will have more time to focus on patient care rather than on debt management.
There is no known opposition to this bill on file.
Analysis Prepared by: An-Chi Tsou / HEALTH / (916) 319-2097 FN: 0001671
Date of Hearing: August 19, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
SB 610
(Pan) – As Amended July 14, 2015
Policy Committee: |
Health |
Vote: |
18 - 0 |
|
|
|
|
|
|
|
|
Urgency: No State Mandated Local Program: No Reimbursable: No
SUMMARY:
This bill imposes new timelines and shortens existing timelines for Medi-Cal payments to federally qualified health centers and rural health centers (FQHCs and RHCs, or clinics).
FISCAL EFFECT:
This bill could be implemented by increasing staff assigned to audits and reconciliations, at a temporary cost in the range of $2.5 million per year for two years (GF/federal). The current staffing level is able to meet the annual demand for audits and reconciliations, and does not have a backlog according to existing timelines. However, as timelines are shortened by this bill, a backlog will be created. Accelerating this workload prospectively, as well as processing past-year workload to catch up, will require more administrative staff on a temporary basis. The long-term ongoing workload impact is unclear. Conservatively, provisions related to more frequent erroneous payment corrections may have some ongoing costs, in the range of $100,000 (GF/federal).
Unknown changes in the timing of payments made to clinics due to changes in the processes and deadlines for making reconciliation payments or correcting erroneous payments (GF/federal). The bill creates new timelines or accelerates existing timelines under which DHCS must make certain payments to clinics. By accelerating payments, the state will incur Medi-Cal costs sooner than would otherwise occur. The Medi-Cal program is budgeted on a cash basis (meaning that the state budget reflects costs as payments are made). To the extent the bill results in payments being made earlier, to some extent the bill will result in shifting of costs between budget years. The bill is not anticipated to increase overall Medi-Cal costs for payments to clinics.
COMMENTS:
Purpose. The purpose of this bill is to expedite payments to clinics for Medi-Cal services rendered. The author states this bill is needed to ensure quality care by making sure these clinics receive their money in a timely 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.
Status Quo. If a new clinic or new clinic site is to be opened, the clinic must apply for a site-specific PPS rate. DHCS currently takes approximately five years to finalize a new rate; during this time, clinics are reimbursed for 60% of what is projected they are owed. For existing clinics, annual reconciliation is performed to ensure clinics are paid according to their PPS rates. DHCS currently takes approximately three years to finalize reconciliation payments, which has resulted in the state owing nearly $50 million to the clinics, according to a March 2015 survey cited by the author.
The chart below indicates the activities performed, their purpose, the current timelines and amounts, and what this bill proposes.
Activity |
Purpose |
Current |
Proposed |
||
Annual Reconciliation payment calculation |
Ensure clinic receives PPS rate for all billable visits. |
3 years |
18 months |
|
|
Payments reflecting reconciliation |
Pay a clinic the balance owed, according to the reconciliation calculation. |
60% interim payment while pending. |
80% interim payment while pending. |
|
|
New rate calculation |
Identify the PPS rate at which a new clinic will be reimbursed. |
5 years |
12 months from submittal of initial year of data |
|
|
Payments reflecting new rates |
Reimburse a new clinic the according to the calculated PPS rate. |
|
|||
Comparability requests |
Identify a new PPS rate based on comparability with other clinics. |
Usually around 4 months |
12 months; 30 days to note findings of non-comparability. |
|
|
Scope of service rate change request |
Calculate a new PPS rate, based on a modified scope of services. |
90 days in practice |
90 days in statute |
|
|
Clinics indicate because of the long lag time in receiving payment, in order to maintain operations, they are forced to take lines of credit at high interest rates.
Comment. Payment timelines that stretch on for years, in a sector as dynamic as delivery of health care services, appear difficult for providers to manage. It is unclear why audits and reconciliations are processed so many years in arrears. It seems to be in the state's interest to enhance stability to clinics that serve so many of the state's Medi-Cal enrollees. Even if the state moves to a different methodology for clinic reimbursement, as is being considered on a pilot basis by SB 147 (Hernández), also being heard today, there will still be years of annual reconciliations to perform. The benefit clinics would receive from greater certainty, and a reduction in finance charges associated with lines of credit, should be weighed against the temporary increase in state costs and workload. Accelerating these payments also has a budget impact, but it is essentially paying off debt for costs already incurred in past years.
Analysis Prepared by: Lisa Murawski / APPR. / (916) 319-2081
SB 610
Page 6
Date of Hearing: June 30, 2015
ASSEMBLY COMMITTEE ON HEALTH
Rob Bonta, Chair
SB 610
(Pan) – As Amended April 28, 2015
SENATE VOTE: 39-0
SUBJECT: Medi-Cal: federally qualified health centers: rural health clinics: managed care contracts.
SUMMARY:
Establishes timelines for the Department of Health Care Services
(DHCS) to review and finalize specified rates and complete annual
reconciliations for federally qualified health centers (FQHCs) and
rural health clinics (RHCs). Specifically, this bill:
Within 30 days of receipt, requires DHCS to perform an initial review of reconciliation filings. Also requires DHCS, in the same timeframe, to perform an initial review of annual reimbursements that reconcile the difference between the payment provided to the FQHC or RHC by a managed care health plan and either the rate established by DHCS for the reasonable costs of care or the clinic’s prospective payment rate (a per-visit baseline payment rate equal to 100% of the center’s average costs per visit).
If a payment is owed to the center or clinic, requires DHCS to pay the clinic or center at least 80% of the amount owed within 30 days of completion of the review or within 60 days of receipt of the reconciliation filing.
Requires DHCS to complete the final reconciliation review and pay the center or clinic any remaining balance within 15 months from the last date of the fiscal year for which DHCS conducted the review.
Requires DHCS to conduct an initial review of a scope-of-service rate change request within 30 days after submission by an FQHC or RHC, and to notify the entity no later than 31 days after submission of the request if additional information is necessary.
Requires DHCS to finalize the scope-of-service rates for existing FQHCs and RHCs within 90 days of receiving a complete request, as specified, and to update the provider master file within 10 business days.
Requires DHCS to finalize the reimbursement rates for new FQHCs and RHCs within 90 days of receiving a complete request, as specified, and to update the provider master file within 10 business days.
Requires DHCS to correct erroneous payments at least quarterly, to reprocess past claims, and ensure all claims are reimbursed at the most recently finalized rate.
Makes technical cleanup changes in to references to existing federal law.
EXISTING LAW:
Establishes the Medi-Cal Program under the direction of DHCS to provide low-income qualifying individuals health care and a uniform schedule of benefits, including services provided by FQHCs and RHCs as defined in federal law.
Defines an FQHC as a federally-approved entity that serves a population that is medically underserved, or a special medically underserved population comprised of migratory and seasonal agricultural workers, the homeless, and residents of public housing, by providing, either through the staff and supporting resources of the center or through contracts or cooperative arrangements.
Defines an RHC as an FQHC located in a non-urbanized area currently designated as a federally designated or certified health care or provider shortage area.
Requires local health plans that subcontract with FQHCs and RHCs to provide reimbursement for services rendered at a level not less than plans pay for similar services provided outside of FQHCs and RHCs.
Requires FQHCs and RHCs subcontracting with Medi-Cal managed care plans to seek supplemental reimbursement from DHCS through a per visit fee-for-service billing system (referred to as the “wrap around” payment).
Requires DHCS, to the extent possible, to perform an annual reconciliation of reasonable costs, and make payments to an FQHC or RHC within six months of the end of an FQHC or RHC’s fiscal year.
Requires DHCS to adjust the computed rate differential as it deems necessary to minimize the difference between the FQHC’s or RHC’s revenue from the Medi-Cal managed care plan and the FQHC’s or RHC’s cost-based reimbursement or the FQHC’s or RHC’s prospective payment rate.
Authorizes an FQHC or RHC to apply for an adjustment to its per-visit rate based on a change in the scope of services provided once per year, as specified.
Requires newly established, licensed, or located FQHCs and RHCs to have their reimbursement rates established as one of the following options, as selected by the FQHC or RHC:
The rate may be calculated based on a per-visit basis in an amount equal to the average of the per-visit rates of three comparable FQHCs or RHCs located in the same or adjacent area with a similar caseload;
In the absence of three comparable FQHCs or RHCs with a similar caseload, the rate may be calculated as in a) using three comparable FQHCs or RHCs located in the same or adjacent service area, or in a reasonably similar geographic area, with similar characteristics in the patient population; or,
At a new entity’s one-time election, DHCS is required to establish a reimbursement rate calculated on a per-visit basis that is equal to 100% of the projected allowable costs to the FQHC or RHC for services provided in the first 12 months of operation. After this period, the rate is increased by the Medicare Economic Index (MEI) in effect at that time. The projected allowable costs for the first 12 months are required to be cost settled and the prospective payment rate is required to be adjusted based on the actual and allowable cost of the visit.
FISCAL EFFECT:
According to the Senate Appropriations Committee, increased
administrative costs, likely in the millions, to comply with the new
or accelerated deadlines in the bill (General Fund (GF) and federal
funds). This bill would require DHCS to complete its review of a
proposed change in scope of service or determine a final rate for a
FQHC or RHC much faster than is current practice.
Unknown changes in
the timing of payments made to FQHCs or RHCs due to changes in the
processes and deadlines for making reconciliation payments or
correcting erroneous payments (GF and federal funds). This bill
creates new timelines or accelerates existing timelines under which
DHCS must make certain payments to FQHCs and RHCs. By accelerating
payments to FQHCs and RHCs, the state will likely incur Medi-Cal
costs sooner than would otherwise occur. The Medi-Cal program is
budgeted on a cash basis (meaning that the state budget reflects
costs as payments are made). To the extent that this bill results in
payments being made earlier, to some extent this bill will result in
shifting of costs between budget years. This bill is not anticipated
to increase overall Medi-Cal costs for payments to FQHCs or RHCs.
COMMENTS:
PURPOSE OF THIS BILL. The author states that with the growing Medi-Cal population and the implementation of the Patient Protection and Affordable Care Act, FQHCs and RHCs have become increasingly important to maintain access to quality health care, and their ability to provide quality care is currently being jeopardized. The author contends FQHCs and RHCs are being blocked from valuable funding that could enable them to better treat patients and increase services to patients as a result of a lack of timelines from DHCS for reimbursements. The author states DHCS currently takes approximately five years to finalize a new rate; during this time, clinics are only reimbursed for 80% of what they are owed. The author further maintains DHCS currently takes approximately three years to finalize reconciliation payments, which has resulted in the state owing nearly 50 million dollars to the clinics, according to a March 2015 survey cited by the author. The author states this bill is needed to ensure quality care by making sure these clinics receive their money in a timely manner. The author concludes this bill will keep DHCS efficient and accountable for the payments owed to FQHCs and RHCs.
BACKGROUND.
FQHCs and RHCs. FQHCs are community-based, nonprofit or public organizations that provide services to people who lack access to other health care, including those without insurance, residents of rural and underserved areas, and some Medicaid patients. These health care services are available to all people, regardless of their ability to pay. FQHCs include community health centers, migrant health centers, health care for the homeless health centers and public housing primary care centers. Most FQHCs receive federal grant funding under Section 330 of the Public Health Service Act. RHCs are a subset of FQHCs which provide primary health care services in medically underserved areas, but differ from health centers in several ways. Because of provider scarcity in rural areas, RHCs tend to employ mid-level providers such as nurse practitioners or physician assistants. Primary care practices that can document their main purpose is to provide primary care services in a rural area may qualify to be an RHC.
Reimbursement Rates. In 2001, federal law required states to phase out cost-based, fee-for-service reimbursement to FQHCs and instead to use an all-inclusive, per-visit, prospective payment system (PPS). For 2001, each state was allowed to set the base rate using each FQHC’s reasonable costs to providing Medi-Cal-covered services in 1999 and 2000, with subsequent years’ payments being adjusted annually using the MEI for primary care. Currently, FQHCs and RHCs are paid per patient visit by the Medi-Cal program, rather than by billing for each individual service as is typically done by many other clinics and providers. This system is based on the average of each health center’s reasonable costs per patient visit; thus, each health center has its own payment rate. The rate is adjusted annually for inflation and for any change in scope of services provided.
FQHCs
and RHCs are both reimbursed under the PPS system. The average
($178.14) and median ($157.24) PPS rate paid to an FQHC and RHC in
2014-15 is considerably higher than the most common primary care
visit reimbursement rates in Medi-Cal, but it also includes
additional services not included in a primary care visit. Because
FQHCs are required to receive an MEI adjustment to their rates under
federal law, and because of their role in providing primary care to
the Medi-Cal population, FQHCs have been exempted from the Medi-Cal
rate reductions.
Annual Reconciliations. DHCS provides additional reimbursement to FQHCs and RHCs for the difference between their PPS rate per visit and payments made by their managed care plans and Medicare. DHCS developed an annual reconciliation process to ensure that the amounts paid for Medi-Cal managed care visits are equal to the full PPS rate that would apply to those visits. DHCS reconciles the amounts paid, the PPS rate, and the amounts received from the FQHC’s and RHC’s managed care plan, Medicare, and third party payers. Each clinic is required to submit their annual reconciliation at the end of their fiscal year. According to DHCS, it has three years from the received date to finalize the FQHC’s or RHC’s reconciliation. During this process, the clinic will receive tentative retroactive adjustment settlements based on the filed data reported on the reconciliation request. The 60% interim settlement may be subjected to change at DHCS’ discretion.
SUPPORT. The California Primary Care Association, the sponsor of this bill, states it is currently taking DHCS years to finalize rates and settle outstanding debts due to the lack of current timelines. The sponsor states health centers and clinics are currently being forced to carry enormous debt for services rendered that can cost a single health center over $1 million. The sponsor contends that the establishment of timelines for DHCS will provide health centers with reasonable clarity on reimbursement rates and reconciliation and allow them to direct more focus and funding towards improving patient care and services, rather than increasing cash reserves to accommodate delays in reimbursement.
Supporters of this bill state reimbursement delays addressed in this bill are very common and can take up to four or five years, causing serious cash flow challenges for FQHCs and RHCs. Supporters state this bill will ultimately improve the level of care that can be provided by FQHCs and RHCs because they will have more time to focus on patient care rather than on debt management.
RELATED LEGISLATION. SB 147 (Ed Hernandez) requires DHCS to authorize a three-year payment reform pilot project for FQHCs using an alternative payment methodology (APM) authorized under federal Medicaid law. Requires an 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. SB 147 is currently pending in the Assembly Health Committee.
PREVIOUS LEGISLATION.
AB 2051 (Gonzalez), Chapter 356, Statutes of 2014, among other provisions, requires DHCS, within 30 calendar days of receiving confirmation of certification as a Medi-Cal provider for an applicant that is an affiliate primary care clinic, to provide written notice to the applicant informing the applicant that its Medi-Cal enrollment is approved.
SB 442 (Ducheny), Chapter 502, Statutes of 2010, streamlines administrative processes for community clinics to apply for affiliate clinic licensure from the Department of Public Health.
CHAPTERING OUT. As currently written, AB 690 (Wood) and AB 858 (Wood), both currently pending in the Senate Appropriations Committee, amend the same code sections as this bill. Amendments should be taken to avoid chaptering out conflicts, should all bills be enacted.
POLICY COMMENTS. The timeframes contained in this bill establish new statutory timeframes. For example, in the case of reconciliation provisions, this bill requires a faster initial response and higher interim payment amounts than is current DHCS practice. According to DHCS’ initial rate setting documents, DHCS indicates it has three years from the received date to finalize a clinic’s reconciliation, and it pays a 60% interim settlement, which is subject to change at DHCS’s discretion. Under this bill, DHCS has to complete the final reconciliation review and to pay to the FQHC or RHC the remaining amount owed within 15 months of the last date of the fiscal year for which DHCS is conducting the review, and DHCS is required to pay at least 80% of the amount owed within 30 days of completion of the initial review or in any event within 60 days of receipt of the reconciliation filing, if DHCS determines during the initial review that a payment is owed to the FQHC or RHC.
It is unclear how well DHCS will be able to adjust to the new,
aggressive timelines established under this bill. If the timelines
are too stringent for DHCS, there may be unintended consequences
having DHCS set an inappropriate reimbursement rate or of increased
incorrect reconciliations, the latter of which could mount
administrative burden significantly. The Committee may wish to amend
the timelines in this bill to better reflect DHCS’ caseload
capabilities.
REGISTERED SUPPORT / OPPOSITION:
Support
California Primary
Care Association (sponsor)
AIDS Project Los Angeles
Alameda
Health Consortium
American Federation of State, County and
Municipal Employees, AFL-CIO
AltaMed (prior version)
Asian
Health Services
Asian Pacific Health Care Venture, Inc. (prior
version)
Association of California Healthcare
Districts
Bartz-Altadonna Community Health
Center
Bienvenidos
Community Clinic Consortium
Council
of Community Clinics
East Valley Community Health Center, Inc.
(prior version)
El Proyecto del Barrio, Inc. (prior
version)
Health and Life Organization, Inc.
La Clínica
La
Maestra Community Health Centers
LifeLong Medical Care
Northeast
Valley Health Corporation
Peach Tree Health (prior
version)
Saban Community Clinic
St. John’s Well Child &
Family Center (prior version)
Tiburcio Vásquez Health Center,
Inc.
White Memorial Community Health Center
Several
individuals
Opposition
None on file.
Analysis Prepared by: An-Chi Tsou / HEALTH / (916) 319-2097
SB 610
Page 7
|
Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 |
THIRD READING
Bill No: SB 610
Amended: 4/28/15
SENATE HEALTH COMMITTEE: 8-0, 4/22/15
AYES: Hernandez, Nguyen, Mitchell, Monning, Nielsen, Pan, Roth, Wolk
NO VOTE RECORDED: Hall
SENATE APPROPRIATIONS COMMITTEE: 7-0, 5/28/15
AYES: Lara, Bates, Beall, Hill, Leyva, Mendoza, Nielsen
SUBJECT: Medi-Cal: federally qualified health centers: rural health clinics: managed care contracts
SOURCE: California Primary Care Association
DIGEST: This bill establishes timeframes for the Department of Health Care Services (DHCS) to review and finalize federally qualified health center (FQHC) and rural health clinic (RHC) Medi-Cal-related scope of service changes and reconciliation changes, and requires DHCS to make payments within specified timeframes if reconciliation payments are owed. This bill establishes timeframes for DHCS to finalize rates for new FQHCs and RHCs. This bill requires DHCS to update the provider master file within specified timeframes with the rates for new FQHCs and RHCs and when a scope of service change is complete. This bill requires DHCS to correct erroneous payments at least quarterly, and to reprocess past claims and ensure all claims are reimbursed at the finalized new rate.
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 and RHC services are covered benefits under the Medi-Cal program.
Requires FQHCs and RHCs to be reimbursed on a per-visit basis. Defines a “visit” as a face-to-face encounter between an FQHC or RHC patient and specified health care providers.
Permits an FQHC or RHC to apply for an adjustment to its per-visit rate based on a change in the scope of services provided by the FQHC or RHC. Requires rate changes based on a change in the scope of services provided by an FQHC or RHC to be evaluated in accordance with Medicare reasonable cost principles.
Requires FQHCs and RHCs subcontracting with Medi-Cal managed care plans to seek supplemental reimbursement from DHCS through a per visit fee-for-service billing system (referred to as the “wrap around” payment). Requires each FQHC and RHC to submit to DHCS for approval a rate differential calculated to reflect the amount necessary to reimburse the FQHC or RHC for the difference between the payment the FQHC or RHC received from the Medi-Cal managed care health plan and either the interim rate established by DHCS based on the FQHC or RHC’s reasonable cost or the FQHC or RHC’s prospective payment rate.
Requires DHCS to adjust the computed rate differential as it deems necessary to minimize the difference between the FQHC or RHC’s revenue from the Medi-Cal managed care plan and the FQHC’s or RHC’s cost-based reimbursement or the FQHC’s or RHC’s prospective payment rate.
Requires DHCS, to the extent feasible, within six months of the end of the FQHC or RHC’s fiscal year, to perform an annual reconciliation to reasonable cost, and make payments to, or obtain a recovery from, the FQHC or RHC.
Requires that an entity that first qualifies as an FQHC or RHC, a newly licensed facility at a new location added to an existing FQHC or RHC, and any entity that is an existing FQHC or RHC that is relocated to a new site to have its reimbursement rate established in accordance with one of the following methods, as selected by the FQHC or RHC:
The rate may be calculated on a per-visit basis in an amount that is equal to the average of the per-visit rates of three comparable FQHCs or RHCs located in the same or adjacent area with a similar caseload; and,
In the absence of three comparable FQHCs or RHCs with a similar caseload, the rate may be calculated on a per-visit basis in an amount that is equal to the average of the per-visit rates of three comparable FQHCs or RHCs located in the same or an adjacent service area, or in a reasonably similar geographic area with respect to relevant social, health care, and economic characteristics.
At a new entity’s one-time election, DHCS is required to establish a reimbursement rate, calculated on a per-visit basis, that is equal to 100% of the projected allowable costs to the FQHC or RHC of furnishing FQHC or RHC services during the first 12 months of operation as an FQHC or RHC. After the first 12-month period, the projected per-visit rate is required to be increased by the Medicare Economic Index (MEI) then in effect. The projected allowable costs for the first 12 months are required to be cost settled and the prospective payment reimbursement rate is required to be adjusted based on actual and allowable cost per visit.
This bill:
Requires DHCS to perform an initial review of the reconciliation filing within 30 days of receipt.
Requires DHCS to pay to the FQHC or RHC at least 80% of the amount owed within 30 days of completion of the initial review or in any event within 60 days of receipt of the reconciliation filing, if DHCS determines during the initial review that a payment is owed to the FQHC or RHC.
Requires DHCS to complete the final reconciliation review and to pay to the FQHC or RHC the remaining amount owed within 15 months of the last date of the fiscal year for which DHCS is conducting the review.
Requires DHCS to conduct an initial review of a scope-of-service rate change request within 30 days after submission by an FQHC or RHC.
Requires DHCS to notify the FQHC or RHC, no later than the 31st day after submission if DHCS determines that additional information is necessary to finalize a new rate. Requires the notification to state the reason or reasons the submitted information is insufficient and to request submission of supplemental information from the FQHC or RHC.
Requires DHCS to finalize the FQHC’s or RHC’s rate within 90 days after receiving a submission that it determines to be complete. Requires DHCS to update the provider master file within 10 business days.
Requires DHCS to finalize a new rate within 90 days after the submission of the actual cost report from the first full 12 months of operation. Requires DHCS to update the DHCS provider master file within 10 business days of finalizing the rate.
Requires DHCS to conduct an initial review of the three FQHCs or RHCs for the purpose of determining comparability within 30 days of submission by the new entity. Requires DHCS to notify the new entity no later than the 31st day after submission if DHCS determines one or more of the submitted FQHCs or RHCs do not meet the comparability threshold.
Requires the notification to state the reason or reasons for the finding of noncomparability and to request a supplemental submission from the new entity. Requires the DHCS request to clearly state whether the new entity must submit data from one, two, or three FQHCs or RHCs to meet the comparability threshold. Requires, once the new entity submits its supplemental information, the initial review process described in #8 above to apply.
Requires DHCS to finalize the new entity’s rate within 90 days after receiving a submission determined by DHCS to be comparable. Requires DHCS to update the provider master file within 10 business days.
Requires DHCS to correct erroneous payments at least quarterly, and to reprocess past claims and ensure all claims are reimbursed at the finalized new rate determined if there has been a scope of service change or if the FQHC or RHC is a new entity.
Comments
Author’s statement. According to the author, with the growing Medi-Cal population and the implementation of the Affordable Care Act, FQHCs and RHCs become an increasingly important provider to maintain access to quality health care. Their ability to provide quality care is currently being jeopardized. A lack of timelines placed on DHCS has blocked clinics from valuable funding that could enable them to better treat their patients or increase services to more patients. This legislation is needed because it will ensure access to quality care by making sure clinics get their money in a timely manner. This bill keeps DHCS efficient and accountable for the payments it promised to clinics.
Current Medi-Cal reimbursement to FQHCs and RHCs. Federal Medicaid payment to FQHCs and RHCs 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). States are required to pay FQHCs and RHCs 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 or RHC during that fiscal year. An example of a scope of service change would be the addition of a new service, such as dental services or technology or from relocating or remodeling an FQHC or RHC. 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.
Annual reconciliation. 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 Medi-Cal managed care 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 FQHC or RHC for the difference between their PPS rate and their Medi-Cal managed care reimbursement.
Within six months after the end of FQHC or RHC’s fiscal year, DHCS is required, to the extent feasible, to perform an annual reconciliation to reasonable cost and to either make payments to or obtain a recovery from the FQHC or RHC. The annual reconciliation is established to provide additional reimbursement to FQHCs and RHCs for the difference between their interim rate or PPS rate per visit and payments made by the Medi-Cal managed care plans. The annual reconciliation process was developed to ensure that the amounts paid for Medi-Cal managed care visits are equal to the full PPS rate that would apply to those visits. DHCS reconciles the wrap around amounts paid, the PPS rate, and the amounts received from the FQHC’s and RHC’s managed care plan. Clinics submit their annual reconciliation at the end of their fiscal year. DHCS indicates it has three years from the received date to finalize the clinic’s reconciliation. A DHCS auditor reviews reconciliation when it is received to ensure forms are complete, and a 60% tentative settlement is paid to the FQHC or RHC if the amount is due to the FQHC/RHC, at the auditor’s discretion.
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No
According to the Senate Appropriations Committee:
Increased administrative costs, likely in the millions, to comply with the new or accelerated deadlines in this bill (General Fund and federal funds). This bill requires DHCS to complete its review of a proposed change in scope of service or determine a final rate for a FQHC or RHC much faster than is current practice.
Unknown changes in the timing of payments made to FQHCs or RHCs due to changes in the processes and deadlines for making reconciliation payments or correcting erroneous payments (General Fund and federal funds). This bill creates new timelines or accelerates existing timelines under which DHCS must make certain payments to FQHCs and RHCs. By accelerating payments to FQHCs and RHCs, the state will likely incur Medi-Cal costs sooner than would otherwise occur. The Medi-Cal program is budgeted on a cash basis (meaning that the state budget reflects costs as payments are made). To the extent that this bill results in payments being made earlier, to some extent this bill will result in shifting of costs between budget years. This bill is not anticipated to increase overall Medi-Cal costs for payments to FQHCs or RHCs.
California Primary Care Association (source)
Asian Pacific Health Care Venture, Inc.
AltaMed Health Services Corporation
Association of California Healthcare Districts
Bienvenidos Community Health Center
California Academy of Family Physicians
Community Clinic Association of Los Angeles County
East Valley Community Health Center, Inc.
El Proyetco Del Barrio
Peach Tree Health
St. John’s Well Child & Family Center
35 individuals
OPPOSITION: (Verified 5/27/15)
None received
ARGUMENTS IN SUPPORT: This bill is sponsored by the California Primary Care Association (CPCA), which argues the current lack of timelines has resulted in DHCS taking years to finalize rates and settle outstanding debts. CPCA states health centers are forced to carry enormous debt for services rendered, sometimes up to a million dollars. CPAC states that, considering health centers operate on thin margins, often 2% or less, this significantly impacts their bottom line and ability to effectively deliver services to Medi-Cal beneficiaries. Opening private lines of credit to carry the debt has become common even though the state does not reimburse health centers for interest accrual on that debt. CPCA states it takes DHCS approximately five years to set a new reimbursement rate, and for annual reconciliation, it currently takes approximately three years for FQHCs and RHCs to receive final payment. CPCA argues the timelines will provide health centers with reasonable clarity on reimbursement rates and reconciliation, allowing them to direct more focus and funding toward improving patient care and services, rather than increasing cash reserves to accommodate delays in reimbursement.
Prepared by: Scott Bain / HEALTH /
5/30/15 16:45:59
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SB 610 (Pan) Page 3 of 3
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
SB 610 (Pan) - Medi-Cal: federally qualified health centers: rural health clinics: managed care contracts
|
|
Version: April 28, 2015 |
Policy Vote: HEALTH 8 - 0 |
Urgency: No |
Mandate: No |
Hearing Date: May 11, 2015 |
Consultant: Brendan McCarthy |
This bill meets the criteria for referral to the Suspense File.
Bill Summary:
SB 610 would modify existing timelines and establish new timelines relating to the process for setting rates and making payments to Federally Qualified Health Centers (FQHCs) and Rural Health Clinics (RHCs) through the Medi-Cal program.
Fiscal Impact:
Increased administrative costs, likely in the millions, to comply with the new or accelerated deadlines in the bill (General Fund and federal funds). The bill would require the Department of Health Care Services to complete its review of a proposed change in scope of service or determine a final rate for a FQHC or RHC much faster than is current practice.
Unknown changes in the timing of payments made to FQHCs or RHCs due to changes in the processes and deadlines for making reconciliation payments or correcting erroneous payments (General Fund and federal funds). The bill creates new timelines or accelerates existing timelines under which the Department must make certain payments to FQHCs and RHCs. By accelerating payments to FQHCs and RHCs, the state will likely incur Medi-Cal costs sooner than would otherwise occur. The Medi-Cal program is budgeted on a cash basis (meaning that the state budget reflects costs as payments are made). To the extent that the bill results in payments being made earlier, to some extent the bill will result in shifting of costs between budget years. The bill is not anticipated to increase overall Medi-Cal costs for payments to FQHCs or RHCs.
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, FQHCs and RHCs 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 FQHC’s or RHC’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 FQHC or RHC, 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 FQHC or RHC to bring the total payment up to the PPS rate.
Proposed Law:
SB 610 would modify existing timelines and establish new timelines relating to the process for setting rates and making payments to Federally Qualified Health Centers (FQHCs) and Rural Health Clinics (RHCs) through the Medi-Cal program.
Specific provisions of the bill would:
Require the Department of Health Care Services to determine whether a request for a change in scope of service by a FQHC or RHC is complete within 30 days and finalize the review of the request within 90 days of determining that the proposal is complete. (Current law does not impose a deadline on the Department. Under current practice, the Department has 90 days to review the request, if the Department finds the proposal is incomplete, the deadline is extended for another 90 days);
Require the Department to finalize a new rate based on cost (for a new FQHC or RHC) within 90 days of submittal of the actual cost report from the first 12 months of operation. (Current law does not set a deadline for finalizing the new rate. Under current practice, the Department determines an interim rate [80% of cost] within four weeks and may take up to three years to establish the final rate.);
Require the Department to determine whether a request to establish a new rate based on comparable clinics (for a new FQHC or RHC) is complete within 30 days and finalize a new rate based on comparable clinics within 90 days of determining the request is complete. (Under current practice there is no deadline.);
Require the Department to make a reconciliation payment (if necessary) of at least 80% of the estimated amount owed to a FQHC or RHC within 60 days of receiving a reconciliation filing and to complete the final reconciliation review and pay the remaining amount within 15 months. (Under current practice, the Department provides an interim payment of 60% of the estimated amount due within five to six months and makes a final payment within 3 years);
Require the Department to correct erroneous payments quarterly, including making payments for reprocessed claims due to the establishment of a new rate for a new FQHC or RHC or if there has been an approved scope of service change. (Under current practice there is no deadline for making erroneous payments).
Related Legislation:
SB 147 (Hernandez) 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. That bill is on this committee’s Suspense File.
Staff Comments:
As noted above, the changes in the bill will change the timing of payments made by the state to FQHCs and RHCs. The changes are not anticipated to change the total amounts of the payments.
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SB 610 (Pan) Page 6 of 6
SENATE COMMITTEE ON HEALTH
Senator Ed Hernandez, O.D., Chair
BILL NO: SB 610
AUTHOR: |
Pan |
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VERSION: |
April 6, 2015 |
||
HEARING DATE: |
April 22, 2015 |
|
|
CONSULTANT: |
Scott Bain |
||
SUBJECT: Medi-Cal: federally qualified health centers and rural health clinics: managed care contracts
SUMMARY:
Establishes timeframes for the Department of Health Care Services (DHCS) to review and finalize federally qualified health center (FQHC) and rural health clinic (RHC) Medi-Cal-related scope of service changes and reconciliation changes, and requires DHCS to make payments within specified timeframes if reconciliation payments are owed. Establishes timeframes for DHCS to finalize rates for new FQHCs and RHCs. Requires DHCS to update the provider master file within specified timeframes with the rates for new FQHCs and RHCs and when a scope of service change is complete. Requires DHCS to correct erroneous payments at least quarterly, and to reprocess past claims and ensure all claims are reimbursed at the finalized new rate.
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 and RHC services are covered benefits under the Medi-Cal program.
Requires FQHCs and RHCs to be reimbursed on a per-visit basis. Defines a “visit” as a face-to-face encounter between an FQHC or RHC patient and specified health care providers.
Permits an FQHC or RHC to apply for an adjustment to its per-visit rate based on a change in the scope of services provided by the FQHC or RHC. Requires rate changes based on a change in the scope of services provided by an FQHC or RHC to be evaluated in accordance with Medicare reasonable cost principles.
Requires FQHCs and RHCs subcontracting with Medi-Cal managed care plans to seek supplemental reimbursement from DHCS through a per visit fee-for-service billing system (referred to as the “wrap around” payment). Requires each FQHC and RHC to submit to DHCS for approval a rate differential calculated to reflect the amount necessary to reimburse the FQHC or RHC for the difference between the payment the FQHC or RHC received from the Medi-Cal managed care health plan and either the interim rate established by DHCS based on the FQHC or RHC’s reasonable cost or the FQHC or RHC’s prospective payment rate.
Requires DHCS to adjust the computed rate differential as it deems necessary to minimize the difference between the FQHC or RHC’s revenue from the Medi-Cal managed care plan and the FQHC’s or RHC’s cost-based reimbursement or the FQHC’s or RHC’s prospective payment rate.
Requires DHCS, to the extent feasible, within six months of the end of the FQHC or RHC’s fiscal year, to perform an annual reconciliation to reasonable cost, and make payments to, or obtain a recovery from, the FQHC or RHC.
Requires that an entity that first qualifies as an FQHC or RHC, a newly licensed facility at a new location added to an existing FQHC or RHC, and any entity that is an existing FQHC or RHC that is relocated to a new site to have its reimbursement rate established in accordance with one of the following methods, as selected by the FQHC or RHC:
The rate may be calculated on a per-visit basis in an amount that is equal to the average of the per-visit rates of three comparable FQHCs or RHCs located in the same or adjacent area with a similar caseload; and,
In the absence of three comparable FQHCs or RHCs with a similar caseload, the rate may be calculated on a per-visit basis in an amount that is equal to the average of the per-visit rates of three comparable FQHCs or RHCs located in the same or an adjacent service area, or in a reasonably similar geographic area with respect to relevant social, health care, and economic characteristics.
At a new entity’s one-time election, DHCS is required to establish a reimbursement rate, calculated on a per-visit basis, that is equal to 100 percent of the projected allowable costs to the FQHC or RHC of furnishing FQHC or RHC services during the first 12 months of operation as an FQHC or RHC. After the first 12-month period, the projected per-visit rate is required to be increased by the Medicare Economic Index (MEI) then in effect. The projected allowable costs for the first 12 months are required to be cost settled and the prospective payment reimbursement rate is required to be adjusted based on actual and allowable cost per visit.
This bill:
Reconciliation Changes
Requires reconciliation to be based upon the reconciliation filing submitted to DHCS by the FQHC or RHC.
Requires DHCS to perform an initial review of the reconciliation filing within 30 days of receipt.
Requires DHCS to pay to the FQHC or RHC at least 80 percent of the amount owed within 30 days of completion of the initial review or in any event within 60 days of receipt of the reconciliation filing, if DHCS determines during the initial review that a payment is owed to the FQHC or RHC.
Requires DHCS to complete the final reconciliation review and to pay to the FQHC or RHC the remaining amount owed within 15 months of the last date of the fiscal year for which DHCS is conducting the review.
Scope of Service Changes
Requires DHCS to conduct an initial review of a scope-of-service rate change request within 30 days after submission by an FQHC or RHC.
Requires DHCS to notify the FQHC or RHC, no later than the 31st day after submission if DHCS determines that additional information is necessary to finalize a new rate. Requires the notification to state the reason or reasons the submitted information is insufficient and to request submission of supplemental information from the FQHC or RHC.
Requires DHCS to finalize the FQHC’s or RHC’s rate within 90 days after receiving a submission that it determines to be complete. Requires DHCS to update the provider master file within 10 business days.
Rates for New FQHCs and RHCs
Requires DHCS to finalize a new rate within 90 days after the submission of the actual cost report from the first full 12 months of operation. Requires DHCS to update the DHCS provider master file within 10 business days of finalizing the rate.
Requires DHCS to conduct an initial review of the three FQHCs or RHCs for the purpose of determining comparability within 30 days of submission by the new entity. Requires DHCS to notify the new entity no later than the 31st day after submission if DHCS determines one or more of the submitted FQHCs or RHCs do not meet the comparability threshold.
Requires the notification to state the reason or reasons for the finding of noncomparability and to request a supplemental submission from the new entity. Requires the DHCS request to clearly state whether the new entity must submit data from one, two, or three FQHCs or RHCs to meet the comparability threshold. Requires, once the new entity submits its supplemental information, the initial review process described in 9) above to apply.
Requires DHCS to finalize the new entity’s rate within 90 days after receiving a submission determined by DHCS to be comparable. Requires DHCS to update the provider master file within 10 business days.
Erroneous Payment Corrections
Requires DHCS to correct erroneous payments at least quarterly, and to reprocess past claims and ensure all claims are reimbursed at the finalized new rate determined if there has been a scope of service change or if the FQHC or RHC is a new entity.
FISCAL EFFECT:
This bill has not been analyzed by a fiscal committee.
COMMENTS:
Author’s statement. According to the author, with the growing Medi-Cal population and the implementation of the Affordable Care Act, FQHCs and RHCs become an increasingly important provider to maintain access to quality health care. Their ability to provide quality care is currently being jeopardized. A lack of timelines placed on DHCS has blocked clinics from valuable funding that could enable them to better treat their patients or increase services to more patients. This legislation is needed because it will ensure access to quality care by making sure clinics get their money in a timely manner. This bill keeps DHCS efficient and accountable for the payments it promised to our clinics.
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 and RHCs. Federal Medicaid payment to FQHCs and RHCs 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 and RHCs 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 or RHC during that fiscal year. An example of a scope of service change would be the addition of a new service, such as dental services or technology or from relocating or remodeling an FQHC or RHC. 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.
FQHCs and RHCs are both
reimbursed under the PPS system. The average ($178.14) and median
($157.24) PPS rate paid to an FQHC and RHC in 2014-15 is considerably
higher than the most common primary care visit reimbursement rates in
Medi-Cal, but it also includes additional services not included in a
primary care visit. Because FQHCs are required to receive an MEI
adjustment to their rates under federal law, and because of their
role in providing primary care to the Medi-Cal population, FQHCs have
been exempted from the Medi-Cal rate reductions.
Annual reconciliation. 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 Medi-Cal managed care 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 FQHC or RHC for the difference between their PPS rate and their Medi-Cal managed care reimbursement.
Within six months after the end of FQHC or RHC’s fiscal year, DHCS is required, to the extent feasible, to perform an annual reconciliation to reasonable cost and to either make payments to or obtain a recovery from the FQHC or RHC. The annual reconciliation is established to provide additional reimbursement to FQHCs and RHCs for the difference between their interim rate or PPS rate per visit and payments made by the Medi-Cal managed care plans. The annual reconciliation process was developed to ensure that the amounts paid for Medi-Cal managed care visits are equal to the full PPS rate that would apply to those visits. DHCS reconciles the wrap around amounts paid, the PPS rate, and the amounts received from the FQHC’s and RHC’s managed care plan. Clinics submit their annual reconciliation at the end of their fiscal year. DHCS indicates it has three years from the received date to finalize the clinic’s reconciliation. A DHCS auditor reviews reconciliation when it is received to ensure forms are complete, and a 60 percent tentative settlement is paid to the FQHC or RHC if the amount is due to the FQHC/RHC, at the auditor’s discretion.
Support. This bill is sponsored by the California Primary Care Association (CPCA), which argues the current lack of timelines has resulted in DHCS taking years to finalize rates and settle outstanding debts. CPCA states health centers are forced to carry enormous debt for services rendered, sometimes up to a million dollars. Considering health centers operate on thin margins, often two percent or less, this significantly impacts their bottom line and ability to effectively deliver services to Medi-Cal beneficiaries. Opening private lines of credit to carry the debt has become common even though the state does not reimburse health centers for interest accrual on that debt. CPCA states it takes DHCS approximately five years to set a new reimbursement rate, and for annual reconciliation, it currently takes approximately three years for FQHCs and RHCs to receive final payment. CPCA argues the timelines will provide health centers with reasonable clarity on reimbursement rates and reconciliation, allowing them to direct more focus and funding toward improving patient care and services, rather than increasing cash reserves to accommodate delays in reimbursement.
Policy comments.
The timeframes contained in this bill establish new statutory timeframes and do not amend an existing law timeframe. In the case of reconciliation provisions, this bill requires a faster response and higher interim payment amounts than is current DHCS practice. For example, DHCS’ reconciliation-related documents indicate it has three years from the received date to finalize a clinic’s reconciliation, and it has a 60 percent interim settlement, which can be subject to change at DHCS’s discretion.
Under this bill, DHCS has to complete the final reconciliation review and to pay to the FQHC or RHC the remaining amount owed within 15 months of the last date of the fiscal year for which DHCS is conducting the review, and DHCS is required to pay at least 80 percent of the amount owed within 30 days of completion of the initial review or in any event within 60 days of receipt of the reconciliation filing, if DHCS determines during the initial review that a payment is owed to the FQHC or RHC.
This bill requires reconciliation to be based upon the reconciliation filing submitted to DHCS by the FQHC or RHC. As drafted, this language would seem to prevent DHCS from using other payment information (such as from health plans or DHCS data) in performing the payment reconciliation. The author has agreed to delete this provision with an author’s amendment.
SUPPORT AND OPPOSITION:
Support: California Primary Care Association (sponsor)
Asian Pacific Health Care Venture, Inc.
AltaMed Health Services Corporation
Association of California Healthcare Districts
California Academy of Family Physicians
Community Clinic Association of Los Angeles County
East Valley Community Health Center, Inc.
El Proyetco Del Barrio
St. John’s Well Child & Family Center
Thirty-five individuals
Oppose: None received
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Discussed in Hearing
2MIN
Senate Floor
1MIN
Assembly Floor
45SEC
Assembly Floor
2MIN
Assembly Standing Committee on Appropriations
1MIN
Senate Floor
1MIN
Senate Standing Committee on Appropriations
3MIN
Senate Standing Committee on Health
Bill Author
Bill Co-Author(s):